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.
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