The Economist Guide to Investment Strategy (3rd Ed) by Economist, The -- Read -- Imperial Library of Trantor

Index

Copyright Page Dedication Page Contents List of figures List of tables Acknowledgements Foreword Introduction Part 1 The big picture

1 Setting the scene

Think about risk before it hits you The Madoff fraud

Betrayal aversion

How much risk can you tolerate?

Attitudes to risk and the financial crisis

Know your niche

War chests and umbrellas Base currency

2 Understand your behaviour

Insights from behavioural finance Investor biases Investor preferences

Loss aversion The “fourfold pattern” of attitudes to gains and losses Mental accounting and behavioural portfolio theory

Investment strategy and behavioural finance Parameter uncertainty and behavioural finance Traditional finance, behavioural finance and evolution

3 Market investment returns

Sources of investment performance Are government bonds risk-free?

Sovereign risk and “a country called Europe”

Safe havens that provide different kinds of shelter Which government bonds will perform best?

Is the break-even inflation rate the market’s forecast?

What premium return should bond investors expect?

The place of safe-harbour government bonds in strategy

The equity risk premium Equity risk: don’t bank on time diversifying risk

4 How should and how do investor strategies evolve?

Model investment strategies

Risk-taking and portfolio rebalancing

The evolution of wealth and its investment since 2002

What is a sovereign wealth fund? Liquid alternative investments

5 The time horizon and the shape of strategy: keep it simple

An appropriate role for strategy models

Asset allocation models: an essential discipline

Short-term investment strategies

How safe is cash? No all-seasons short-term strategy Do bonds provide insurance for short-term investors?

Are you in it for the long term?

Time horizon for private and institutional wealth

Long-term investors

Financial planning and the time horizon “Safe havens”, benchmarking, risk-taking and long-term strategies The danger of keeping things too simple Declines in prices are sometimes good for you Unexpected inflation: yet again the party pooper “Keep-it-simple” long-term asset allocation models Should long-term investors hold more equities? Inflation, again Laddered government bonds: a useful safety-first portfolio Bond ladders, tax and creditworthiness: the case of US municipal bonds Municipal bond ladders: the impact of the credit crisis and ultra-low interest rates What’s the catch in following a long-term strategy?

Market timing: an unavoidable risk Some “keep-it-simple” concluding messages

The chance of a bad outcome may be higher than you think “Models behaving badly”

Part 2 Implementing more complicated strategies

6 Setting the scene

A health warning: liquidity risk

Investing in illiquid markets

“Liquidity budgets”

Illiquidity in normally liquid markets

Behavioural finance, market efficiency and arbitrage opportunities Barriers to arbitrage

Fundamental risk and arbitrage Herd behaviour and arbitrage Implementation costs, market evolution and arbitrage

Institutional wealth and private wealth: taxation

7 Equities

The restless shape of the equity market

Concentrated stock positions in private portfolios

Stockmarket anomalies and the fundamental insight of the capital asset pricing model “Small cap” and “large cap” Will it cost me to invest ethically or sustainably? Don’t get carried away by your “style”

Value and growth managers

Should cautious investors overweight value stocks?

Fashionable investment ideas: low volatility equity strategies

Equity dividends and cautious investors Home bias: how much international? Who should hedge international equities? How much in emerging markets?

Fashionable investment ideas: frontier markets

8 Credit

Credit quality and the role of credit-rating agencies Portfolio diversification and credit risk

Local currency emerging-market debt

Securitisation, modern ways to invest in bond markets and the credit crunch

Mortgage-backed securities The role of mortgage-backed securities in meeting investment objectives

International bonds and currency hedging

What does it achieve? What does it cost? How easy is foreign exchange forecasting?

9 Hedge funds

What are hedge funds? Alternative sources of systematic return and risk “Do hedge funds hedge?” The quality of hedge fund performance data What motivates hedge fund managers? Are hedge fund fees too high? The importance of skill in hedge fund returns The shape of the hedge fund market

Hedge fund replication and “alternative betas” Directional strategies

Global macro Equity hedge, equity long/short and equity market neutral Short-selling or short-biased managers Long-only equity hedge funds Emerging-market hedge funds Fixed-income hedge funds: distressed debt

Arbitrage strategies

Fixed-income arbitrage Merger arbitrage Convertible arbitrage Statistical arbitrage

Multi-strategy funds Commodity trading advisers (or managed futures funds)

Hedge fund risk

Madoff, hedge fund due diligence and regulation Operational risks Illiquid hedge fund investments and long notice periods Lies, damn lies and some hedge fund risk statistics “Perfect storms” and hedge fund risk Managing investor risk: the role of funds of hedge funds

How much should you allocate to hedge funds? Questions to ask

Your hedge fund manager Your hedge fund adviser Your fund of hedge funds manager

10 Private equity: information-based investment returns

What is private equity? Private equity market risk Listed private equity Private equity portfolios Private equity returns

Private investments, successful transactions and biases in appraisal valuations

11 Real estate

What is real estate investing? What are the attractions of investing in real estate?

Diversification Modern real estate indices and assessing the diversifying role of real estate Income yield Inflation hedge

Styles of real estate investing and opportunities for active management What is a property worth and how much return should you expect?

Rental income Government bond yields as the benchmark for real estate investing Tenant credit risk Property obsolescence

Private and public markets for real estate International diversification of real estate investment

Currency risk and international real estate investing

12 Art and investments of passion

How monetary easing probably inflated the prices of fine art and collectibles Psychic returns from art and collectibles Wealth, inequality and the price of art

Art market indices

Price indices for other investments of passion or “collectibles” Investing in art and collectibles

Shared characteristics of fine art and other investments of passion

Appendices

1 Glossary 2 Essential management information for investors 3 Trusting and aligning with your adviser 4 Sources and recommended reading

Notes on sources Index

← Prev
Back
Next →

← Prev
Back
Next →