The document discusses the history and future of quantitative easing programs. It notes that the end of the second quantitative easing program is approaching. It briefly reviews the effects of the end of the first quantitative easing program, when stock markets declined. The document suggests monitoring how markets respond when the current program ends, and considers what may happen given banks' current holdings of cash from quantitative easing versus other economic indicators like unemployment.
A simple 3-step strategy can help determine how much life insurance is needed:
1. Estimate final expenses such as funeral costs, which average $15,000.
2. Total debts such as mortgage, loans, which survivors may want funds to pay off without selling assets.
3. Consider future education costs, estimating college costs will rise 4% annually and purchasing coverage for those future costs now.
Taking a systematic approach considering expenses, debts, and future needs provides a better estimate than simply following rules of thumb about income multiples or online calculators. The amount varies per individual situation.
This document discusses how individual retirement accounts (IRAs) can be used as versatile financial tools to accomplish savings goals. It notes that IRAs allow saving for retirement, reducing current or future taxes depending on the type of IRA (traditional or Roth), and passing wealth to future generations. The document also mentions that IRAs can be used to save for a child's future if they have earned income through work.
This presentation is intended for investment professionals and discusses alternative approaches to traditional passive indexing and active portfolio construction. It argues that current processes can hide risks by not properly reflecting true investment objectives. It promotes considering liability-matching fixed income portfolios, alternative equity benchmarks that are not market-cap weighted, and customized approaches to alternative investments rather than traditional indices. The presentation provides examples to illustrate issues with traditional approaches and potential benefits of the proposed alternatives.
Chapter18 International Finance ManagementPiyush Gaur
Dorchester Ltd is considering building a new manufacturing plant in the US to expand its candy production and sales in North America. The initial cost of the plant would be $7 million. Local debt financing of $1.5 million at 7.75% interest would be provided. Dorchester must decide whether to issue additional debt in pounds sterling at 10.75% or US dollars at 9.5%.
Building the new plant would allow Dorchester to serve the entire North American market and realize higher profits of $4.40 per pound sold. However, the analysis of costs, revenues, tax rates, debt financing, and exchange rates is complex given the international dimensions. A full capital budgeting analysis is required to
Revival Investment & Financial Solutions is an investment and financial services firm founded in 2009 in New Delhi, India. It has a network of 25 branches across major cities in India. The company provides services including investment banking, private equity syndication, mergers and acquisitions advisory, debt syndication, and investor relations management. It aims to build long-term client relationships and has experienced professionals with backgrounds in capital markets and corporate finance.
Revival Investments & Financial Solutions is an investment and financial services firm founded in 2009 in New Delhi, India. It has a network of 25 branches across major Indian cities. The company specializes in investment banking, private equity syndication, mergers and acquisitions advisory, debt syndication, investor relations management, and trading in currencies, commodities, properties, and fixed income. The founder and CEO, Pardeep Kumar, has over a decade of experience in capital markets. The company prides itself on its long-term client relationships and extensive industry network.
The document summarizes an upcoming conference on pension plan de-risking to be held from May 19-21, 2010 in New York City. The conference will focus on strategic asset allocation, risk management, and liability-driven investing (LDI) for corporate and public pension plans. It will include sessions on implementing LDI strategies, examining investment opportunities, and discussing best practices for investment manager selection and portfolio construction. A pre-conference seminar on defined contribution plans will also be held on May 19 to discuss topics such as participant education and investment challenges.
Safe Harbor Asset Management focuses on protecting investor assets and achieving steady growth rather than quick gains. The company believes risk can be managed through diversification using modern portfolio theory. President Stephen Davis has over 30 years of experience and takes both a scientific and artistic approach to building portfolios. Safe Harbor offers low-cost managed portfolios that have outperformed market indexes and aims to improve returns while reducing taxes for clients.
A simple 3-step strategy can help determine how much life insurance is needed:
1. Estimate final expenses such as funeral costs, which average $15,000.
2. Total debts such as mortgage, loans, which survivors may want funds to pay off without selling assets.
3. Consider future education costs, estimating college costs will rise 4% annually and purchasing coverage for those future costs now.
Taking a systematic approach considering expenses, debts, and future needs provides a better estimate than simply following rules of thumb about income multiples or online calculators. The amount varies per individual situation.
This document discusses how individual retirement accounts (IRAs) can be used as versatile financial tools to accomplish savings goals. It notes that IRAs allow saving for retirement, reducing current or future taxes depending on the type of IRA (traditional or Roth), and passing wealth to future generations. The document also mentions that IRAs can be used to save for a child's future if they have earned income through work.
This presentation is intended for investment professionals and discusses alternative approaches to traditional passive indexing and active portfolio construction. It argues that current processes can hide risks by not properly reflecting true investment objectives. It promotes considering liability-matching fixed income portfolios, alternative equity benchmarks that are not market-cap weighted, and customized approaches to alternative investments rather than traditional indices. The presentation provides examples to illustrate issues with traditional approaches and potential benefits of the proposed alternatives.
Chapter18 International Finance ManagementPiyush Gaur
Dorchester Ltd is considering building a new manufacturing plant in the US to expand its candy production and sales in North America. The initial cost of the plant would be $7 million. Local debt financing of $1.5 million at 7.75% interest would be provided. Dorchester must decide whether to issue additional debt in pounds sterling at 10.75% or US dollars at 9.5%.
Building the new plant would allow Dorchester to serve the entire North American market and realize higher profits of $4.40 per pound sold. However, the analysis of costs, revenues, tax rates, debt financing, and exchange rates is complex given the international dimensions. A full capital budgeting analysis is required to
Revival Investment & Financial Solutions is an investment and financial services firm founded in 2009 in New Delhi, India. It has a network of 25 branches across major cities in India. The company provides services including investment banking, private equity syndication, mergers and acquisitions advisory, debt syndication, and investor relations management. It aims to build long-term client relationships and has experienced professionals with backgrounds in capital markets and corporate finance.
Revival Investments & Financial Solutions is an investment and financial services firm founded in 2009 in New Delhi, India. It has a network of 25 branches across major Indian cities. The company specializes in investment banking, private equity syndication, mergers and acquisitions advisory, debt syndication, investor relations management, and trading in currencies, commodities, properties, and fixed income. The founder and CEO, Pardeep Kumar, has over a decade of experience in capital markets. The company prides itself on its long-term client relationships and extensive industry network.
The document summarizes an upcoming conference on pension plan de-risking to be held from May 19-21, 2010 in New York City. The conference will focus on strategic asset allocation, risk management, and liability-driven investing (LDI) for corporate and public pension plans. It will include sessions on implementing LDI strategies, examining investment opportunities, and discussing best practices for investment manager selection and portfolio construction. A pre-conference seminar on defined contribution plans will also be held on May 19 to discuss topics such as participant education and investment challenges.
Safe Harbor Asset Management focuses on protecting investor assets and achieving steady growth rather than quick gains. The company believes risk can be managed through diversification using modern portfolio theory. President Stephen Davis has over 30 years of experience and takes both a scientific and artistic approach to building portfolios. Safe Harbor offers low-cost managed portfolios that have outperformed market indexes and aims to improve returns while reducing taxes for clients.
Our school is Gymnasium 4 in Rybnik, Poland, which has over 400 students. The narrator's class has 27 students. Students study two foreign languages, either English and German or English and Italian, with 6 hours of English per week. The school has a good canteen, an interesting library, a swimming pool that the class visits weekly, and 4 hours of physical education per week. Students take the bus to school.
Programs used during the creation of my ThrillerJake Williams
Blogger was used to write about the film project and techniques learned. LiveType was used to create film titles with various effects like fading text in and out. A digital camcorder was used to film scenes which were then edited together in Final Cut Express, allowing customization of audio levels, speeds, and cuts. YouTube was used to view examples and upload the completed film. A still camera captured settings and storyboards. Survey Monkey created an online questionnaire for audience research. Wordle visually presented frequent words from the feedback. One True Media created a montage for the thriller.
This document discusses the development of a new wearable device that aims to address shortcomings of current offerings. It outlines functions like mobile authentication, phone/SMS capabilities, exercise tracking and more. Market research shows existing products are limited or unstylish. The proposed device would be a fashionable, multifunctional smartphone replacement. It would come in luxury, sport and lifestyle versions priced $350, $150 and $200 respectively. The target market is individuals focused on health, work facilitation and fashion ages 21-100 making over $40k. A marketing plan and video are proposed to showcase the device's capabilities and position it as enabling confidence, control and convenience through a user's daily routine, work and entertainment.
This document provides an overview of phonetics and the pronunciation of English words. It discusses that English spelling does not always indicate pronunciation and introduces phonetic symbols to represent sounds. It lists common consonant and vowel phonetic symbols and provides many examples of English words paired with their phonetic transcriptions to illustrate pronunciation. The purpose is to learn phonetics in order to correctly pronounce English words, as their spellings are not reliable guides to pronunciation. Suggested methods for learning phonetics include using dictionaries, CDs, movies, and online resources.
The letter opposes the implementation of a hunting moratorium in Trinidad & Tobago for several reasons:
1) A moratorium would not address the biggest threats to wildlife like habitat loss from development and pollution.
2) It could increase poaching by drastically increasing wild meat prices.
3) It would not be welcomed by those who enjoy hunting for sport, food, or tradition.
4) Enforcement would be difficult given limited resources and armed poachers in forests.
Instead, the letter recommends alternatives like shortening the hunting season, targeted restrictions, reforestation projects with hunters, and focusing enforcement on protected zones. The goal is to balance wildlife conservation with existing hunting practices.
Planning The Double Page Spread Image.Doc New Music Magguest3bed7f
The document outlines the planned details for a photoshoot of Danielle Emina playing guitar, including the agency name, model, camera angle, location, lighting, props, intended connotation and denotation, contingency plans if the model is absent, an alternate shooting angle, and comments about using close-ups and long shots.
The company sold $300,000 of accounts receivable at a 2% discount, receiving $294,000 in cash. This increased cash by $244,000 while reducing accounts receivable and shareholders' equity by $300,000 and $6,000 respectively. Selling accounts receivable improved the company's days sales outstanding from 29 to 7 days.
Empire is the biggest selling film magazine in Britain that has been published monthly since 1989. It covers films and has annual film awards. Total Film is the second biggest selling film magazine in the UK, launched in 1997. Both magazines use covers featuring exclusive photos of James Bond from Skyfall to attract subscribers and promote their coverage of the new film. The covers are designed to grab attention and invite readers to learn more about the latest films inside the issues.
El documento describe un intercambio escolar entre estudiantes españoles e ingleses. Los estudiantes españoles visitarán Alemania del 24 al 31 de marzo y los estudiantes alemanes visitarán España del 5 al 12 de mayo. Durante las visitas, los estudiantes se hospedarán con familias anfitrionas y participarán en actividades escolares y excursiones culturales.
What if this career opportunity were open to everybodyClubwww1
The document discusses how home-based businesses and network marketing are growing rapidly as career opportunities, with a new home-based business starting every 11 seconds accounting for $382.5 billion in revenues in 1993. It notes that major companies are increasingly involved in network marketing and poses the question of what if this career path was open to everybody regardless of their background or experience.
Los instrumentos musicales se dividen en de viento, percusión y cuerda. Los instrumentos de viento incluyen la flauta, trompeta, oboe, saxofón, clarinete y fagot. Los instrumentos de percusión son el tambor, castañuelas, triángulo, bongó, xilófono y platillos. Finalmente, los instrumentos de cuerda son la guitarra, bajo, violín, viola, violoncello, arpa y bandurria.
Hedge Funds: A Look Back and A Look Ahead - Dec. 2011RobertWBaird
Hedge funds have proven to be worthy financial instruments over the past 20 plus years, and have contributed to the growth of the modern financial industry. The addition of a well diversified group of hedge funds to a traditional portfolio has been shown to be an effective way to potentially increase returns, while also preserving capital during adverse market environments. Going into 2010, the hedge fund industry appears to be healthier than it has been in more than a decade, albeit much smaller in terms of assets than it was at its peak two years ago.
Structured products provide exposure to specific securities or asset classes and are designed to hedge existing exposures. They typically have two components, a note and a derivative, and have a fixed maturity. It’s important to understand that the protection of principal for structured products is backed solely by the creditworthiness of the issuer. Structured products perform differently than traditional debt obligations and investing in them involves various risks, such as credit risk, market risk, and limited liquidity. Investors should carefully review the risks and understand how structured products may impact their specific tax and investment needs before purchasing them.
Our school is Gymnasium 4 in Rybnik, Poland, which has over 400 students. The narrator's class has 27 students. Students study two foreign languages, either English and German or English and Italian, with 6 hours of English per week. The school has a good canteen, an interesting library, a swimming pool that the class visits weekly, and 4 hours of physical education per week. Students take the bus to school.
Programs used during the creation of my ThrillerJake Williams
Blogger was used to write about the film project and techniques learned. LiveType was used to create film titles with various effects like fading text in and out. A digital camcorder was used to film scenes which were then edited together in Final Cut Express, allowing customization of audio levels, speeds, and cuts. YouTube was used to view examples and upload the completed film. A still camera captured settings and storyboards. Survey Monkey created an online questionnaire for audience research. Wordle visually presented frequent words from the feedback. One True Media created a montage for the thriller.
This document discusses the development of a new wearable device that aims to address shortcomings of current offerings. It outlines functions like mobile authentication, phone/SMS capabilities, exercise tracking and more. Market research shows existing products are limited or unstylish. The proposed device would be a fashionable, multifunctional smartphone replacement. It would come in luxury, sport and lifestyle versions priced $350, $150 and $200 respectively. The target market is individuals focused on health, work facilitation and fashion ages 21-100 making over $40k. A marketing plan and video are proposed to showcase the device's capabilities and position it as enabling confidence, control and convenience through a user's daily routine, work and entertainment.
This document provides an overview of phonetics and the pronunciation of English words. It discusses that English spelling does not always indicate pronunciation and introduces phonetic symbols to represent sounds. It lists common consonant and vowel phonetic symbols and provides many examples of English words paired with their phonetic transcriptions to illustrate pronunciation. The purpose is to learn phonetics in order to correctly pronounce English words, as their spellings are not reliable guides to pronunciation. Suggested methods for learning phonetics include using dictionaries, CDs, movies, and online resources.
The letter opposes the implementation of a hunting moratorium in Trinidad & Tobago for several reasons:
1) A moratorium would not address the biggest threats to wildlife like habitat loss from development and pollution.
2) It could increase poaching by drastically increasing wild meat prices.
3) It would not be welcomed by those who enjoy hunting for sport, food, or tradition.
4) Enforcement would be difficult given limited resources and armed poachers in forests.
Instead, the letter recommends alternatives like shortening the hunting season, targeted restrictions, reforestation projects with hunters, and focusing enforcement on protected zones. The goal is to balance wildlife conservation with existing hunting practices.
Planning The Double Page Spread Image.Doc New Music Magguest3bed7f
The document outlines the planned details for a photoshoot of Danielle Emina playing guitar, including the agency name, model, camera angle, location, lighting, props, intended connotation and denotation, contingency plans if the model is absent, an alternate shooting angle, and comments about using close-ups and long shots.
The company sold $300,000 of accounts receivable at a 2% discount, receiving $294,000 in cash. This increased cash by $244,000 while reducing accounts receivable and shareholders' equity by $300,000 and $6,000 respectively. Selling accounts receivable improved the company's days sales outstanding from 29 to 7 days.
Empire is the biggest selling film magazine in Britain that has been published monthly since 1989. It covers films and has annual film awards. Total Film is the second biggest selling film magazine in the UK, launched in 1997. Both magazines use covers featuring exclusive photos of James Bond from Skyfall to attract subscribers and promote their coverage of the new film. The covers are designed to grab attention and invite readers to learn more about the latest films inside the issues.
El documento describe un intercambio escolar entre estudiantes españoles e ingleses. Los estudiantes españoles visitarán Alemania del 24 al 31 de marzo y los estudiantes alemanes visitarán España del 5 al 12 de mayo. Durante las visitas, los estudiantes se hospedarán con familias anfitrionas y participarán en actividades escolares y excursiones culturales.
What if this career opportunity were open to everybodyClubwww1
The document discusses how home-based businesses and network marketing are growing rapidly as career opportunities, with a new home-based business starting every 11 seconds accounting for $382.5 billion in revenues in 1993. It notes that major companies are increasingly involved in network marketing and poses the question of what if this career path was open to everybody regardless of their background or experience.
Los instrumentos musicales se dividen en de viento, percusión y cuerda. Los instrumentos de viento incluyen la flauta, trompeta, oboe, saxofón, clarinete y fagot. Los instrumentos de percusión son el tambor, castañuelas, triángulo, bongó, xilófono y platillos. Finalmente, los instrumentos de cuerda son la guitarra, bajo, violín, viola, violoncello, arpa y bandurria.
Hedge Funds: A Look Back and A Look Ahead - Dec. 2011RobertWBaird
Hedge funds have proven to be worthy financial instruments over the past 20 plus years, and have contributed to the growth of the modern financial industry. The addition of a well diversified group of hedge funds to a traditional portfolio has been shown to be an effective way to potentially increase returns, while also preserving capital during adverse market environments. Going into 2010, the hedge fund industry appears to be healthier than it has been in more than a decade, albeit much smaller in terms of assets than it was at its peak two years ago.
Structured products provide exposure to specific securities or asset classes and are designed to hedge existing exposures. They typically have two components, a note and a derivative, and have a fixed maturity. It’s important to understand that the protection of principal for structured products is backed solely by the creditworthiness of the issuer. Structured products perform differently than traditional debt obligations and investing in them involves various risks, such as credit risk, market risk, and limited liquidity. Investors should carefully review the risks and understand how structured products may impact their specific tax and investment needs before purchasing them.
A study analyzed 110 socially responsible companies that received funding from members of Investors' Circle, a network of angel investors, over a 10-year period. A portfolio simulating $72 million invested in these companies generated returns of 8-14% under different holding strategies. This performance was comparable to stock market indexes and outperformed expectations of most investors who accepted lower returns for social/environmental benefits. The results provide evidence that social purpose ventures can achieve financial returns meeting investor expectations.
This document summarizes the use of the private cost of capital model for valuing privately held companies. It discusses that privately held companies obtain capital from private rather than public markets, so their cost of capital should be based on expected returns in private capital markets. The Pepperdine Private Capital Markets Project surveys private capital providers to determine expected returns by type of capital and investment size. These expected returns are used to estimate cost of capital for privately held firms according to the private capital they would likely obtain.
This document discusses investing during bear markets and periods of volatility. It provides two hypothetical examples where investing $1 million halfway through a market decline and recovery resulted in better returns than trying to time the market bottom. Waiting until the market clearly rebounded also resulted in lower returns. The document advocates for long-term investing through downturns rather than trying to predict short-term market movements. History shows that while bear markets are painful, positive market years have outweighed negative years. A diversified "core and satellite" approach is presented as a prudent strategy for investors.
The document is a cheat sheet for hedge funds. It provides summaries of key information about hedge funds in 3 sentences or less:
1) The first page summarizes common characteristics of hedge funds, who invests in them, and why investors may choose hedge funds for diversification, downside protection, and an absolute return focus.
2) Page 2 defines differences between hedge funds and mutual funds, such as flexibility, paperwork requirements, liquidity, and an absolute vs. relative return focus. It also summarizes reasons to invest in hedge funds.
3) Page 3 summarizes common hedge fund fees including an annual management fee typically between 1-2% of assets and an incentive fee usually 20% of profits
Demystifying the Role of Alternative Investments in a Diversified Investment ...RobertWBaird
Alternative investments can potentially improve the risk-return profile of investment portfolios by increasing diversification and enhancing returns. They invest in less traditional assets and strategies than stocks and bonds. While alternatives may boost portfolio performance, they also carry higher fees and less liquidity, transparency and tax efficiency than traditional investments. For most investors, allocating 10-20% of a portfolio to alternatives can provide benefits while balancing their risks.
Hedge funds have evolved from an elite investment for wealthy individuals to an important tool for institutional investors like pensions and endowments. Over 65% of hedge fund assets are now owned by institutions rather than private investors. Adding hedge funds to investment portfolios can increase returns and lower risk by improving the probability of positive returns and reducing volatility. Studies estimate hedge funds could add $13.67 billion in annual returns to US public pensions and $1.73 billion to university endowments.
This document discusses the debate between active and passive portfolio management. With active management, a manager tries to beat market benchmarks by selecting individual securities. Passive management attempts to match benchmark performance at low cost through index funds. Proponents of each argue their approach provides better returns. The document also describes blending the approaches through core-satellite asset allocation, where low-cost index funds form the portfolio "core" and actively managed funds are "satellites" with potential to boost returns or reduce risk. Before investing, carefully consider investment objectives, risks, charges and expenses outlined in a fund's prospectus.
Structured Products: Tailoring Risk to Meet Investment NeedsLarry Shaw
For years, we’ve been told that managing wealth successfully requires balancing portfolios to manage risk efficiently. But what if you had the ability to customize the level of risk to match your unique investment objective or market expectation?
Net lease properties remain an attractive investment for those seeking predictable returns, according to industry leaders. While some question if high investor demand could lead to an overheated market, experts believe the sector will remain stable given targeted acquisition strategies and diverse property types and locations. Leaders from Equity Global Management, Iridium Capital, United Trust Fund and Paragon Real Estate expect continued investor appetite and transaction volume, especially for well-located assets with investment-grade tenants and long-term leases.
Investment is generally defined as the application of money for earning more money in the future. There are several types of investments including stocks, bonds, mutual funds, real estate, and financial securities. Stocks represent shares of ownership in a company and earn dividends. Bonds are a loan to a company or government that pays fixed interest regularly and returns the principal at maturity. Mutual funds pool money from investors and invest in a mix of stocks and bonds managed by a fund manager. Real estate involves purchasing property like houses or land to generate rental income. Financial securities provide financial security through a mix of income, savings, and being debt-free.
This document discusses different types of investments and the investment environment. It defines investment in both economic and finance terms and outlines key concepts like direct vs indirect investment, equity vs debt investment, and short vs long term investment. The document also covers different types of securities like stocks, bonds, derivatives, and more high or low risk options. Overall, the document provides an overview of various investment vehicles and considerations within the investment environment.
The Hidden Cost of Holding a Concentrated Position - Dec. 2011RobertWBaird
1) Family wealth created from holding a single appreciating stock exposes families to undue risk that should be understood and managed due to the disproportionate allocation of wealth in a concentrated position.
2) Investors tend to hold onto concentrated positions due to emotional attachment, tax implications, or constraints around selling but there is a point where preservation of wealth and lifestyle outweigh continued wealth creation, especially near retirement.
3) Studies show diversified portfolios produce greater long-term wealth than concentrated positions, with significantly less risk. Over half of individual stocks in one study underperformed a diversified portfolio and all showed much higher volatility.
Starting early and saving regularly provides substantial benefits over time. Delaying saving, even for just a short period, can significantly reduce the final fund value. For example, starting at age 30 instead of 35, saving $1,000 per month until age 55, results in over $250,000 more in the final fund value due to compound interest and time in the market.
Investing involves deploying capital toward projects or assets that are expected to generate a positive return over time. There are various types of investments including stocks, bonds, mutual funds, real estate, and more. Each investment carries different levels of risk and potential return. Investors can manage their own portfolios or hire professionals to do so. Starting small with as little as $1,000 allows people to begin growing their money through long-term investing.
This document is a student project report on comparing physical gold and gold exchange-traded funds (ETFs) as investment opportunities. It includes an acknowledgements section thanking the project guide and institute. It also includes a certificate from the guide certifying the project. The report will cover an introduction to investments and gold, the advantages and disadvantages of physical gold, an introduction to gold ETFs, and a comparison of physical gold and gold ETFs as investments. It will analyze the options through case studies and literature review before providing conclusions and recommendations.
Crowdfunding involves individuals networking and pooling resources online to support initiatives started by other people or organizations. It relies on collective effort, inspiration, and shared risk-taking. Contributors are motivated by a sense of purpose, collaboration, meaning, engagement, loyalty, and advocacy for the cause or project. Successful crowdfunding depends on clearly communicating the reasons or purpose behind the initiative in order to attract funding and supporters. Revenue and cost models must also be flexible and authentic to justify customer contributions and ensure sustained value. Diversity of ideas and initiatives is important given limited funding resources.
The document discusses whether the United States may be headed toward a double-dip recession. It analyzes key economic indicators like GDP, personal income, unemployment, and bankruptcies that are still below pre-recession levels. This suggests the recession may not have truly ended and the economy experienced just one prolonged recession rather than two discrete recessions separated by a recovery. The National Bureau of Economic Research, which officially declares recessions, will be slow to announce the end given most indicators have yet to surpass pre-recession highs. Individuals should understand the economy remains weak rather than speculate on the NBER's eventual announcement.
General Stanley McChrystal was fired by President Obama after unflattering comments he made about administration officials were published in Rolling Stone magazine. The article was able to be published because the freelance journalist who wrote it, Michael Hastings, was not constrained by concerns about burning bridges, unlike beat reporters who rely on ongoing access. This highlights how outsiders can sometimes uncover important stories that insiders miss due to fears of jeopardizing relationships and access.
The document discusses how the recession has impacted consumer spending habits and how consumers will pay for goods going forward. It notes that consumers are deleveraging and taking on less debt due to job losses and stagnant wages. While credit card usage fueled spending for decades, consumers will now likely shift to debit cards and alternative payment methods. This change creates opportunities for new payment companies and technologies to fill the gap left by reduced credit availability and help consumers continue to purchase goods and services.
The Morton Investment Doctrine is presented as an alternative to Modern Portfolio Theory for developing suitable asset allocations. It focuses on geographic proximity and common ancestry to identify investable free markets during a period of expected financial market volatility. The doctrine aims to protect and grow wealth as global consumption patterns transition away from developed markets towards emerging economies. It questions relying solely on government efforts to reduce debt levels and considers weighing probable outcomes of policies intended to correct high consumer leverage in the US.
The document discusses the global crisis of legitimacy facing political and corporate elites in Europe and the United States. It argues that the financial crisis revealed perceived collusion between political and corporate interests, undermining public trust. This political crisis now threatens the stability of governments and international economic systems. The aftermath of such widespread distrust can last years and provide opportunities for other powers to gain influence. The document examines economic and political disruptions facing different countries and regions, as well as generational changes and the challenges of transitioning from the baby boomer era. It argues for new models of risk management that incorporate endogenous risk factors and liability-driven investing.
The document discusses several topics:
1) Taiwan and China signed a trade agreement representing a form of detente between the two entities embroiled in a sovereignty dispute for over 60 years.
2) The agreement opens markets in key sectors like banking, insurance, and movies, reflecting thoughts that the "new normal" is a world of changing risks and opportunities during this global economic transition period.
3) Protecting one's wealth in this epochal transition requires proactive risk assessment and management as debt levels globally are over 4 times annual global GDP and resolving this debt will be deflationary for years to come.
The document contains several articles discussing economic and financial market risks and opportunities. The first section highlights Standard & Poor's downgrading of the UK banking system due to economic weakness, reputational damage to banks, and high dependence on government support. The second section focuses on opportunities in emerging markets such as Brazil, where fundamentals remain positive and growth is expected to be strong. It also notes pension funds pouring funds into emerging market debt and the potential for relatively higher growth in developing economies going forward.
This document provides a summary of quotes from various individuals and institutions in April 2010 regarding global economic and fiscal matters. It discusses risks and opportunities related to the aging US population and challenges funding entitlement programs. It suggests opportunities to address structural deficiencies through increased exports, immigration, employee ownership, and tax policy incentives. Overall, the document questions whether current US leaders can make difficult decisions needed to ensure future prosperity or will they be constrained by protecting their own entitlements and legacy views.
Summit Creek Capital, LLC (SCC) is an independent asset management firm that provides customized investment advisory services. SCC analyzes each client's unique goals, risk tolerance, and financial situation to develop personalized investment strategies and portfolios. SCC aims to balance risk management with achieving clients' objectives through its proprietary research and selection of both in-house and third-party investment products. The firm is led by experienced principals and provides independent advisory services without conflicts of interest from proprietary products.
This document discusses seven major investment themes that are seen as important drivers of global economic growth: connectivity, demand, efficiency, energy, food, mobility, and resources. It provides an overview of each theme, highlighting trends and growth opportunities across industries that are shaped by these interconnected themes. The document argues that considering how companies relate to and benefit from these evolving global themes can provide valuable insights into their potential.
1. summitV I E W
The CosT of opporTunITy
by Ian Jameson
When you decide to pursue one action over another, the act you didn’t do is referred to as the
opportunity cost; what you could have been doing if you weren’t doing what you’re doing. Weighing this
cost after a decision has been made can lead to buyers’ remorse, or a validation of your action.
summitVIEW
An interesting series of questions arise from this line of thinking: How do you know what the opportunity
cost is? How do you know what you don’t know?
Much of modern financial theory has defined opportunity cost as the return that an investor would
receive from investing in a “risk-free” asset versus investing in a different financial asset. Investment
professionals have then divided assets into classes such as bonds, stocks, real estate, cash, natural
resources, foreign currency, collectibles and insurance products.
By this logic, the opportunity cost
1
for an equity investor would be
the return that they would receive
from holding bonds, real estate,
May
cash, etc. instead of their equity
investment. Defining the relative
returns of the various asset classes
2011
has been a bit of an art form as
well; services like Standard and
Poor’s and others provide indices
for a variety of asset classes, the
most familiar being the S&P 500,
an index based on 500 large
companies that trade in the US on
the NY stock exchange and the
NASDAQ. For many people, the
S&P 500 serves as a benchmark for
the concept of stock market return.
The opportunity cost for holding
cash or bonds, for example, would
be the return that you could have
generated if you’d invested in
stocks, approximated by the return
of the S&P 500.
Stepping back from modern
financial theory, the opportunity
cost for an equity investor also
includes the “return” that could
have been achieved by investing
in a local charity, re-insulating
your home, taking a week-long
backcountry trip, or sending your
child backpacking around Europe.
Quantifying these benefits is not
something that modern financial
theory, or anyone else, is able to
accurately model. However, there
are costs and benefits associated
with each potential investment.
When choosing how we donate,
see disclaimer on last page
2. where we vacation, if we spend now to save on the performance of your Growth-oriented Large-
future energy bills, and what we want our children cap mutual fund will yield some similar results,
to experience in life, we are looking to the future, but stepping back from America will offer some
seeking to improve upon all we’ve experienced until perspective:
summitVIEW
this point.
From Standard and Poor’s:
Looking to the future, then, is a very important part
of investing, as is incorporating past experience. If The S&P 500® has been widely regarded as the
we know the sugar high from a Krispy Kreme donut best single gauge of the large cap U.S. equities
is followed by a not-so-great crash, we’ll incorporate market since the index was first published in
that knowledge into our future decision making 1957. The index has over US$ 4.83 trillion
processes. If we know that financial assets tend to benchmarked, with index assets comprising
move in the same direction during periods of market approximately US$ 1.1 trillion of this total.
2
turmoil, that too can be incorporated into our future The index includes 500 leading companies
decision making process. in leading industries of the U.S. economy,
capturing 75% coverage of U.S. equities.
May 2011
A Benchmark for Investing? • The current market capitalization of the S&P
500: $12 trillion
We are somewhat constrained in our historical
knowledge of financial assets. Just as people have • Current market capitalization of stock markets
realized that the language we speak shapes the way in the World Federation of Exchanges: $55
we think, the language of investment also shapes trillion
our thought process.
• World financial assets---including equities,
Anyone who has ever invested in a mutual fund has private and public debt, and bank deposits
seen a diagram like this: according to McKinsey: $178 trillion in 2008
Value Blend Growth
• Size of the global derivatives market, according
to Paul Wilmott: $1,200 trillion.
Large
1000000 - million
1000000000 - billion
1000000000000 - trillion
1000000000000000 - quadrillion
Mid
Yeah, that’s $1.2 quadrillion........
So, the S&P 500 represents 22% of the stocks
traded in the world, 6% of world financial assets,
Small and is 1% the size of the global derivatives market.
Now, we are not suggesting that individuals need
to participate in some sort of collateralized debt
This diagram represents the universe of options
obligation investment to gain a broader investable
available to a mutual fund investor: style on the
universe (if you thought the Krispy Kreme hangover
horizontal axis, and market capitalization on the
was rough, try unwinding one of those contracts
vertical axis.
when it goes south). Rather, the point of the
Is an investor’s entire universe of possible exercise is to show what else exists in the world of
investments contained in a 3x3 box? The answer is financial assets, and how our perspective is shaped
Yes, and No. by what we know. As the 2011 Ibbotson SBBI
Classic Yearbook points out, “[a]n investor who
Is “the market” a proxy for investment performance? chooses to ignore investment opportunities outside
The answer is Yes, and No. the United States is missing out on over half of the
investable developed stock market opportunities in
Watching movement on the S&P 500 and comparing the world.”
3. As our knowledge increases, so too does our
understanding of the opportunity costs that we face as
investors. In that regard, our investments will change
to reflect what we’ve learned over time. When
America experienced an oil price shock in the 70s, We have historical data that shows what risk/
investment decisions incorporated the threat of higher reward relationships have looked like for a
fuel prices, auto makers produced vehicles that got variety of asset classes in the past, but what
will the opportunity cost be of holding these
summitVIEW
40+ mpg, and consumers invested in them. As fuel
prices declined and vehicles got larger and consumed asset classes in the future? For example, what
more fuel, we re-learned (or un-learned) some of the is the likelihood that large company stocks
lessons from the past and when fuel prices spiked will exceed their historical average returns
again, revisited a similar cycle. in the next five years? We consider the use
of historical data important in forecasting
Incorporating the longer term trends (i.e., oil as expected returns. However, we also believe
a finite quantity) with the shorter term cycles (fuel deviations from historical returns are likely
efficiency in vehicles) is a necessary part of an in any given long term period of time.
investment analysis. Defining an investable universe Forecasting asset class returns is just as much
3
means defining long term trends and cycles within art as science. Consideration of pertinent
those trends, then choosing assets that reflect socio-economic matters helps us to adjust
everything we’ve learned up until today, and putting historical returns to reflect our beliefs.
May 2011
resources towards assets that we believe will prosper
in the future. What will be the structural changes to the
economy as a result of these socio-economic
trends? How will the structural trends affect
What is your Benchmark? market performance over the long term?
Historically, investors have been taught that there Once again, a multitude of variables are in
is one “market portfolio,” which serves as the play, and any one person’s interpretation
benchmark for investing. Many have used the S&P of these variables will differ from another’s,
500 as the proxy for the “market portfolio.” The sometimes dramatically. As we wade through
percentage of one’s assets allocated to the “market data and interpret opinions on what trends are
portfolio” is determined by an individual’s risk being played out in the world, we will begin to
tolerance. We believe that no two investors, who determine the returns that we expect for each
differ in either risk tolerance or in their forecasts for asset class in our investable universe, and the
returns, will have the same investment strategy. level of uncertainty surrounding those returns.
Defining your risk tolerance is equally as important Once we’ve established our ideas about
as defining your investable universe, and has strong returns and the uncertainty of those returns, we
similarities: both will change over time given new can determine how much of each asset class
knowledge, understanding, global trends, and an investor should hold.
evolving investor circumstances. In determining if By assessing one’s risk tolerance and future
you’re a conservative or aggressive investor, you are financial needs, investors can construct
determining which aspects of the investable universe appropriate benchmarks for investment
will be larger parts of your portfolio. Determining performance. Once suitable benchmark
your asset allocation hinges on an interpretation of allocations have been determined, assets can
the risks and rewards associated with each asset class be allocated to reflect individual risk tolerance
in your investable universe. and return forecasts.
some perTInenT soCIo-eConomIC vArIABles:
- growth of global middle class and global markets
- ageing population demand for entitlements
- political will to adjust governmental entitlement obligations
- debt levels in the public and private sectors
- deficit spending by local, state, and federal governments
www.summitcreekcapital.com
4. ConsCIenTIousinvesting
by penny mandell starting to embrace impact investing At Summit Creek Capital we focus
is that traditionally they invested on returns in the broadest sense,
For many investors, if you discuss purely to optimize risk based returns that means both bottom line and
“Socially Responsible Investing” with no thought to social factors, social impact are important to us.
the immediate assumption is that and on the philanthropy side they Rather than viewing impact investing
this is synonymous with sub par are used to investing to maximize as a restrictive process we view it as
profitability and that it is the bastion social impact with no expectation of a proactive portfolio choice.
of tree huggers and nuns. It also financial return.
conjures up a process of creating
exclusionary screens designed to
weed out morally reprehensible The glow of doing a social good
practices like drinking, gambling, mixed with high returns would
weapons manufacture and child seem attractive to high-net-worth
labor. These perceptions may have individuals. But impact investing
been true at one time but there is is still in its infancy. The Global
Impact Investing Network, a
a big change underway and this nonprofit group, said that current
change offers exciting opportunity. impact investments amounted
to about $50 billion. It projects
There is an increasing investor this area to grow to $500 billion
awareness that you can actually do by 2014, putting it at roughly 1
well while doing good. percent of all managed assets.
Impact investing is the term “I think the tipping point is now,”
given to the practice of directing said Camilla Seth, director of
investment portfolios to solve social programs and operations for The
and environmental problems as Global Impact Investing Network.
well as generating a return on the “This activity has been happening
investment. for 10 years but investors have
been insulated.”
True impact investing is really
more about effecting positive
change through investment and Combining philanthropic ideology We too feel that we are at a tipping
creating positive results beyond with investment savoir-faire, impact point here. The $500 billion [see
the financials. Impact investing investing — actually the intersection box above] estimate clearly indicates
can be a powerful complement to of these two concepts — creates a that there is potential for large
philanthropic and governmental very powerful engine for change. amounts of capital movement, and
spending. The reason a lot of The philanthropist is targeting right now there is a lot of innovative
institutional investors are just now money at specific needs with no thinking about how to best achieve
expectation of profit; this. We have been actively
it is money that is working with various experts in this
given away. The burgeoning space and are excited
3 T his is noT your investor is targeting about the ongoing opportunities.
’ .
investments for
moTher s book club maximal profits with Education is a critical part of this
no goal to alleviate process for both individuals and
broader social institutions. It’s exciting to show
problems. Impact that the impact investors can have
Penny Mandell has created a fun and investing allows for extends far beyond the bottom line
provocative environment for becoming targeting specific and will be the catalyst for solutions
financially fluent. solutions while still to many of our planets most
generating a profit. pressing problems.
This is an exciting
3 concept for many What issues are you most
individuals who
fluent females focused on
flourishing fiscally typically keep their
passionate about?
philanthropic funds
segregated from their
visit www.f3blog.com to learn more investment funds.
5. Where We’ve Been,
summitVIEW
Where We’re Going by matt mcneal
With the shutdown of the second round of without wage growth?).
Quantitative Easing (QE2) looming at quarter’s Banks have received large amounts of cash, though
5
end, investors are wondering what the equity it isn’t totally clear what they have done with it. We
markets will look like when the Federal Reserve don’t attempt to answer that question, instead we
halts the massive liquidity program. As a brief offer our observations of what happened when
May 2011
refresher, Quantitative Easing is when the Federal round 1 of QE ended and what might happen
Reserve Bank prints money (just creates it out of when QE2 closes. It sounds cliche, but before
thin air), and uses the newly minted dollars to buy we look at what might happen in the future, it is
assets from banks (mostly Treasury bonds).Where useful to take a look at the past - in this case the
the bank used to be sitting on a pile of Treasury first round of Quantitative Easing - how the market
bonds, they are now sitting on a pile of cash. The reacted when that program ended, and how the
theory is that banks will push this new money out market responded to the possibility of QE2. In
their doors as loans, circulating it into the economy, the green box below is a short piece we wrote in
thus jumpstarting a sustainable recovery. Well December 2010 taking a look at the effects both
- some things have jumpstarted (stock market, QE programs have had on the market. Note that
we’re lookin’ at you), while other things remain we did not perform any correlation calculations
stubbornly stagnant (unemployment) and others or higher math of any sort - just pinpointed some
defy explanation (consumer spending expansion dates on a chart of the S&P 500 index.
That was then... the Federal Reserve will do anything The first round of Quantitative Easing
The economy seems to have subtly to keep the stock markets propped (now known as QE1) essentially ran
turned a corner heading into the last up. It is telling to look at a chart of from late 2008 until the end of the
weeks of 2010. Consumer and Business the S & P 500 over the last year, and 1st Quarter in 2010. Clearly, the
Leader Sentiments are up, the major pick out a few important dates on the market did not appreciate the program
indexes have surpassed the highs Quantitative Easing timeline to review. ending. After a steep selloff and a
reached over the summer, and have
achieved levels not seen since the days
before Lehman Brothers went down in QE2 Officially
Announced
flames. Has the US finally shrugged
off the anchor of the Great Recession
and returned to sustainable long term
growth? We remain skeptics, but some
of the recent global improvements have
kept us from turning into outright cynics
(well, some of us anyway). Certainly
there are areas in the global economy
that will provide attractive opportunities,
and it is these areas where we focus our Bernake’s Speech
efforts. QE1 Ends
However, if there is one thing that we
have learned (because it has been
hammered into our skulls) it is that www.summitcreekcapital.com
6. summitVIEW
6
summer of rangebound returns, budging the stubbornly high to argue with. Again, please
May 2011
Ben Bernanke made a speech in unemployment, but as the chart reference the above chart.
Jackson Hole, WY in which he above shows the old adage The unemployment rate may
hinted that if necessary, the Fed “Don’t Fight the Fed” clearly still be stuck near 9%, consumer
would not hesitate to engage in applies in the equity markets. sentiment may be stuck well
another round of Quantitative below the levels associated with
Easing. In the speech he tried Way back in January 2010, any previous recovery in recent
to stress that the Federal the Economist Magazine history, and any other of a
Reserve believed the economy featured a cover story accusing number of economic indicators
was strongly recovering and central bankers of pumping may be pointing to prolonged
probably would not need the up asset bubbles through pain, but clearly the stock
additional stimulus. The two monetary stimulus. Europe market responded well to the
months that followed that seems to be chastised (through Federal Reserve’s programs over
speech were a bizzaro world for necessity) into taking the the past two years.
equities (not that it hasn’t been austerity approach - tax hikes
bizarre for longer than that). and spending cuts on the On top of the monetary stimulus
Headlines that suggested the fiscal side, and the discipline provided by Quantitative
economy was not improving of the common currency on Easing, the President recently
were greeted with strong run- the monetary side (though signed fiscal stimulus into law in
ups in market indexes, as Great Britain maintains an the form of tax cut extensions.
investors believed that the poor independent currency it is also Worth $858 billion, will these
news reflected a greater chance choosing the austerity path). tax cuts also help to prop up
for QE2, thus a greater chance The United States has chosen to equity markets? Once again, the
of a Federal Reserve driven bull punt these difficult decisions to government is pushing serious
market. Good economic news future generations, and decided reform down the road in order
(admittedly sparse) was seen as the best way to get out of a to maintain the status quo.
a sign QE2 would not happen, debt induced economic crisis
and paradoxically reduced is to borrow and spend more. At this point, the best course of
investors’ enthusiasm for risk While the long term wisdom of action may be to drink the Kool-
assets, sending markets down. this strategy is rightly questioned Aid and enjoy the ride up.
by responsible thinkers, the
The Federal Reserve may not short term effects of the fiscal
have had much success in and monetary steroids are hard
7. summitVIEW
This is now................................
With the benefit of hindsight, drinking that Kool-aid and
going all in was a good idea. Below is an updated version
of our original chart, with the market returns extended to the
7
beginning of April 2011. The gains continued from the time of
Bernanke’s WY speech until Spring of this year.
May 2011
QE2 Officially
Announced
QE1 Ends Bernake’s Speech Mid-East Uprisings,
Nuclear Meltdowns, etc
It took radical uprisings in the Middle East and an earthquake,
tsunami and nuclear meltdown in Japan to derail the relentless
upwards march of the market, and even then it couldn’t knock
it down for long. There are US military forces actively fighting in
Libya and radioactive water leaking into the Pacific Ocean even
as we type, and the market is rallying. That Quantitative Easing
is powerful stuff!
Not to overstate the importance of QE2, there have been
some data prints that point to a strengthening economy. Lower
unemployment, a hint of price inflation (which would be a
good thing now), increased labor productivity and increasing
ISM manufacturing survey numbers have given investors some
optimism that the US is edging towards a sustainable recovery.
Of course there are two ways to look at each one of these
statistics, but that may be the subject of another paper.
www.summitcreekcapital.com
8. We aren’t the only ones thinking about the end of Quantitative Easing. A quick, unscientific
internet search turns up scores of articles which, true to form for anything to do with
summitVIEW
forecasting, are all over the map. As an example, these two headlines appeared right next to
each other on the first page of a Google search (quotes added for flavor):
End of QE2? no ProblEm for StockS
VS.
[bill] GroSS WarnS QE2’S End
could Sink markEtS
“The economic recovery is much
stronger than most give it ”By eliminating QE II, the
credit for, and so much of the
8
Fed would be ripping a
talk about the end of QE2 Band-Aid off a partially
is factored in already,” said healed scab,” Gross
Ryan Detrick, senior technical
May 2011
writes. “Ouch!”
strategist at Schaeffer’s
Investment Research, whose
forecasts puts the S&P 500 up
another 6% by the end of the year.
So which story is more believable? Well, if our Reserve, by keeping the interest rate target pegged
past experience with the withdrawal of the Federal at the 0% to 0.25% level, has forced investors into
Reserve liquidity program is any sort of guide risk assets in order to realize any sort of return.
for the future, we might be in for another rough The reward for holding Treasury bonds is simply
summer in the equity markets. Of course, as every too low, even for traditionally risk-averse investors.
investment professional knows, past performance Hence they are forced to seek yield in riskier assets
is not a guarantee of future results, but in this like common stock and corporate bonds. This, of
case it certainly deserves attention. Even if the course, is part of the goal for the Federal Reserve,
economy has truly recovered enough to stand on and one of the reasons we ended up with QE2 - to
its own two metaphorical feet, quitting the QE drug support the equity market. The major indices (Dow,
cold turkey is not going to be easy and perhaps S&P 500, NasDaq) are collectively taken as a
withdrawal really is the right word to use in this bellwether for the economy as a whole. When they
case. Take Barry Bonds as a comparison - one are plummeting, no one feels confident.
year he is pumped up on performance enhancers,
breaking records and feeling great, then he quit It might help to take a look at some widely read
the juice and the next thing he knows he is in a economic indicators to see how they compare to
courtroom listening to humiliating questions about this time last year, when the Fed was on the verge
the changing size of parts of his anatomy. He of ending QE1.
isn’t dead, but clearly isn’t the star performer he
once was. Will the markets behave differently or
continue to be a star performer? March 2010 March 2011
Unemployment Rate 9.7 8.8
To be clear, if the market is healthy enough to ISM PMI Index 60.4 61.2
withstand the ending of QE, then the program
should end as soon as possible. We are simply Consumer Sentiment 52.3 63.4
questioning what the aftermath of the withdrawal
will look like. Ending the program was never going There has been some improvement in each of
to be easy, and if anything keeps the Bernank (sic) these metrics over this time last year. It isn’t a rosy
up at nights, it is this very problem. The Federal recovery, but its not doom & gloom either. Just sort
of...sideways.
Disclaimer: All material presented herein is believed to be reliable but we cannot attest to its accuracy. Neither the information nor any opinion expressed constitutes a solicitation by us for the purchase or sale of any securities.