Insight - Making Sense of the Narrative

Invest with Market Thinking in a UCITS global equity fund, developed in collaboration with Toscafund, a UK and HK-based specialist investment manager, harnessing the power of behavioural finance through thematics and factor ETFs.


If we had a blank sheet of paper and a New Year resolution to make better investments in 2024, what would we resolve? We would take out the unforced errors built into the system and achieve what Charlie Munger would term an advantage, not by being brilliant, but by consistently 'not being stupid'. That means weighting portfolios by conviction on return not market capitalisation, recognising that volatility and benchmark 'tracking error' are not good measures of risk to the underlying investor but create perverse incentives for managers of other people's money. It also means taking out the emotional element of investing by building systems to eliminate behavioural biases that will enable us to take better decisions.

Media Commentators don't want to hear what Trump is saying, watch his rallies or talk about his likely policies. But the markets are starting to pay attention.

The traders unofficial year end at Thanksgiving produced a lot of mean reversion including powerful short squeezes in Equities and bonds and even if they have run out of momentum they have catalysed cash to move into Equities and bonds, focussing the mind of Asset Allocators on the challenges for 2024, first and foremost being that they need to generate real returns and beat cash rather than simply hug it.

The Financial media was awash with deserved tributes to Charlie Munger last week. We wanted to add our own, short, tribute to the definitive long term investor, whose thoughts and wisdom are not only timeless, but also in a world of normalisation of interest rates are starting to come back into 'fashion'

Periodically, we take the opportunity to refresh our portfolio of Themes, incorporating new ideas to replace ones that that we think are no longing offering attractive risk return opportunities. We monitor the new ideas for a period, before incorporating them when we think the risk return is attractive, guided by our confidence scoring systems. As the risk return profile more generally has improved and as we reallocate cash back into our themes, we have added two new themes from our 'watch list' - Japanese Wholesale and Trading Companies and Emerging Markets ex China. The note provides more details and background.

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