News/Media

Perfect hindsight

Predicting the future is hard, really hard, if not impossible and yet it is most investor’s favourite pastime. We are all terrible at forecasting whether we acknowledge it or not. “It’s tough to make predictions, especially about the future” – Yogi Berra Most of the predictions that we remember are the ones that are completely […]

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December Already!

Our faithful readers no doubt expect a story about Michael Bublé, coming out of hibernation to sing Christmas songs. Or maybe something punchy about a wrathful President Ramaphosa, realising it’s time for action.  If only that were the case: the Zondo Commission carries on, for example, with no arrest warrants in sight.  Better to dwell […]

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Think twice before selling out

Previous editions of The Insider have addressed the need to treat equities as a long-term commitment.  An equity investment thesis should be at least 5 years; shorter than that lies the realm of speculation.  We revisit this idea this month to see whether the long-term view still holds true, especially in light of all the anecdotes […]

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Like a horse and carriage

In one of our recent due diligence exercises, we were asked to state whether Methodical targets risk metrics or return metrics.  The form then went on to ask Why? and Elaborate on this philosophy and Please provide your 5 most used quantitative measures.   Managers are faced with questions like this all the time but this particular sequence seemed odd.  It got […]

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Increasingly, the glass is half full

It’s time for some SA positivity. The word on the street is that the ANC is failing in its delivery; that President Ramaphosa has not succeeded in catching the Zuma-era crooks or in boosting the economy; and, that other countries are racing ahead and SA is left behind.  These stories make great headlines but the […]

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ETFs here, there, everywhere

All things change – and when it comes to investing methodically, that holds doubly true. Because we invest on data, rather than sentiment (read conviction), it is important to periodically assess and re-assess our investment positions. Analysis can be updated more readily than emotions. With that in mind, Methodical has made the decision to re-allocate the offshore […]

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Baby, it’s cold outside

As we move into winter proper, we saw an interesting – if staggering – chart last month from South African Market Insights (SAMI). It shows projections for SA’s economy against composites for advanced and emerging economies. South Africa, having always been ahead of the emerging economies cluster, is now forecast to fall behind by 2022. […]

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No one likes tariffs….except the Trumpsters

As we look forward to South Africa’s next chapter, it is useful to know what is happening around us. We do not live in a vacuum; international events do affect us. One that may have the biggest impact is that of international trade. The US, Europe and China are all now considering whether the Trump […]

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Millennials… Gen Y… whatevs

Millennials are often portrayed in media as a generation of snowflakes.  The received wisdom is that they are university graduates without meaningful jobs, without direction, full of debt, high expectations and a strong sense of entitlement.  All that said, they actually are the future of investment. Like it or lump it, the investment industry should […]

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The Return of Intuition

Investing in sentiment has taken on new impetus.  It has always been a driver in the markets but dropped out of the limelight in the post-WW2 world.  When sentiment gets out of hand, the markets experience crazed bubbles like the Dutch tulip mania of 1636-37 or the British South Sea Bubble of 1720.   The Dot.Com […]

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Are you a tortoise? Or a hare?

The psychology of investing is fascinating. Not only is our decision-making typically influenced by biased risk/return metrics, but the outcomes are also super-charged with emotion. This is precisely because outcomes involve our own money, i.e. they represent financial gain (or loss). Financial gain/loss is a relative measure. Although we talk about absolute gains, such as […]

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Am I Really Safer In Cash?

At this point in the market cycle, many investors are trying to decide whether to change their asset allocation.  The argument runs thus: cash has outperformed equities over the past 1, 3 and now 5-year periods; it’s time to lock in returns because the risk of remaining invested in equities is beginning to outweigh possible […]

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What Does The Fox Say?

It’s early January! In the financial markets, that means there is no news and every market participant is scrambling to find something to say. This results in a lot of backward-looking analysis such as What did 2018 mean?, as well as a slew of outlook pieces such as What will 2019 bring? The main theme […]

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Data, data, everwhere

Equity markets over the past 2 months have sure been challenging, both within South Africa and abroad.  Previous editions of The Methodical Insider have discussed the return of volatility and, more recently, why performance might be stormy indeed in the short to medium-term. So: forewarned is forearmed.   That doesn’t stop market participants from looking for advantages, […]

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Fasten Your Seatbelts

Many of you will have observed that the JSE All Share Index has recently moved into negative territory, being 11.96% lower in the year-to-date, 01 Jan to 31 October 2018.   That’s -11.96%!  Scary, but maybe just South Africa? Unfortunately not:  the same is also true of many of the global equity markets, as indicated in […]

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The Future Is A Tricky Place

It’s tricksy, as Gollum might say. What might be slowly gives way to what is. In hindsight, our choices end up looking naïve, often over-enthusiastic, sometimes too conservative or, if we’re one of the very lucky few, correct. Not many actually are correct, though. Yet market forecasts multiply in volatile times. With the US equity […]

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Hey Market! You’re Looking Good … For Your Age

Spring might be in the air – but is it autumn in the markets? Opinion is divided. On the one hand, we are now in the longest bull run in modern history and many think it could have years yet to run. On the other, there is a torrent of negative news stories about worsening […]

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“Sorry, how much until I break even?!”

No two ways about it: realising losses in an investment portfolio is painful. It happens to every investor and forms part of any investment journey. Psychologically, however, we seem ill-equipped to deal with losses. Loss avoidance is one of the most researched investment biases but still one of the most prevalent. All of us have […]

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Bringing technological innovation to investing

Through the ages, every industry has introduced tools, machines and technologies to improve production, automate processes and increase efficiencies. There is always resistance to change and questions raised about the value of the new. But once these innovations have been absorbed, it’s hard to imagine going back to the way things were before. There are […]

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Methodical Semi-Annual Report

Methodical’s Semi-Annual Report for the six months ending 30 June 2018 is now available on our website. This report provides a market summary, as well as detailed analysis on each Fund in terms of investment returns, and specific stocks contributing or detracting from these returns.

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Is That Your Final Answer?

In the financial industry, people are quite taken by the “wisdom of crowds”. It is not a new idea but one that has become increasingly popular, as the number of books written on the subject attest. The phrase is used as short-hand expression to mean that the average collective opinion of a group tends to […]

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Russia 2018 Football World Cup Predictor

The World Cup is here! And with the Cup comes a slew of predictions, odds, bets, forecasts and projections, as well as a healthy dose of prejudice and favoritism. Being a data-driven Investment house, we believe that distance from proximate noise is a good thing. It allows clarity of vision and space to make decisions […]

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Correlation: play safe out there, kids

Correlation can be a dangerous thing. Correctly applied, correlation has the potential to be a powerful tool to help detect relationships between different data sets. Used outside of context, though, correlation can be a false indicator of causation, with potentially disastrous consequences. Worse yet, because correlation matrices are easily calculated based on data, their ubiquity […]

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It’s A Long-Term Game

Everyone knows that they should invest for the long term…and does until they experience losses in the short term. Even the most seasoned and successful investor’s commitment, insight and emotions are tested in times of stress. But short-sightedness is often detrimental to investors. Making hasty decisions and reacting to short-term market developments is a good […]

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“I’ve never seen a bad backtest…”

Everyone in the financial industry has heard these words at some point. As a systematic manager, Methodical knows them all too well. Some investors really do believe that backtests are a complete waste of time – but then what a curious phenomenon that managers expend so much time and energy producing something that will invariably […]

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What Are You Waiting For?

There is electricity in the air – and it’s not everyone mining Bitcoins. There is a palpable sense in South Africa that things are changing, including the investment landscape. Investors are aware that there are alternatives to traditional active managers. In addition to trackers, passive funds and index tweakers such as smart beta, professional managers […]

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Once bitten, twice shy..

The problem with investing based on sentiment is exactly that: sentiment. Keynes’ animal spirits are unpredictable, irrational and often run contrary to our interests. Moreover, they hold grudges. A fund manager whose investment in a given stock ends badly, resulting in poor performance for the fund, will naturally be reluctant to reinvest in that same […]

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My fund has a diversified risk profile….oh, wait…Naspers…

When you buy a supposedly low-risk ETF tracking the JSE All Share index, are you really diversified or are you making an increasingly large bet on a single share?  Everyone loves how profitable Naspers is but its profits aren’t even generated in-house: everything derives from its overseas minority stake in Tencent.   To put this […]

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Systematic Strategies Finding Favour

They say that one is the loneliest number… and, since its launch, Methodical has largely been the only equity house in South Africa utilising pure systematic investment in its retail and institutional offering.  That has begun to change, however, with the entrance of several new South African products in the same space. Quantitative investment is […]

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Dark Clouds, Silver Lining

The 1st of June marked the first birthday for the Methodical Equity Prescient Fund (“Methodical Equity”), what a year it has been. Remember, this fund is South Africa domiciled, with a 75% allocation to South African large and mid-cap equities as well as fixed 25% allocation to developed market equities. In our discussions with investors […]

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