Investment Process
Being a global macro manager we strongly believe that understanding the "big picture" is the key to investment success. This approach applies to the real economy, financial markets as well as portfolio construction.
Likedealer defines two different but interconnected investment processes which represent the foundations of its investment framework.
The Investment Process at Portfolio Level defines the set of investment themes (e.g. inflation vs. deflation, water, peak oil & renewable energy), that result from the current and expected economic environment but most importantly, when and how these themes become valuable opportunities.
Investment themes are screened to create a list of high conviction ideas that are assessed individually and in the context of portfolio allocation.
Risk/Reward ratio are defined for each idea and a source of cheap insurance is always investigated before the idea is implemented.
The Investment process at Position Level is the implementation of our best ideas and it answers the following questions:
- Why we invest in something (e.g Gold)
- How we invest in it; as there are a number of possibilities to achieve exposure but with major differences (e.g asymmetric pay-off of options, ETFs, physical or pure play etc.)
- When we invest; timing is almost entirely based on technical analysis and it attempts to achieve a margin of safety for every portfolio position.
- How much we want to own; Initial weights are defined in relation to our conviction keeping it mind that perfect timing is practically impossible. Therefore, we prefer to build up the position over time.
- How the exposure is managed; that is, realize when it is the opportune time to liquidate a position partly or fully, increase the exposure or insure the exposure.