Investment Strategy / case for stocks
Investment Strategy / case for stocks
Get insights and commentaries on current market developments and research as well as our permanent views on successful investment strategy.
Reflections on the equity risk premium and the Reversion of returns to the mean
Investors attempt in the medium/ long term to take advantage of the extra returns generated by participating as shareholders in the selected companies of their portfolios. Taking non diversifiable Risk is eventually compensated by higher returns. In addition, as the investment horizon expands returns exhibit a behavior observed in many aspects of life : a reversion to […]
The curse of the screen / Financial assets vs real estate / A simple example with rising interest rates
Financial assets have some great advantages like the ability to diversify and the possibility to engage in partial sales to finance desired expenses. No doubt, Liquidity is a great blessing. However, they also have a great disadvantage . They create nervousness as a result of their ability to provide continuous valuation. Investors sometimes panic by marking […]
Inflation, interest rates & the Equity risk premium: A critical evaluation of the consesus views.
The first quarter of 2022 reinforced the view that a diversified portfolio should strategically include most asset classes and can prove beneficial during hard times. Cash and gold justified during this period their presence in portfolios despite not providing any yields ! Evidently, as always the portfolio asset allocation is instrumental.
Inflation, interest rates and the Equity risk premium : A critical evaluation of the consensus views.
A critical evaluation of the consensus views. The first quarter of 2022 reinforced the view that a diversified portfolio should strategically include most asset classes and can prove beneficial during hard times. Cash and gold justified during this period their presence in portfolios despite not providing any yields ! Evidently, as always the portfolio asset […]
Mid summer 2021: Tactics and strategy
Year 2021 has been very kind to the believers in the equity culture who had the courage to stay invested during the impressive multi year run since 2009. In the recent past, we have experienced brutal corrections in 2018 and 2020.
On Market Timing
Very often we hear and read comments on the necessity to engage in excessive or radical market timing. Some old truths : A) ‘‘The graveyards of stock market participants is full of market timers ‘.’ B) “Sell Rosh Hashanah buy Yom Kippur”
Rationality and equilibrium in the economy and in capital markets : From Theory to Practice.
The issues of rationality and the attainment of equilibrium (as well as its stability and uniqueness ) in the macro economy and in capital markets lie in the center of the most important theoretical debates. Great original theories stressed the rationality of economic agents and investors.
Old Truths and Recent Lessons
The recent great crisis reminded us of certain truths and lessons. A) Do not bet against the human race. Progress of humans in science has been tremendous. Anything humans undertake together can be achieved.
VALUE vs GROWTH
Historically, over the very long term, investing in value stocks has delivered better returns than investing in growth stocks (MSCI defines value as stocks which are cheap based on price-to-earnings, price-to-book and dividend yield metrics, relative to the market).
Investor Biases; irrationality and common investor mistakes
While traditional finance assumes that investors will rationally calculate probabilities of outcomes to maximize utility, behavioral finance suggests that we make decisions based on bounded rationality and instead of maximizing our benefit, we come to satisfactory conclusions without necessarily getting what is best.
Plant the seed and watch it grow…
“In the short run, the market is a voting machine, but in the long run it is a weighing machine.” – Benjamin Graham
Owning stocks pays dividends
Pay dividends: To cause or produce good results in the future due to an investment of time, money, or other resources.