learning from experience
Case for Stocks
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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…
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…
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…
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…
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…
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…
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…
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…
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,…
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…
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.
The Case for Investing in Stocks – Long Term Evidence
Equity investors have been rewarded
Analysing long term returns of different financial assets it becomes clear that stocks have outperformed bonds and cash. Furthermore, the consistency of outperformance increases with…
Staying on Course – NR comments from deep in the 2008 crisis
While data and financial theory support equities as a superior long term investment to cash and bonds, this can be difficult to remember during large market declines. There have been…
Recessions and Bear Markers are not created equal
Very often ‘This time it is different’ is true !
The causes, the length and the severity of recessions and Bear markets are not the same ! Depending on the…
“Park Avenue apartments belong to the optimists”
We would like to repeat our longer term view: Valuations relative to bonds and cash are compelling. Following the worst decade since the 1920’s (all possible decades are included) we…
Strategy and Tactics
A) A stock market P/E of 19 to 20 means a 10 to 15pct appreciation from current levels. We would welcome it before “a nasty correction”!