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New bubbles from misguided monetary policy

Have any lessons been learned following the Great Financial Crisis? Around the world, it looks like new bubbles are growing. Certainly, the crisis showed that central banks and politicians can move decisively on the threat of economic collapse. But the sequel has been years of bad policy; propping up banks, bad loans and unsustainable growth. […]

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EU Referendum: Investors should be wary of the polls

How should investors prepare for Britain’s referendum on EU membership? Shares were weak ahead of the Scottish referendum and the UK general election, but ultimately it proved right to ignore the opinion polls. Polls can capture a lot of biases and wishful thinking, whereas voting often concentrates the mind. In the polling booth, fear of […]

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3 key psychological challenges for investors

What are the main challenges to achieving good long term returns? Investors focus mainly on what the stockmarket might do; less so on their own behaviour. Some of the human behaviour that confers advantage in everyday life can drive poor investment decisions. The big challenges include; how we search for patterns and trends, the desire […]

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Investors love stories, but no happy ending for Emerging Markets

Investors love a good story, but the latest chapter of the emerging markets growth story has come as a nasty surprise to many. There may be much worse to come. Narratives can help to make sense of facts and figures. Stories can convey meaning, by joining up often unrelated information, and they offer hope. But […]

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Not what was forecast: UK index funds lagging active managers

Many UK active funds are now outperforming passive funds. But prejudices rarely disappear when hit with the facts. It is human nature to disregard data that contradicts our misplaced beliefs. This may be why little attention has been paid to the remarkable results of many active UK fund managers – in the face of much […]

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Should we worry about China?

Investors struggle with bubbles. Sure, we know they eventually burst, but lessons are quickly forgotten. Now China is a puzzle: it might look like a bubble, but what to do? Uncontrolled Yen devaluation could break China’s Renminbi peg and trigger more global deflation. But, timing and is hard to assess. Analysts and the press pay […]

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QE’s unintended consequences: Pension deficits to hit balance sheets

QE is having some serious unintended consequences, increasing pension scheme deficits and hitting company finances. Driven by liquidity and deflation fears, UK government stock, gilts, beat shares and most other asset classes in 2014. Long dated gilts gained over 20%. The trend has even accelerated already this year. Yet many UK pension funds, endowments and […]

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US Dollar’s impact on emerging markets may have just begun

Investors rarely worry about the global economy running out of money. Faith in central banks and liquidity is deeply ingrained. It may even just be cynicism; a belief that central banks will print whatever politicians want. But could the global economy be entering a period where US Dollars are scarce? The Dollar is nearing an […]

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Do executive incentives actually work?

Executive remuneration is not just a problem for banks. Headlines from other industries show there is a broader pay problem. Rewards in companies such as Tesco and Serco seem to have been a part of a weakness in strategy and governance. Boards assume that complex pay structures and incentives will drive useful management behaviour, but […]

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Why do the biggest companies disappoint on governance?

Tesco’s high profile failure reveals the interaction between incentives, failed strategy and governance. Unfortunately, despite hiring what should be the best non-executives, the record shows the biggest companies have more governance blow-ups. What is it about the way that big businesses operate that makes them more accident-prone, not less? Even the investors lucky enough not […]

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