Perspectives
Economic Moats
April, 2023
We have written previously about how certain companies exhibit a competitive advantage which makes it difficult for its earnings to be eroded away by a competitor. In the recent inflationary period, it is these companies which have been able to increase prices whilst not destroying demand in the process. Microsoft, a common position in three […]
Late frosts
April, 2023
Gardeners among our readers will be very conscious of the damage a late frost can cause, especially if it has been preceded by clement weather which has encouraged buds to form and birds to settle down into comfortable nests. One night below freezing at just the wrong moment can devastate an apple harvest and spoil […]
Banking 101
April, 2023
Charlie Munger, who at the age of 99 is the senior half of the nonagenarian duo that run Berkshire Hathaway, is famous for his quip that runs, “Show me the incentive and I’ll show you the outcome.” It chimes with Upton Sinclair’s remark that “It is difficult to get a man to understand something, when […]
Dividends
March, 2023
Tacit strategies have a core of investments whose investment approach can be described as dividend investing. The investment approach focusses on dividend levels and growth prospects as a good predictor of future performance of a stock. Dividends are paid out of cashflows a company generates but what exactly are they? When a company earns a […]
Never Bet Against America
March, 2023
Previously we have written about the King and the conman trading their understanding of financial compounding. Luckily, what the King lacked in financial acumen he more than made up in regal authority. If there is a modern monarch of finance, it is surely Warren Buffett. Now known to investors as the “Sage of Omaha,” in […]
Banks and the financial system
March, 2023
Whilst our strategies have no exposure to Silicon Valley Bank (SVB) or Credit Suisse this week we feel it necessary to provide a narrative to market movements and events surrounding the banks. At its core, SVB experienced a run on its deposits as clients realised that it had not managed its asset base appropriately and […]
How do you know something is cheap?
March, 2023
Having been in the investment industry for over 30 years it is still confusing to us that most investment processes attempt to put the valuation of an asset at their core. In simple terms the decision these investors are making is either that an asset is cheap today because of its historic attributes or it […]
Not all bonds fall when interest rates rise
March, 2023
With interest rates rising, bond prices have fallen. Bond prices move inversely to interest rates: they rise when interest rates fall, and they fall when interest rates rise (as now). Since November our strategies have had meaningful exposure to a different type of bond in lieu of equity, namely Floating Rate Notes (FRN). FRNs, unlike […]
Counting the cost of interest
February, 2023
There is a very old story about a king and a trader. The king liked to play chess and collected rare and fine chessboards. One day a trader approached the king with a particularly ornate chessboard and offered it to him. The king was enraptured by the piece and asked the trader to name his […]
8012 Points
February, 2023
This week the FTSE 100 index reached a new all time high of 8012 points. This is a newsworthy event as, unlike other equity markets around the world, the UK equity market has struggled to make new highs since 2018. In fact, the index failed to trade higher than its level in 1999 until after […]