Investor optimism is at a low point due to a lack of confidence in the financial system, and the reasons for this are many and varied. From the financial crisis of 2008 that erased a significant amount of investor savings to the Flash Crash of 2010, or scandals from the likes of Bernie Madoff and the exorbitant compensation of big financial firm executives, it is no wonder that the average investor has a dreary view of wealth creation via stock market investments.
The Financial Times ran a compelling story recently discussing how trust might be re-established with investors. The columnist summarized a number of salient points from a report written for the U.K. government by London School of Economics academic John Kay on how to restore trust in the equity market. The article caught my eye not only because I strongly agree but also because many of the suggestions are in line with how Burgundy has been managing investments since our inception: we behave like owners, invest alongside our clients and run concentrated portfolios with high active share.
To access the Financial Times article, please follow this link – A Return to Vision of J.P. Morgan.
The full research piece by John Kay (100+ pages) can be found here.