Boston QWAFAFEW Meeting: Tuesday, 16 Sep 2014

Next Boston QWAFAFEW Meeting: Tuesday, 16 Sep 2014

Time: 6:15 PM sharpe
3rd Floor of the Tennis & Racquet Club, 939 Boylston Street


Mailing List 

Seeing The Big Picture: Financial Markets, Conflict and Corruption

A QWAFAFEW discussion led by:

Dan diBartolomeo


In this presentation we explore the relationship between long-term returns of financial markets to two aspects of the global geopolitical scene.   In the first part of our study, we examine the relationship of global stock and bond returns for the 110 years from 1900 to 2010 to global geopolitical conflict.   For our dependent variable we use data from the Dimson, Marsh, Staunton data set.  We aggregate annual return data into eleven decade observations for global stocks  and bonds.    For our independent variable, we utilize a proprietary Northfield data set that the counts the annual number of deaths in war, civil wars, genocides and famines over the same period.   High, median and low estimates of the death counts are normalized as a percentage of contemporary global population.  Our first hypothesis that is there would be a negative relationship between decade-long returns and the level of violent conflict.   Our second hypothesis was that the negative relationship would be even stronger for bond markets, as wars are expensive encouraging government borrowing and driving up yields.    In addition, the debts of nations that are conquered in war or have a change of regime through civil war  are often simply unable to pay. We find the signs on the relationships are intuitive, being negative in all cases.   The correlation between global bond market returns and the log of the conflict measure was nearly linear at -.86, and was highly statistically significant.  In second half of the study, we update the work of Schliefer and Vishny (1993) which examines the relationship between a metric of financial market success (aggregate equity market cap / GDP) and Corruption Perception Index from Transparency International.   Our third hypothesis is that financial markets will be small in corrupt countries, as investors do not trust their legal systems to protect their interests given the “arms-length” nature of public securities markets.  Using a pooling of both cross-sectional and time series data, we again find a strong negative relationship in the cross-section, and intuitive return observations over time.   In the final part of the presentation, we will consider the conditions under which it would be in the economic interest of large institutional asset owners to financially subsidize non-government organizations such as UNICEF, Red Cross and the Red Crescent as a way to reduce geopolitical conflict and corruption, and thereby improve market returns and reduce volatility.


Dan diBartolomeo is President and founder of Northfield Information Services, Inc.  He sits on the board of numerous industry organizations include LQG, IAQF and CQA.  His publication record includes more than thirty books, book chapters and research journal articles.   In addition, Dan is a Visiting Professor at Brunel University and has been admitted as an expert witness in litigation matters regarding investment management practices and derivatives in both US federal and state courts. 

Please RSVP

Mailing List

All annual dues ($150) should be paid to Boston QWAFAFEW by credit card or check.

By credit card (PayPal)

By Bitcoin

Send us Bitcoin, our address is:


Please send a separate email identifying your anonymous payment.

By check:

Executive Management Associates

12 Academy Avenue

Atkinson, NH  03811

Please RSVP for all meetings you plan to attend:

Guests who do not RSVP may have to wait to enter the meeting, due to space constraints (capacity=100, BFD).

Guest fees ($30) can be paid through EMA (check or PayPal, bring receipt) or bitcoin (at address above). We still allow walk-ins (space permitting). The $30 guest fee can be paid by bitcoin, cash or check at the door, no credit cards at the meeting.

As always, if you have names or discussion topics, please forward them to any member of the Steerage Committee

Questions, comments:

Steerage Committee

Max Arai

Hugh Crowther (Treasurer)

Dan diBartolomeo

Steve Gaudette

Mark Kritzman

John Minahan

Donna Cool Murphy (Dinners)

Larry Pohlman

Dan Potter

Dan Rie

Evan Schulman

Michael Wilcox

The members of the Steerage Committee are responsible for coordinating the program content.

Program suggestions from members are always welcome..

RSVP to:

Leave a Reply

Your email address will not be published. Required fields are marked *