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Addidi Insights - We Are All Slaves To Our Behavioural Weaknesses

We are all prone to making mistakes when investing, not because we are foolish, but because we are human. It does appear that a switch inside even the most sensible person seems to flick and rationality disappears in a cloud of emotion, when we begin to think about the markets. This note highlights some of the dangers and provides some tips on how we can attempt to behave better. In short, the answer lies in adopting a disciplined process.

Posted by Anna Sofat on 11 April 2017
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If I were a rich man - human capital and financial capital

We tend to regard wealth as financial assets, large houses, and nice cars accumulated through a life of hard work. Yet that is to view wealth in narrow terms; on the very day we are born we are wealthy in terms of our human capital, or in other words, the present value of all the future earnings that we will generate over our working lives. This needs to be reflected in how we invest during the accumulation phase of investing.

Posted by Anna Sofat on 14 February 2017
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Addidi Newsletter - The Foundation Stones Of Good Investing

When investing money, it is often tempting to spend time thinking about what to invest in rather than how to invest. If investors spent more time thinking about the latter, their investment experience is likely to be a more fruitful one. Although investing is not easy, these ten, simple foundation stones lay the platform for success...

Posted by Anna Sofat on 12 August 2016
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The Outcome Of The Referendum And Your Portfolio

With the UK’s referendum vote on whether or not to remain in the EU almost upon us, this note looks at the impact that BREXIT could potentially have on client portfolios. The market risks may seem material, but they are mitigated by the ownership of robustly structured, well-diversified portfolios. The key is to stay calm in the face of market uncertainty. ‘This too shall pass’ as the investment sage John Bogle has said many times before at other seemingly concerning times.

Posted by Anna Sofat on 10 June 2016
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Addidi Newsletter - The Fall & Decline Of Buy-To-Let

The British continue to be obsessed with buy-to-let property, based on a simple narrative that provided the owner is covering his or her mortgage costs, all will be well, as house prices always rise. There is no doubt that many established buy-to-let landlords have made considerable money, but the past is not prologue. Without due care and attention to the rapidly falling profitability of buy-to-let property – not least due to recent tax reforms – newcomers and those with high loan-to-value mortgages risk getting their fingers burnt. Caveat emptor! ...

Posted by Anna Sofat on 20 May 2016
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Addidi Newsletter - The Ordinariness Of Market Falls

It is all too easy to get overly concerned about falls in the equity markets from previous highs. As humans, we are hard-wired to be concerned about recent events and feel losses keenly. However, it is also easy to ignore the fact that interim losses occur with monotonous regularity. Reminding ourselves of this fact, combined with a justified confidence in the power of global capitalism, allows us to overcome some of the concern that we may feel from time to time. Top tip: don’t look at the value of your portfolio too often...

Posted by Anna Sofat on 13 April 2016
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Addidi Newsletter - Expected Returns

All investors know that risk and return are related – taking on more (sensible) risk should provide higher returns, over time. Yet there are no guarantees. Advisers will often talk about target or expected returns from portfolios needed to deliver the financial goals of the client. Where do they come from and how can they be used sensibly?

Posted by Anna Sofat on 15 January 2016
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Addidi Newsletter - Smoke, Mirrors & The True Cost Of Investing

In this day and age, price comparisons are quite easy to make, particularly when it comes to buying tangible goods, as the internet provides great transparency. When it comes to investing, gaining meaningful insight into the real costs incurred is extremely hard and approximate. We have a go using the latest insights available. The result: a passive investment approach is extremely competitive...

Posted by Anna Sofat on 13 November 2015
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Addidi Insights - Peer To Peer Lending

Much has been written over the years about the increasing disintermediation of the banks. Their traditional role as lenders and – via their investment banks – issuers of equity capital, has been undermined by other market participants such as hedge funds, mutual funds and private equity firms. Now, individuals are beginning to participate in this process too, lending to individuals via peer-to-peer lending schemes and raising equity capital via crowd funding in search of a return. This note explores peer-to-peer lending. Conclusion: not mainstream any time soon, higher risk than first appears, but an interesting innovation worth keeping an eye on....

Posted by Anna Sofat on 4 September 2015
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