Wealth Management Basics

Key Points: The eruption of Mount Tambora in 1815 had a significant impact on global climate and agricultural commodities, causing a shortage of agricultural products and a rise in prices. The US experience during the Year without a Summer in 1816 was less catastrophic compared to Europe, but it still led to farmers selling their land and heading west for … Read More

Key Points: Quitting a career can be beneficial and lead to success, even though it can be difficult to let go. Emotional attachment to a job can prevent us from considering a career switch. Opportunity cost is the value lost by choosing one opportunity over another. Considering the time value of money can help us evaluate the financial benefits of … Read More

Bitcoin and equity markets are uncorrelated, debunking the notion that bitcoin is merely high beta equity exposure. The recent FTX-inspired crypto bear market served its purpose by flushing out speculative traders and strengthening the resolve of long-term crypto investors. The FTX collapse triggered an “allergic reaction” in the investment world, but deeper analysis has shown the resilience of bitcoin and … Read More

Franklin J. Parker, CFA, is the author of Goals-Based Portfolio Theory, published by Wiley. Key Points: Valuing cryptocurrencies is a challenge for professional investors. Without a pricing model, it is difficult to make buy/sell decisions. A rough rule-of-thumb or ballpark estimate would be a welcome starting point. Sell discipline is crucial for investment portfolios. Crypto enthusiasts need to provide a cogent concept … Read More

Key Points: Policymakers in the US are hindering investors from conducting risk management by proposing and passing laws that make it illegal to consider the financial risks of climate change. Climate change poses financial risks, as droughts, heat waves, and extreme weather events can cause significant damage to infrastructure, supply chains, and facilities. Investors have integrated climate considerations into their … Read More

– Companies are increasingly investing in, partnering with, or acquiring AI start-ups in order to gain a competitive edge in the fast-developing AI sector. – Mega-cap serial acquirers are adopting a more nuanced AI-focused strategy, looking to build, partner, and buy in order to increase their capabilities. – Incumbent companies can boost their positions by partnering with AI start-ups to … Read More

ESG ratings are meant to assess a company’s ability to manage environmental, social, and governance risks. Higher ESG ratings are expected to correlate with better financial performance and higher valuations. However, there is no clear consensus on the correlation between ESG ratings and financial performance. A study found no significant correlation between ESG ratings and bond credit spreads. Credit rating … Read More

Key Points: Mortgage rates have increased significantly in some countries, but residential real estate markets have not experienced distress. Assessing residential real estate as an asset class is complex due to various influencing factors. Supply and demand imbalances and speculation are key drivers of housing prices. Long-term outlook for residential real estate in many large economies is dismal due to … Read More

Myron Scholes, co-developer of the Black-Scholes options pricing model, continues to explore the financial markets, with a focus on artificial intelligence (AI) and decarbonization strategies. The Black-Scholes model revolutionized the pricing of options and contributed to a shift from agency-only banking to a principal business. The options market can be seen as a crowd-sourcing platform for determining market risk levels … Read More