Emerging Market Consumer - Mirae Asset Global Investments ...

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Profile He was the founding president of the Morgan Stanley Investment Group. He is a Financier, an educator, and an author. He is also the Managing Director and Chief Investment Strategist of Morgan Stanley Smith Barney. In addition to his impressive background, David serves as Vice Chairman of the MSSB Global Investment Committee, where he is responsible for Asset Allocation and Investment Strategy. Because of his vast knowledge and experience in business and finance, David has made regular appearances on several American business television programs, such as CNBC, Fox, and Bloomberg, to name a few. He has also been a contributing writer to major publications such as The Money Manager, Euromoney, and Barron’s. David has written four widely sold books: (1) The Complete Bond Book (McGraw-Hill); (2) The Handbook of the Bond and Money Markets (McGraw-Hill); (3) The Art of Asset Allocation; and (4) Mastering the Art of Asset Allocation (McGraw-Hill). david martin darst “ What should investors be favoring in today’s economic situation?” We asked this question and more, when we spoke with Managing Director and Chief Investment Strategist of Morgan Stanley Smith Barney, on asset allocation. EmErging markEts insight 4 Special Interview PHOTOS/SHUTTERSTOCK
it is important for investors to know where the markets are today. as we just started to recover from the worst financial crisis in generations, the eurozone has fallen into a debt crisis. this puts further downward pressure on the global stock market. against this backdrop, how do you see the current crisis and how do you predict the emerging markets will perform in 2012 and beyond? We believe it is likely that the US and Europe will experience a recession, but we don’t foresee a global recession. Earnings expectations are likely to come down in the developed and emerging markets, but these markets should continue to enjoy growth, enlightened policies, and reasonable financial market conditions. In fact, emerging markets are forecast to account for 80 percent of global growth in 2012. in your book, the art of asset allocation, you said asset allocation, rather than manager selection, explains around 90 percent of performance differences in diversified portfolios. however, most investors tend to A large body of evidence suggests that short-term considerations are less consequential to portfolio performance over time than a longer-term allocation strategy. ignore the importance of asset allocation, putting more time and energy on predicting future direction of the stock market. What reason do you think behind such behavior? A large body of evidence suggests that short-term considerations are less consequential to portfolio performance over time than a longer-term allocation strategy. Nevertheless, according to studies in behavioral finance, individual and institutional investors follow the news flow closely and overestimate their ability to make successful short-term tactical portfolio adjustments. EmErging markEts insight 5 Special Interview asset allocation sometimes does not work under certain conditions. Please explain when the case is and give some advice to investors on how to respond to it. Asset allocations that provide investors with proper diversification tend to mitigate portfolio volatility over time. However, this diversification benefit does not work as well if various asset classes that usually behave dissimilarly begin to behave similarly. Another description of such conditions is rising correlations of assets returns. in your book, the little book that saves your assets, you introduced the “asset allocation clock,” which was very informed and proved to be an interesting concept for investors. the asset allocation clock shows the asset classes that advisors should favor based on their expectations regarding inflation and economic recovery. could you introduce the asset allocation clock more in detail for our readers who don’t have a concrete idea of it yet? and according to the asset allocation clock, what should investors be favoring in today’s economic situation?
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