This quarter’s top picks illuminate what’s currently catching the eye of investment pros: skepticism towards traditional valuation methods, real assets’ performance amid inflationary spikes, AI in the mix of strategy development, and mounting stress in private markets. From discussions on discounted cash flow (DCF) to hedge fund viability, bank liquidity worries, and career prospects in wealth management, these highlighted articles dive into the crucial issues influencing today’s financial scene.
### 1. The Discounted Cash Flow Dilemma: A Tool for Theorists or Practitioners?
Is the discounted cash flow (DCF) model best left to the textbooks, or does it have genuine value for modern-day investors?
Sandeep Srinivas, CFA, jumps into the ongoing DCF discussion with an investigation into its current relevance and application. He scrutinizes both the model’s advantages and its shortcomings, offering insights that will interest theorists and practitioners alike.
### 2. Did Real Assets Provide an Inflation Hedge When Investors Needed it Most?
When inflation is on the rise, can real assets really safeguard investors?
Marc Fandetti, CFA, takes a deep dive into the COVID-era from 2021 to 2023 to see how real assets measured up as inflation hedges. Examining index-level data, he concludes that while most real assets fell short as hedges, commodities offered a slight buffer against inflation’s pressures.
### 3. What Lies Beneath a Buyout: The Complex Mechanics of Private Equity Deals
Private equity deals often appear shrouded in mystery. What actual processes occur behind the curtain?
Paul Lavery, PhD, unveils the complex workings of private equity buyouts, dissecting the financial structures and strategies in play. His detailed post explains the roles of acquisition vehicles and their effects on the performance of portfolio companies.
### 4. The Endowment Syndrome: Why Elite Funds Are Falling Behind
Elite endowments once set the investment benchmark. So, why are they slipping?
Richard M. Ennis, CFA, delivers an incisive analysis of elite endowments, arguing that their heavy leaning on alternative investments is dampening returns. Drawing from extensive data, he illustrates how increased alternative allocations correlates with poorer performance, questioning the very premise of the endowment approach.
### 5. Volatility Laundering: Public Pension Funds and the Impact of NAV Adjustments
Are public pension funds altering their real performance by tweaking NAVs?
Richard M. Ennis, CFA, delves into the practice known as volatility laundering, where public pension funds adjust net asset values (NAVs) to level returns. He examines how this affects transparency and trust among investors.
### 6. Six Reasons to Avoid Hedge Funds
Hedge funds lure with the promise of high returns, but are they worth the gamble?
Raymond Kerzérho, CFA, enumerates six strong reasons why investors might want to bypass hedge funds. Citing high fees and mediocre performance, his post critically evaluates the impact of hedge funds on institutional investors.
### 7. Using ChatGPT to Generate NLP-Driven Investment Strategies
Could artificial intelligence be the game-changer for investment strategies? ChatGPT might hold the answer.
Baptiste Lefort, Eric Benhamou, PhD, Jean-Jacques Ohana, CFA, Béatrice Guez, David Saltiel, and Thomas Jacquot, CFA, explore AI’s potential to interpret financial data and anticipate market shifts, positioning it as a glimpse into investment management’s future. They zero in on ChatGPT’s use to analyze Bloomberg Market Wrap news through a methodical two-step process.
### 8. Beyond Bank Runs: How Bank Liquidity Risks Shape Financial Stability
Liquidity risk isn’t just jargon; it’s essential to financial stability.
William W. Hahn, CFA, investigates liquidity risk’s critical role in banking, using high-profile collapses as examples. He stresses the need for vigilant liquidity risk management to uphold financial stability and avert crises.
### 9. Bank Runs and Liquidity Crises: Insights from the Diamond-Dybvig Model
The Diamond-Dybvig model provides enduring insights on bank runs and liquidity crunches.
William W. Hahn, CFA, revisits the classic Diamond-Dybvig model to shed light on bank runs and liquidity crises, discussing the model’s applicability in today’s financial environment and its significance for policymakers and investors.
### 10. 2025 Wealth Management Outlook: Spotlight on Investment Careers
What’s on the horizon for careers in investment by 2025?
April J. Rudin presents an exhaustive forecast of the wealth management sector, highlighting emerging trends and professional opportunities. She offers key insights for those navigating the evolving terrain of investment careers.
