Risk management

Macrobites

What policy challenges could move markets?

The Bank of England, the European Central Bank and the US Federal Reserve all tightened monetary policy in 2017. Should investors be prepared for more of the same next year?

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Portfolio Thinking

Correlations: when falling below the averages is a good thing

‘Less is more!’ That is what correlation wants to brag about to enhance diversification. However, following the financial crisis, many believe that correlations are at an all-time high – is this the end of low correlations? We think not.

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Economics

This time it’s different – the odds of financial crisis in China

History is littered with episodes where the rules of economics were declared dead, only for these rules to return with a vengeance. You remember the ‘end of the business cycle’ debate in the late 90s or the ‘great moderation’ paradigm of the early 00s? Despite these precedents and despite overwhelming evidence that large debt build-ups can end in tears, we believe a Chinese financial crisis is not that likely over the next 2-3 years.

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Strategy

Waiting for the ‘fat pitch’

A great advantage in managing money is having the ability to wait: avoiding a situation where you have to invest. This means you can pass on an investment idea simply because it doesn’t look interesting enough and wait for truly great opportunities. American baseball fans call this “waiting for the fat pitch”.

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Portfolio Thinking

Unlucky 13

 

In my recent post The future ain’t what it used to be, I talked about the importance of looking ahead for scenarios that could affect our portfolios, and assessing what impact they might have. 2017 is littered with potential event risks; here we look at the 'unlucky 13', with European politics taking centre stage.

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Macrobites

Flying yellow submarines

We've seen buoyant market conditions of late. In fact, conditions are so buoyant that they have brought to the surface some rarely seen dwellers of the market depths.

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Macrobites

Between the hammer and the anvil

The French people go to the polls for two rounds of voting in the spring. Markets have belatedly noticed that there is a significant risk associated with this event. In particular, they fear the French people being caught "entre le marteau et l'enclume" (between the hammer and anvil) in the second round of voting in early May.

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