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Consilient Observer
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May 20, 2020

Myth Busting, Popular Delusions, and the Variant Perception

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May 20, 2020

Myth Busting, Popular Delusions, and the Variant Perception


Consilient Observer

Myth Busting, Popular Delusions, and the Variant Perception

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May 20, 2020

 
 

We address four myths or popular delusions in the investment industry:

  • Short-termism is rampant and deleterious: We hear this argument made a lot but often without concrete evidence, so we critically examine some of the claims to see if they hold up;
  • Dividends play a large role in equity returns over time: We show that price appreciation is the only source of investment return that increases accumulated capital;
  • Investing in money-losing companies is a bad idea: This is too simplistic, as some money-losing companies may still have attractive economics; and
  • The rise of indexing has made it easier to be an active manager: If the investors who have turned to indexing tend to be less skillful, the remaining investors are left competing against stronger competition, making it harder to generate alpha.
 
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Counterpoint Global consists of 42 people, including 21 investors, five disruptive change researchers, two consilient researchers and two sustainability researchers. Counterpoint Global’s culture fosters collaboration, creativity, continued development, and differentiated thinking.
 
 
 
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