On Portfolio Returns, Asset Allocation, Benchmarks, Asset Class Returns, Sectors, Countries, Style, Diversification, Indices and more…
Every year, the largest banks, asset managers and consulting firms publish their economic and market outlooks for the following year, highlighting key topics, trends, opportunities and areas of concerns. For the first time, we have used ChatGPT to skim-read through and summarize 48 of these outlook presentations and built a database, containing the various opinions expressed in the the areas that are traditionally of interest to our clients and us.
“Evidently, bonds got tired of being called boring and decided to grab some headlines."
Portfolio Managers Greg Wilensky and Jeremiah Buckley offer a framework for interpreting economic news for investment decision making.
Sell-side analysts working for investment banks routinely issue forward-looking price targets for the stocks they cover, which can be summed and weighed for broad market indices. The difference between the contemporary index level and these price targets can be considered the implied expected price return. We have asked ourselves whether the return outlook given by analysts on aggregate (consensus estimate) does indeed provide information about future market performance. The answer is simple and disappointing but yields some intriguing insights into the sell-side analyst’s reaction function.
Many impossible things are happening in the investment world at the moment; like the bluebottle which sits upside-down on the ceiling, we have to come to realise these things were not so impossible, after all.
20 Years Ended 31 December 2022
”2022 was one of the worst years for fixed-income investors in history. Bonds lost money. Stocks lost money. Crypto lost money. Inflation rose to levels not seen since the 1980s. The only thing that increased in value were commodities. You have to go back to the Civil War in the United States or the Napoleonic Wars in Britain to find a worse year for bonds”.
1999 - 2022
1999 - 2022
"When inflation appeared, it was deemed transitory. When it persisted, there was a pause of disbelief. Then everyone lost their nerve."