Perspectives

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Haven Currencies

April, 2018

In September 2017, North Korea fired a missile over Japan and yet somehow, the value of the yen went up. The threat of a possible war could not change investors mind about the safe status of the Japanese yen. Was this caused by a reversal of a carry trade or because everyone views the yen […]

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The limits of intuition

April, 2018

Human brains have been wired through years of evolution to think intuitively. This fast, emotional and automatic way of thinking was useful for our ancestors in navigating the Savannah of East Africa and escaping lions. If a lion was chasing you, spending too much time deliberating whether it is friendly or not wouldn’t end well […]

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Trade Wars

March, 2018

Our quarterly investment conference takes place next week when we take the time to review the data coming out of the world economy. Is the global economy contracting or expanding, what is the impact for the cost of capital and where should investors be positioned to navigate the changing tides of international capital flows? What […]

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Not all FAANGs are Created Equal

March, 2018

Investing is laying out money now with the reasoned probability that you will receive more money in the future, adjusting for your good friends Mr inflation and Mr Tax who will help themselves to a portion of your earnings. When you buy shares in a company or put money in a fund, you become a […]

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Groceries and Capitalism

March, 2018

In 1798, Thomas Malthus predicted that population growth would outstrip food production leading to declines in the quality of life. If Malthus was lucky enough to read our Tacit Thoughts, perhaps he would have understood the futility of making forecasts about complex systems with lots of moving parts. The ‘complex system’ is planet earth and […]

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Keep it Simple

March, 2018

Last week, Berkshire Hathaway released its annual shareholder letter which Warren Buffett has penned every year since 1965.  The beauty of the annual letters is how well Buffett communicates complex ideas to a general audience without dumbing down the message. Brian Fugere, the author of the wildly interesting book ‘Why business people speak like idiots’ […]

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Loss Aversion

February, 2018

Investors do not like to lose money: in fact, academic studies show that the pain of losing money is psychologically about twice as strong as the pleasure of making a profit. Consider the following two options: Option 1: A guaranteed return of £10,000. Option 2: Playing the Euromillions lottery with an 80% chance of winning […]

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Trees Don’t Grow to the Sky

February, 2018

Albert Einstein, when asked to name humanity’s best invention responded by saying ‘Compound interest is the most powerful force in the universe’. Compound interest is such a powerful force because it leads to exponential growth. Moore’s law, which is what makes our smartphones and computers shrink in size while simultaneously increasing in processing power and […]

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The Paradox of a Stronger Economy

February, 2018

The recent market moves are driven by a repricing of liquidity and risk fee rates that in turn drive a reassessment of the value of holding any investment. The worldwide cost of capital is rising: benchmark US 10-year Treasury yields are currently 2.78%, up from a low of 1.4% in July 2017. The market looks […]

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Man with a Hammer Syndrome

February, 2018

To the man with a hammer, every problem looks like a nail. This essentially means that people are biased to use the tools they possess to solve problems, regardless of whether such tools are appropriate for the problem at hand. For most analysts working in finance, the “hammer” is forecasting and the “nail” is uncertainty. […]