Staying Agile
It’s reporting season in the U.S. A multitude of companies are announcing their earnings to the market each day. While it might seem like an overload of information, those with a game plan to navigate this time can benefit immensely. As we enter the pointy-end of this reporting season, it’s worth remembering how fruitful this […]
Overconfidence and subjective probabilities
Investing involves the application of imperfect information to subjective probability assessments in a complex, multivariable system. Successful investing requires the investor to be both different and right more often than not in his or her probability assessments. In an ideal world, we would train (“calibrate”) our forecasting skills by making a high number of subjective […]
Can quality be detrimental to your investment returns?
In the school of value investing, there are two broad investment styles: the deep value style espoused by Ben Graham, Philip Fisher and the young Warren Buffett; and the quality-biased style for which Charlie Munger and the old Warren Buffett are best known. Some investors will favour one style over the other, while other investors […]
Could lower fees ever be bad for investors?
A topic of considerable interest in investing circles today is the current boom in indexation and low-fee passive investing. It is certainly worth thinking about given the global exchange traded fund (ETF) space has grown to more than US$4 trillion, according to data provider ETFGI. A lot of thought-provoking work on the space is currently […]
Managing Currency Exposures of Montaka’s Portfolio
For any global investor, consideration of underlying currency exposures is unavoidable. Even for managers of “fully hedged” or “fully unhedged” funds, there must still be a clear understanding and intention around the currencies to which the portfolio is being exposed at any point in time. The following memo seeks to describe how we manage currency […]
Is passive investing the perpetual motion machine of wealth creation?
The passive investing debate is one over which no shortage of ink (and pixels) have been spilled. What active managers had hoped to be a topic du jour has turned into a seismic shift for the investment industry, and one that has accelerated with each passing year. With passive strategies accounting for nearly 40% of […]
The art of positioning the truth
Investing is never easy at the best of times. Making sense of complex financial accounts takes both time and the aptitude to anticipate the numerous ways in which CFOs can position their businesses in the most favourable light. Sometimes the business models themselves allow for great subjectivity in arriving at the reported earnings level. Sometimes […]
The Forgotten Denominator
In the late 1990s and early 2000s, the world’s best cyclists – including Lance Armstrong – were being coached by Italian Doctor Michele Ferrari. While Ferrari has since been issued a lifetime ban by the US Anti-Doping Agency for doping violations, he was still arguably one of the world’s greatest sports scientists. In a fascinating […]
The power of compounding
“Leaving the question of price aside, the best business to own is one that over an extended period can employ large amounts of incremental capital at very high rates of return.” – Warren Buffett, 1992 Shareholder Letter If someone offers you a choice between either paying 50 cents on the dollar for the assets of a low […]
What are the elements of accurate forecasting?
Forecasting is a critical ingredient to any investment. Readers will know that our job is to “buy a dollar for fifty cents”. Now, observing the market price of fifty cents is easy – we need only look at the share price of the particular stock we are considering to buy. The hard part is knowing […]
