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Revenue Recognition: The Bottom Line on the New Top Line

Revenue — perhaps the most important number in financial statements — and how it is calculated by nearly every public company across the globe is set to change. Today’s kerfuffle over General Electric’s choice of the retrospective method to adopt the new revenue recognition standard in 2018 — as disclosed in its 2017 Form 10K filed […]
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Beyond Carbon: Water Risks and Sustainable Investing

More than 1,900 institutional investors around the world have signed on to the Principles for Responsible Investment (PRI) that encourage investors to integrate sustainable and responsible investment practices into their daily investment decision making. For many investors, climate and carbon risks are central to their responsible investing activities. Their commitment is reflected in the growth of Ceres […]
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Can Fundamental Momentum Diagnose Mr. Market?

Ben Graham, the father of modern value investing, introduced his Mr. Market analogy back in 1949. As Graham saw it, whenever you invest in the stock market, you partner with the moody Mr. Market. Each day he offers you a choice: sell to him, buy from him, or do nothing. His daily mood determines the […]
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The Seven Kinds of Asset Owner Institutions

Say whatever you want about the world, but there’s never been a better time to be an end investor. Many things investment professionals fear — fee compression, automation, artificial intelligence (AI), and blockchain — benefit clients through higher account balances and lower fees. Asset owners are the largest of those clients. Though they are frequently […]
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Rupal J. Bhansali: Insist on the “And” Proposition

A good stock call isn’t just about being right — it’s also about being different, about diverging from consensus. Rupal J. Bhansali, chief investment officer and portfolio manager of international and global equity strategies at Ariel Investments, described this concept as the “And” proposition. “Contrarians insist on the ‘And’ proposition. They refuse to settle for […]
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Weekend Reads from India: Cures and Prevention, Time Inconsistency

The preference for cures over prevention is an alluring trap. Economists have a name for this well-known behavioral trait: time inconsistency. Despite detrimental future outcomes, our senses demand instant gratification. Cures, with the action-oriented halo around them, offer that immediacy in abundance. Prevention, on the other hand, tends to be slow and boring. The cause-and-effect […]
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Book Review: The End of Theory

The End of Theory: Financial Crises, the Failure of Economics, and the Sweep of Human Interaction. 2017. Richard Bookstaber. The use of mathematical models in economics dates back to 1862, with the introduction of marginal utility by William Stanley Jevons. The misuse of financial models in economics followed soon after. Jevons was determined to link economic cycles […]
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Navigating a China Dip

Visiting Hong Kong for the first time in two decades, I see evidence of breakneck economic transformation everywhere: swathes of new skyscrapers, enticing shopping malls, filled with outlets selling nothing but luxury watches, and everywhere a crush of cheery tour groups from China’s booming mainland. Someday the music may stop. That fear sent global central […]
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