Research Process and Philosophy
How we approach the world of macro and markets
You might have looked over some of the sample reports on here, and while that certainly helps get a feel for what is on offer, it can be a bit of a mystery when you’re doing due diligence on a research provider in terms of just what exactly they do…
This post aims to shed some light on how we approach the world of macro and markets: and the philosophy and beliefs that underpin the insights in the reports.
Overall Research Process/Framework
The table below outlines the major parts of the research process: typically the process involves starting with a valuation anchor to guide the strategic view, then bringing in macro/cycle/policy considerations to build out the medium-term view, and then rounding it out with tactical considerations (sentiment/technicals) to help finesse the timing aspect and raise conviction in the idea.
Of course sometimes the process moves in reverse e.g. maybe starting by looking at a market that is undergoing a technical breakout and then filling out the rest of the picture (valuations, macro) to see if it makes sense or is just noise.
Underpinning that framework is a set of core beliefs that help tie it together and serve as a guiding force through sometimes chaotic and uncertain conditions.
Core Beliefs on Research and Investment Management
With good research and a sound process active asset allocation can add value
Relying on one indicator/variable is risky (technicals vs fundamentals vs macro)
Different indicators take on different importance through the cycle
Risk management is just as important (maybe more) as swinging for the fences
Charts/Data/Indicators can help drive intelligent investment decisions
Better to make decisions on what we can observe vs forecast
Making money is more important than “being right”
Investing is a competitive endeavor: innovation is vital
As you can gather it is a process which is grounded in pragmatism, and focused on actually helping clients achieve their goals.
Objectives and Scope of Research
That brings us to the question “what are you actually trying to do?“ (something we ought to ask ourselves from time to time). Basically at the highest level it’s to help portfolio managers do their job. Practically this means providing risk management input, presenting a flow of ideas, and building perspective with meaningful macro insights and market studies.
In terms of the scope of the research, it is an unconstrained global multi-asset universe. The big focus is on getting the main thing right (i.e. growth asset vs defensive assets), but also on finessing the allocations within/across asset classes through the cycle - with an emphasis also on coming up with interesting ideas around the edges.
For those who are already familiar with our work this should all make abundant sense, but even if this is your first time looking into Topdown Charts the above should give a feel for the “how” and “why“ of what we do.
If you have any questions or thoughts on this article feel free to get in touch direct or simply leave a comment below.
p.s. also, check out the “track record“ article for further context
p.p.s. if you haven’t subscribed yet you can do that here
Head of Research & Founder at Topdown Charts