The quarterly Dynamic Asset Allocation is published electronically, and emailed to subscribers in early March, June, September, and December. It features farrelly's Editorial; long-term outlook for markets; Forecast in Focus; and three different approaches to Implementation...

Classical economists often incorporated human behaviour into their thinking. But in the 1960s and 1970s, homo economicus - the great rational agent of economic theory - was born. It was not until the 1990s that the link between human behaviour and economics began to be re-established.

Behavioural finance supplements traditional financial and investment theory. Findings in the field of behavioural finance may help advisers, consultants and clients better manage their thoughts, feelings, and actions when investing.

Established in 2009, Portfolio Construction Forum Markets Summit is THE investment markets scene setter of the year. With interest rates near historical lows and asset prices around all-time highs, practitioners are grappling with the defensive side of multi-asset portfolios. Downside protection is essential in such an uncertain environment. Arguably, the best offence is a great defence! Markets Summit will help you better understand the key drivers of and outlook for the markets, and the opportunities and risks ahead on a three- to five-year view, to aid your search for return and to help them build better quality investor portfolios.

US President-elect Biden's appointment of Janet Yellen as the next Secretary of the Treasury is good news for the US and the world. No one is better equipped to deal with today's economic challenges.

These tutorials relate to various of the IMAC lectures and are available to CIMA candidates currently completing the Investment Management Analyst Certificate course.

As financial markets celebrate the coming vaccine-led boom, the confluence of epidemiological and political aftershocks has pushed us back into a quagmire of heightened economic vulnerability.

There is a fundamental inconsistency over the long run between an ever-rising share of US debt in world markets and an ever-falling share of US output in the global economy.

To say a lot has changed since I spoke to you back in February at Markets Summit 2020 is an incredible understatement. Between now and Markets Summit in February 2021, I'm going to be watching three things.

As Joe Biden eked out a victory in the US presidential election, observers of American democracy were left scratching their heads. How did Donald Trump manage to retain the support of so many Americans?

Just as China led the world in economic recovery in the aftermath of the Global Financial Crisis of 2008, it is playing a similar role today. It is a bitter pill for many to swallow.

In a world where interest rates are zero or negative, we need new ways of valuing assets. This is a very common refrain and it drives me nuts. It is almost all wrong - and on so many different levels!

The world today is an acceleration and escalation of the world that existed before Covid-19, rather than a whole new world. Broad, multidisciplinary thinking is essential.

Decarbonisation and data growth will dominate every aspect of our lives for decades to come. If your infrastructure manager isn’t leveraging off these themes then you need to find a new one.

In the past, ESG considerations were seen as a choice or a preference but, going forward, they are increasingly becoming a necessity in the evaluation of investment opportunities in a whole new world!

For investors needing more from their fixed income allocation, global convertible bonds offer a whole new world of opportunity.

We are at the threshold of an epic bull market buoyed by the emerging Buenos Aires Consensus and desensitisation to Covid-19. But beware, inflation will eventually re-emerge.

The Covid-19 crisis has triggered a step change in policy, accelerated trends and transformed investment frameworks. Opportunities will arise out of dislocation – but a more regional view is required.

Incumbent investment frameworks such as Value, Shorting, Passive and Index Aware strategies are failing. Going forward, successful investors will need to be extremely selective when allocating capital.

The tech-wreck of the early 2000s was ground zero for the birth of a succession of Australian technology companies that have disrupted markets and established themselves as global leaders.

On 3 November, US voters go to the polls. The presidency will be determined once again by 14 swing states and six of them really matter.

Post Covid-19, Australian company dividends were cut by 30% overall but it is still possible to achieve 5% cash yields with up to 2% franking credits from a well constructed portfolio.

Traditional business models will increasingly be challenged. To win, companies will need to spend for the future and investors will need to take a longer term view to define ‘value’.

Post GFC, inflation risk skewed to the downside with central banks fighting against disinflation and deflation – and the market is potentially under-pricing inflation risks going forward.

While it may not be a new approach, ESG investing creates risk-aware portfolios that are more likely to outperform over the long term.

The Covid-19 pandemic is accelerating pre-existing consumer trends. The new world winners will be those businesses which focus on culture and purpose, and which aspire to make a positive difference.

Since the early 1980s, developed market government bond yields have broadly been falling, with investors voicing concerns that the asset class offered little or no value. Continually, they have been proven wrong.

Covid has accelerated tech adoption on an unprecedented scale and while the winners have been broad, not all are equal. Short-term investors with simple valuation techniques are missing the bigger picture.

Driven by Covid-19, 2020 saw economics 101 meet market psychology. Today, fear and greed set up a rich opportunity set on long and short sides.

In the US, a durable and economic bottom has formed, and global investors are well-served to re-frame their mindset towards the incipient economic expansion now underway.

There have been few US elections with such a discernible difference in the likely quality of the two candidates' economic policies. In this case, Biden's are better. Post-war Democratic presidents have been significantly better for the US economy than Republicans have. There is every reason to believe that trend will continue if Biden wins on 3 November.

This crisis may morph over time. The second quarter of 2020 looked like an I, free fall. Quarter three looked like a V, as any rebound from very low levels of activity initially does. My baseline scenario is an anaemic U-shaped recovery.

This lecture instructs IMAC candidates on the history of global capital markets and the key principals of capital market valuation.

This lecture instructs IMAC candidates on the fundamentals of applied economics with an Australian perspective.

Now in its 19th year, Portfolio Construction Forum Strategies Conference has gained a reputation as THE portfolio construction strategies conference of the year. This year's theme is "It's a whole new world!". Covid-19 is disrupting societies, economies, and markets around the world like no other crisis since World War II. Strategies Conference 2020 will challenge and refresh your portfolio construction thinking as we debate the contemporary and emerging portfolio construction strategies that will help us build better quality investor portfolios in a whole new world!

The dollar's recent slide is one in a series of readily explicable fluctuations. Indeed, the most striking takeaway is its resiliency. The explanation is "TINA" - There Is No Alternative.

In April, I argued equity markets might continue to rally despite the collapse of the world economy. And so they have. But in my 40 years of observing and participating in financial markets, I've learned that August is always a month to watch.

In the last two weeks, very important data on the US economy and corporate earnings have been released. These depressing data are as we had predicted. It remains true that the S&P 500 should drop by 35% from its 1 January level.

One of the most important tasks for any decision-maker is to continuously stress-test assumptions and mark-to-market their hypotheses as to how the future will unfold. Let's "nowcast" a little.

In February, I warned any number of foreseeable crises - "white swans" - including Covid-19, could trigger a massive global disturbance in 2020. Many are now in play. Why are financial markets ignoring these risks?

The Investment Management Research Program is the academic research unit of Portfolio Construction Forum, the specialist, independent provider of portfolio construction continuing education, accreditation and certification services in Australia and NZ. The IMR Program aims to advance investment management research by curating courses, workshops and symposia focused on the spectrum of issues involved in designing and building investment portfolios.

Much of the new push for industrial policy in the US and Europe is motivated by the perceived Chinese "threat". But economic considerations suggest this is the wrong focus.

The performance of stock markets during the coronavirus pandemic seems to defy logic - until one considers possible explanations based on crowd psychology.

Valuations in both equities and bonds are near their pre-Covid levels, yet the US economy is in recession and 40 million people are unemployed. What should investors be doing in their portfolios?

Early in the Covid-19 crisis, most people anticipated a quick V-shaped recovery, on the assumption that the economy merely needed a short timeout. It was an appealing idea. But now it is July, and a V-shaped recovery is probably a fantasy.

We are at the half way mark for 2020, and every fibre of my being tells me that the next six months will see many more extraordinary events. Covid-19 can be seen as the great accelerant, or amplifier.

The impact of Covid-19 and the resulting massive worldwide government fiscal response to the crisis has sparked new discussion about the risk of an upsurge in inflation - or deflation. This is not a trivial debate.

No matter how big an economy, it is likely to be influenced by US economic growth, international financial stability, and monetary policy spillovers. The challenge for other countries now is to reduce America's "execution risk".

I foresee a 35% drop in the broad dollar index over the next two to three years. Covid-19 may have spread from China, but the Covid currency shock looks like it will be made in America.

The risk today of a debilitating 1930s-style overshoot in deglobalisation is massive, particularly if the US-China relationship continues to fray. And it is folly to think a retreat from globalisation will not introduce more, vastly more serious, problems.

The US jobs report this past week was euphoric and propelled the stock market to even higher levels. But after the easy gains over the next two or three years from reopening the service sector, the US economy faces a slow nine-year recovery. US equities remain overvalued.

Governments are responding forcefully to the COVID-19 crisis with a combined fiscal and monetary response that has already reached 10% of global GDP. The key now is to increase incentives to spend.

According to a new World Bank report, China’s total income has now surpassed the US’s on a PPP-basis. But on a GDP basis, the US economy is still far ahead of China’s. Both measures have distinct implications for geopolitics, so must be considered separately.

In most emerging and developing countries, COVID-19 is causing an economic hurricane, the worst crisis the Bretton Woods institutions have experienced in 76 years. Their response so far has been both admirably fast and utterly inadequate.

Many in the financial markets are expecting a V-shaped recovery starting in the fourth quarter of this year, possibly even in the third quarter. Robert Huebscher speaks with renowned economist, Dr Woody Brock about why Woody disagrees, and instead foresees a slow and uneven recovery with periodic slumps.

The 2020s must be a "decade of action". By harnessing the disruptive potential of fintech, we can create a fairer, more inclusive financial system that propels sustainable development everywhere.

A year ago, I showed it's possible to measure prediction accuracy for active managers, and that it influences optimal portfolio construction. Is this still a valid approach to portfolio construction, given today's markets?

The global economy will be shaped in the years ahead by three trends. While COVID-19 reinforces and entrenches them, it is not the primary force driving them. All three predate the pandemic. The fate of the world economy hinges not on what the virus does, but on how we choose to respond.

The COVID-19 crisis augurs three watersheds: the end of Europe’s integration project; the end of a united, functional America; and, the end of the implicit social compact between the Chinese state and its citizens.

For those who viewed negative interest rates as a bridge too far for central banks, it might be time to think again. Emergency implementation of deeply negative interest rates would not solve all of today's problems. But it would be a start.

The funds management industry has spawned a lot of gurus. This research paper looks at whether market forecasters are any good at what they do.

Ten risks, already looming large before COVID-19 struck, now threaten to fuel a perfect storm that sweeps the entire global economy into a decade of despair.

If on 1 Jan 2020, I’d thought we’d see US unemployment head to 20%, China’s first quarter real GDP growth at -10% and the global economy shut down, I wouldn't have picked the S&P PE Ratio would now be above its long-term average since the GFC.

Europe needs about €1 trillion to fight the COVID-19 pandemic. Financing the EU Recovery Fund with perpetual bonds is the easiest, fastest, and least costly way to establish it.

The impact fixed income market is becoming more diverse in terms of currencies, issuers and ratings, delivering mainstream returns but with impact.

This lecture argues that a diversified portfolio of core fixed income securities is an essential component of an optimal multi-asset portfolio. What's your philosophy?

To paraphrase Churchill, will those who can end a pandemic well also allow a good recovery? It depends on their understanding of history.

As the COVID-19 virus spreads globally, many emerging and developing economies will stop paying their debts. The world needs to get in front of the problem.

With crisis comes opportunity. Much of the bad news is now reflected in stock prices and, while stock markets will re-test their lows in coming weeks, expect a rally during Q2 2020.

Even with all-out efforts by central banks and fiscal authorities to soften the blow, a deep economic slump and financial crisis are unavoidable. The key questions now are how bad the COVID-19 recession will be and how long it will last.

We are feeling the anxiety effects of not one pandemic but two - the COVID-19 pandemic and a pandemic of anxiety about its economic consequences. The two are different, but inseparable.

On Monday, the US central bank acted with stunning shock and awe. Then, government after government announced the biggest fiscal support packages ever seen in history. All of which begs the billion dollar question - sorry, multi, multi trillion dollar question. Are we out of the woods?

While pandemics are comparatively rare, and severe ones rarer still, I am not aware of a historical episode that can provide any insight as to the likely economic consequences of the unfolding global coronavirus crisis. This time truly is different.

For active fund managers, the coronavirus pandemic is unlike any other crisis in modern times. In this podcast, Jonathan Ramsay of InvestSense speaks with emerging market equities portfolio manager, Tassos Stassopoulos, about the impact of values on responses to COVID-19 around the world, and the art of contrarian stock picking and managing client monies in these challenging times.

Coronavirus has put an end to the longest post-war US expansion, and is all but certain to cause a recession that will be wholly different from any other in economic history. In this podcast, Robert Huebscher speaks with renowned economist, Dr Woody Brock, about how and why.

This is a time to be buying not selling. Question marks remain as to how far this market will fall before it bottoms out. But what we do know is that valuations are attractive. The chances of long-term investors earning returns well in excess of Term Deposits over the next five to 10 years are very, very high.

COVID-19 threatens both medical and economic disaster. While it may be too late to avert a public-health crisis, unlike the medical effects of the virus, the economic impact is easy to predict and overcome.

Two weeks ago as the coronavirus crisis began to unfold, I warned that the market could soon drop to 17,500 on the Dow. One very important form of investor ignorance today concerns the market's view that it is prospects for corporate earnings that will matter most. This is wrong.

The market has now woken up to the size of the traumatic shock to the global economy, which just hit a massive air pocket. In the next few weeks, financial markets and the broad capital markets will come under severe stress. How does this end?

The G7 has vowed to use "all appropriate policy tools" to contain the economic threat posed by the COVID-19 coronavirus. That should include those wielded by medical practitioners and epidemiologists.

Joe Biden had a fantastic night on Super Tuesday and he could be the Democratic Nominee - but a lot can change over the next month. Meanwhile, trade relations between the US and China may falter if China struggles to honor its commitments due to a weak economy.

The new virus is an "unknowable unknown" of the first order. Should the virus turn into an epidemic, all Americans will alter their behavior, such that an outright recession could result.

The world economy was weak, and getting weaker, when COVID-19 struck - and it has brought the Chinese economy to a virtual standstill. China's sneeze may prove to be especially vexing for long-complacent financial markets.

Markets Summit 2020 facilitated debate on the key drivers of and outlook for the markets (on a three- to five-year view) - with particular emphasis on being alert to the high VUCA risks and opportunities ahead - to aid your search for return, and to help you build better quality investor portfolios.

In the decade ahead, ageing demographics, income inequality, market share concentration and climate change will reshape the economy, elevating the VUCA facing investors, requiring deep fundamental research to determine where best to invest.

Coronavirus represents a Black Swan event, the economic shock of which to China will reverberate around the world, thereby amplifying and exposing global economic weaknesses.

Market capitalism has survived many rotations of the political cycle over generations. But there is nothing certain or given about capitalism – and today, its future is being called into question, with growing calls to fundamentally change the system.

US/China trade tensions and the coronavirus outbreak highlight that a VUCA world abounds. But this does not change long-term trends that make emerging markets ripe for investment.

It must be something about Davos. High profile names again spoke out about the attractiveness of the equity market. But the economic cycle is not over. Boom/bust has not been banished.

After a blockbuster 2019 for bond returns, investors should moderate their return expectations while watching for VUCA events and tail risks, especially trade, Brexit and the US elections.

VUCA issues are going to increasingly drive market outcomes. Mapping out different scenarios is a must to check your biases as well as challenge your own, others' and consensus views, and generate investment ideas that help manage VUCA and target the right opportunities.

VUCA is alive and well. The environment requires a disciplined, risk-based approach that considers the direction of market risk appetite to identify the right assets at the right time.

Our diverse panel of experts debates which of the high-conviction propositions they heard during Markets Summit 2020 resonated most strongly, and which they disagreed with most, and the portfolio construction implications.

As growth becomes more scarce in developed markets, the valuation gap between emerging market equities and developed market equities will close. Within EM, Asia is the place to be investing.

Bull market longevity tells us nothing about the timing of the next bear market. Valuations are a helpful warning, but don't inform us on the timing because the trigger is normally a shock.

The current VUCA environment creates opportunities for investors to increase diversification and income in their diversified portfolios, using carefully selected, higher yielding parts of the credit market.

As the old certainties break down, the response from policy makers has been to stimulate economies. The liquidity provided is particularly evident in longer dated growth assets. In the context of the Australian market, Australian mid caps is the sweet spot.

With an ageing demographic seeking more stable outcomes, many investors have been steadily increasing allocations to infrastructure securities, to capture the attractive relative income and low volatility.

The world has checked into Hotel California – interest rates are failing to stimulate demand and monetary policy is less effective. Successful adaptation will require a re-think of traditional strategic asset allocation approaches.

Low inflationary outcomes and very low interest rates are expected to remain in place for some time. REITs have resisted the attraction of cheap credit and will continue to provide a safe haven.

Trade Wars, the US Election, Brexit 3.0, natural disasters and pandemic risks are causing fear and uncertainty in Australian equity investors. The key to capturing opportunities is to focus on what matters to long-term returns.

Practitioners should examine portfolios for slow or no growth equities, priced like bonds, whose attractions may be inundated by a wave of fiscal stimulus.

Investors are facing a "Code REDD" with reflation, election, duration and disruption all key themes. The reflation theme is favouring a rotation into more cyclical sectors, lower duration assets and lower rating bonds.

High household debt places Australia in a fragile position for further disinflation, implying that bond yields will remain lower for longer. Investors should look to accumulate bonds and ensure portfolios have an appropriate defensive allocation in anticipation of the next downturn.

The best response for investors pondering a future that is always VUCA is to ground their decisions in investment basics. In short, look for mispriced quality companies.

Investors can gain exposure to high quality real estate through global REITs, which offer exposure to sectors experiencing better growth prospects and benefiting from tech disruption.

Markets require constant accommodation to deliver status quo economic (not market) outcomes. Watch for changes in liquidity provision as forward markers of performance.

Corporate bond spreads are now tighter than they were before the GFC, yet corporate leverage is higher. Buy financials, sell corporates.

Emerging market assets and the Australian dollar present as having the greatest upside risk through the remainder of 2020-21.

Innovative firms spend their money on research and long-term investment, rather than on share buy-backs and paying out dividends. To benefit, investors must think in decades.

To fully appreciate the risks and opportunities in a high VUCA environment, portfolio construction practitioners must adopt a mindful approach in order to adapt to unexpected events.

Venture capital is evolving globally to deliver both financial outcomes and also significant and measurable social impact for investors, entrepreneurs and communities.

Traditional metrics suggest equities appear overvalued, but other factors argue against this and indicate a sustainable equity advantage.

The US-China trade deal was supposed to settle global trade uncertainty in 2020. Nothing could be further from the truth. Diversified supply chains are vital to minimising VUCA risks into the 2020s.

Many of the discussions at Davos this year revealed that global elites are struggling to respond to important economic and environmental challenges, in a highly volatile, uncertain, complex and ambiguous world.

Established in 2009, Markets Summit has gained a reputation as THE investment markets scene setter of the year. The jam-packed, one-day, face-to-face and online learning program is designed and curated by our specialist, experienced and independent team and features our Faculty of 25+ leading investment thinkers from around the world. Each offers his/her best high conviction ideas on the key drivers of and outlook for the markets (on a three- to five-year view) – with particular emphasis on being alert to high VUCA risks and opportunities ahead.

The world economy is operating dangerously close to stall speed. Ever-present shocks and a sharply diminished trade cushion raise serious questions about financial markets' optimistic view of global economic prospects.

Ten risks could cause the most economic and financial trouble in 2020. But these are not predictions - continuing global expansion is more probable than any combination of these setbacks.

I believe time allows signals to surface amidst the ubiquitous noise. In the spirit of the hit Fleetwood Mac song "Don't Stop" that urges a future focus, I offer this year's set of five-year-forward global predictions.

Central banks have proved willing and able to keep stock and bond prices elevated. For long-term economic well-being and financial stability, a policy response is needed that extends well beyond their traditional remit.