Top 10 Posts from Q1: Valuation Models, Inflationary Shocks, Private Markets

This quarter’s top reads reveal what’s capturing the attention of investment professionals: overreliance on traditional valuation models, the performance of real assets during inflationary shocks, AI-driven strategy development, and heightened tensions in private markets. From debates on discounted cash flow (DCF) and hedge fund value to bank liquidity risks and career opportunities in wealth management, these standout blogs reflect some of the most pressing questions shaping today’s investment landscape.

1. The Discounted Cash Flow Dilemma: A Tool for Theorists or Practitioners?

Is the discounted cash flow (DCF) model a relic of financial theory, or a practical tool for today’s investors?

Sandeep Srinivas, CFA, explores the ongoing debate surrounding the DCF model, examining its relevance and application in modern investment analysis. His post delves into the strengths and limitations of DCF, providing insights for both theorists and practitioners.

2. Did Real Assets Provide an Inflation Hedge When Investors Needed it Most?

In times of rising inflation, do real assets truly offer the protection investors seek?

Marc Fandetti, CFA, investigates how real assets performed as an inflation hedge during the 2021–2023 COVID-era surge. He analyzes index-level data and finds that most real asset categories underperformed as hedges, with only commodities offering modest protection against inflationary pressures.​

3. What Lies Beneath a Buyout: The Complex Mechanics of Private Equity Deals

Private equity deals are often shrouded in mystery. What really happens behind the scenes?

Paul Lavery, PhD, uncovers the intricate mechanics of private equity buyouts, shedding light on the financial structures and strategies employed. His post offers a detailed look at the roles of acquisition vehicles and the impact on portfolio company performance.

4. The Endowment Syndrome: Why Elite Funds Are Falling Behind

Elite endowments have long been seen as the gold standard in investment. So why are they underperforming?

Richard M. Ennis, CFA, delivers a sharp critique of elite endowment performance, arguing that heavy allocations to alternative investments have consistently eroded returns. Drawing on years of data, he reveals that the more institutions invest in alts, the worse they perform — challenging the very foundation of the endowment model.

5. Volatility Laundering: Public Pension Funds and the Impact of NAV Adjustments

Are public pension funds masking their true performance through NAV adjustments?

Richard M. Ennis, CFA, delves into the practice of volatility laundering, where public pension funds adjust net asset values (NAVs) to smooth returns. He explores the implications of this practice on fund transparency and investor trust.

6. Six Reasons to Avoid Hedge Funds

Hedge funds promise high returns, but are they worth the risk?

Raymond Kerzérho, CFA, outlines six compelling reasons why investors might want to steer clear of hedge funds. From high fees to lackluster performance, his post provides a critical analysis of the hedge fund industry and its impact on institutional investors.

7. Using ChatGPT to Generate NLP-Driven Investment Strategies

Can artificial intelligence revolutionize investment strategies? ChatGPT might just be the key.

Baptiste Lefort, Eric Benhamou, PhD, Jean-Jacques Ohana, CFA, Béatrice Guez, David Saltiel and Thomas Jacquot, CFA, highlight the potential of AI to analyze financial data and predict market trends, offering a glimpse into the future of investment management. They homed in on a popular LLM, ChatGPT, to analyze Bloomberg Market Wrap news using a two-step method to extract and analyze global market headlines. 

8. Beyond Bank Runs: How Bank Liquidity Risks Shape Financial Stability

Liquidity risk is more than just a buzzword. It’s a critical factor in financial stability.

William W. Hahn, CFA, examines the role of liquidity risk in the banking sector, using recent high-profile failures as case studies. He emphasizes the importance of robust liquidity risk management in maintaining financial stability and preventing crises.

9. Bank Runs and Liquidity Crises: Insights from the Diamond-Dybvig Model

The Diamond-Dybvig model offers timeless insights into bank runs and liquidity crises.

William W. Hahn, CFA, revisits the classic Diamond-Dybvig model to provide a deeper understanding of bank runs and liquidity crises. He discusses the model’s relevance in today’s financial landscape and its implications for policymakers and investors.

10. 2025 Wealth Management Outlook: Spotlight on Investment Careers

What does the future hold for investment careers in 2025?

April J. Rudin offers a comprehensive outlook on the wealth management industry, focusing on emerging trends and career opportunities. She provides valuable insights for professionals looking to navigate the evolving landscape of investment careers.