Callum Thomas is the Head of Research at Top Down Charts, a chart-driven macro research house covering global asset allocation and economics. Not only does he have a vast base of retail and institutional clients, he has a strong presence on social media with his regular “chart storms”. He joined the ETF Think Tank to discuss all things global macro, including his unique perspective on how the environment in his home base of New Zealand compares to that of the United States.
Thomas discusses first his perspective on his career move from “employee to employer” and what it was like building a research business from the ground up. He calls it “radical self-development” in that he had to pivot away from the money management side and towards the sales and business building side, which he had little experience with. He admits that his first few client sales meetings didn’t go so well, but was encouraged to keep gaining experience, honing his pitch, developing a clear and coherent message, and trying again. He thinks more about the 100th presentation because that’s when you start becoming a true professional.
Home bias is a significant behavioral flaw for many U.S. investors, but it also exists overseas. Thomas says that there are many parallels between the U.S. and New Zealand, particularly that investors have a large percentage of their portfolios dedicated to domestic equities. New Zealand also has its version of Robinhood, which has opened up the equity markets to smaller investors. Valuations are also similar, although New Zealand’s markets are more heavily skewed towards utilities and REITs. He preaches the benefits of diversification to clients, but there are some challenges in terms of being able to communicate it effectively to clients.
Thomas prefers, however, to approach his research with a focus on the global macro environment. He first takes a more agnostic view before then drilling down to more specific opportunities, looking at regions, asset classes and factors. For example, growth vs. value and emerging markets vs. developed markets are popular views. Value, in particular, is challenging because you have to be careful with how you read the metrics. You have to be patient when looking at valuations and it could be years before the opportunity presents itself.
Among Thomas’ current views on different areas of the market:
- Energy – We’ve been in a prolonged bear market where many companies were simply trying to survive. Tightening credit markets, mine closures and supply chain issues of simply getting equipment into place have extended the industry’s problems. The current cyclical upturn is encouraging, but the key factor could be capex. If shippers don’t invest in new capacity, the issues will be prolonged. Whether current conditions are transitory depends on their capex response.
- China – He wouldn’t call the market un-investable, but Thomas believes it hasn’t fallen enough to make it look attractive from a valuation standpoint. He finds emerging markets ex-China to be the better opportunity. A lot of those emerging countries are linked to the commodity story and investors remain under-allocated to many emerging markets.
- Bitcoin – Thomas sees a lack of demand for crypto within his client base, so he doesn’t cover it closely. He views Bitcoin as not really a commodity, but more of a currency. It will continue to become a larger part of the investing landscape.
- Payments & Platforms – The availability of information and prevalence of low-cost platforms has been a huge development. Even a few years ago, it could cost $60 to execute a trade. Now, they can be done for a few dollars, if not free altogether. Getting a Bloomberg terminal almost doesn’t make sense anymore because there are so many free resources available.
This week our guest will be Darius Dale, joining us to discuss research and risk management. Sign up here.
Disclosure
All investments involve risk, including possible loss of principal.
The information provided here is for financial professionals only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.
All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.
Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.
The value of investments and the income from them can go down as well as up and investors may not get back the amounts originally invested, and can be affected by changes in interest rates, in exchange rates, general market conditions, political, social and economic developments and other variable factors. Investment involves risks including but not limited to, possible delays in payments and loss of income or capital. Neither Toroso nor any of its affiliates guarantees any rate of return or the return of capital invested. This commentary material is available for informational purposes only and nothing herein constitutes an offer to sell or a solicitation of an offer to buy any security and nothing herein should be construed as such. All investment strategies and investments involve risk of loss, including the possible loss of all amounts invested, and nothing herein should be construed as a guarantee of any specific outcome or profit. While we have gathered the information presented herein from sources that we believe to be reliable, we cannot guarantee the accuracy or completeness of the information presented and the information presented should not be relied upon as such. Any opinions expressed herein are our opinions and are current only as of the date of distribution, and are subject to change without notice. We disclaim any obligation to provide revised opinions in the event of changed circumstances.
The information in this material is confidential and proprietary and may not be used other than by the intended user. Neither Toroso or its affiliates or any of their officers or employees of Toroso accepts any liability whatsoever for any loss arising from any use of this material or its contents. This material may not be reproduced, distributed or published without prior written permission from Toroso. Distribution of this material may be restricted in certain jurisdictions. Any persons coming into possession of this material should seek advice for details of and observe such restrictions (if any).
