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Book Review: Corporate Governance Failures

In August 2007, the head of AIG’s financial products division stated, “It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing one...

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Eight Key Factors in Effective Portfolio Management for Turbulent Times

How can investors better manage their portfolios in these turbulent times? This central question framed an engaging session led by Pranay Gupta, CFA, last month at the second annual India Investment...

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The Feuding Tribes of Practitioners (and Theorists) in Investment Management

Amidst the worst financial crisis in a generation, polarizations between proponents of quantitative approaches and those who favor classical fundamental analysis and behavioral finance pose a hindrance...

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Asset Allocation for Private Clients: One Part Theory, Two Parts Emotion

Helping a client understand and articulate their own goals and their biggest fears, and then building a compatible investment strategy, is an enormous challenge and is likely to be different with every...

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Modern Portfolio Theory: Bruised, Broken, Misunderstood, Misapplied?

If the global financial crisis has left us with any enduring lessons, it's that asset return distributions can be significantly skewed and asymmetrical with fat-tails. So how can investment...

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Quantitative Methods: What Is Modern Portfolio Theory?

Many investors have been using Modern Portfolio theory to maximize return in their portfolios while reducing risk, but they often either aren’t sure what that means or aren’t even aware of the thinking...

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Weekend Reading for Financial Advisers: Fiscal Cliff, Behavioral Finance, and...

What better way to start off the new year than with a handy reading list? Lauren Foster rounds up her favorite articles on private wealth management and behavioral finance. Read more →

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Behavioral Portfolio Management: An Alternative to Modern Portfolio Theory

As modern portfolio theory fades in reputation from intense pressure from behavioral finance, many researchers are seeking to fill the void with behavioral finance applications. Behavioral portfolio...

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Behavioral Portfolio Management: Emotions and Volatility Are Key to...

Despite numerous studies attempting to link volatility to changing fundamentals, research shows that investor emotions are the root cause of the vast majority of these price changes, according to C....

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Weekend Reads for Financial Advisors: Behavioral Finance, Investing, and Saturn

Lauren Foster rounds up some of the most interesting content on behavioral finance, investing, and retirement from the past couple weeks. Read more

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Are We Complacent or Petrified?

On my recent one-day visit to San Francisco, I chatted briefly with a flight attendant who wanted to know whether any of the papers I was discarding would make her rich if she read them. I suggested...

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Record Low Rates and Volatility Muddle Financial Models

Alarm bells have been ringing over the summer about remarkably low levels of volatility — a key input in many common investment models — across global markets. Read more

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Are We Complacent or Petrified?

After examining his own and others' current thinking, A. Michael Lipper, CFA, believes our low level of activity in the market could indicate that we have become petrified. Read more

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Book Review: Asset Rotation

Although the author’s argument heralding the demise of modern portfolio theory (MPT) seems weak, he offers a compelling argument for active management. Using exchange-traded funds (ETFs) and asset...

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Has Emerging Market Debt Entered the Mainstream?

GMO's Tina Vandersteel, CFA, believes emerging market debt is attractively priced, particularly local currency debt at current relative levels. Vandersteel believes opportunities to outperform are...

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C. Thomas Howard Urges Practitioners to “View the Markets as They Are”

C. Thomas Howard, an opponent of the efficient markets hypothesis, advocates for a radical departure from the idea of diversification at the core of a healthy portfolio.

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Modern Portfolio Theory: Bruised, Broken, Misunderstood, Misapplied?

If the global financial crisis has left us with any enduring lessons, it's that asset return distributions can be significantly skewed and asymmetrical with fat-tails. So how can investment...

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Is Mainstream Finance Theory Adrift?

An important new monograph from the CFA Institute Research Foundation explores a fundamental question in the wake of the global financial crisis: Has finance theory failed investors?

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What Hungry Investors Really Want from Their Financial Advisers

Investors want what Meir Statman calls “utilitarian benefits.” We know that a diversified, low-cost portfolio is theoretically best, but we'd rather have the amusement and bragging rights of expensive,...

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Has Goals-Based Investing Ruined Modern Portfolio Theory (MPT)?

Although a fundamentally important financial concept, modern or mean-variance portfolio theory (MPT) has been of little practical value to retail investors in their asset allocation. Hansi Mehrotra,...

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