Tacit Thought

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A Framework for Decision Making

April, 2019

On the surface, science and investigative journalism appear to have nothing in common with investing since the two professions have nothing interesting to say about economics or a company’s business model. However, science and investigative journalism have a framework that helps in decision making which is very important in investing. The scientific method is all […]

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Checklists

April, 2019

Simple checklists have been shown to be a good antidote against ineptitude. Research has shown that checklists reduce error rates in intensive care units.  A simple checklist used by John Hopkins hospital reminding doctors to wash their hands and use antiseptic before operating on patients prevented infections, saved several lives and millions of dollars in […]

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The Importance of Small Numbers

April, 2019

At Tacit, we focus on limiting drawdowns. With the risk of sounding trite, maths shows us that a focus on minimising losses can increase returns. How? Let’s imagine you make a loss of 10% on an investment. In order to break even, you need to make back 11%.  If you lose 40%, you need to […]

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The Importance of Stabilisers

March, 2019

Although we have recently become more optimistic about certain equity markets over the last few weeks, the importance of stabilisers in a portfolio cannot be over emphasised. The Figure below shows the returns of a broad UK equity index versus index-linked bonds. The job of a stabiliser is to act as a hedge against uncertainty. […]

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Investment Strategy Quarterly Conference

March, 2019

We held our quarterly investment conference this week where we take the time to review the evolving economic data around the world and to consider the implications for our investment strategies. The OECD and the IMF have recently downgraded their estimates for global growth in 2019/20 by 20bps to 3.4%. Recent Sino-US trade conflict has […]

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Searching for an Edge

March, 2019

In 1969, Buffett announced he was closing down his fund – the Buffett Partnership. This was after a stellar track record of 30% annualised over a 13-year period since the fund was started. Some of his clients asked him to suggest other managers they could give their money to. One name that was thrown at […]

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Out of Uncertainty Comes Opportunity

March, 2019

The past year has been difficult for investors as asset values have been buffeted by increasing interest rates in the US and political tensions, be they trade wars between the US and China, Brexit or the populist election win in Italy. For us, although the political environment is important, our focus remains on assets prices […]

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Compounding Wealth

March, 2019

One of our analysts was contacted by a millennial friend of his about an ‘investment opportunity’. The promoters of this scheme claimed you could make 10% a month, guaranteed. There is however, quite literally, not a single sliver of truth in the phrase “10% a month, guaranteed”. First, very few things in life are guaranteed […]

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Brexit & Skin in the Game

February, 2019

Stephen King, the bestselling author of horror and sci-fi stories wrote a book specifically about writing aptly called “On Writing”. In it, he mentioned that the writer has a variety of tools in his/her toolbox. The fundamental tools include vocabulary, grammar and the elements of style. To be a good writer, one must have these […]

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Beware the Herd

February, 2019

Academics have attempted to identify and predict the rational and irrational behaviour of group think in order to help predict future economic outcomes. Behavioural finance teaches us that herding is a natural human instinct driven by emotional reactions such as greed and fear. But it’s also something to be wary of: investors rushing to be […]