PIMCO’s Sundstrom discusses how to navigate the “recession moment”

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Geraldine Sundstrom, a managing director at PIMCO and portfolio manager who focuses on asset allocation strategies, keeps getting the same question from clients: “When is a recession going to come?”

At the 72nd CFA Institute Annual Conference, hosted by CFA Society of the UK, Sundstrom argued that we aren’t at the end of the economic cycle yet. As she sees it, we are late in the economic cycle, and she explained how investors can position their portfolios to take advantage of late-cycle growth while protecting against the risk of a recession. Read More

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Understanding the Secrets to Perfect Timing with Daniel Pink

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Are there really secrets to the best timing for activities and events in our lives? Best-selling author and behavioral science expert Daniel H. Pink asserts that there are. At the 72nd CFA Institute Annual Conference, hosted by CFA Society of the UK, Pink shared some of the secrets that he gleaned from analyzing research on the timing of life.

According to Pink, research on timing has been siloed in many areas. Social psychologists, economists, linguists, anthropologists, and even endocrinologists have all conducted their own inquiries, looking at different aspects of similar problems. Pink sifted through the research to find evidence-based ways of informing the timing of our activities, work, and decision making.

Pink’s frustration with his own decision-making abilities led him to write When: The Scientific Secrets of Perfect Timing. He said that he was making all kinds of decisions about when to do things “in a sloppy way,” and he was looking for guidance that didn’t really exist. Read More

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Roger Ibbotson Explains the Price of Popularity

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Record executive Scooter Braun employed a simple formula to achieve wild success with Justin Bieber and other artists: identify talented performers right before they become household names. Yale Professor Roger Ibbotson thinks that investors should maximize their returns with a similar strategy — a strategy that hinges on popularity.

At the 72nd CFA Institute Annual Conference, hosted by CFA Society of the UK, Ibbotson compared a box of Bayer aspirin with a generic version of the drug. Their retail prices vary, even though the content is the same, and yet Bayer manages to attract a significant consumer base for their more expensive product. Stocks are no different, according to Ibbotson. “Popular stuff has higher valuations but lower expected returns,” he said.

Like many ideas in behavioral finance, Ibbotson’s thesis seems very common-sense. Its originality lies in the fact that unlike the CAPM, which correlates returns with risk, it considers the popularity of an asset. The model builds on CAPM to create PAPM, a Popularity Asset Pricing Model. Read More

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Can Investment Professionals Avoid Creating a “Cobra Problem”?

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Daniel Brocklebank, CFA, had a warning for the audience at the 72nd CFA Institute Annual Conference: Bad incentives lead to bad results. In investment management, compounding bad results can be catastrophic.

Brocklebank, who is UK director of Orbis Investments, began his presentation by telling the story of the cobra effect. It’s a lesson in policy gone wrong, where a reward placed on dead cobras drove people to breed venomous snakes for profit. The moral is that people respond to incentives.

With that in mind, he suggested that it was worth considering the incentives affecting asset manager behavior. Read More

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Build the Perfect Financial Services CV with these 11 Resume Tips

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The Perfect Financial Services CV: 11 Resume Tips

Does your curriculum vitae (CV) pass the six-second test?

When they look at applicants’ resumes, recruiters and hiring managers will spend six seconds on average looking at each. If your CV doesn’t set you apart in that brief moment, you are likely out of luck.

How can you craft a financial services resume that aces that test?
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Deborah Fuhr Discusses the Growth of ETFs

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Institutional investors are increasingly moving into exchange-traded funds (ETFs) and other exchange-traded products (ETPs), and market volatility is one of the main drivers of demand. A BlackRock-sponsored study, conducted by Greenwich Associates, found that institutional investors held 25% of their assets, on average, in ETFs last year. It’s an increase from the 19% reported in 2017.

At the 72nd CFA Institute Annual Conference, hosted by CFA Society of the UK, the rise of the asset class was tracked by Deborah Fuhr, managing partner and co-founder of ETFGI. Fuhr offered a historical perspective and made projections for the future; she expects the ETF/ETP industry to increase to US$8.9 trillion in 2020 and US$22.3 trillion in 2025. Read More

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A Painful Realignment: Peter Zeihan on Brexit Fallout

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A Painful Realignment: Peter Zeihan on Brexit Fallout

Self-interest is the order of the day in foreign relations. That’s what Peter Zeihan is seeing in his role as a geopolitical strategist.

The relative stability that followed World War II was maintained through a tradeoff, he explained at the 72nd CFA Institute Annual Conference, hosted by CFA Society of the UK. The United States ceded economic benefits to other countries in exchange for their participation in a global defense network.

The international order that developed in the 1940s to contain the Soviet Union did not include contingency plans for anything other than a world dominated by two global superpowers. “It had never occurred to the Americans that the global system could ever go anywhere except for the logical endpoint of nuclear annihilation,” he said.

That global order no longer serves US interests. “Economically, it was never supposed to,” Zeihan said. “Then it wouldn’t be a bribe.” Read More

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The Era of Big Data Capitalism

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The Era of Big Data Capitalism

Can you feel the change in the air? We have officially entered the era of big data capitalism. That’s according to Viktor Mayer-Schönberger, Professor of Internet Governance and Regulation at the University of Oxford.

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The Secret to Bringing Your Best Brain

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If you have 12 minutes to read this blog post, then you have enough time to become a bada$$.

That was the goal of Pete Ronayne’s session at the 72nd CFA Institute Annual Conference, hosted by CFA Society of the UK. Ronayne, from the Center for Creative Leadership, led a presentation on How to Bring Your Best Brain and Bada$$ Self to All That You Do.

Central to the idea of bringing your best brain to something is the idea that your brain is both lazy, and paradoxically, greedy for energy. On average, it weighs 2% of a person’s body weight while consuming 20% of the body’s energy. And it is working at 100% of capacity, all the time! Read More

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