Enterprising Investor

In Episode #353, Professor Raphael Douady and Ron Rimkus, CFA, discuss the evolution of risk management practices and where we are today. Douady believes even with the “quantitative-ization” of risk management and increased sophistication in data analysis, investors need to strive to uncover the invisible or hidden risks of their investment portfolios. Risk management strategies that only focus on the visible risks could exacerbate the invisible risks inadvertently. Douady also explains that the evaluation of risk is not just about fat tails, it is also about where the risks are coming from. Douady’s “Dominant Factor Analysis” is one method that helps investors determine dominant factors and the possible sources of risks in the portfolio as a window to portfolio sensitivities under different market conditions. Finally, Douady warns that investors cannot seriously avoid economic cycles and notes it is better for investors to be prepared for a “Minsky Moment” rather than trying to predict it.

In Episode #352, Sonny Kalsi discusses his outlook, including the megatrends affecting real estate investment opportunities today. Kalsi examines the effects of disrupters—from the growth of online retail to the sharing economy and changing generational preferences. Kalsi explores single-family and multi-family housing in the United States 10 years after the Great Recession and changes he expects going forward during a rising interest rate environment. He shares his mistakes and lessons learned in his nearly 30 years as a real estate investor and discusses how his philosophy, process, and people have adapted to better position his firm for the future.

In Episode #351, Professor Luigi Zingales discusses Capitalism and the economic system—what works, what doesn’t work, and what can be done to fix the parts that are broken. Zingales focuses on the problems with capitalism, such as the concentration of market power and where distortions occur that benefit the few—not the many. In addition, Zingales proposes a unique alternative to the public company model of maximizing shareholder wealth and recommends companies instead  "maximize shareholder welfare” to focus on what investors care about—not just profits and market value—but also the environment, governance, and society. 

In Episode #350, we continue our talk on with the Pension Fund Association of Japan, which manages over US$ 110 billion in assets for pension clients.

In Episode #349, Martin S. Fridson, CFA, chief investment officer at Lehmann Livian Fridson Advisors LLC, is regarded as one of Wall Street's most thoughtful and perceptive analysts and has been dubbed "the dean of the high yield bond market". In a wide-ranging interview, he discusses a number of issues, including the investment grade and the high yield credit markets, how to correctly forecast the default rate, and how the leveraged buyout market has evolved since the 1980s.

In Episode #348, we talk pension funds and how they tend to have regular outflows and are often underfunded, as a result the tools the industry has developed tend to be based on these assumptions.

In Episode #347, Richard Howitt, CEO of the International Integrated Reporting Council, discusses the power of Integrated Reports for investors. For example, their additional detail on multiple sources of capital and return; their prospective, not retroactive nature; and their insistence on executive management narrative to help make sense of data.

In Episode #346, Roger Urwin, lead author of the CFA Institute report Investment Firm of the Future, and Willis Towers Watson's global head of content, along with Richard Howitt, CEO of the International Integrated Reporting Council, discuss the report, as well as pertinent details with which all investment pros should familiarize themselves.

In Episode #345, Matt Gertken, geopolitical strategist at BCA Research, shares his thoughts on some of the current largest geopolitical topics that we should all be thinking about. From China to Russia, via the United States, there is a lot to consider in terms of the big picture. Mr. Gertken talks about the likely shift in power from west to east—both politically (global influence) and economically (trade wars). With China facing domestic demands as well as global ones, the topic of the country’s growth outlook makes for fascinating listening.

In Episode #344, recorded at the 71st CFA Institute Annual Conference in Hong Kong, Mary C. Gentile, creator and director of Giving Voice to Values (GVV) at the University of Virginia Darden School of Business, explains the values-driven leadership that is at the center of GVV, an innovative approach to values-driven leadership development in business education and the workplace.