What we’re reading (1/22)
“Pension Funds Want Private Equity To Open Up About Fees And Returns” (Wall Street Journal). “A group of U.S. pensions and other institutions is pushing private-equity firms to share more information on their fees and investment returns, in a bid to address simmering frustration with the industry’s disclosures. The Institutional Limited Partners Association, a trade group that counts the retirement plans of public workers in California and Wisconsin as members, proposed this week new guidelines to standardize financial reporting by private-equity firms, people familiar with the matter said.”
“Commodities Are Targeting 2022 Highs” (Price Action Lab Blog). “Since 2022, commodities ($CRB) are up 33.9%, stocks ($SPXTR) are up 31.9%, the US dollar index ($USDX) has gained 14.3%, and the 20+ year bond total return is down 35%.”
“Netflix Hikes Prices As Its Lead Widens Over Other Streaming Services” (Washington Post). “Netflix has raised its prices after gaining a record 41 million subscribers last year. The world’s largest streaming service said Tuesday that it had raised subscription rates for most plans in the United States, Canada, Portugal and Argentina. For U.S. users, Netflix’s ad-supported plan increased from $6.99 to $7.99 monthly, while a standard subscription has increased from $15.49 to $17.99. The platform’s premium ad-free plan — which allows four users to stream concurrently — went up by $2, to $24.99 per month.”
“China, UK Resume Economic Talks After 6-Year Hiatus” (Semafor). “The UK resumed high-level economic talks with China after a six-year hiatus. British finance minister Rachel Reeves’ trip to China reflected the Labour government’s self-described “pragmatic” approach to Beijing, with the aim of striking long-term economic deals. It’s a marked change from the previous Conservative government, which hardened London’s stance over human rights, Hong Kong, and spying allegations.”
“The Impact Of Risk Mismatch On Personal Portfolio Performance” (Georges Hübner). “Within the Modern Portfolio Theory framework, personal portfolio choice is driven by the investor's risk aversion. In practice, this criterion is usually replaced by a target volatility level, potentially leading to similar allocation choices. Reconciling these two approaches leads to the design of a performance measure that explicitly allows us to isolate a penalty for the portfolio unsuitability, defined as the mismatch between the actual and targeted portfolio risks. This penalty is particularly strong for defensive investors and when the market risk premium is high. We also show that the target volatility criterion leads to inadequate portfolio choices when the market conditions change or when the investor is confronted with a well-performing active portfolio. We extend this approach to attitudes towards extreme risks, through the investor's preference for skewness. The resulting performance measurement framework involves a penalty for unsuitability that can be substantially aggravated, especially for investors who simultaneously exhibit a strong aversion to volatility and asymmetry risks.”
