Why passive investors have so far taken the upper hand… and why this is not sure to last

Posted on 26. Nov, 2012 by Jean Jacques Ohana in Weekly Focus

The rationale behind volatility-weighted allocation strategies is to allocate risk evenly across a diversified set of assets in order to make the strategy robust to various macroeconomic configurations. As showed in figure 1, the assets may be classified into four main clusters:

The risky assets represent equities and assets linked to global growth.

The inflation-protecting assets consist [...]

What’s next after the corporate credit bubble?

Posted on 19. Nov, 2012 by Jean Jacques Ohana in Weekly Focus

Investors passively investing in High Yield bonds have caught a return of 10% in the US and 18% in the euro zone. Similarly, emerging bonds have returned around 16% since the start of the year. The causes of this risky bonds’ mania are well-known: faced with negative real yields on the so-called safe haven [...]

Inflation and deflation altogether: how to invest in a quantum economy

Posted on 06. Nov, 2012 by Jean Jacques Ohana in Weekly Focus

From 2010 onwards, the European investor has been facing a lasting financial insecurity. Peripheral Eurozone countries may default on their debt, as illustrated by the Greek debt restructuring. More worryingly, their sovereign debts have turned into risky assets, with a positive correlation to stocks. European banks are still undercapitalized and doubts persist on their solvency. [...]

Strengths and weaknesses of the financial system

Posted on 05. Nov, 2012 by Jean Jacques Ohana in Weekly Focus

Two major political events are looming and with no doubt will shape financial markets outlook until the end of the year:

The US presidential election will be held on 6th November. According to statistician Nate Silver and Obama’s contract on Intrade, Obama has a clear advantage in the battleground states which should lead him to victory. [...]