The low-yield environment manufactured by central banks has encouraged and precipitated yield-seeking speculation. Investors and speculators alike have taken up a near-religious conviction in the demi-god status of central bankers. Will these central bankers continue to enjoy their god like status indefinitely or will they disappoint their followers?
In this article, I provide evidence that GDP growth rates do not correlated well with investment returns while refuting the claim of a prominent investment manager from India that GDP growth rates are somehow directly linked with investment returns.
Trailing 3-year and subsequent returns in developed markets show existence of both momentum and mean reversion with momentum persisting in the near-term. The best performing developed markets over the past three years, continue to outperform over the next year and vice versa. However, returns show some mean reversion in the second and third year with the mean reversion effect being stronger with countries that outperformed earlier.
Do Investors Intelligence bulls and bear readings have predictive ability? In this post, I discuss a model for analyzing II readings and their role as a sentiment analysis tool.
My telephonic interview with Cris Sheridan of Financial Sense where we discuss my article on U.S. Corporate Profit Margins and why are they likely to revert to their long-term mean.