Weekly Digest

“The Odyssey” by Homer is an ancient Greek epic poem that tells the tale of the Greek hero Odysseus and his challenging journey back home after the Trojan War. It introduces the Sirens, mystical beings who entice sailors to their doom through captivating songs that draw them closer to their island, ultimately causing shipwrecks on the rocky shores. Odysseus’ response to the Sirens’ threat offers a valuable lesson for investors. He sought to protect his crew by instructing them to plug their ears with beeswax, preventing them from hearing the Sirens’ calls. However, he was curious about what the Sirens were saying, so he had his crew tie him to the mast and not release him until they had passed the Sirens’ island.

As a reminder, macro is only ever an input into our investment process, and it is subordinate to bottom-up company (and government) analysis. Previously, I’ve called this a ‘macro aware approach’ to differentiate it from a macro driven process, and I think that’s a useful way to characterise what we do.

The scope of the macro work we do is twofold: firstly, we aim to formulate a view on key macroeconomic variables, specifically growth, inflation, interest rates and geopolitics (although not strictly a macroeconomic variable…). At times these key macroeconomic variables inform the bottomup work the team does. Secondly, we reflect on market dynamics and whether any high-quality indicators suggest we should be bullish or bearish in the short term.

Mathematics never lies, but our ability to interpret mathematical concepts accurately and honestly is at times limited. Blame our faulty, imperfect, imprecise, biased human brains! Numbers can say a lot and nothing, or sometimes can be well-trained puppets that speak just like the ventriloquist. Numbers should never be trusted blindly: challenge them, poke them with a stick and make sure you fully understand them before drawing any conclusion.

According to the International Energy Agency (IEA), real estate generates 40% of global CO2 emissions. The sector is therefore critical to global efforts to meet the Paris Climate Agreement’s target of limiting average temperature rise to well below 2°C. At Momentum we believe it is vital for the sector to manage and reduce these levels. We hold the same expectation for our Real Estate Investment Trusts (REITs) in which we invest, as well as our in-house real estate fund, MAREF (Momentum Africa Real Estate Fund).

On Thursday last week I was presented with two looming Friday deadlines; producing the Global Matters Weekly blog and selecting a fantasy football team before the new season kicks off… my desire to field a team comes down to the mentality that you need ‘to be in it to win it’, which applies as much to investing as it does to fantasy football.

Last week the world watched on as a congressional hearing was held in the US with the goal of exploring Unidentified Flying Object (UFO) sightings and trying to establish whether alien life-forms do exist. Sightings of UFOs in the investment world, however, are less elusive – with many ‘Undervalued Forgotten Opportunities’ floating around an asset allocator’s atmosphere.

The last two years have seen their fair share of volatile events. However, whilst we patiently decipher the latest data releases, there is a strong case for allocating to fixed income in multi-asset portfolios, locking in high levels of income whilst positioning for the potentially significant capital gains element.

“I’m from the government and I’m here to help”. President Reagan referred to those words as being the “nine most terrifying words in the English Language”. August 1986 feels like a distant era and in many ways it is, however the debate over what any government’s role should be in a capitalist free market system is as relevant today as it was back then.

According to my Spotify, I spent an astonishing 51,000 minutes of 2022 listening to music. For those without a calculator handy that’s a combined 35 days of listening to everything from ABBA to Zadok the Priest. Given all that time spent listening to music, you might think I’d have an idea about what it is that makes a good song

Five years in the making, I finally got round to watching Oscar-winning documentary Free Solo. An activity that involves the highest level of risk-taking may not seem the most appropriate place to identify traits to look for when searching for good fund managers to partner with. However, we know that only a small fraction of fund managers are able to outperform their benchmark over time. We are looking for another kind of outlier.