Investing around themes like innovation or emerging economies often underperforms in the long run. Here’s what works instead. — In November 2001, Jim O’Neill, Head of Global Economic Research at Goldman Sachs, published an influential research report titled “Building Better Global Economic BRICs”, coining the acronym for Brazil, Russia, India, and China. He forecast that “Over the next 10 years, the weight of BRICs and especially China in world…

It’s a questionable investment, as his stake in Tesla has already taken a big hit — It’s not every day that an investor files a Schedule 13D with the Securities and Exchange Commission (SEC), indicating they’ve crossed a threshold and now own more than 5 percent of a company, and within three weeks has its bid for the entire company approved by the board of directors…

Harry Markowitz’s Nobel-prize-winning Modern Portfolio Theory still holds up well in the age of cryptocurrencies and meme stocks — An important milestone passed almost unnoticed last month when Modern Portfolio Theory, or MPT, turned seventy. It was in March 1952 when Harry Markowitz published his seminal paper, Portfolio Selection, in the prestigious Journal of Finance. Those fifteen pages not only helped Markowitz win a Nobel Prize in Economics, but…

Wars are associated with increased volatility, but often rising prices as well — The war in Ukraine is causing a devastating human toll, in terms of lost lives including heavy civilian casualties, and the displacement of millions. Much has been written about courage and leadership, the humanitarian crisis, and geopolitical implications. A less-talked-about angle and in a broader context is: How does war…

Book review of “Undiversified: The Big Gender Short in Investment Management” — The key message of Modern Portfolio Theory, developed seven decades ago by Nobel laureate, Harry Markowitz, can be summarized succinctly: when it comes to your investments, it pays to be diversified. Yet when it comes to the investment management industry itself, according to a recent study, gender diversification is lacking…

Relative to income or rent, it’s much more expensive to buy a home in Canada — It’s a great time to be selling a home in the U.S. In 2021, home sales hit a 15-year high, up 8.5 percent from the previous year, to 6.12 million. The price of homes also grew at a record pace in the year ended August 2021, at almost 20 percent…

History Can Provide a Guide — The U.S. stock market — and many others worldwide — is on a roll, having completed its third consecutive bull market gaining year, since the down year of 2018. Can we expect it to continue in 2022? …

Inflation Expectations Matter, and Could Become Self-Fulfilling — This is a story about trying not to think about white bears — can you do that? Give it a try. “I’m not going to think about white bears…” Ooops, did you just think about white bears?! Let’s try this again: “I’m not going to think about…” Wow, every time…

Reexamining the Friedman Doctrine, that The Social Responsibility of Business is to Increase its Profits — On a scale of 1(strongly disagree) to 5 (strongly agree), how would you rate the following statement: “The primary goal of every public company should be to maximize shareholder value?” We recently posed this question to almost 300 undergraduate students at a prominent business school. The results: less than half…