Predicting Bond Default Rates: Martin Fridson’s Method

By

Martin S. Fridson, CFA

Behavioral finance has cataloged an array of self-inflicted errors that can work against investors’ best interests — most often, these errors stem from functional but imperfect mental shortcuts that the brain applies in order to avoid serious cognitive effort. Successful investors understand that the market conventions arising from these kinds of shortcuts can be deeply flawed, and they recognize the importance of examining prevailing assumptions in greater detail. One such example is Martin S. Fridson, CFA: at the 69th CFA Institute Annual Conference in Montreal, he asserted that the majority of market participants are regularly projecting the high-yield default rate incorrectly.

“Most projected default rates in the marketplace, and you can read about this in the press, are based on a calculation method that takes the spread over Treasuries and subtracts a fixed illiquidity premium,” Fridson said. “This is wrong for a number of reasons.” Read More

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Building Long-Term Value: 10 Trends in Asset Stewardship

By

Kumar
How can investors use their skills to improve the firms they invest in? Rakhi Kumar, managing director and head of corporate governance at State Street Global Advisors, spoke to delegates at the 69th CFA Institute Annual Conference in Montréal about the approach she and her team use to engage with companies in their portfolio and the trends that she sees in investor engagement. Kumar believes it is important for long-term investors to encourage long-term strategy at companies and for all investors to recognize the role they play in markets. Read More

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Applied Fintech: Combining Invest-Tech’s Building Blocks

By

Ashby Monk

These days, it seems everyone in the investment business wants to talk about fintech. What does it mean for my firm? What does it mean for my job? How can we use it? How can we survive it?

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Generating Alpha by Exploiting Market Anomalies

By

Peter Berezin

Peter Berezin, chief strategist at BCA Research, reminded delegates at the 69th CFA Institute Annual Conference of the certainty that, net of fees, the average active investor will underperform the stock market.

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Changes in Geopolitical Perspectives: “A World That Will Fragment”

By

Peter Zeihan

How we view geopolitical strategic scenarios for the future dramatically impacts our investing perspectives today.

At the 69th CFA Institute Annual Conference, geopolitical analyst Peter Zeihan outlined a global political framework that is in the midst of increasingly rapid change.

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Amy Myers Jaffe: Energy Markets and Musical Chairs

By

Amy Myers Jaffe

Ten years ago, we thought the world was running out of oil, that China and other emerging market countries would have insatiable energy demand growth, and that production costs would generally rise over time.

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Career Management: Adapting for the Future

By

Tracey Wilen

If you knew with certainty that you would live to be 100, how would that impact how you think about your career?

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Cyber-Security in the 21st Century: Hunt or Be Hunted

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Cyber-Security in the 21st Century: Hunt or Be Hunted

Cyber-security expert Eric Cole likes to remind his audiences about an African proverb that, in his telling, goes something like this:

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Think Different, But Be Right

By

Rupal J. Bhansali

Here’s a crazy idea: If you want to perform better than everyone else, start by doing something different from them.

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