One of the trickiest aspects of asset management is identifying potential alpha and beta in terms of future company performance. Despite assertions to the contrary, the answer is not always that positive alpha is a result of manager genius, whilst negative alpha is the result of bad luck! Similarly, one of the hardest concepts to explain to newcomers is how to structure a process which will quantify and incorporate their qualitative view of a management team into a company valuation. Identifying these quantitative aspects is difficult, as the relevant factors change according to the market cycle. However, as we enter the next phase of the cycle, identifying key qualitative factors is particularly relevant in current market conditions, gradually adjusting to market equilibrium as inflation and interest rates hopefully peak.
Qualitative positioning for the next phase
The Professor
