It has become conventional wisdom that underperformance is due to the irrational investment behavior of individuals. For the creation and propagation of this conventional wisdom, we have DALBAR to thank. Now that Wade Pfau has shown that DALBAR’s research is likely to be worthless because it calculates its numbers wrong, it is time to question whether the conventional wisdom has even a scintilla of meaning.
Despite some uncertainties, economic improvements in developed and emerging markets have supported a positive mood across both equity and fixed income this year.
The Trump bump reveals market expectations of continuing public policies prioritizing stability, inhibiting creative destruction, depressing yields and wage growth, and inflating a profits bubble. If instead, the Administration delivers reforms that allow creative destruction, invigorate growth and raise returns to capital and wages, then the lofty profits of corporate incumbents will be at risk.
How is it possible that stock market bubbles are so obvious after they burst, but are almost never identified in advance – except by what seem, after the fact, to have been a highly perspicacious few? A new study found that there is a way to tell before it bursts that the market, or a segment thereof, is in a bubble. But profiting from an investment strategy designed to exploit bubbles is incredibly difficult.
My previous article, The Death of the Virtuous Cycle, provided readers with a clear understanding of why the United States and many other developed economies have seen productivity, wages, and economic growth stagnate. Due to the significance of its message and my desire to effectively reach as many people as possible, I take a new approach and present the concepts using an animated short video.
Because changing technologies and trade patterns can be both beneficial and disruptive, countries must strike a balance between the abstract principle of openness and concrete measures to limit their negative impact. To this end, policymakers should be mindful of not just how but when they implement structural reforms.
In the latest edition of "Global Macro Shifts," the Templeton Global Macro team examines potential US corporate tax reform and the possible impacts of a border adjustment tax (BAT). Read an excerpt from the paper.
The first quarter of 2017 was an interesting quarter in that performance was a reversal of 2016 and particularly the fourth quarter of last year.
The Federal Housing Finance Agency’s proposal to increase liquidity and reduce costs to taxpayers could actually lead to reduced liquidity and higher mortgage rates.
Lower correlations, coupled with greater dispersion of volatility across sectors, highlight the importance of asset allocation and could lead to more opportunities for outperformance by active managers over passive beta strategies.