There’s exists a common belief that superior investment results stem from the staffing of multiple research analysts – each, perhaps, specializing in some fundamental aspect of the market or a given sector, style or region.

 

Our observation – one that can be verified by an online search of Wall Street Firms’ historical prediction results and/or the track records of the world’s largest mutual funds and hedge funds – is that little, if any, empirical evidence exists to support the notion that bulky staffs produce bulky returns. Some, in fact, might argue the opposite.

 

The beauty/challenge of markets and economies is that the factors influencing them are too numerous to count, let alone assemble and predict. A firm with hundreds of analysts can't even begin to know precisely how 7 billion humans are going to react to the next bit of news or the next global development. The latest examples being the dire predictions coming from the majority of the high profile pundits with regard to specific outcomes of Britain’s June 2016 referendum and the 2016 U.S. Presidential Election. In both instances, the would-be “dire” result occurred. Yet, lo and behold, rather than – as predicted – descending into deep corrections (if not outright bear markets) global equity markets promptly ascended to new heights following each event.

 

For our purposes, we've concluded that sharp focus on the most robust data points (technical and fundamental), at the exclusion of the noisier data, through processes that require robust analytical tools keeps us undistracted in our endeavor to deliver high quality investment management.

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