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New Road Capital's Two Cents : The Illusion of Certainty

In this article, we examine overconfidence and hindsight bias in predictions, using the 2024 US presidential election as an example. We draw parallels to investing, warning against overconfidence in active stock picking while suggesting that portfolio diversification is a powerful tool for reducing risk.
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Citywire Article - Consistently delivering the average ‘transforms into excellence’

JC Louw, chief executive of Custodian Investment Managers, believes delivering predictable and consistent average returns ultimately transforms into excellence. ‘Leave your ego by the door. No one’s bigger than the market. If you think you’ll outperform the market, you’ll fail. Keep it simple. Know your strengths,’ Citywire + rated Louw said during a Boutique Collective Investments webinar. ‘Where does performance come from? Most studies show that 90% of returns come from asset allocation. If you get the allocation right, a lot of your returns will follow. Keep your risks low. Make sure you take just enough risk for the product you’re managing,’ he added.
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New Road Capital's Monthly Wrap Up - June 2024

June saw remarkable market performance, especially in South Africa, with equities and bonds rallying strongly post-election. The ALSI rose 4.1%, while the ALBI index achieved an impressive 5.24% return. As fears eased, the rand also strengthened significantly over the month, ending at R18.18 to the dollar. Inflation remained well-controlled both locally and in the US, opening up the door for future rate cuts. These positive developments, coupled with potential interest rate cuts, paint an optimistic picture for markets going forward.
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