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Owning possessions that are financially valuable, emotionally pleasing and culturally significant is a timeless tradition and one that shows no sign of abating. In the report, Barclays looks at the financial and emotional reasons high net worth individuals across the world have for holding treasure assets. They examine trends in the market for these particular assets, and assess behavioural biases and various risks involved in holding them.
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Stocks for the Long Run

Interview with William Bernstein

Consider an airplane safety analogy. Short-term risk is like turbulence. It can make fearful flyers very nervous and wish they could just get off the plane. The real risk of flying, though, is different – like long-term risk. It is the risk that ultimately, you won’t get where you’re going because the plane will crash. If you’re a long-term investor, you can recover from shallow risk and usually will if you understand it and don’t panic. Read the Article

The Great Debate

Debate between Professors Zvi Bodie and Jeremy Siegel

Professor Siegel’s point of view is that stocks are the most powerful way to protect and accumulate wealth over the long run. Professor Bodie offers a counterpoint to the traditional investment paradigm by showing that, in fact, stocks are very risky even in the long run.
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The Lessons of History – Endowment and Foundation Investing Today

Remarks by John Bogle (The Vanguard Group)

Over the very long run, it is the durable economics of investing – enterprise – that has determined total return; the evanescent emotions of investing – speculation – so important over the short run, has ultimately proven to be virtually meaningless.
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So what is value investing all about? This article starts by examining two concepts that are central to the value philosophy: the importance of a business owner’s perspective, and the irrationality of the stock market in the short term, and explores other key principles, including intrinsic value and the margin of safety.
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The Fecundity of Endowments and Long-Duration Trusts

Jim Garland (The Jeffrey Company)

Rather than focusing on market values, overseers of endowments and long-duration trusts should focus on the extent to which cash can be withdrawn from their funds to meet current spending needs without negatively impacting future withdrawals to meet future spending needs. Cash withdrawals can come from dividends, interest, or portfolio asset sales. This paper explains how to determine the fecundity (=fruitfulness, fertility, or a portfolio’s long-term ability to generate spendable cash) of a typical endowment or long-duration trust fund.
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To Thine Own Self Be True (Or: We Know We’re Not Frank Perdue)

Remarks by Jim Garland (The Jeffrey Company)

For many portfolios, the overriding objective is income, specifically income that grows to keep pace with inflation. There are three lessons in what the Jeffrey Company is doing that might apply even to taxable clients who have other objectives. The lessons are these: that taxes matter a lot; that you must take nothing for granted; and that you must never take your eyes off your clients’ unique objectives.
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Expected Returns on Major Asset Classes

Antti Ilmanen (Research Foundation of CFA Institute)

Expected returns are arguably the most important input into investment decisions. This book discusses how to forecast returns of the major asset classes including stocks, government bonds, corporate bonds, and alternatives, under different parameters. It also reviews investment strategies and the effects of growth, inflation, liquidity, and different risk perspectives.
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The financial crisis of 2008/2009 increased plan sponsors’ desire to control risk-and we are still seeing the unfortunate effects. Sponsors are misapplying tools designed to monitor portfolios, and instead, are relying on them to build portfolios. Portfolio design and reallocation decision often are now driven by complex, but often incomplete, measurement tools. The purpose of this paper is to challenge this increasingly popular approach to portfolio construction and evaluation that relies on complex, quantitative models. As an alternative, a case is made for simple and transparent portfolios.
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In the wake of market volatility, many investors may feel a desire to change their approach and be more “nimble” or “opportunistic” in their pursuit of investment goals. In this paper, Robert Maynard, Chief Investment Officer for the Public Employee Retirement System of Idaho and Brandes Institute Advisory Board member, cautions investors who are thinking about abandoning traditional investment plans. He advocates policies that are simple, transparent, and focused rather than adopting increasingly popular “alternative” tactics such as illiquid instruments and vehicles, leverage, and complex, opaque investment strategies.
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The Longest Pictures

Merrill Lynch

In this remarkable reference chartbook, Merrill Lynch plots almost 100 charts on asset price returns, correlations, volatility, valuations and many other market and macro factors for the US, UK, Europe, Japan and Emerging Markets over very long terms. Investors can view US equity prices since 1871, Dutch bond yields since 1517, the oil price since 1861, risk premia since 1900 and German dividend yields since 1869 among many other charts. The study shows the secular trends of major asset classes and economic indicators, and the historical significance of where they are at today.
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Life Insurance as an Asset Class

Wayne Miller, Sally Murdock (Sun Life Financial Canada)

Permanent life insurance has always been a helpful estate planning tool, but in this report, the authors demonstrate its additional merits as an alternative asset class, specifically for those who wish to improve the return or reduce the risk of the fixed-income portion of their investment portfolio.
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Equities outside Canada, including those of developed and emerging markets, account for 96% of the global market capitalization, representing the majority of the world’s equities. However, according to the most recent survey from the International Monetary Fund, Canadian investors only allocate about 40% of their total equity investments outside Canada. This paper evaluates the short- and long-term impacts of global diversification and finds that Canadian investors should consider increasing their allocation to international equities.
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Successful investment management suggests focusing on those things within your control. Instead, too many investors focus on the markets, the economy, manager ratings, or the performance of an individual security or strategy, overlooking the fundamental principles that can give them the best chance of success. These principles have been intrinsic to Vanguard since its inception, and they are embedded in its culture and include creating clear, appropriate investment goals, developing a suitable asset allocation, minimizing cost, and maintaining long-term discipline.
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In the investing arena, “active versus passive” is a perennial subject of debate. This debate is often pitched in heated, adversarial terms, as if there were ultimately just one correct way to manage investments. What is missing in the debate is recognition that appropriate structuring and management of investments may well depend on investors’ relative situations. The overarching message is that best choices can vary across asset classes, investor circumstance, and perhaps even time.
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Relatively Simple

Michael Drew

Complexity is everywhere. And nowhere is its forward march more evident than in the field of investing. Seemingly unabated, the complexity of new products, processes, financial engineering and innovation grows.
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