11.12.2018 Pasi Havia

HCP Quant 11/2018 -4.91% | Haze in the Markets

HCP Quant 10/2018 -12.02% | Market Turbulence | Buyout Offer Cancelled
HCP Quant 12/2018 -3.82% | The Year 2018 | The Fund's Key Ratios and Allocation

HCP Quant returned -4.91% in November. The benchmark index MSCI ACWI SMID Value Total Return went in the other direction thanks to its large USA weighting and returned +1.19% in euros. The US S&P 500 Total Return index rose by 1.96% in euros. The S&P 350 Total Return index in turn declined by 0.74%.

We now live in a time in which stock prices are moved not so much by corporate fundamentals but other, external factors. A single tweet  can cause market drops of several percentage points and even on different continents. The clash between China and the US has resulted in it being more difficult to evaluate the business environment until the situation is resolved. Markets do not like uncertainty and all changes in the situation are easily and strongly reflected in stock prices.

A fitting analogy is driving a car. When the Sun is shining and visibility is good, one has the courage to drive faster. When sunshine changes into the darkness of the night and a haze envelops the road and the environment, visibility decreases. When you can see only a few meters ahead of the windshield, a driver immediately drops the driving speed. We are now in the same situation in the investing world. Visibility has decreased because predictability is poor. Changes in the haze immediately impact the driving speed. When a car drives into the mist it causes braking, whereas when it clears it’s immediately pedal to the metal.

It is once again good to remind of the difficulty of timing markets. Especially in stock markets, declines are fast, which makes reacting to them difficult. Rises on the other hand are slow and long. According to research, most investor trying to time markets fail at it. The reason is because the selling is done after markets have dropped and buying after markets have risen. Buying expensively and selling cheaply is not a good strategy. Usually the best solution is to sit on your hands, so to speak. Patience is currency!

This year’s last fund subscription is coming up. HCP’s funds are a good alternative to place, for example, your tax refund in. You can make a subscription electronically by clicking the button below. Remember that the subscription sum must be seen in the account on Monday December 31st at 4.p.m. at the latest, so one ought to do the money transfer a day or two before.

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Wishing you a good Christmas season,
Pasi Havia
HCP Quant portfolio manager

“The desire to perform all the time is usually a barrier to performing over time.”
– Robert Olstein

(This text is a translation of the Finnish-language HCP Quant investor letter.)

HCP Quant 10/2018 -12.02% | Market Turbulence | Buyout Offer Cancelled
HCP Quant 12/2018 -3.82% | The Year 2018 | The Fund's Key Ratios and Allocation

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