The Long View - value value on the wall, who is the cheapest of them all?

The Long View


Fidante identifies issues relevant to long-term investors


“The single greatest edge an investor can have is a long-term orientation.”

Seth Klarman

In the long run we might all be dead, but our portfolios are not. If you are managing a pension fund or an endowment, chances are the portfolio will continue to exist long after you retire or become an “ex-investor.” If you are working in wealth management, your clients’ portfolios oftentimes will be inherited to their children and grand-children and thus will exist even after they have started to push up daisies. Conscious or not, our investment decisions are a form of legacy that we leave behind to our clients and successors.

Yet, in our daily lives, we rarely focus on the long-term effects of our investment decisions or the long-term outlook for our assets. A typical pension fund assesses its strategic asset allocation about once a year or once every couple of years. In between, quarterly meetings of the board of trustees are typically dominated by short-term returns of the portfolio and the selected managers. Of course, both a long-term orientation and intense monitoring over shorter periods are necessary to manage a portfolio successfully, yet, every investor and trustee I know agrees when I say that in our industry we typically spend too much time on short-term fluctuations and not enough time on the long-term outlook.

This publication called “The Long View” is explicitly designed to counteract this imbalance. On a quarterly basis, we will address issues that are relevant to long-term investors. We will try to take a step back from the day-to-day gyrations of financial markets and the global economy and focus on the long-term drivers of returns, such as valuations, long-term earnings and interest rate trends, the effects of compound interest and sequence risk, etc. The reports will dive into financial market history, investor psychology, and, sometimes, economic theory to give us a deeper understanding of the trends and developments that we can expect in the coming five to ten years.

In the first four instalments of “The Long View,” we will gradually develop our models for long-term capital market assumptions. First, we focus on valuations as a main, but not the only, driver of long-term returns.

In the next edition, we will focus on the long-term earnings growth trends before we focus on the role of income in the third edition. Finally, towards the end of 2018 we will collect all the information and present our capital market assumptions for different asset classes.

For now, though, let us focus on valuations only and on global equity markets and alternative investment themes.


To view the full report click here.


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