Emerging Market Equities on the way back? According to GAM, UBP and Barclays they are certainly worth another look. Source and Pictet agree that the oil price collapse may ultimately prove to be a good thing. Deutsche Asset Management is more cautious about high yield and Novus explains the win/loss ratio.
- In “Darkness before Dawn” Tim Love from GAM debates why it may be riskier to be out than in EM equities. Among the top-six indicators of emerging equity upside is EM/DM relative value. The developed market / emerging market (DM/EM) relative value is back to 2004 levels. Tim is kind enough to remind us that a 400% rally in EM started in 2004.
- UBP is also asking itself the question whether 2016 will be a year for a turnaround in EM. They point out that one of the factors (among others) that could be in favour of EM equities is that most investors are considerably underweight EM. Hence small improvements can have major effects.
- Deutsche Asset Management is one of the first to come with an update of the 2016 outlook. The commodities bear market has made them more cautious on U.S. and EUR high yield. But they keep the faith in existing fundamentals and the equity market, although the equity indices forecasts for 2016 have been altered downwards.
- Source discusses the history of oil price collapses and equity markets. They view “the decline in oil as a transfer of income from producers to consumers”. They argue that this may give global growth a boost, if the spending’s of users rise more than the fall of producer’s. But at this point in time the market does not agree with them (yet?).
- “The Novus Guide to Win/Loss Ratio” explains the importance of this ratio. Off course you already knew this ratio measures how much a manager makes when they are right versus how much they lose when they are wrong. But how should it be interpreted? And how is it related to the “batting average” ratio? Novus tells it all.
- Pictet asks itself the question whether 2016 will end as badly as it started. They give five reasons why the pessimism looks overdone. In one of them they argue that the lower oil price will be positive for the economy. Among other things will it boost the spending power of consumers.
- Barclays made A Tactical Asset Allocation Adjustment. They reduced the allocation in Cash & Short Maturity Bonds and increased the allocation in EM and DM equities.
The book Superforcasting – the art and science of predicting by Philip Tetlock was one of the books that was really standing out in 2015. Philip Tetlock discusses how predictors can get to a satisfying prediction. This book helps you to divide a prediction into little parts and how you can get by these smaller problems and smaller predictions to a great end prediction.
Tetlock uses examples of contemporary politics and decisions, which we know from history, to explain it is all about working with chance. It is never 0% or 100%, but it’s always something in between. A great example is the following question: How many piano tuners are there in Chicago?
By dividing this question into the following parts:
- How many inhabitants does Chicago have?
- How many pianos are there on average per 100 inhabitants?
- How much time does it take to tune a piano?
- How much does a piano tuner work in a year?
It’s very amusing to see that every answer to these questions was estimated incorrectly, nonetheless the final prediction was only 10 piano tuners from the actual answer. How can you answer these sub-questions correctly? Have access to great research!
Superforcasting vs OpinioPro
To make a good prediction you need to know the consensus. At OpinioPro you can view thousands of research documents. Search for a specific subject and you can find multiple visions. Good ‘superforecasters’ appear to read a lot and discuss their vision with people who don’t share this same vision. Opposite opinions appear to have a good influence making an accurate prediction, tells the book Superforcasting.
OpinioPro wishes to assist investment professionals, by making investment research easily accessible, which will lead to better investment decisions. The search engine is available without registration as well at: www.opiniopro.com
We have a turbulent start of the new financial year, and that’s probably an understatement. So you might think that current reports “reporting” on the stormy conditions are among the best read on our platform. Of course there is significant interest in them, but the average OpinioPro user looks well beyond the current state of affairs. Classified by subject “investment outlook 2016” remains on top of the list. We guess that has something to do with keeping a long term perspective. The current volatile market conditions come in 2nd place. But here comes the interesting part. We see a heightened interest in “old” reports concerning the state of financial and economic affairs in China. Maybe there is something to learn from recent past. Also interested in a little history lesson? Recent and old report about China can be found here.
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- By clicking the “more docs like this” icon, which is shown at the top left corner of each research report, a selections of research documents with a similar subject will be shown.
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