I am going to do something very dangerous today. I am going to touch on one of the most controversial topics in current politics. I am going to write about immigration. To be clear, this post is not intended to upset anyone. I know there are many dimensions to this debate, most of which have nothing to do with economics, such as the impact of immigration on social cohesion and cultural identity. I am not going to say anything about that except that I agree these are valid concerns. All I am going to focus on today is the economic impact of immigration, knowing full well that this is only one p ..read more

Every professional investor knows that they must read the financial statements of a company to get a deep understanding of a company, its operations and its financials. But who among us has ever analysed the financial statements of an equity fund? Maybe we should because there is some useful information in there to predict future fund performance. James Li from the Wharton Business School examined if the information in the financial statements of open-end and closed-end funds in the US provides insights above and beyond what one can get from the usual data like expense ratios, past performance ..read more

We all know that if someone divests from a company, all they do is sell the shares to another investor who may care less about the environmental or social record of a company. But David Whyte from the Queen Mary University in London tracked what happened to the shares in BP and Shell that were sold by large investors divesting from these companies. And the results are sobering. Whyte tracked the changes in shareholding of the 20 largest institutional investors in the two UK oil majors after the Paris Climate Accords in late 2015 until 2022. On average, he found that the largest institutions in ..read more

If you read this, another geopolitical event has triggered fears in financial markets. In this note, I provide a simple checklist to help investors make sense of the events from a fundamental perspective. Based on the evidence from dozens of empirical studies I provide a list of questions to answer and how to position portfolios in reaction to these answers. A guide to help investors separate the signal from the noise We live in a world where wars, civil strife, and geopolitical tensions have an increasing influence on markets. There are plenty of geopolitics consultants ready to help investor ..read more

Warning: Irony. The French are fantastic people. They eat some of the best food in the world, have great wine, and hardly go to work but have no problem picketing the streets for months if somebody tells them to work 40 hours a week. And their attitude towards extramarital affairs is so relaxed that the English language uses a French word to describe it. Yet, a new study shows that the French love their wives (and husbands). Or at least, they love them more than going to work… The study used the fact that there are several public holidays throughout the year when employees get a day off, but s ..read more

Tax cuts are universally popular – at least with those who benefit from them. Unfortunately, modern day tax codes are so complicated that what is intended to be a broad-based tax cut can lead to an increase in the effective tax rate for most recipients. Don’t believe me? Then let’s take a look at the so-called ‘Trump tax cuts’ of 2017. These tax cuts, officially called the Tax Cuts and Jobs Act of 2017 (TCJA) were a major achievement of the Trump Presidency. The key provision of the TCJA was the introduction of a flat tax on corporate profits at 21%. Until then, businesses had to pay a tax of ..read more

One of the more annoying type of people you have to deal with in wealth management (at least in my view) are the people who constantly worry about inflation. Don’t get me wrong, inflation is a dangerous thing, and we absolutely need to make sure it remains low and stable because if it gets out of control like in the last two years, it becomes a severe problem for the economy, jobs, etc. But worrying about inflation can go too far and with many wealthy individuals it does. I cannot tell you how often I had to listen to men moaning and groaning about how the vast amounts of government debt will ..read more

Many hedge funds sell their approach as good diversification to traditional stock/bond portfolios. But if you look at the diversification benefits of hedge funds, you will find that the majority of hedge fund strategies come up wanting. In practice, they tend to have rather high correlation with stock markets. One hedge fund style that is truly uncorrelated is global macro together with its close cousin managed futures. I like global macro hedge funds, but then again, I would say that since I am a macro junkie. So, let’s take a fresh look at the evidence, or lack thereof, for their diversifica ..read more

My latest article on Marketwatch is available: https://www.marketwatch.com/story/european-companies-are-finally-buying-back-their-stock-opening-up-opportunities-4526e91d This time, I am talking about what I think is an important structural change in the attitude of European companies toward share buybacks and why this opens up opportunities for investors. Check it out ..read more

Trees are wonderful. They are beautiful to look at, good for your mental health and help cool down their immediate neighbourhood. Even if you are a city slicker like me, the value of trees is evident to everyone. And if you didn’t appreciate the value of trees in the past, then the pandemic lockdowns should have made the point. I live in a leafy neighbourhood on the River Thames. Being in lockdown and taking walks under the trees along the river was a much better pandemic experience than being stuck in a high-rise in East London near an A&E.   As I said, the value of trees is evident ..read more