Active Management

The main criticism of active management is that the cost of performance is expensive relative to passive investing and that most active managers underperform.  But funds which have a high “active share” typically outperform. “Active…

Week in review: What the Fed said

A familiar sense of anticipation settled over investors awaiting the result of the US Federal Reserve’s September deliberation. By and large, analysts and commentators expected the central bank’s interest rate-setting committee to hold firm and…

Behavioural economics and finance

The central tenets of modern portfolio theory and beliefs in rational markets have been found wanting.  Critics have observed that Sharpe’s “Capital Asset Pricing Model” (CAPM) and the Modigliani-Miller theorem were written during periods of…

Central Bankers Hold Markets Hostage

“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.” - Warren Buffett For several weeks, we have intended to write about some of the structural…

Markets Dump after a Cocktail of Negative Issues

Financial markets have just suffered their worst week since February. The catalyst would appear to be a cocktail of rising bond yields precipitated by either concerns over a potential rate rise from the Fed or…

Ranges Have to Break at Some Point

Last week, we set out the case for being constructive on the US Dollar. Although the resilience of the Dollar in the face of weak data is impressive, in reality the Dollar, along with bonds…

Current Economic Thinking May Need to Change

Having taken my family holiday in July, I had actually been hoping that August would see a pick-up in volatility and offer some trading opportunities. However, with trading ranges compressed and the post Brexit rally…

Week in review: Desperate times

On Wednesday the result of the most wide-ranging survey of British businesses since the Brexit vote was released. The purchasing managers’ index showed the sharpest fall in business activity for 20 years, and follows a…

Simplicity

Simplicity is not just a business and regulatory imperative. Investor revulsion at the global financial crisis has led to a renaissance for simplicity. Certainly the complicated mathematical models so beloved in some quarters of finance…