A Look At Equity Market Risk From A Debt Perspective

A Look At Equity Market Risk From A Debt Perspective, At Benguela we focus most of our forward-looking efforts on the fundamentals of individual securities rather than a broad sector or geographic outlook. However, this does not mean we do not look at macroeconomic factors at all; nor does it suggest that we think they are not important. In fact, to the contrary, Benguela hosts a macroeconomic strategy session on a quarterly basis (under the leadership of the CIO) to review the big picture in which our target securities operate.

Nonetheless, we recognise that even if we spent all our productive time on macroeconomic analyses, we would still come out with a low level of conviction given the complexity of such a task. We liken the complexity of macroeconomic forecasting to trying to predict which atoms in a nuclear reactor would produce the most energy during the nuclear fission process. Our approach focuses on a few broad variables like interest rates, inflation, money supply, GDP drivers and the capital markets cycles (debt/equity) in broad sectors and key geographies.