‘Twas the week before Christmas
'Twas the week before Christmas, thus time to review—the economic story of 2022.
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Prepare, Don’t Predict: Lin Wells, 100 years of stock returns, and the Lindy Principle
Using Lin Wells' Pentagon memo and Hendrik Bessembinder's research, this article illustrates that companies with sustained modest returns over long periods significantly outperform short-term high performers, suggesting investors should focus on resilient businesses that can adapt across changing world orders rather than making predictions.
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Stop, Go, Yield: A Quick Mental Model for Uncertain Times
At times like these, temperament matters as much as analysis. While transitions create uncertainty, they also generate opportunity for those who remain clear-eyed.
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Fixed Income Allocations for 2025 and Beyond: A Playbook for Investors
Credit valuations appear elevated, global debt levels are high and rising quickly, and persistent fiscal imbalances risk undermining market confidence. In this piece, we discuss how investors should consider navigating the current uncertainty while improving the long-term prospects of their fixed income allocation.
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Survive and Advance
College basketball teams don't win because they are the best—they win because they find ways to survive. That’s what long-term investing is about.
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Extra Credit: Defaults Matter
We explore default risk, one of the most significant challenges in credit investing. We cover the data behind default risk, current trends and compensation, and Mawer's approach to managing this risk.
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An AI Efficiency Breakthrough: DeepSeek’s Impact
A sudden release from a Chinese AI start-up rocked markets last week. DeepSeek, a new large-language model (LLM), has demonstrated performance comparable to OpenAI’s ChatGPT while dramatically reducing compute and power costs through innovative design and optimizations. This news has the potential to upend the current AI narratives and surrounding technology ecosystem that have been driving financial markets this cycle.
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Extra Credit: Bank Additional Tier 1 Capital Instruments
In this piece, we cover the structure of AT1s, some history on how the space has evolved (including its use globally), thoughts on valuation, and potential use in a well constructed credit portfolio.
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Dead Reckoning: Investing Lessons from the High Seas
The waters of the market are choppy and unpredictable. Investors, like sailors, must grapple with incomplete information, unexpected shifts, and the ever-present possibility of being wildly off course. The currents—momentum—can be powerful. PE multiples, EV-to-EBITDA ratios, earnings expectations, leading economic indicators, discounted cash flow models… all dead reckoning.
This article will illustrate several ideations and tools investors can incorporate into their processes to navigate the choppy, mercurial waters of long-term investing.
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'Twas the week before Christmas
‘Twas the week before Christmas, so let's have some fun. Mawer recaps the main themes of 2024.
-
Extra Credit: Why Not Just a “Little” High Yield?
High yield spreads continue to tighten. As risk premiums fall, and economic and political conditions appear positive for corporates in general, it is tempting to reach for yield in credit markets. As Howard Marks of Oaktree points out, the all-in yield (benchmark yield plus risk premium) on high yield is 7.0% and who doesn’t love a 7.0% return? What could possibly go wrong?
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Extra Credit – Fallen Angels: Boeing on the Precipice
When this piece was being written, Boeing had not filed their US$25 billion shelf prospectus and the company was a downgrade candidate to high yield (HY) at both Moody's and S&P which would qualify them as a "Fallen Angel". The term “Fallen Angel” is often paired with its opposite, a “Rising Star”. We decided it would be interesting to highlight the importance and impact that a Fallen Angel has on both the IG market, and, more importantly, the HY or "Junk" bond market.
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Elections: Noise or Signal?
While speculators fuss over the cacophony of political campaigns and election forecasts, savvy investors recognize that the true impact of elections on financial markets is mostly short-term noise irrelevant to long-term financial strategies.
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Public and Private Credit: Where investors should focus
Private credit assets have surged to $2-3 trillion USD over the past decade, but investors might benefit from shifting some focus back to public credit, which offers attractive returns, transparency, and liquidity. While both credit types share common features, the current strong tilt towards private credit may overlook the strategic advantages of a well-diversified public credit allocation.
-
Prepare, Don’t Predict: Lin Wells, 100 years of stock returns, and the Lindy Principle
Using Lin Wells' Pentagon memo and Hendrik Bessembinder's research, this article illustrates that companies with sustained modest returns over long periods significantly outperform short-term high performers, suggesting investors should focus on resilient businesses that can adapt across changing world orders rather than making predictions.
April 22, 2025
-
Stop, Go, Yield: A Quick Mental Model for Uncertain Times
At times like these, temperament matters as much as analysis. While transitions create uncertainty, they also generate opportunity for those who remain clear-eyed.
April 4, 2025
-
Fixed Income Allocations for 2025 and Beyond: A Playbook for Investors
Credit valuations appear elevated, global debt levels are high and rising quickly, and persistent fiscal imbalances risk undermining market confidence. In this piece, we discuss how investors should consider navigating the current uncertainty while improving the long-term prospects of their fixed income allocation.
April 2, 2025
-
Survive and Advance
College basketball teams don't win because they are the best—they win because they find ways to survive. That’s what long-term investing is about.
March 27, 2025
-
Extra Credit: Defaults Matter
We explore default risk, one of the most significant challenges in credit investing. We cover the data behind default risk, current trends and compensation, and Mawer's approach to managing this risk.
March 5, 2025
-
An AI Efficiency Breakthrough: DeepSeek’s Impact
A sudden release from a Chinese AI start-up rocked markets last week. DeepSeek, a new large-language model (LLM), has demonstrated performance comparable to OpenAI’s ChatGPT while dramatically reducing compute and power costs through innovative design and optimizations. This news has the potential to upend the current AI narratives and surrounding technology ecosystem that have been driving financial markets this cycle.
February 4, 2025
-
Extra Credit: Bank Additional Tier 1 Capital Instruments
In this piece, we cover the structure of AT1s, some history on how the space has evolved (including its use globally), thoughts on valuation, and potential use in a well constructed credit portfolio.
January 30, 2025
-
Dead Reckoning: Investing Lessons from the High Seas
The waters of the market are choppy and unpredictable. Investors, like sailors, must grapple with incomplete information, unexpected shifts, and the ever-present possibility of being wildly off course. The currents—momentum—can be powerful. PE multiples, EV-to-EBITDA ratios, earnings expectations, leading economic indicators, discounted cash flow models… all dead reckoning.
This article will illustrate several ideations and tools investors can incorporate into their processes to navigate the choppy, mercurial waters of long-term investing.
January 23, 2025
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'Twas the week before Christmas
‘Twas the week before Christmas, so let's have some fun. Mawer recaps the main themes of 2024.
December 18, 2024
-
Extra Credit: Why Not Just a “Little” High Yield?
High yield spreads continue to tighten. As risk premiums fall, and economic and political conditions appear positive for corporates in general, it is tempting to reach for yield in credit markets. As Howard Marks of Oaktree points out, the all-in yield (benchmark yield plus risk premium) on high yield is 7.0% and who doesn’t love a 7.0% return? What could possibly go wrong?
November 19, 2024
-
Extra Credit – Fallen Angels: Boeing on the Precipice
When this piece was being written, Boeing had not filed their US$25 billion shelf prospectus and the company was a downgrade candidate to high yield (HY) at both Moody's and S&P which would qualify them as a "Fallen Angel". The term “Fallen Angel” is often paired with its opposite, a “Rising Star”. We decided it would be interesting to highlight the importance and impact that a Fallen Angel has on both the IG market, and, more importantly, the HY or "Junk" bond market.
November 7, 2024
-
Elections: Noise or Signal?
While speculators fuss over the cacophony of political campaigns and election forecasts, savvy investors recognize that the true impact of elections on financial markets is mostly short-term noise irrelevant to long-term financial strategies.
October 31, 2024
-
Public and Private Credit: Where investors should focus
Private credit assets have surged to $2-3 trillion USD over the past decade, but investors might benefit from shifting some focus back to public credit, which offers attractive returns, transparency, and liquidity. While both credit types share common features, the current strong tilt towards private credit may overlook the strategic advantages of a well-diversified public credit allocation.
June 20, 2024
