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Author Archive for Bob Collie


Is active investing a zero-sum game?

Some argue that active management is a zero-sum game. They claim that passive investing – i.e. relying on the wisdom of crowds, and following the herd – is better. According to passive investors, it’s all about the fees. What’s the logic behind this view? Today I argue that it is more complex than it seems.

Is the stock-bond correlation positive or negative?

Is the stock-bond correlation positive or negative?

Some periods of history might point to the conclusion that the correlation between the returns on stocks and bonds is positive, others that it is negative. These variations can be a signal of fundamental change in the broader market environment. Phase transitions The behaviour of investment markets is not fixed. There are periods, for example,

May 18, 2017 Categories: Markets
fragile are today’s financial markets

How fragile are today’s financial markets?

The U.S. stock market continues to hit new highs. Interest rates remain remarkably low compared to historical norms. It’s almost 8 years since the last U.S. economic recession. But nothing lasts forever. Feedback loops drive market behaviour At some point, the economic cycle will turn – it always does – and that will most likely

Apr 21, 2017 Categories: Market Updates
Russell Investments Wire Blog Factor Exposure

Using factor exposures to in pursuit of better returns in a multi-asset portfolio

The low interest rate environment of recent years has created a challenging return outlook for institutional investors. In response, one area that many investors have turned to in their pursuit of incremental returns is factor exposure management (widely referred to as smart beta). Factor exposures in a multi-asset context The management of factor exposures is

Apr 13, 2017 Categories: Investment, Investment Strategy

Stock market volatility in 2016: reality or rumour?

  There was much talk of stock market volatility in 2016 – so where do you think 2016 would rank among the past twenty years, when we compare the daily volatility of market returns? Smoother than the average year 2016 was the 14th most volatile of the past twenty years, as measured by the Russell

Jan 11, 2017 Categories: Market Updates

What if the experts were right to put Trump’s and Brexit’s chances at 30%?

It’s the quiet week before Christmas, so I’m taking the opportunity to briefly set investment, pensions and charitable trusts aside and sneak in a post that touches on some of my favourite subjects: probabilities, forecasting and uncertainty. Specifically: what are the right – and wrong – lessons about forecasting from Donald Trump’s victory and the

Dec 21, 2016 Categories: Market Updates

Proxy voting and the effective functioning of markets

While the world’s attention is focused on the US Presidential elections this week, this post addresses a different kind of voting: shareholder voting. Proxy voting In Developed equity markets, we have seen a progressive fall in individual share ownership. For instance, in the UK, the Office for National Statistics now estimates that UK individuals own

Nov 7, 2016 Categories: Governance & Regulation

You cannot work out what’s next for China by extrapolation

Investment means dealing with an uncertain future, but forecasting is a tricky undertaking. The First Law of Forecasting Human beings tend to follow a pretty simple formula when forecasting the future, namely: assume that current trends will continue. We might even call that the First Law of Forecasting.1 That is not a bad approach when

Jun 29, 2016 Categories: Markets

Investors: Are you a return seeker or a risk manager?

Investing, at its most basic level, is a delicate trade-off between return seeking and risk management. For many investors, the factor that dominates their decision making shifts over time with somewhat predictable, and more often than not negative, results. From fear to greed I don’t believe that one approach is necessarily always better than the

Jun 8, 2016 Categories: Markets

Could bounded responsibility push responsible investing into the mainstream?

Responsible investing* continues to grow. But although the concept has its advocates, many large European and U.S. institutional investors have no policy with regards to responsible investing, and no intention of creating one. Bounded responsibility Among many institutional investors, responsible investing is not truly mainstream. The current situation is bifurcated: in or out. Investors in

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