Anytime somebody has been efficiently analyzing the markets for many years, I take note of their deep dives. Paul Zummo has been doing considerate, helpful market evaluation for JPM for 3 a long time.
That is from his current “Anniversary Insights.”
Listed here are 10 often-overlooked insights that can assist you make higher funding choices:
1. Be a skeptic.
Strategy due diligence from the angle of the place does the providing “break”?2. Volatility isn’t your enemy.
Allocators usually focus an excessive amount of on supervisor volatility; in a portfolio context, it’s hardly ever the problem.3. Concentrate on the tail.
Being “uncorrelated” is sweet; being uncorrelated within the tail is highly effective.4. Have the braveness to make errors.
Mitigate pointless dangers however take calculated bets.5. Simply say no.
You’re extra more likely to remorse making a failed, poorly conceived funding than lacking an excellent one.6. Foundation kills.
Concentrate on misalignment between your longs and shorts, as two bets are riskier than one.7. Don’t be afraid to run into fires.
A few of the biggest funding alternatives and supervisor entry are sourced throughout dislocation.8. It’s solely an excellent funding when you can maintain it.
Stress take a look at not solely the portfolio but in addition how the enterprise, financing and counterparty threat maintain up underneath materials market stress.9. The other of a protracted isn’t a brief.
Nice brief sellers are wired otherwise; don’t count on success on the lengthy facet to essentially translate to a profitable brief guide.10. Don’t make logical choices based mostly on flawed data.
Take the time to make sure high quality inputs and recognize the flood of biased data throughout market extremes.
Try “10 easy however highly effective elements of due diligence,” numbers 11-20 on this checklist; and “10 reminders that can assist you keep a step forward,” nos 21-30 additionally from the complete checklist of 30…
Supply:
JPMAAM’s Pearl Anniversary Insights: 30 “pearls” of knowledge from our final 30 years
by Paul Zummo
JPM, April 2025
