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Investing is not a matter of timing

Evidence based investing

Nobody wants to invest a lump sum just before share prices fall. With global stock markets hitting new highs this is a valid concern for an individual looking to invest; especially given interest rates are still at very low levels. However if we assume investors, unlike speculators, are not concerned about the next week or quarter but are putting capital to work for medium to long term objectives such as to fund their retirement years – should timing the market be a consideration?

Are Argentina and the Ukraine emerging markets?

Reading a Financial Times article about emerging markets over the weekend by John Redwood (the former Conservative government minister and Chairman of the Investment Committee at Pan Evercore) reminded me of a few recent conversations with clients on the same subject. These conversations tend to have been prompted by media coverage of the recent geopolitical tensions in the Ukraine – which have rarely been out of the news since the shooting down of flight MH-17 – or the saga over the recent Argentinian debt default.

Momentum is like gravity

Momentum is the much ascribed theory that a stock whose price is rising faster than its peers will continue to rise, and a stock whose price is falling faster than its peers is set to continue to fall.  FT journalist David Stevenson describes momentum (and the evidence behind it) as “the dirty secret of modern investment research” in last Friday’s MoneyWeek publication.  He states the existence of momentum as a well-established empirical fact, citing Jagadeesh and Titman’s 1993 paper: Returns to Buying Winners and Selling Losers: Implications for Stock Market Efficiency.  More recent research from Cliff Asness of investment firm AQR has shown that the momentum risk-premium has been evident in the US in 212 years (!!) of financial data from 1801 to 2012. 

A Good Education

Over the years I have chalked up a few academic accolades and whilst of course I value them I also value the depth of achievement of colleagues. At MASECO we have individuals who have passed advanced qualifications such as CFAs, CFPs, ACAs, those who have completed and are completing MBAs and Mark who is concluding his Ph.D. in Finance.

It’s better to be Rich & Healthy than to be Sick & Poor

Growing up my father used to always say: ‘It’s better to be Rich & Healthy than to be Sick & Poor’. I have often thought about that statement and about how lucky I was to be born into a wealthy country during a great time in history when people on average became healthier and lived longer. I was recently thinking about this statement over the holiday season when I remembered Hans Rosling’s excellent visualisation of this concept and how countries across the world have grown wealthier and healthier.

Who are DFA anyway?

MASECO strongly believes in and practices investment management along the lines of the efficient market hypothesis – that it’s hard to beat the market, and impossible to do it consistently, by stock-picking (Fama, 1965). There are, however, various factors that can be exploited to provide market-beating returns. That, along with sophisticated trading strategies, a keen eye toward tax-efficiency, and low expenses (%) has led MASECO to

In theory and in practice

I read with interest John Bogle’s letter in the Economist (“Fama not in the Vanguard”, November 2nd) in response to Eugene Fama sharing the Nobel prize for economics. Fama won the Nobel prize for his work on the Efficient Markets Hypothesis that proposes security prices fully reflect all available information, are therefore efficient and that it is

Pursuing a personal boondoggle

With thanks to Carl Richards

In October 2001, the Joint Strike Fighter program was made official with the announcement that the Defense Department would buy 2,852 airplanes. The goal was to replace multiple aircraft models across all arms of the military with one new model, the F-35. The cost was estimated at $233 billion, and the first aircraft should have