Monetary Policy To smooth out extreme inflation or deflation, central banks act as mediators. It is generally accepted that expansionary policies are less effective than those that are restrictive. In other words, it’s easier for governmental authorities to cool down…

Until the early 20th century, the money supply was primarily dictated by the supply of gold and silver backing up bank deposits. This made periods of both deflation and inflation expected. Now that fiat currencies are backed by the faith…

The business cycle refers to variations of economic productivity–often measured in terms of GDP–around its long-term trend rate. It is this long-term trend rate that serves as an anchor for forecasting business environments. This is because the economy cannot sustainably…

Economic forecasting typically falls under one of three distinct approaches: Econometric modeling. Economic indicators. Checklists. Econometric Modeling Econometric modeling is the use of statistical methods to map out relationships among economic variables. Models may range from simple to extensive and…

The expected trend growth rate is an all-important element in developing capital market expectations. Its primary use is in developing expected returns for asset classes. In addition, it informs potential currency movements and government policy. Critical considerations of economic trend…

Exogenous shocks refer to external factors (created outside the economic model) that profoundly affect an economy’s growth. While some factors enhance growth, others impede growth. The following is a summary of typical shocks. Sources of Exogenous Shocks Policy changes: These…

Inappropriate capital market expectations could be devastating to portfolio performance. Several pitfalls could lead to false expectations and a less-than-optimal asset allocation. Regardless, the analyst is tasked with following a disciplined process and understanding potential challenges in developing capital market…

Capital market expectations involve setting likely risk and return parameters for a portfolio. These expectations inform the asset allocation that is ultimately selected, which is the investment results’ primary driver. Macro expectations involve forecasting risk and returns for an entire…

Learning Module 1: The Private Wealth Management Industry Los 1(a): Discuss the typical business models of private wealth management service providers and their segment-based strategies Los 1(b): Discuss typical fee, revenue, and compensation structures prevalent in the private wealth management…

All asset managers should have a trade policy document that clearly and comprehensively articulates the firm's trading policies and escalation procedures. The curriculum can be quite wordy in this section. The heart of the message is simply this: “Firms need…