This is the inaugural posting of my new blog AlphaBetaAsia. I am an investor and have been for a couple of decades, and the object of the blog is to share the benefit of my experience, at a time when investors need all the guidance that they can get. Although this blog will tend to be focused on Asia it will not be exclusively, as I have invested globally over my career. However Asia appeals to me as an investor due to the long term opportunities, and the chance to buy companies cheap, when sentiment swings too negative, as well as short/exit when the markets get too frothy.
Currently the lustre has well and truly been removed from China and India, the two big emerging economies in the region, and Japan looks like an old rusted bucket – dented and leaking. However in the world of investing nothing is ever perfect, and investing is rarely easy, yet there are always opportunities out there. Our job as investors is to go and find them.
Over the last 2 years it has been difficult generating genuine alpha as the market has been much more about gauging when to put risk on and when to take it off. This has largely been down to the global debt crisis, which keeps rearing its ugly head in peripheral Europe, but could actually pop up anywhere in the future – Japan, USA, UK, France etc etc. Tail hedges continue to be essential.
As I said generating alpha has been difficult, but it has not been impossible. Calbee (2229 JP) which has been one of my favourite discoveries of the last 18 months has been a great performer (+60% YTD), and it has performed fro all the right reasons – new management leading to improving margins, improving growth opportunities. The stock is too expensive now, so we do not need to own it, but it highlights the fact that there are opportunities.
However this does not get away from the fact that in this risk on/off environment, we need to manage the beta of our portfolio our investment objective should be to identify our alpha opportunity and it isolate it with a hedge, and then make a decision on whether we want risk on or off.