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Global Matters Weekly – Past performance is not indicative of future results

“Past performance is not indicative of future results” is a regulatory risk warning on most investment oriented material that everyone knows but not many people seem to actually implement into their decision making. A Fund Managers performance can dictate whether they become a hero or villain in the eyes of the public and the press. This then influences investment flows and ultimately determines whether the fund thrives or is liquidated.

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Global Matters Weekly – Patience is a Virtue

Patience is essential to daily life and even more so if you are parents to young kids. When I was a child, I was often told to “be patient”, which meant staying calm in the face of delay, frustration or adversity. We all have many opportunities in life to practice this virtue; being stuck in traffic, the ups and down of parenthood, or indeed, managing one’s investments. By understanding the importance of having patience, we can maintain our focus on our long-term goals, and not let short term noise push us into taking unnecessary action. Time in the market is better than timing the market, as they say, as it allows investors to benefit from the power of compounding, which Albert Einstein once referred to as the 8th wonder of the world.

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Global Matters Weekly – For what it’s worth

What is it worth then? This is a question investors should be asking themselves all the time. However, the true answer is not always obvious. There are many ways to approach it and there is of course an easy “short cut” to establishing an answer; the stock market price. However, relying on such a public pricing mechanism implies a high level of faith on efficient markets and to believe there is no such thing as “the madness of crowds”.

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Global Matters Weekly – This time may be different

“As violent as a mugger, as frightening as an armed robber and as deadly as a hit man.” Ronald Reagan’s caricature of inflation in 1978 reflects a degree of fear at the time about this pernicious thief that is largely absent amongst today’s policymakers. After several decades of low inflation, policymakers and investors have potentially become too complacent about the risks of higher inflation. Although there remains a wide range of potential outcomes in the coming years, we see a return of higher inflation as the biggest risk factor in markets; it would erode purchasing power, damage the real value of savings and wealth, and would have far-reaching implications for the construction of portfolios.

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Global Matters Weekly – Macro Matters

When I raise the issue of the importance of macro, I tend to get the same responses, which fall into two categories:

  1. It can’t be done; no one has a good record predicting macroeconomic variables like GDP growth.
  2. Why bother? Even if you had perfect foresight of what these variables were going to be, you wouldn’t be able to predict the market’s reaction.
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Global Matters Weekly – Be smart, be decent: empower women

I think we, as human species, have proved how advanced and smart we are in many ways: we have sent people into space, observed the smallest atoms, cured diseases and invented pizza. Yet, many people still fall foul of one of the most extreme idiocies: sexism. There is no justifiable or objective reason behind the discrimination based on the absence (or presence) of the Y chromosome, so, in a world of cognitive human beings, such a thing should not exist at all. Yet it does, and I can’t really understand why, because gender discrimination is not only terribly wrong, but also plain stupid.

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Global Matters Weekly – ESG: Don’t be a spectator

Environmental, Social and Governance (ESG) investing is at the forefront of most investors’ minds and the real estate sector is no exception. A survey published by Bentall Kennedy, Real Property Association of Canada (REALPAC) and the United Nations Environment Programme Finance Initiative (UNEP FI), which included investment managers representing over $1 trillion in assets under management from North America, Europe, and the Asia-Pacific region found that 93% of investors include ESG criteria in real estate investment decisions. At Momentum we are no different.

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Global Matters Weekly – Relationship Problems

With the US election now just two weeks away, investors are busy forming expectations on the result and looking at the potential policy implications of either a Biden or Trump victory. While there is plenty of short term focus on the eventual shape of any additional stimulus package to emerge from Congress, perhaps the most important issue for long term investors will be how US-China relations develop from here. For those wanting a detailed outline of our thinking on this issue, we have recently published a thought piece in addition to this week’s blog which is available here.

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Global Matters Weekly – Ipse dixit? No, thanks

Pythagoras was a clever man: philosopher, cosmologist, musician and mathematician. His famous theorem within Euclidean geometry is one we all learn at school, despite the 2500 years that have now gone by since the man lived. His opinions were so well respected that his disciples across Magna Graecia would appeal to his assertions, rather than to evidence or reason, as a watertight argument. They would simply use the formula “ipse dixit”, literally meaning “he said so”. We, at Momentum, are no Pythagoreans and do not accept dogmatic assertions from anyone, nor do we blindly trust common knowledge. All we trust is evidence and when this is not given to us, the scavenger hunt begins.

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Global Matters Weekly – The Perfect Storm

TIf readers cast their minds back to February this year, they will remember the horror that unfolded on the high seas with dozens of cruise ships being forced to stay at sea as the first wave of Coronavirus took hold. The poster child for the industry was the ‘Diamond Princess’, a Gem-class cruise ship with a capacity of nearly 2700 passengers and 1100 crew, which eventually anchored at Yokohama port in Japan where passengers had to remain on board and self-isolate for several weeks. The world watched on thinking perhaps this would be contained to Asian shores but of course this was wrong as we now know. Global equities would continue to make gains for almost three weeks after the cruise liner had docked before freefalling, only to reach a bottom just over a month after that. Far from plain sailing.

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