Assume nothing, new models and analytical tools, coupled with constant revision, questioning everything, reassessing, and re-analyzing, are essential to success in today's markets. Often, and we are seeing that in today's market, relying on bad assumptions, dogma, or prior belief can be disastrous. This story about medieval astronomy applies directly to investment strategies, market valuations, and portfolio construction today. It's the same lesson –begin by questioning the very assumptions on which an entire system is built. There is also a very specific application of this model that is particularly current. One of the most valuable lessons is to assume no knowledge and analyze closely every initial assumption. Nothing is so obvious that it can't be questioned. Unexamined ideas and assumptions will eventually be useless. Any assumptions and any model used to explain and predict anything (whether it's the movement of planets or financial markets) needs to go back to first principles and discard any assumptions, preconceived knowledge, or bias.
Straightforward analysis and simple formulas are inadequate. In Nicholas Mitsakos’s new book, “Investment Principles: Strategies for an Irrational World” (Investment Principles: Strategies fo…
Nicholas Mitsakos says AI is the beginning of an ambitious phase that will include more accurate, less biased & effective prediction tools
Nicholas Mitsakos is emerging as a leading player digital asset and crypto space by combining core asset management experience along with new digitized finance decentralization. He is actively maki…
Nicholas Mitsakos gave a lecture at a graduate program for innovation, technological disruption and the impact on global industries.
Nicholas Mitsakos is an early and active investor in the digital asset and blockchain industry. He focuses on extensive and deep research to develop investment strategies. Digital asset investment is in its early phases, but success requires disciplined investment experience, and he has developed strategies and standards over decades of work and is now focused on specific opportunities within digital asset space. Visit At:- https://arcadiacapitalgroup.com/nicholas-mitsakos-chairman/
Investment Principles: Strategies for an Irrational World proposes a context for understanding – a broader, methodical, and disciplined way to think about investing. Investment success requires understanding many elements ranging from global economics, competitive and microlevel analysis, game theory to human behavior and emotions.
Read out the latest facts about rising food and fuel prices because everyone has to be prepared for rising costs on the grocery bill.
Nicholas Mitsakos write about his living experience in the different cities of the world like London, New York, Singapore, Honolulu, etc.
Nicholas Mitsakos states, “We will not fight a war in Ukraine against Russia, as it will start World War III”, but it has already started.
Investment models that account for uncertainty, volatility, and failure succeed in the long term. Events in Ukraine, oil and natural gas markets, commodities, supply chain disruption, and spiking inflation highlight that, while none of these were predictable, all represent increasing uncertainty permeating all markets. The pandemic and war in Ukraine were unforeseen, but that’s just the point, unforeseen events will occur. It is a waste of time to try to predict the specifics, it is an essential investment strategy to manage risk to not only withstand but profit from “certain uncertainty. "Irrationality, not only in human behavior (with unfortunate, often tragic results) but market movements, investment volatility, and bewildering prices, is another certainty. “Mr. Market” as Benjamin Graham said, “is an irrational schizophrenic.” Investing as if he is not assures an investment strategy that will ultimately fail.
Distinguishing what's happening in the market and the direction of important market metrics - the signal - from garbled, inconsistent, and mostly useless data – the noise - is extremely challenging today. Information is contradictory and transient making data and critical events more confusing and indistinguishable. Unusual circumstances brought about by the pandemic, subsequent supply chain interruptions, inconsistent production and demand, and unclear economic forecasts combined for almost unprecedented uncertainty and unpredictability. Typically, near-term predictions are reasonable and reliable because we have immediately available and fairly accurate data making short-term predictions reasonably accurate. In other words, we can estimate what will happen because we have a good idea what just happened. But this is not the case today. Predictions based on the near-term past are more muddled now than ever. While we used to be able to say we can see a trend, whether that’s inflation, economic growth, or some other important metric, too much volatility, irrelevance, and lack of applicability (after all, who is going to project from a base that includes a pandemic impacting global supply chains and production?), we really can't reasonably rely on any of that data to try to find a trend or connect the dots generating a near-term forecast with any meaningful depth of data and understanding More intense volatility occurring more often will be characteristic of this market from now on. An investment strategy must withstand and profit from this. The only clear signal from the market is that there is far too much noise and not enough of a clear signal. Without clarity, determining an investment strategy is flying blind with no instruments. Core holdings combined with an ability to withstand and profit from volatility and unpredictability are essential for investors today.
The onslaught of market-making bad news seems almost a daily event. A gloomy picture of slowing economic growth, elevated inflation, and confusing fiscal and monetary policy has added a lethal mixture to the market’s performance. Fiscal stimulus is sidelined, and monetary policy is constricting economic growth and entrepreneurial innovation. It makes for a gloomy outlook and an even more depressing long-term perspective. The next 10 years look more like a lost decade. High-growth company valuations have been significantly discounted, and over time as discount rates drop, their valuations are likely to increase substantially. Higher-yielding fixed income securities will be a standout performer as interest rates are reduced, the higher-yielding BDCs, REITs, leveraged loan securities, and high cash flow instruments, along with high-dividend equities, will prove extremely attractive and are currently available at bargain prices. Providers of value and users of value will be the winners for the next decade. Those generating real cash flow and disruptive innovation will define the next decade.
Separating signal versus noise is challenging these days because today's signal is more muddled than ever. One of the more unusual circumstances, which I covered in more detail in the article "Important and Unknowable" is that the immediate past is telling us extraordinarily little about the near future. That is unusual because we can typically estimate the near-term by connecting the dots with reasonable depth and data from the recent past.One of the reasons why people have inflation fears, currency tremors, market jitters, and emotional vacillation between joy and terror is that all these outcomes seem equally likely that any sense to realistically gauge the directions of these key metrics. We can usually rely upon near-term data to predict the near-term future, and that usually gives us a reasonable sense of comfort about the markets, and how to plan, prepare, predict, and withstand anticipated market moves. But that does not seem to be the case now.
Collectively, the world is good at screaming about all sorts of immediate and looming crises, whether that is climate change, totalitarian governments abusing civilians and trampling on personal rights or outright genocide. A speech and a prayer suffice but we’re not going to do anything. Donation websites, lighting buildings in flag colors of abused nations, and sending hopes and prayers accomplish nothing. We send prayers. We just won't answer them. The Ukraine war’s consequences are severalfold. Economically, global consequences may be slower and less spectacular than the dramatic Russian military invasion. But, the effects will permeate the global economy, and Russia will be the biggest long-term loser. While this does not comfort families suffering and dying in the streets of Ukrainian cities, it realigns global industries and economies, strengthens the West, and is likely to galvanize United States' leadership in the global economy – setting up even more intense rivalry China. A big uncompromising response now is the most likely strategy to settle these dramatic issues – and if it leads to regime change in Russia, that helps everyone, especially the Russians. The US and the EU need to grow up and start acting like global leaders.
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