Modern portfolio theory and practice are failing institutional investors at a time when their depressed funding levels and high covenant risks require smarter ways of investing, according to a paper by NSFM participant Professor Amin Rajan.
In The Death of Common Sense: How elegant theories contributed to the 2008 market collapse, Professor Rajan examines modern portfolio theory’s influence on the thinking of successive generations of investors and policy makers since the 1960s and the role it played in the cataclysmic financial crash of 2008.
"Academics collide on the relationship between environmental, social and corporate governance (ESG), and alpha. One view is there is a clear link that can be uncovered by a deep dive into the underlying factors using a sophisticated operating engine. The other perspective is that the market will price in environmental and social factors, the way it has done with governance. Amanda White speaks to academics with different points of view."
The Price of Fish, NSFM participant Michael Mainelli and Ian Harris' latest book, has been awarded the Gold Medal in the Finance, Investment and Economics category of the 2012 Independent Publisher Book Awards.
"In The Price of Fish Michael and Ian examine the world's most abiding and wicked problems - sustainability, global warming, over-fishing, overpopulation, the pensions crisis - all of which are characterised by a set of messy, circular, aggressive and peculiarly long-term problems. Yet it is not that the circumstances that lead to such problems are too complex, but rather that our way of reading them is too simple. Too simple and often wrong."