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Issue No: 0001 dated 8th July 2020

Quote of the Day

“Successful investing is anticipating the anticipation of others”

John Maynard Keynes

Preparing for all possible eventualities gives you an edge over competition. True for life in general and investing in particular.

Chart of the Day

High Conviction ideas and Alpha

An excellent research study recently explored how active managers generate stock-selection alpha. 

The study involved a multi-year analysis covering 114 US equity mutual funds from 57 fund families and evaluated more than 400,000 individual rolling one-year performance periods.

The objective was to examine the correlation between the fund Manager’s conviction for an investing idea and the alpha the fund generated. The findings were pretty interesting but in hindsight not totally surprising:

high conviction ideas and alpha
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“High-Conviction Overweights (ideas) are the sole category through which active managers could add alpha. High-Conviction Overweights achieved success rates of 84% gross of fees and 74% net of a theoretical 85 basis points (bps) fees. Underweights and Neutral Weights, by comparison, generated a success rate of 50% gross of fees — the equivalent of a pure beta portfolio — and materially inferior success rates after fees “

Also Read on FinMedium:  Franklin Templeton and the courts – Subramoney

Good Reads

  • This wealth start up allows Indians to invest in overseas stocks and buy fractional shares of highly-valued firms like Facebook, Google, Amazon, Apple, Netflix, Tesla, and others on the S&P 500 index. ( Your Story )

  • Ben Carlson distills the crux of Financial classic books into one sentence each for us to easily understand ( A wealth of common sense )

  • Few business schools teach resilience, and today’s managerial toolkit is dominated by financial performance management. As a result, very few companies are able to explicitly design for, measure, and manage resilience. A guide to building a resilient business ( Harvard Business Review )

Keep Reading, Happy Investing.

PS: Hope you liked reading this. Feel free to share any suggestions or feedback.



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Ravi Chand
Ravichand's web home, Stock and Ladder, is devoted to the study of his life’s passion – Investing and Stock markets.
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