Disciplined Systematic Global Macro Views

Between chat of shrinking alpha and the loss of life of investment skill, it’s been a negative month for energetic managers. It has only gotten worse, if you take a look at a few of their performance numbers for the first area of this year. The story has credibility when you review investment moves. The move to passive indices has continued at the trouble of active managers.

The long-term debate is that when there is more money in passive investments, the energetic managers shall have more opportunities to generate a return, but that argument is not true exactly. The reason is based on the “paradox of skill”. If the amount of skill managers either increases or stays the same in accordance with the amount of money managed, the alpha gain should be less. More skill players are running after the same opportunities. Skill is appreciated on a relative not a complete basis. The quality of money management has increased predicated on training and education, but this skill is across the table. Managers are operating faster to stay in the same relative space. We see this is sports activities.

Runners have higher skill now when compared to a generation or two ago. Runners have a complete performance advantage over the past, today, but that does not suggest anybody runner will win more races. So what should investors do? A very important factor should be obvious. Don’t be prepared to make money with managers who concentrate on, for example, large cover growth or value. There are too many of the managers looking for the same thing thus creating crowded trades. The original active stock relationship mangers are in fields that are too packed. The alternative is to concentrate on investment strategies that are more unique and less packed.

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Strategies where there is higher dispersion in beliefs will by description be less congested and have the chance for higher results based on skill. One of the key reasons we like global macro is that there is less contract on reasonable value. Hence, alternative models that create even a little edge have a chance for success.

Encana Corp (TSX-ECA) is only displaying as cheap by the historical median dividend yield. Husky Energy (TSX-HSE) is showing as cheap by the historical median and the historical average dividend yields. I’ve two materials stocks. Teck Resources Ltd (TSX-TCK.Year median dividend produce B) is displaying as relatively cheap by the 5. Of the infrastructure-type utility companies only AltaGas Ltd (TSX-ALA) is showing relatively cheap by the 5-year median. Of the Telecom Stocks WiLan Inc. (TSX-WIN) is showing as relatively cheap historically.

BCE (TSX-BCE), Manitoba Telecom (TSX-MBT) and Shaw Communications Inc. (TSX-SJR.B) are displaying as relatively cheap by the historical average and the historical median dividend yields. Manitoba Telecom (TSX-MBT) and Shaw Communications Inc. (TSX-SJR.Year median dividend yield B) are showing as relatively cheap by the 5. The utility company TransAlta Corp. (TSX-TA) is showing as relatively cheap by the historical average and the historical median dividend yields. ATCO Ltd (TSX-ACO.X) is showing relatively cheap by the historical median and 5-season median dividend yields.

Canadian Utilities (TSX-CU) is showing as cheap by the 5-yr median dividend yield. Today writing about Pembina Pipelines Corp On my other blog I am. This blog is intended for educational purposes only and is not to provide investment advice. Prior to making any investment decision, you should always do your own research or seek advice from an investment professional. I do research for my very own edification and I am willing to share. I write what I think and I may or might not be correct. See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.

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