Prepare, Don’t Predict: Lin Wells, 100 years of stock returns, and the Lindy Principle

Using Lin Wells' Pentagon memo and Hendrik Bessembinder's research, this article illustrates that companies with sustained modest returns over long periods significantly outperform short-term high performers, suggesting investors should focus on resilient businesses that can adapt across changing world orders rather than making predictions.

Stop, Go, Yield: A Quick Mental Model for Uncertain Times

At times like these, temperament matters as much as analysis. While transitions create uncertainty, they also generate opportunity for those who remain clear-eyed. 

Fixed Income Allocations for 2025 and Beyond: A Playbook for Investors

Credit valuations appear elevated, global debt levels are high and rising quickly, and persistent fiscal imbalances risk undermining market confidence. In this piece, we discuss how investors should consider navigating the current uncertainty while improving the long-term prospects of their fixed income allocation. 

Survive and Advance

College basketball teams don't win because they are the best—they win because they find ways to survive. That’s what long-term investing is about. 

Extra Credit: Defaults Matter

We explore default risk, one of the most significant challenges in credit investing. We cover the data behind default risk, current trends and compensation, and Mawer's approach to managing this risk.

An AI Efficiency Breakthrough: DeepSeek’s Impact

A sudden release from a Chinese AI start-up rocked markets last week. DeepSeek, a new large-language model (LLM), has demonstrated performance comparable to OpenAI’s ChatGPT while dramatically reducing compute and power costs through innovative design and optimizations. This news has the potential to upend the current AI narratives and surrounding technology ecosystem that have been driving financial markets this cycle.

Extra Credit: Bank Additional Tier 1 Capital Instruments

In this piece, we cover the structure of AT1s, some history on how the space has evolved (including its use globally), thoughts on valuation, and potential use in a well constructed credit portfolio.

Dead Reckoning: Investing Lessons from the High Seas

The waters of the market are choppy and unpredictable. Investors, like sailors, must grapple with incomplete information, unexpected shifts, and the ever-present possibility of being wildly off course. The currents—momentum—can be powerful. PE multiples, EV-to-EBITDA ratios, earnings expectations, leading economic indicators, discounted cash flow models… all dead reckoning.

This article will illustrate several ideations and tools investors can incorporate into their processes to navigate the choppy, mercurial waters of long-term investing.

'Twas the week before Christmas

‘Twas the week before Christmas, so let's have some fun. Mawer recaps the main themes of 2024. 

Extra Credit: Why Not Just a “Little” High Yield?

High yield spreads continue to tighten. As risk premiums fall, and economic and political conditions appear positive for corporates in general, it is tempting to reach for yield in credit markets. As Howard Marks of Oaktree points out, the all-in yield (benchmark yield plus risk premium) on high yield is 7.0% and who doesn’t love a 7.0% return? What could possibly go wrong?

Extra Credit – Fallen Angels: Boeing on the Precipice

When this piece was being written, Boeing had not filed their US$25 billion shelf prospectus and the company was a downgrade candidate to high yield (HY) at both Moody's and S&P which would qualify them as a "Fallen Angel". The term “Fallen Angel” is often paired with its opposite, a “Rising Star”. We decided it would be interesting to highlight the importance and impact that a Fallen Angel has on both the IG market, and, more importantly, the HY or "Junk" bond market. 

Elections: Noise or Signal?

While speculators fuss over the cacophony of political campaigns and election forecasts, savvy investors recognize that the true impact of elections on financial markets is mostly short-term noise irrelevant to long-term financial strategies.

Public and Private Credit: Where investors should focus

Private credit assets have surged to $2-3 trillion USD over the past decade, but investors might benefit from shifting some focus back to public credit, which offers attractive returns, transparency, and liquidity. While both credit types share common features, the current strong tilt towards private credit may overlook the strategic advantages of a well-diversified public credit allocation.

The Long View: Global Equity Positioning in Uncertain Markets | EP 188

Global equity co-manager, Manar Hassan-Agha, examines how tariff policies have created uncertainty for businesses, particularly impacting capital deployment decisions and supply chains. Manar explains how a focus on asset-light, service-oriented businesses with recurring revenue provides resilience during volatile periods, with limited direct exposure to tariff-vulnerable exports. Through specific company examples like Admiral Group, UnitedHealth, and a beauty products business, he illustrates how the team evaluates short-term price movements versus long-term intrinsic value, emphasizing the importance of disciplined position sizing and maintaining a balanced, diversified portfolio across geographies and market caps during uncertain times. 

Investment Opportunities in a Changing Military Landscape | EP 187

In this episode, we discuss the defense industry's evolution with equity analyst Joshua Samuel. He highlights the historical underinvestment in European defense, the recent increase in defense spending, particularly Germany's program, and the strategic importance of land systems. 

Finding Silver Linings: International Investing Through Trade Policy Turbulence | EP186

In this episode, portfolio manager, Peter Lampert discusses international equities and the impact of tariffs on portfolio management.

Quarterly Update | Q1 2025 | EP185

In this Quarterly episode, Crista Caughlin, lead portfolio manager for Canadian bonds, and Jeff Mo, lead portfolio manager for U.S. midcaps, discuss market performance through Q1 2025 and the significant volatility that followed in early Q2—particularly after "Liberation Day" when the Trump administration imposed sweeping tariffs, followed by retaliation from other countries, and then a partial pause.

Market Update: April 8, 2025 | EP184

Mawer President and portfolio manager, Jim Hall, discusses the current market environment and the team's approach to risk management. 

When Tariff Waves Crash: Maintaining Course in Volatile Markets | EP 183

U.S. mid cap equity portfolio manager, Jeff Mo, discusses the market's sharp sell-off following President Trump's announcement of widespread tariffs on nearly all U.S. trading partners. 

U.S. Equity Insights: The Impact of Policy Shifts and AI | EP182

We discuss the early months of the new U.S. administration with Grayson Witcher, lead portfolio manager for the U.S. equity strategy at Mawer. Grayson touches on the impact of tariffs, including the practical and unpredictable aspects of tariffs and how they influence decision-making. Grayson also shares insights on the potential long-term effects of the AI boom and highlights recent portfolio adjustments in response to evolving market dynamics.

Credit Markets: Risks, Rewards, and the Road Ahead | EP181

We discuss credit markets with Brian Carney, lead portfolio manager of the Mawer Global Credit Opportunities strategy. Brian touches on the tightening of credit spreads, risks in the leveraged loan market, and the limited compensation for high-yield bonds relative to their risks. He also reviews concerns about U.S. government credit quality, private credit profitability, and corporate policy shifts. Looking back on Mawer's GCO strategy performance in 2024, Brian highlights future plans for growth, process refinement, and team expansion.

A “Balanced” Perspective Amid High Uncertainty | EP180

Balanced portfolio manager Steven Visscher discusses 2024 performance, asset allocation decisions, trade uncertainty, potential tariffs, and the impact of AI-driven productivity growth. He highlights the importance of long-term discipline, diversification, and staying rational in an unpredictable market, and more.

Navigating Tariff Tensions in Canada: Risks and Opportunities | EP179

We discuss the escalation of U.S./Canada tariff tensions with Mark Rutherford, co-manager of Mawer’s Canadian equity strategy. Mark provides historical context of how we got here; highlights the potential economic impact tariffs may have on the Canadian economy; provides specific portfolio holding examples of how businesses and industries may be affected; and mentions several potential benefits for Canada. Ultimately, he stresses that adhering to a disciplined, long-term investment approach is vital amid uncertainty.

Quarterly Update | Q4 2024 | EP178

We discuss 2024's economic landscape and what to expect in 2025, with Crista Caughlin, lead portfolio manager of the Mawer Canadian bond strategy. Crista highlights U.S. and Canadian growth trends, central bank rate adjustments, housing market dynamics, equity and fixed-income performance, and political uncertainties. She also discusses Mawer’s asset allocation strategy, balancing risks with opportunities amidst shifting fiscal policies, trade tensions, and global economic developments heading into 2025.

Canadian Equity: 2024 Overview and Looking Ahead to 2025 | EP177

We discuss the Canadian equity market with Mark Rutherford, co-manager of Mawer’s Canadian equity strategy. Mark highlights the key drivers behind Canadian equities' strong 2024 performance, highlighting standout sectors like technology, financials, energy midstream, and gold. He also examines challenges in telecommunications and real estate, discusses risks from slower economic growth, inflation, and higher mortgage rates, and emphasizes strategic portfolio adjustments.

Why Invest Outside of the U.S.? The Benefits of EAFE Large Cap | EP176

Equity Analyst Ian Turnbull joins the Art of Boring podcast to discuss Mawer’s EAFE large cap portfolio and tackle the question: why invest outside the U.S. at all? Ian takes us through quick two-minute drills on five of the portfolio’s key holdings. He highlights the portfolio's diversification benefits, AI's transformative potential in healthcare R&D, while acknowledging the challenges posed by regulatory hurdles, and more.