M&G’s Macro Investment Team is a dedicated team of active asset allocators, many of whom have been investing for over 20 years. In our day-to-day roles as fund managers we are frequently asked for our views. Most of these questions are pure noise and in general we try to avoid this – we don’t think anyone can consistently predict where the FTSE will finish at the end of the year, what the Federal Reserve will do, or how the Chinese economy will grow in the years ahead. To suggest otherwise on our part would be at best ludicrously over-confident.
What we do have is a sense of the inefficiency of markets and how our own emotions and other “behavioural biases” can cause decision-making that in the hard light of day is anything but rational. We think being aware of this is an essential element to being a good investor.
“Episodes” are periods in which markets become driven by behavioural rather than fundamental considerations. Investors may become overly focused on one issue, become too concerned about the short term, and fall victim to a whole host of biases which can create opportunities.
Importantly, we believe that observing these “behavioural biases” in ourselves and in markets as a whole can be interesting, amusing, and most importantly of all, useful.
Useful, in that a constant “kicking of the tyres” of what we believe, what the market believes, and how these beliefs change over time can only lead to better investment decision making.
We hope that this blog will be of use to those who are interested in our current views, or in markets in general. Most importantly though we hope that a true, unfiltered record of our own views can help us look back objectively at what we really believed, without the benefit of hindsight, and to learn from our mistakes, as well as our successes.