All Posts By

Team Multi-Act

WWReading-Cards-Global-Equity1

Volatility is not the same as Risk

By | What We Are Reading | No Comments

In this article:

Why do people equate volatility with risk? Volatility is NOT the same as risk. Risk is defined as the chance of losing some or all of your investment. The path that the price of the stock takes between when you buy it and when you sell it shouldn’t matter, at least from a financial point of view. In fact, in many cases higher volatility equals LESS risk

The psychological impact of the price changes can convince you to make non-optimal choices with your money. Read this article to find out how volatility and risk are related in an investment scenario and learn how you can minimize investment risk.

Read More

Macro

The Rising LIBOR Pains

By | What We Are Reading | No Comments

In this article:

Since mid-2015, 3 month USD LIBOR has soared from a low of approximately 22.5 basis points to its current level of 115 basis points.

It is now more than 5 times higher than two years ago. Banks have vacated their previous role of market makers. The demand for corporate debt and in particular junk debt has been enormous, and corporations have obviously sated it by producing more debt than ever before. Such a scenario implies a latent risk, one that keeps growing and is ready to bust.

Rising interest rates and a slowdown in credit growth imply that this precondition is very likely to prevail when the next batch of problems shows up.

Learn the impacts of rising LIBOR in this in-depth analysis of LIBOR.

Read More

WWReading-Cards-Global-Equity1

Are Global Housing Prices Fairly Valued?

By | What We Are Reading | No Comments

In this article:

The National Association of Realtors estimates that Chinese investors bought 29,000 American homes for a total of $27bn in the year to March 2016. Foreign buyers focus on a handful of cities: San Francisco, Seattle, New York and Miami. Foreign money has helped propel skyrocketing prices in other places, too. London’s mayor has ordered a study on foreign ownership in the capital after property prices rose by 54% in four years. Central bankers fret about the dangers fickle capital flows pose to financial stability.

Are houses fairly valued across the globe? Learn more about how these changes have impacted House Prices around the world in this interactive chart.

Read More

Macro

The Time Arbitrage Investment Strategy

By | What We Are Reading | No Comments

In this article:

This article talks about the edge that an investor can have by focusing on the long term when the entire market is obsessed with short term data/events. The underlying value of a business is determined by stream of cash flows that it is going to earn over long time. We at Multi-Act believe that any event that does not structurally impair long term earnings power of a business would provide an opportunity if the market is worried about its short term impact. Read how many have found success through this investment activity.

Read More

Macro

The Consequences of Command and Control Economics

By | What We Are Reading | No Comments

In this article:

Everyone knows that the law of supply and demand is designed to bring equilibrium in the economy. If it is true for commodities, the same rule should apply to interest rates as well. But like Soviet Russia where the price of sugar has very little to do with supply and demand because it runs on a command-and-control economy, central bankers have been setting the price for the most important commodity in the world: money. How will all this end? Does anyone know?

Read More

WWReading-Cards-Global-Equity1

Is It a Good Time to Invest in Emerging Markets?

By | What We Are Reading | No Comments

Are you wondering why you should invest in emerging markets? Here’s something to consider. For long-term investors, a unique opportunity presents itself in emerging market equities because of the rare combination of cheap equity valuations, depressed currencies, and positive momentum in equity prices and economic fundamentals.

Discover how a building-block approach to valuation creates forward-looking returns rather than the idea that it’s too late to invest, and how depressed currencies show a projected real return of 3.9% a year over the next decade. In addition to this, EM stocks are trading cheaply and showing robust 12-month price momentum.

The classical British economist David Ricardo’s advice to investors to “cut short losses” and “let your profits run on” couldn’t be more relevant. While the Trump election was forecast to leave a trail of destruction, this article delves deeper into why it is better to invest in attractively valued emerging market assets even in the midst of fear and uncertainty, which are making a slow exit. 

Read More

WWReading-Cards-Global-Equity1

Edelweiss Journal: Reflections on Trump’s America; The Challenge of Preserving Capital within the Financial System

By | What We Are Reading | No Comments

This issue of the journal from Edelweiss Holdings has two brief essays on relevant issues that hold value for any investor today.

Reflections on Trump’s America unveils historic perspective on the patriotic and business-wise President-elect Donald Trump. Within the context of financial markets, his election has received jubilation worthy of the second coming of an industrial revolution. Yet, even as Mr. Trump’s businesslike ideas should be welcomed in a nation that has veered further and further into an economic unknown, this essay shows how there is little reason for the boundless euphoria of anticipated greatness.

The Challenge of Preserving Capital within the Financial System by James Watson is an essay that makes for compelling read. While touching on myths attached to liquidity and the troubling imposition of control on individual financial affairs, this essay makes a point that has been echoed by Multi-Act; when credit implodes – as it must – only HQ stocks will have any sort of bid, as market participants realize that the inherent strength of HQ stocks were obscured with the hype attached to liquidity and credit mis-pricing.

Read More

Macro

Role of Network Effects and Critical Mass as mental models in Business

By | What We Are Reading | No Comments

Replete with examples, Tren Griffin, a senior director at Microsoft, explores two powerful mental models: Network Effects and Critical Mass. Drawing on years of experience as a businessman for one of the world’s most renowned tech companies, Griffin offers practical expertise with adept and clarity. In this article, Griffin explains how companies can use these two mental models as a protective moat. 

Read More

Macro

Don’t Confuse Cheap with Value

By | What We Are Reading | No Comments

There are just two ways to behave as an investor,

One requires buying cheap, selling at a profit, and repeating the process. This requires making hundreds, sometimes thousands of smart investment decisions in the course of a career. To make many smart decisions is too hard.

The second way to invest just requires one decision: buy a great business. This way is to adopt a strategy that requires being smart only a few times. Almost no one does this despite the obvious advantages. It requires the right investor base.  This article shows you how.

Read More