Passive Vs. Active Management In investment choices, investors have the initial question of whether their investments should be passively or actively managed. Passive management refers to tracking the performance of various indices, such as the S&P 500, and not making…

 The global market portfolio is a theoretical representation of the aggregation of every investable asset with respective weights held constant. While there may be an ETF somewhere that attempts to mimic this, it is safe to say that the…

How do the dealings of one country affect the economies of other countries across the globe? Most countries are linked via a global economic network of trade. Countries with more extensive, robust, and diverse economies tend to be less influenced…

Historical Statistical Approaches Historical statistical approaches involve the collection of data from past returns and using them to extrapolate future performance. Using a pure-historical returns approach to forecast equity market returns is complicated because equities have a high standard deviation…

The history of emerging and/or frontier market government borrowers began slowly with only a few nations. It has since grown into a large and distinct market. Numerous crises from Latin America, Asia, and Europe have plagued the market throughout its…

The shape of the yield curve is often cited as a leading reliable economic indicator. The yield curve maps the relationship between interest rates and the maturity of fixed-income investments on a graph. On the horizontal axis is time or…

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…

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…

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…

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…