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 […]
As we start 2017…
Happy new year! Welcome to Montaka in 2017. As we say goodbye to 2016 and begin a new calendar year, it is worth reviewing what markets delivered over the last 366 days and how this compared to our expectations exactly one year ago. First the score sheet: the MSCI TR Index (the “global market”) delivered […]
Accounting for true motivations
Readers of this blog will know that we will never tire of discovering new instances of accounting trickery. We see it time and time again in the corporate world. CEOs and CFOs become masters in presenting the numbers of their businesses in ways that, all too often, create a better perception of the underlying economics […]
Dealing with the Margin of Danger (Part II)
How can investors deal with the margin of danger? The important thing for investors to accept is that the margin of danger comes hand in hand with the margin of safety. This means that we can never completely remove the margin of danger, but can only minimize the probability of the intrinsic value estimate being […]
What do we think about Europe?
The following is a transcript from a recent interview of Montaka’s Andrew Macken by an Australian journalist. What are the possible market-friendly political scenarios? The friendliest scenarios for markets are those in which right-leaning Euro-skeptic political parties or leaders do NOT come to power in major European nations such as Germany, France or Italy. Or said another way, […]