Argonautica

Professional investors can review published thought leadership and market updates from the Argonaut Investment Team.

‘Current yield gap calls for an allocation to European equities’

In Europe, the yield gap or difference between equity yields and bond yields is reaching historic highs (again). History shows that this is an important signal to investors. Indeed, the extent of the current yield gap has not often been seen over the last 20 years – and when it has occurred, investors who moved in to equities have been rewarded - not only would they have generated strong total returns, but also locked-in attractive yields for their portfolios. Although against the grain of current…

‘The hedgehog market’

“The fox knows many things, but the hedgehog knows one big thing” Ancient Greek poet Archilochus The hedgehog knows only one very important thing: when in danger it will curl up into a prickly ball to defy the cunning fox, who despite knowing an infinite variety of things, is defeated. The Oxford philosopher Isaiah Berlin (in his essay on Tolstoy in 1953[1]) divided up historical figures between hedgehogs and foxes: those who believed in a central unified philosophy in which all other things made…

‘Déjà vu Trichet 2008: Central banks tightening monetary policy into an economic downturn’

Ignoring the gathering storm in US sub-prime mortgages and tangible signs of a slowing European economy, the then ECB President Jean-Claude Trichet infamously presided over an ECB rate hike in July 2008, subsequently seen as hastening the onset of the global financial crisis. Then inflation in the Eurozone was running at 4% and the ECB’s backward looking models suggested that a 25bps hike to 4.25% was appropriate. This hike was the proverbial straw that broke the camel’s back. Just three months later…

‘European equities - an overlooked source of income’

Whilst the UK market on a headline basis is the highest yielding major market globally, it is Europe which we believe presents perhaps the greatest source of income opportunities and means by which to diversify one’s income portfolio. It is a market which is grossly overlooked by investors, yet contains a vast array of attractive income stocks – far more than any other major market, with the most dispersion across sectors and the strongest dividend growth rates.   The scope in Europe becomes apparent…

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