Key Points: Around 90% of US drivers rate themselves as safer and more skillful than average, illustrating the human tendency to overrate their own abilities. Only 17% of US large-cap mutual fund managers beat the S&P 500 over the last 10 years, indicating that successful manager selection is nearly impossible. Outperformance and alpha are not the same thing, as factors … Read More

Machine learning has the potential to revolutionize investment management, but many professionals in the field are still trying to grasp its concepts and applications. In this article, we will provide an overview of machine learning training methods and present a decision-making flowchart that can guide the selection of appropriate approaches based on the desired outcomes. Key Points: Ensemble learning combines … Read More

Key Points Experts predict that equity returns in the next 10 years will be below the long-run average. While the CAPE ratio has been an empirical failure for timing, it can be useful for forecasting. Investors and pension funds should adjust their allocations when equities are expected to underperform their historical average. When expected returns on everything are low, investors … Read More

Key Points Human capital, financial capital, and social capital are the three forms of capital essential for a successful finance career. Human capital refers to knowledge and skills gained through education and experience. Financial capital is necessary to invest in oneself and take risks. Social capital, built through trust, respect, and helping others, can open doors and create opportunities. A … Read More

Key Points: Inflation outcomes are not solely driven by central bank policies. Demand destruction may not lead to lower inflation, as demonstrated by previous experiences. Other factors like fiscal spending and geopolitical events can have a significant impact on inflation. The traditional framework of tight monetary policy leading to demand destruction and disinflation may no longer be operable. Demand Destruction … Read More

Key Points: Jim Cullen’s book, “The Case for Long-Term Value Investing,” provides a guide to achieving stock market success through a disciplined approach. With 60 years of experience, Cullen shares his expertise, supported by analysis and memorable stories. Long-term value investing focuses on achieving investment objectives over at least a five-year period. Cullen presents data that demonstrates the outperformance of … Read More

Key Points: Fed chair Jerome Powell’s recent speech at the annual Jackson Hole Economic Symposium emphasized the importance of history in guiding the Fed’s current approach to combating inflation. Powell outlined three lessons from financial history that support the Fed’s commitment to delivering low and stable inflation. Lesson 1: Central banks can and should take responsibility for delivering low and … Read More

– Quantitative easing (QE) is a topic of debate among finance academics and professionals. – QE restructures the maturity of government debt in private hands. – The Federal Reserve’s balance sheet shows that QE has not significantly impacted reserves or bonds. – The impact of QE on asset prices, such as equities, is a point of contention. – The fiscal … Read More

Key Points: – Biodiversity loss is one of the top five global risks. – Institutional investors have a fiduciary responsibility to consider environmental factors in their investment decisions. – The annual value of ecosystem services is greater than global GDP. – Sustainable investing can reduce risk and enhance returns. – Responsible investing strategies cover a wide range of asset classes. … Read More

– The banking and finance sectors have been early adopters of AI and ML technology, including large language models (LLMs) like ChatGPT. – LLMs have automated the model-development process and have performed as well as, if not better than, traditional models. – ChatGPT’s ability to comprehend human language opens up a wide range of use cases in finance, from risk … Read More