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Investment Insights

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The 6 Sources of a Firms Competitive Advantage

By | Investment Insights | No Comments

This article originally appeared on Advisor Perspectives.

As we have discussed previously, sustainable competitive advantages (SCAs) are a key characteristic of high-quality businesses. While SCAs are good indicators of business quality, not all competitive advantages are created equal.  The strength of the competitive advantage and the risks that the business needs to protect itself against are largely dictated by the type of competitive advantage that the business possesses. Read More

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Strike Gold

By | Gold, Investment Insights | No Comments

The recent decline in the price of gold has led many market participants to question the investment value of the yellow metal. Much has been spoken and written about the relatively poor return to be earned from gold. We think investing is NOT an exercise in bragging rights about which asset class has higher returns in the past and are therefore assumed to hold in the future. Read More

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Why Most Quantitative Investing and Trading Systems Fail

By | Investment Insights | No Comments

This article originally appeared on Advisor Perspectives.

“Invert, Always Invert.” – Carl Gustav Jacob Jacobi, German Mathematician

“Hundreds of studies have shown that wherever we have sufficient information to build a model, it will perform better than most people.” – Daniel Kahneman (as you read this statement, don’t forget to consider the implication of the word “sufficient”)

“Roger Federer plays tennis using Wilson racquets. I use Wilson racquets. Does that make me Roger Federer?” – Paraphrasing a friend of ours. Read More

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We Are Happy To Score Centuries With Just Ones And Twos And Not Necessarily With Sixers

By | Investment Insights | No Comments

Prashant K Trivedi, Chairman of Multi-Act Trade & Investments Ltd., talks about his investment philosophy, especially for family office investors with long term patient capital, and how he constructs his portfolio. His investment philosophy of giving appropriate weightage to quality, valuation and price momentum has helped him offer capital preservation and good returns to the investors. Read More

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Bounded Rationality, Unbounded Confidence

By | Behavioral Finance, Investment Insights | No Comments

This article originally appeared on advisor perspectives.

“The capacity of the human mind for formulating and solving complex problems is very small compared with the size of the problems whose solution is required.” – Models of Man, Herbert A. Simon

“Boundedly rational agents experience limits in formulating and solving complex problems and in processing (receiving, storing, retrieving, transmitting) information.” – Oliver E. Williamson citing Herbert A. Simon Read More

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The Warren Buffett Way: High Quality Stocks in Emerging Markets

By | Investment Insights | No Comments

This article originally appeared on advisor perspectives.

“Shares are not mere pieces of paper. They represent part ownership of a business. So, when contemplating an investment, think like a prospective owner.” – Warren E. Buffett

“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” – Warren E. Buffett Read More

Analysis of S&P 500 companies

Profit Margins, A Bottoms-up Analysis of S&P 500

By | Global Equity, Investment Insights | No Comments
  • Profit margins as measured by Corporate Profits divided by Gross National Product are way over norm.
  • We show that profit margins for the S&P500 Index derived as Total Net Profits divided by Total Sales of all non-financial components of the index are way over mean as well.
  • We look at profit margins of various sectors and find that high profit margins aren’t limited to service businesses only. Read More
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High Quality Stocks in Developed Markets

By | Global Equity, Investment Insights | No Comments

This article originally appeared on Advisor Perspectives.

‘Quality’ is becoming widely accepted as an anomaly and is now being designated by many researchers as a fifth factor explaining investment returns along with the four widely accepted factors: beta, size, momentum, and value. This development is in sync with our long-held belief that quality is a distinct investment style.
In this article the authors, Baijnath Ramraika (CFA) and Prashant Trivedi (CFA), present a framework for superior risk-adjusted returns from high quality stocks. Read More