Volatility

Economics

Could Brazil be next?

After Argentina and Turkey, could Brazil be the next emerging market (EM) that goes into crisis? These events are not linked – each of these countries currently has idiosyncratic weaknesses. In the case of Brazil, the fiscal deficit is in the spotlight, coupled with the presidential elections in October.

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Portfolio Thinking

Risky or not? The currency hedging debate for equities

Some investors propose hedging all currency exposure while others see no benefit to hedging at all, so is currency exposure a risk?

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Portfolio Thinking

Correlation galaxies – how to grasp asset class behaviour over time

Correlations show us how assets have moved relative to each other in the past. As multi-asset investors, one of our key objectives is to identify assets that improve diversification. To do this, we try to combine assets with low or even negative correlations. This sounds easy, but can be surprisingly difficult in reality.

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Economics

CAPE fear

On some indicators equities look expensive – the CAPE ratio is the highest since the dot.com boom. But with interest rates at multi-decade lows, shouldn't equity earnings yields be low too? Rising interest rates pose a threat to valuations, but models suggest this could be offset as long as recession fears remain low.

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Macrobites

Bitcoin: The rise of a new currency?

Bitcoin was the talk of the town in the last few months of 2017, rising from relative obscurity to headline news as it rocketed in value. But can it overcome hurdles to cross over from a speculative asset to a mainstream currency?

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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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Strategy

Going to extremes

With 2017 now upon us, it’s clear that a new political paradigm has emerged. The prominence of Brexit, Trump, Le Pen, Corbyn, Alternative for Deutschland and many others is not the result of idiosyncratic national political issues; it reflects a systemic political shift. Given this shift, is it possible for investors to find inner peace?

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