22 Feb The Weekend Starts Here...
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MiFID II has created numerous headaches across the investment industry since it came into force at the beginning of this year – and as with any legislative changes, there are good and not so good elements to it. One requirement of MiFID II (that research is paid for by the fund managers and not their clients) has had an ‘interesting’ result. Less research is being bought.
“Clearly, if research has value you should either be willing to pay for it out of your fee or by telling your clients why they should be paying for it,” says Godfrey. “If it doesn’t add value, it should disappear.” Quite. [3 min read]
I’m surprised at how seldom we are asked by clients (both new and existing) whether they should invest a lump sum in one go, or phase it into the markets over a period of time, especially as the decision often involves millions of pounds. This next piece illustrates which strategy works best from an investment perspective, but while I agree with Nick’s conclusion, ultimately the best investment strategy is the one the client can stick with through thick and thin. [Nick Maggiulli 4 min read]
We’ve been incorporating a ‘disaster scenario’ into our clients’ financial plans for a while now – showing them what their lifetime cashflow might look like if they experienced a fall equivalent to the amount they can emotionally tolerate so that we can have an intelligent conversation about it ahead of time. It’s one of many reasons why investing according to your emotional tolerance to risk is so important. As Michael Batnick says in this next piece, “The investor’s job is to figure out what risk means to them, how much they can stomach, and if necessary make changes along the way until their true ability to tolerate it is properly calibrated.” Apart from believing that it’s the investor’s AND their financial planner’s job, I couldn’t agree more. [4 min read]
“There’s an old saying that stocks return to their rightful owners during a bear market.” *
Whoever came up with that saying was a genius. Investment strategies can work during some time periods and not others (value vs growth for example); some strategies can be arbitraged away as they become known. But there are some strategies which will always give you an investing edge. [Ben Carlson 4 min read]
This next infographic makes for depressing reading. Once again, the herd mentality prevailed in December 2018 (see above*) – we’ve still got a long way to go in educating investors about their behaviour. [Infographic]
I thought this next piece was a great analogy. The relationship between an author and their readers is not dissimilar to that between a fund manager and their investors. Nobody Wants to Invest in Your Shit [Meb Faber 4 min read]
Charlie Munger spoke at the Daily Journal’s annual meeting this week. He had some interesting things to say (as always) on investing. [Robin Powell 4 min read]
“In today’s regulatory environment, it’s virtually impossible to violate the rules.” So said Bernie Madoff in 2007. “This is something the public doesn’t really understand. It’s impossible for a violation to go undetected. Certainly not for a considerable period of time.” Different kinds of stupid [Morgan Housel 4 min read]
Treat economic indicators with caution. [Thomas Mullooly 3 min read]
And finally. Reason #10,398 why I love the internets. You’re welcome [0:13 video]
Whatever you’re up to this weekend, I hope it’s a good one.