Looking Ahead From the Market Rally
The unprecedented scale of the global fiscal and monetary policy response helped ease financial conditions during the second quarter of 2020. Looking ahead, we cover our latest thinking on the aggregate risk-for-reward picture in global markets.
Key takeaways
- The goal of assigning a conviction level to an asset class is to distill the attractiveness of an investment opportunity into a single rank. The term “conviction” derives from the Latin verb “convincere,” which means to argue.
- In assigning an asset class conviction, an analyst trades off the aspects of an investment opportunity that argue for and against it, culminating in the expression of a conviction level. The conviction level is expressed on a five- point scale (Low, Low to Medium, Medium, Medium to High, and High), and serves as a key input into our asset allocation process.
- Our conviction scoring system is based on four criteria: absolute valuation; relative valuation; contrarian indicators; and fundamental risk.
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