Owning a wide range of assets doesn’t automatically make you diversified. True diversification is about managing uncorrelated risk, not just achieving variety. Diversification isn’t simply adding more assets to a portfolio — it’s about strategically allocating to assets that behave…
Economic growth must exceed expectations to generate abnormal stock returns, something increasingly difficult when starting expectations are already high. As a result, the relationship between GDP growth and stock market returns tends to be weak or even negative, despite widespread…
Equity markets serve as aggregators of collective investor expectations about future developments, reinforcing that potential is the central determinant of stock valuations rather than proof. Stock prices are predominantly forward-looking, embedding investors’ forecasts regarding future earnings, growth opportunities, competitive positioning,…
Skewness measures the asymmetry of return distributions, influencing investment risk-return profile, making it an essential statistical tool for portfolio management. Equity returns exhibit a negative skew, whereas Bond returns exhibit a neutral or slightly positive skew. However, there are certain…
The service economy demonstrates a sustainable pattern of spending, supported by its inherent diversity and the essential nature of many services. This growth trajectory can only be significantly disrupted by a strong exogenous shock that affects multiple industries and leads…
The financial market is driven more by expectations of future demand than by past fundamentals. It is an emotional theatre where stories, narratives, and psychology dictate direction far beyond the underlying fundamentals.
Bond markets are forward-looking, pricing in expected monetary policy moves. Surprises occur when a central bank’s actions or communications deviate from these expectations. These banks significantly impact bond prices and returns as the market reprices bonds based on new, unexpected…
Buybacks are beneficial payouts as they are typically taxed more favourably than dividends*. A 1% buyback tax was introduced in the US in 2023 and increased to 4% in 2025. Buybacks increase shareholder ownership and can boost earnings per share…
Housing is a leading economic indicator due to its sensitivity to interest rates and economic sentiment. When housing demand weakens, it often signals broader economic challenges, such as reduced consumer confidence, tighter credit conditions, or slowing job growth. The housing…
As the U.S. presidential elections approach, the equity market’s volatility tends to increase and remain stable. Historically, volatility tends to subside immediately after the election, regardless of the winning candidate. On average, markets have seen about 5% gains in the…