A Pioneering Spirit
Renée Blasky, CFA, on investment prospects for East Africa. In this interview with CFA Magazine, Blasky discusses the challenges and opportunities of investing in East Africa and future prospects for growth and returns.
Download: CFM – Pioneering Spirit – 2012 Jan-Feb
The Second Great Contraction
The exact timing of the financial crisis may have been unpredictable, but the trajectory of subsequent events has been entirely average and typical, says Kenneth Rogoff.
THREE YEARS AFTER THE GLOBAL FINANCIAL CRISIS, events are seeming eerily familiar to Kenneth Rogoff, co-author with Carmen Reinhart of the 2009 book This Time Is Different: Eight Centuries of Financial Folly. Historically, financial crises and their economic effects have tended to follow a similar pattern, and this one is no different, closely tracking the average for financial crises since 1945. In an interview with CFA Magazine, Rogoff, the Thomas D. Cabot Professor of Public Policy and professor of economics at Harvard University, explains his views on the predictability of crises and their aftermath, the likely time frame for recovery, why the current crisis might more accurately be called “the Second Great Contraction,” the link between debt burdens and growth, and the possible return of financial repression.
Download: Second Great Contraction – CFA Magazine – Nov-Dec 2011
Emerging Threat Funds
ETFs promise cheap diversification, liquidity, and perhaps unintended consequences for systemic risk.
IT’S BEEN A QUIET REVOLUTION BUT A REAL ONE. Exchange-traded funds (ETFs) have colonized pretty much every available niche in the investment world – frequently at the expense of traditional vehicles, such as mutual funds and hedge funds. And the land grab has apparently just begun. Which means it’s time to start thinking about unintended consequences.
Download: Emerging Threat Funds – CFA Magazine – Sept-Oct 2011
Politically
The investment industry is not equipped to understand the impact of global political instability, says one expert on political risk. What can investors do?
Download: Politically Motivated – CFA Magazine – 2011 July-August
Sludge
Is a toxic culture poisoning your investment firm? “When you have a lot of sludge in the system, you are not going to be making good decisions”
Is there more to performance than performance? James Ware, CFA, founder of Focus Consulting Group, has worked with investment firms for more than a decade on what he calls “leveraging talent.” Great culture, says Ware, encourages great performing teams and great client service.
Download: Sludge: CFAM May-June 2011
The Race to Zero
Mix falling birth rates with demographic insight and what do you get? Low-interest-rate environments and a new take on trends in currencies, according to Richard Hokenson, founder of demographic economic consulting firm Hokenson & Company. Previously director of demographic research at Credit Suisse First Boston, Hokenson was also chief economist at Donaldson, Lufkin & Jenrette, where, in 1978, he pioneered the application of demographics to economic and financial market forecasting. In an interview with CFA Magazine, Hokenson spoke about labor force as a trigger for rate changes, the strength of the U.S. population profile, and currency moves as a demographic effect.
Download: The Race to Zero – CFA Magazine – March-April – 2011
The Once and Future INVESTMENT MANAGEMENT Industry
After the financial crisis, investment firms are looking for a different skill sett. “You need to be able to work in different asset classes, across different geographies,” says Sergio Focardi.
Download: Once and Future CFA Magazine Jan-Feb 2011
Download: In Focus Licensing Jan-Feb 2011
End Score
Can hedge fund operational risk be quantified? A scoring model described in a Graham and Dodd award-winning article estimates the unobservable
Download: End Score CFA Magazine Nov-Dec 2010
MARGIN FOR ERROR
Howard Marks, CFA, a self-professed “worrier,” explains why “girding for bad times … is more essential [to success] than preparing for good times”
Download: Margin for Error CFA Magazine Sept-Oct 2010
Do the Right Thing
After crisis and scandals, managers see Asset Manager Code as opportunity.
“We think it is extremely important to clarify to the public that our company works within high standards regarding ethical and professional responsibilities.”
SANTI SOLIVERES GARCÍA-GRANERO, CFO of Cluster Family Office
Download:Do the Right Thing CFA magazine Sept-Oct 2010
MIDDLE MARCH
Will an expanding global middle class open doors for investors and the world economy?
The growth of the emerging global middle class has given rise to a number of tantalizing scenarios. The GDP of emerging countries could triple to US$24.3 trillion by 2030, pushing their share of global output from 23 percent currently to 33 percent of a potential US$75 trillion global economy. Members of the global middle class, numbering 430 million people in 2000 by one measure, could rise to 1.15 billion in the same period.
Download: Middle March 2010 July-August
Did the financial crash alter investors’ risk tolerance?
Your private clients stuck with equities even after the dot-com bubble burst. They held steady for the ensuing decade, even though the S&P 500 was essentially flat for the years 2000 through 2009. But the financial crash did them in. They rode the market down, but their risk tolerance diminished and they tired of volatility. Since the March 2009 bottom, they’ve simply been waiting until their portfolios had at least partially recovered, and now they’re asking you to reduce their exposure to risky assets in favor of guaranteed returns.
Is this a scenario widely faced by advisers?
Download: Risk and Regret – 2010 May-June CFA Mag
UNSUSTAINABLE PROMISES
“If you don’t understand demographics, you won’t understand how to choose the right stocks or estimate economic growth”
An interview with Amlan Roy
Download: Unsustainable Promises 2010 Mar-Apr CFA Mag
MIND GAMES
What can computer games tell us about the investment decision-making process?
Plenty, say researchers.
Download: Mind Games 2010 Jan-Feb CFA Mag
Leadership and Crisis
With many firms in transition and under stress, some managers face the ultimate test of their leadership skills. What works best? To find out, CFA Magazine talked with practitioners and academics around the world.
Download: Leadership and Crisis 2009 Nov-Dec CFA Mag – 107 KB
Hur Kyung-Wook, CFA, talks about the South Korean recovery and how lessons learned from the 1997 Asian financial crisis helped the country deal with recent events.
Hur Kyung-Wook, CFA, is a busy man these days.
As vice minister of strategy and finance for the Republic of Korea, Hur has travelled the globe in 2009, helping to stabilize the international financial crisis. Representing Korea at meetings of the International Monetary Fund, the Inter-American Development Bank in Colombia, and the ASEAN Plus Three in Thailand, he has worked to strengthen fiscal coordination and has shared the insights that have positioned Korea as one of the first economies to enter a recovery. For the second quarter of 2009, the country’s GDP grew 2.3 percent on a quarter-on-quarter basis.
Download: Korea Success 2009 Sept-Oct CFA Mag – 192KB
Fears about capital preservation have made offshore investing a popular option. But the rules of the game are changing.
Once upon a time, moving money offshore was no big deal for a person of means. Simply wire funds to a Swiss bank or Cayman trust and watch your money disappear into the black hole of state-sanctioned bank confidentiality. But those days are over.
Download: Outward Bound 2009 Jul-Aug CFA Mag – 211KB
CAREER STRATEGIES FOR A DOWNTURN
For those seeking new employment in the current environment, a strategic, proactive approach can improve the odds of success.
The tectonic plates of the FINANCIAL LANDSCAPE are shifting under our feet. Where are the major fault lines, and what will be left standing?
The lure of starting your own firm includes the ability to set your own hours, the freedom to work with the clients you select rather than those assigned to you, an opportunity to manage wealth as you believe it should be managed, and a chance to earn more money and build equity in your own business. No doubt, independence has its benefits even firms managing a relatively small amount of assets under management can compensate their owners generously and offer a better work–life balance. But going independent is a major step that requires an examination of one’s skills and temperament, adequate financial resources, and a sound business plan. No guarantees of success exist, and the dream of achieving a more balanced life can vanish with 70-hour work weeks in the early years.
Think you’re ready to join the growing number of advisers starting their own firms? Make sure you consider all the angles.
Investors are going beyond emerging markets and blazing new trails. What are the potential risks and rewards? – Who would invest in Lebanon, which seems perpetually on the brink of civil war? What about Vietnam, where stocks have shown they can plunge 60 percent in mere months?
Roundtable discussions among experts find consensus on major trends shaping the investment industry. Four years from now, will the investment world look measurably different from the way it looks now, and if so, how? To address this two-part question, CFA Institute convened three panels of about a dozen practitioners drawn from diverse industry specialties. The advisory sessions—held in New York, London, and Hong Kong—elicited opinions about the trends that are shaping the investment industry and professional firms, the demands being made of investment professionals, and the role CFA Institute should play in the industry between now and 2012.
How well can we read our emotions? How well do we manage them? New research focuses on the emotional drivers of investor behavior. A growing body of research suggests that investment decisions are heavily informed by emotions, which can be measured, analyzed, and perhaps incorporated into predictive models. This article looks at three concepts — emotional intelligence, emotional accounting, and emotional finance — that involve the impact of emotion on investor behavior. The development of each concept draws on decades of research and applies it to the field of finance, and all may be catalysts for further research.
PORTFOLIO MANAGERS SPEND THE BULK OF THEIR TIME DEVELOPING their buy discipline, and as a result, their sell discipline, if it should be called a “discipline,” often evolves haphazardly. Few, however, would ever admit it. “Everyone has what sounds like a very well thought out sell discipline, one that leaves emotions out of the equation,” says Michael Ervolini, founder and CEO of Boston-based Cabot Research. “Yet, much of what makes up their decisions represents something other than hard, measured fact.”
If this talk of a green tech (or clean tech or enviro tech) boom has a familiar ring, that’s because we’ve been here before—twice. Salad Days
Independent research is in a difficult spot, but some players still have a shot at success
Will global markets feel the heat from the U.S. subprime conflagration? “This could be a major event,” says one expert.
The tectonic plates of the financial landscape we thought we knew are shifting under our feet. Global finance will never be the same after this crisis. The financial leadership of the United States is being challenged, capitalism is under assault, industry structures are realigning, and (all agree) more regulation is coming.
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