Consumer spending accounts for almost 70% of nominal US GDP. As such, consumer sentiment ought to have some correlation with market performance. Financial journalists certainly act as though it does. Whenever new sentiment or confidence numbers — consumer or otherwise — are released, pundits spring into action, speculating on what the data’s implications are for the markets and the overall … Read More

The evolution of language models is nothing less than a super-charged industrial revolution. Google lit the spark in 2017 with the development of transformer models, which enable language models to focus on, or attend to, key elements in a passage of text. The next breakthrough — language model pre-training, or self-supervised learning — came in 2020 after which LLMs could be … Read More

Key Points: Many industry professionals who advocate for active management often fail to provide strong and substantiated sources to support their viewpoint. Active management has a poor track record, as evidenced by research studies and industry critiques. When considering active management, it is important to have a clear understanding of how to identify outperforming managers and when to go active … Read More

Key Points: Public debt in excess of 90% of GDP can negatively impact economic growth. Governments can reduce public debt through strategies such as redeeming assets, taxation, inflation, and debt restructuring. Extending repayment time frames can also alleviate debt burdens, but it may come with its own risks. Ultimately, the approach to reducing public debt depends on a government’s specific … Read More

– When evaluating investment managers, it is important to ask three key questions: – What are the drivers of their investment process? – What evidence is there that their investment process will be effective? – What risk controls are part of their investment process? – Investment managers should be able to explain the factors they consider important in their investment … Read More

Key Points: Climate risk is financial risk, and understanding this connection is essential. Companies must incorporate climate change’s economic implications into decision-making processes. Investors can engage with companies to set emissions reduction goals. Bringing together stakeholders is crucial for addressing climate risk. The politicization of climate issues hinders progress. Collaboration and consensus among stakeholders are key to driving change for … Read More

Key Points: There is currently no US country-level index that weights holdings by each sector’s underlying GDP. To create a US GDP-weighted index, the S&P 500 was broken down into its 11 underlying sectors and the data for each sector’s corresponding Vanguard exchange-traded fund (ETF) was pulled from 2005. The index’s overall return for each quarter was calculated by multiplying … Read More

The Art in Fundamental Analysis Financial statement analysis represents the art in fundamental equity valuation and helps creditors and investors make better economic decisions. For reporting purposes, corporations prepare statutory statements that combine accounting rules describing the accrual process, management estimates of projected events based on past experience, and managerial judgment that is subject to a cost-benefit rationale. Corporate press … Read More

Key Points: Legendary investor Howard Marks believes that the end of easy money and low interest rates represents a sea change in the financial markets. Marks predicts that interest rates will not continue to decline and that investors will have to adjust to more difficult conditions. He suggests that the market is shifting from a borrower-friendly environment to one that … Read More

– Pulak Prasad’s book, “What I Learned about Investing from Darwin,” offers practical insights for investors. – The book emphasizes the importance of good perspective and strategy in investing. – Prasad draws on examples from his own portfolio to illustrate investment theory and analytical techniques. – The book highlights the parallels between evolutionary theory and investment theory. – Prasad’s focus … Read More