Perspectives

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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. […]

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The Risks of Overpaying

January, 2018

We have written many times about the ‘comfort blanket’ that diversification provides investors by lulling them into a sense of false security. Holding more assets in itself does not necessarily reduce risk. The plethora of asset classes that can be used to diversify an investor’s portfolio range from government bonds, corporate debt and commodities to […]

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Growth Spurts

January, 2018

The respected British economist Gavyn Davies has recently been noting that global growth may be significantly stronger than thought. Economic “nowcasts” attempting to take the real-time “temperature” of the economy point to global growth edging 5%. Moreover, this resurgence is broad-based and synchronous with all four corners of the globe contributing to growth. In another […]

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What’s all the fuss about?

January, 2018

I have received numerous questions over the past few weeks and months regarding Bitcoin: a cryptocurrency that rose in value almost exponentially during 2017. These questions have generally been from friends and clients that do not have an in-depth knowledge of investment markets and have become curious about an investment that has become a household […]

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Why we do not forecast

January, 2018

Happy New Year! Last year was another good year for UK investors, with most growth assets rising in value again in 2017. In this environment, we are pleased that all Tacit strategies provided positive absolute and ‘real’ returns in 2017 driven by our focus on long term valuations. At Tacit, we do not construct our […]

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Still Expanding

December, 2017

We hold our regular quarterly investment conference next week and in preparation we have been reviewing the data coming out of the key world economic sources. It is very striking that the world economy is still very much in expansion mode with global growth set to accelerate into 2018. The aggregate global PMI, the economy […]

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Do not chase the market

December, 2017

With equity markets near all-time highs we find it fascinating that everybody wants to embrace risk. This is primarily due to the concern of missing out on returns as investors worry that they will not meet their objective if they are not benefitting from good times in equity markets.   This is true: it is […]