Passive Investors – What is your thesis?
The debate as to the merits of investing passively or actively rages on. And over recent months, we have observed a sharp acceleration of flows into passive equity strategies – largely at the expense of active equity strategies. Source: Citi We have argued in the past that, in a lower-returning world, “locking in” the market […]
The Retreat from Free Trade
Despite the numerous benefits of free trade, countries are increasingly reverting to protectionist policies that have long been absent from the recent decades of globalization. The post-World War II paradigm has been one of increasingly open cross-border flows of capital and labor, the proliferation of free trade agreements, as well as millions being lifted out […]
Is tax reform really easier than healthcare reform?
Last Friday, the Republican plan to repeal Obamacare and overhaul the US healthcare system came crumbling down without even going to a vote. President Trump acquiesced to House Speaker Paul Ryan’s request to withdraw the American Health Care Act (“AHCA”) from consideration after it became apparent that the bill did not have enough Republican votes […]
We’re all global investors now
The decision to invest globally is one that all investors will face at some point. And for investors based in relatively small economies like Australia – which represents less than two percent of global gross domestic product – this decision is even more important. The case for investing a significant share of one’s portfolio abroad […]
Unveiling the Obamacare Replacement
On Monday 7 March, 2017, the House GOP unveiled its plan to repeal and replace Obamacare. Obama’s signature healthcare mandate required nearly all Americans to purchase health insurance, using the proverbial stick to push Americans towards healthcare coverage. The plan announced by House Republicans, on the other hand, uses a system of tax credits to […]
Certainty is dangerous in an uncertain world
Investing is not a simple process. It involves drawing conclusions from incomplete evidence in an ever-changing world. But if we think about how our minds work when confronted by these uncertainties, then we are taking an important step to making better investment decisions. Imagine you are a contestant on a quiz show along with an […]
China’s Impossible Trinity
You may have heard a lot of discussion about Chinese capital controls and its currency exchange rate recently. It’s a fascinating subject, though one which is poorly understood. You see, in macroeconomics, there is a concept called the “impossible trinity”. It basically states that, of the following three characteristics, a country/currency area can have any […]
Never Underestimate the Power of Incentives
For long term outperformance in investing it is necessary to have a rigorous, logical process that is followed with discipline. This is not easy. It is also not enough to ensure outperformance in the long run. In addition to a good process, investors must also give due regard to the role of human psychology in […]
Is valuation important?
Recently, I read a post by John Hempton on the Bronte Capital blog which concerned the topic of valuation as a component of investment analysis. The position advanced by Hempton was that valuation (a buy and a sell price) was not necessary for each and every stock in one’s portfolio, on the premise that such […]
Can you lose on purpose?
Despite the best efforts of money managers to apply skill to the stock picking process, the success of any investment will always be driven by both skill and luck. The proportion of skill and luck determining an investment outcome, however, is constantly changing. More accurately, the role luck plays in the success of an investment […]
