Disclosures

Overview Economic forecasting is a well-established practice among credit and financial analysts. Our view is that it is appropriate and helpful at the issuer level but more often than not, an exercise in futility at the macro level. Sophisticated risk and portfolio managers are best served by focusing on those areas where they can be successful and engage in scenario analysis for the other areas.

Overview Typically, issuers are subject to the vicissitudes of the economic environment. Hence a key question is what determines its strength or weakness, and perhaps more importantly, what predictions can be made regarding the future attractiveness. This installment will attempt to address some of the underlying drivers for the relative attractiveness of various environments.

Overview As a risk manager or manager of institutional capital, it is critical to have a firm grasp on major challenges and likely outcomes. Building and maintaining a portfolio based on false assumptions can be disastrous. To make this installment as useful as possible, we aim to address some of the underlying assumptions making the rounds in the markets. “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” -Mark Twain  “An economist is a portfolio manager who never marks to market.” -Howard Marks