Category: Uncategorized

In his long awaited review of the functioning of the UK equity market, published two weeks ago, Prof John Kay highlighted the short termism and lack of engagement displayed by many professional investors towards their holdings of corporate equity. As could be expected from such a source, his points were elegantly and forcefully argued, even if his recommendations for redress have not found universal favour.

Rob Arnott, the chairman of Research Affiliates, is one of the most articulate and interesting market analysts in the States, and someone whose ideas and

Are your European assets Greek euros, or Spanish euros, or Finnish euros, or German euros? The defining feature of a single currency is that no one asks that question. They do not distinguish Massachusetts dollars from Californian dollars and they do not – yet – ask whether the pounds they hold are Scottish or English.

The elections in France and Greece held this weekend introduce yet another layer of uncertainty and complexity into what is already becoming a fascinating conundrum for investors; namely, how to factor the approaching endgame of the Eurozone crisis into their thinking and planning for the future. The ever changing political dynamics in Europe, overlaid on a deteriorating and inherently unstable economic situation, make conventional linear analysis difficult.

Anyone who puts their head above the parapet to offer a view on the direction of the markets knows they run the risk of being made to look foolish. It is an occupational hazard. In my experience most pundits get more criticism for making the right call at the wrong time (typically too early) than they do for making the wrong call and sticking to it when it goes sour. You rarely get fund management or journalism awards for being right in the wrong calendar year, any more than you would expect to get a big bonus at an investment bank for making a great (but premature) market call outside the annual bonus cycle.

If one thing puzzles private investors more than anything else, it is the extraordinary capacity of the stock market to move in ways that appear to follow no discernible logic. “Profits Up: Shares Tumble”, or even “World War Declared: Stocks Rise” – such headlines are understandably prone to cause confusion for the uninitiated. In reality there is nothing strange about this pattern of behavior, and understanding why explains why being a contrarian – going against the thrust of expert professional opinion – is so often the key to the greatest investment success.