Statistics

Statistics

Economics

Goldilocks - will the porridge ever overheat?

We're currently in a Goldilocks environment - not too hot, not too cold. How long can this last? Structural forces are depressing inflation but cyclical pressures are intensifying. Even if the microwave is less powerful than before, if you keep zapping the porridge for long enough, surely it will eventually overheat?

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Portfolio Thinking

The small-cap anomaly

Regardless of intention, I think a lot of the commentary on active management performance is misleading. High or low success rates for active managers are far too often explained in nonsensical ways. In fact, there are just four main options in my view and three of these likely explain the anomaly in small-cap equities.

 

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Strategy

Grey is the new black (or white, or beige)

As our attentions turn to outlooks for the year ahead, it's best to avoid messages from perma-bears, perma-bulls and the hopelessly vague. However, clairvoyance is not a strategy. Instead we should try to favour sound analysis and be more willing to think (and talk) in probabilistic terms, or as I like to call it, shades of grey.

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Macrobites

Déjà vu all over again

It's been a week since Donald Trump’s victory took almost everyone by surprise. We always argued that his election was more likely than it seemed following the UK referendum, but it was not our base case. This has made us wonder what went wrong. Could a Trump victory have been predicted by pollsters and bookies, or by us?

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Macrobites

Greece beneath the headlines

It is over a year since the last big Greek drama, but recovery remains elusive and the danger of a sudden convulsion has not passed.

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Economics

Home sweet home?

The housing market was already expected to slow going into the summer. In the immediate aftermath of the of EU referendum, however, fears about the UK housing market intensified.

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Strategy

Spot the odd one out

The below market consensus pricing of European and US inflation markets contrasts starkly with the picture in the UK. British investors looking for protection against a global (rather than country-specific) inflation shock could find better value overseas.

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