Category Archives: Opinion

Opinion: Cognitive science exposes a serious mistake made by most asset allocators

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Stephen Duneier
Bija Advisors

Why is it that results “produced” through paper trading are discounted relative to those that are actually generated?

For anyone who has managed capital, the reason is obvious. What a paper trader’s experience lacks is the emotional impact of losses, gains, regret, and accountability. When real money is at stake, repercussions from a misstep can involve serious consequences, and that affects the decision maker, and her process. Read More

Opinion: The salesperson of the future will be invisible

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Kyle DunnKyle Dunn
President & CEO,
Meyler Capital

No, I am not indicating that the future will be void of human contact, nor am I down playing the importance of relationships. I am simply conveying that people now have a strong aversion to being “sold” to.

This is especially true for institutional investors. They want to feel in control, that they have objectively made the decision to approach you, not the other way around. You will never convince an allocator of anything. They don’t want to be convinced. You can, however, present information in a logical manner, and let them arrive at their own conclusion. How you present that information is “the sell”. Read More

Opinion: Index fund parasites are killing their host

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Jeffrey MillerJeffrey Miller
Eight Bridges Capital Management

A man who does not think for himself does not think at all. – Oscar Wilde
Global stock markets are in a little bit of turmoil, and the reasons are many. A primary driver of the recent volatility is the increasing concentration of assets in investments where no one is driving the bus. Index funds are, by definition, parasites. These funds assume that the current price of a stock is the “correct” price at all times, and that trying to make a judgement about the company is futile. When Vanguard was small, it could be the parasite – charge really low fees, rely on the work done by active investors to adjust prices to reflect the fundamentals of the underlying business, and be the parasite along for the ride. But now, forty years later, the parasite has grown too large. Small amounts of money indexed to large companies don’t really impact the stock price. But large amounts of money do.  A parasite only survives so long as it doesn’t kill its host. Read More

Opinion: Isn’t a discretionary trader the real ‘black box’?

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Gernot Heitzinger
Managing Director,
smn Investment Services

After years of bullish markets around the globe combined with a constant decrease in volatility, some spice has come back to global markets recently. Be it the bursting bubble in China, the endless story about Greek debt or maybe the epiphany that printed money will never be able to change anything in the real world. In the end it will not make a difference to find out the trigger for the turnaround, but at some point investors will again have to face the fact that every bull market comes to an end at some point. But how to react? Read More

Opinion: Italy is the next domino to fall in the Eurozone

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Jonathan RochfordJonathan Rochford
Portfolio Manager,
Narrow Road Capital

In the last six months the inevitability of a haircut on Greek government debt has become obvious with even the IMF putting forward that the current level of debt is unsustainable. Once markets have digested that, the logical question is who will be the next Eurozone nation to default?
Portugal, Ireland, Italy and Spain are the main contenders with each having their own issues that could bring them unstuck. Amongst this group, I’m singling out Italy as the weakest, even though the ten year government bond yields would indicate Italy is the second lowest risk amongst the four. Read More

Opinion: The Fallacy of Activism’s Impact on Corporate Activities

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Peter LPeter Lupoffupoff
CEO & Portfolio Manager,
Tiburon Capital Management, LLC

Better corporate stewardship, heightened community of interest between managements and stakeholders through aligned compensation, protracted low interest rates and asset reflation via global quantitative easing created a perfect environment to foment shareholder-friendly events.[1] Concurrent with this organic evolution, managers who’ve visibly pressed for such behaviors have performed well and raised significant amounts of money in the process. Drivers of these events are likely independent of activist’s campaigns and their attributed successes. The coincidence of activist involvement and the occurrence of shareholder-friendly events suggest continued flow of investor capital into activism and further campaigns and outcomes (largely notwithstanding activist activities). Read More

Poll Result: 53.33% agree that the capital markets revolution is still broadly underestimated

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In our last newsletter Christoph Bruns of Loys AG stated that the capital markets revolution is still broadly underestimated.

We asked our readers whether they agree with his view.

The opinions were divided as one might expect with a topic as controversial as whether future history books will describe the current economic developments as a veritable revolution in the financial world.

Please see below the results and a few opinions that disagree with the author.

Poll Result April 2015 Read More