Month: May 2016

The Success Equation vs OpinioPro

The Success Equation
The Success Equation

The Success Equation, untangling skill and luck in business, sports, and investing is a book that puts numbers in perspective of sports and business. The writer Michael Mauboussin shows with his two other books, More than you know and Think Twice, that he is located in the spectrum of Behavioral Finance as well.

People usually have a favourite sport and by looking from that perspective to statistics makes it easier to understand them. The book has 233 pages and in those pages clear case studies are mentioned and in that way numbers are becoming quite clear for the reader. However, if those numbers are still not clear enough for you then Mauboussin has a website for you. On www.success-equation.com are five simulations and with those simulations you can let numbers vary. Afterwards, the results are in a visually clear way presented to you.

Investment professionals tend to attribute good results immediately to skill. However, after reading this book you will see that skill is probably overrated. You will understand the factor named luck more and you will see this in top sport as well. Anyone can kick a football, but that does not make you Lionel Messi…

In 11 chapters the many aspects of skill and luck are mentioned. In the last chapter, ten guidelines are written down to stimulate your personal development and to let statistics really work for you!

OpinioPro vs The Success Equation

Taking action is often the rule, so to undertake nothing seems not an option. Choices are mostly supported by… statistics. However, in an investment committee not only statistics are brought forward – arguments are also part of the discussion. In that situation, it is very valuable to know the pros and cons. OpinioPro is a platform made for professional investors in order for them to find visions on the topic that is at issue in their organization in a fast way. Visions of both supporters and of opponents!

On OpinioPro’s platform, you can find new research on a daily basis. However, you can also search an asset manager’s vision he had in the past. At the moment are Brexit, asset allocation and factor investments are hot topics on www.opiniopro.com.

OpinioPro has currently over 2,500 investment research reports on these subjects at its platform. The best ‘research engine’ is now available without registration on www.opiniopro.com.

Brexit: A big discrepancy between supply and demand of investment research

A referendum is being held on Thursday, 23 June to decide whether Britain should leave or remain in the European Union. This was officially announced a few months back in February. Since then the discussion of the pros and cons has significantly gained momentum. We will show that publishers of investment research (Investment Banks etc.) have been lagging the “Brexit” interest of their readers. In other words, “Brexit” has been a relevant topic for the user of investment research much longer then for the writers of investment research.

We came to this (non-academic) conclusion after we analysed the following set of data:

  1. In how many investment analysis reports the word “Brexit” is mentioned since the beginning of 2015 (as a percentage of all documents featured on OpinioPro.com)
  2. In how many investment analysis reports that were actually read the word “Brexit” is mentioned (as a percentage of all read documents on OpinioPro.com).

The first step was to check on a monthly basis in how many investment research reports, we have currently 3.500 available, the word “Brexit” was mentioned. As you can see from the chart below, for the most part of 2015 the word “Brexit” did not feature in more than 5% of all reports. In other words, investment writers were not really interested in the subject. This changed significantly in 2016. In May the word can be found in 30% of all publications.

To put things in perspective we also added “Grexit” to the equation. At the top of the Grexit hype last summer it was mentioned in 27% of all reports. So it seems that right now Brexit is a bigger topic then Grexit.

But so far we took a look at was has been written. Does this correspond with what has been read? And the answer is a clear NO. As can be seen from the chart as from November interest from readers has been much higher. Interest topped in March (in 46% of all read documents the word “brexit” is mentioned) and is declining since then. Although more has been written, readers are starting to read less about the subject. We can only guess why this is happening, maybe everything has been said by March? One thing is clear, there seems to be a investment research supply-demand disbalance.

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The ETF-Strategist vs OpinioPro

The-ETF-strategistThe ETF Strategist: Balancing Risk and Reward for Superior Returns seems dated from the fact that that the book was written in 2008. The writer Russ Koesterich was employed by Barclays as Managing Director and Head of Investment strategy. In June 2009 the index department of Barclays was acquired by BlackRock. In recent years iShares grew fast under the wing of BlackRock.

In 243 pages, the author takes you into the world of multi assets. The book consists of two parts, the challenges and the solutions. The challenges are about the investor, be it an individual or an institutional investor, there are always goals. Also, there are always risks which need to be manageable. The solution is to spread across multiple asset classes with the CAPM-model.

Alpha and beta are also discussed to deal appropriately with skill. However, if you read an book about investment, it is important to know the background of the writer. Although there is no direct judgment made about passive investing, Russ Koesterich works for an ETF producer.

Chapter two discusses the problem of active funds. If the writer had active management as an investment belief, then it is certain that this chapter would be titled “the problems of passive funds”. Koesterich discusses the book in a way that creating alpha is similar to a beta game. The beta is cheapest in ETFs and if there is an optimal asset allocation, than that is the optimal portfolio.

OpinioPro vs The ETF Strategist

Asset allocation can be approached both active and passive. On the platform of OpinioPro there are many active views to be found, but passive is certainly present in the form of white papers. Cheap and expensive is an important theme, but if the price is to prevail then the quality comes under pressure on the long-term.

On the platform of OpinioPro a lot of research in the field of ETFs can be found. Currently, on www.opiniopro.com many searched and read about Brexit, asset allocation and smart beta.

OpinioPro has currently over 2,500 investment research reports on these subjects at its platform. The best ‘research engine’ is now available without registration at www.opiniopro.com

Seven Research Reports you don’t want to miss #8

After two slow weeks, with a lot of public holidays and excellent summer weather, we are back with some interesting research reports that you do not want to miss.

  1. Blackrock is signalling an EM sweet spot. With a weakening U.S. dollar, a rebound in commodity prices and a recovering Chinese economy headwinds are abating for this asset class. But no reason to get too excited. Structural reforms addressing excess debt, industrial overcapacity and low corporate profitability are still necessary
  2. Actiam presented its investment vision and implications for asset allocation. The biggest change is the new overweight position in Emerging Markets. From -0,5% they add to +2% for this category.
  3. Janus posted a Barron’s interview with Bill Gross. In this interview Gross lectures that an investor, like a golfer, should not change strategy when he is down one with two holes to play; do not panic, just play your game!
  4. UBS is Meeting the challenge of negative rates. One of the recommended measures is the “Endowment approach”. Allocate a higher proportion of portfolio assets to illiquid alternative asset classes, including hedge funds, private equity, private debt, and real assets
  5. In May 2016 Barometer “Rally has further to go”, Pictet explains their current asset allocation. They stick to their overweight stance on equities and remain underweight bonds as monetary stimulus should underpin economic growth.
  6. Vontobel delves into the subject of negative interest rates. From “How did we get here?”, their “…best defence against low interest rates” to the impact on asset allocation. Read all about it in Investors’ Outlook – May 2016.
  7. And what would a “Seven Research Reports you don’t want to miss” blog be without a reference to the coming Brexit referendum? Read all about phone polls and betting markets. AXA is checking the British pulse in “Brexit Update
  8. Weekly Roundup OpinioPro

Expected Returns vs OpinioPro

ExpectedReturns-bookExpecting Returns: An investor’s Guide to Harvesting Market Rewards belongs with its 570 pages to the category of Big Books. This very complete work by Antti Ilmanen explains the heart of investing, in a very clear way that has not been done before.

The title appears to say the core of the book is only about future returns. However, the largest part of the book is about returns in combination with working strategies. A very strong point of the book is the cube Ilmanen shows. By using this cube, a very clear division appears of the investment categories, strategies that work and risks you have to look out for.

To asset allocation specialists this is the work you should have read: it’s highly recommended. Not only does this book contain a lot of statistics and objective criteria; it can be used as an easy reference book as well. This book can also be recommended to specialists of a specific asset class. After all, strategies and risks are universal and applicable to the entire financial world.

This book seems rather a challenge with its 29 chapters. However, the division of asset class, case studies and broad themes helps you find information very quickly. You can watch an introduction (2:13 minutes) on YouTube:

OpinioPro vs Expected Returns

Explaining returns and strategies leads to ‘Factor Investing’. Which factors matter? Antti Ilmanen advocates Risk Premia and this leads to investing objectively and systematically. The concept ‘timing’ won’t be mentioned in this book…

On OpinioPro’s platform you can find research about Expected Returns. The number of asset managers that publish this kind of Expected Returns reports is lower than asset allocation opinions. What are the differences between the expectations and why? These questions make an investments committee more accurate. At the moment a lot of people search for and read about factor investing at www.opiniopro.com. The amount of publications is growing very fast. These publications are timeless: it’s about a strategy, not about an actual vision.

OpinioPro has currently over 2,500 investment research reports on these subjects at its platform. The best ‘research engine’ is now available without registration at www.opiniopro.com