02
Oct
2020

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Investment and speculation

For centuries there have been speculators hoping to find the path of least resistance to wealth and riches. Stock markets as an asset class have proven potential to create immense wealth, but are an open arena for both the speculator and investor.

Over smaller stretches of time speculators can generate large returns, but the sustainability of these returns over the long term is highly unlikely. We would argue strongly in favour of choosing the path of investment over speculation as a means to build wealth.

Investing and speculation as approaches to the stock market are wholly-irreconcilable. The investor will do diligence on their investments, basing decisions on data and sound analysis. The speculator, on the other hand, dispenses of these requirements and launches carelessly into the stock du jour. The investor recognises that price and value often diverge, and uses this fact to their advantage, selling when prices become overly-sanguine, and buying when others are misguided by fear. The speculator makes no such distinction between price and value, preferring to instead follow what’s working at the time, with the hope of selling out before everyone else does. This is akin to a large party where everyone wants to continue dancing until the music stops, at which point hundreds of people will try to exit through the same door.

Notably, speculation has been alive and well for centuries, and it is in human nature to want to shortcut the journey to wealth creation. The book Facts, Failures and Frauds (1859) by D. Morier Evans notes that “Without any great violence, all the incentives to commercial crime may be brought under the one common rubric – the desire to make money easily and in a hurry…but still actuated by the same desire, is the reckless speculator, who would risk everything in the hope of a sudden gain, rather than toil safely and laboriously for a distant reward.” It is in this sense that the stock market can hold a certain allure – it’s an accessible venue where stories of overnight riches abound.

There are clearly success stories of those who have speculated in the stock market. However, these outcomes have been driven by luck rather than skill. It is this lack of repeatability of the process that created those investment gains which dooms the fortunes of the speculator in the long run. While it might seem far less exciting, we are proponents of an investment approach that strives for repeatability of process in picking quality, undervalued stocks that have a high chance of creating wealth over a period of decades.

Our Funds

The Montgomery Fund

  • AUSTRALIA/NZ
  • Concentrated high conviction equities
  • From $25,000
Learn More

Montgomery Global Fund

  • GLOBAL
  • Concentrated high conviction equities
  • From $25,000
Learn More

Montaka Global Access Fund

  • GLOBAL
  • Access long/short global equity portfolio
  • From $50,000
Learn More

Montgomery Global Equities Fund (ASX:MOGL)

  • GLOBAL
  • Concentrated high conviction equities
  • No minimum investment - see your broker limits
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Montgomery Small Companies Fund

  • AUSTRALIA/NZ
  • Concentrated high conviction equities
  • From $25,000
Learn More
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Our Funds

Concentrated High Conviction Equities

Listed

Montgomery Global Equities Fund (ASX:MOGL)

Global
Available on the ASX as an Exchange Traded Managed Fund, invests in 15 to 30 quality global businesses for long-term capital growth with a target distribution yield of 4.5% per annum. Mirrors the strategy of the Montgomery Global Fund.
Unlisted From $25,000

Montgomery Global Fund

Global
Invests in 15 to 30 quality global businesses for long-term capital growth. Priced daily. Mirrors the strategy of the Montgomery Global Equities Fund (ASX:MOGL).
Unlisted from $25,000

The Montgomery Fund

Australia/NZ
Aims to provide long-term growth and income by investing in 20 to 40 high-quality Australian and New Zealand businesses trading at attractive valuations. Priced daily.
UNLISTED FROM $25,000

Montgomery Small Companies Fund

Australia/NZ
Aims to provide long-term growth by investing in 30 to 50 high quality, undervalued, Australian and NZ small and emerging companies with strong growth potential. Priced daily.
Unlisted from $1 Million

The Montgomery [Private] Fund

Australia/NZ
Seeks to deliver absolute returns from a portfolio of high-quality Australian and New Zealand businesses. Capital preservation is paramount. By invitation only.

Alternate Equity Strategies

New Fund

Montaka Global Extension Fund (ASX: MKAX)

GLOBAL
An ASX-quoted managed fund, typically, the Fund seeks to hold 15 to 30 long positions and partially offsets these with 10 to 40 short positions, operating with 130% exposure to its long portfolio and 30% exposure to its short portfolio, resulting in a net market exposure of around 100%. Features a target distribution yield of 5% per annum.
Unlisted from $50,000

Montaka Global Access Fund

Global
Aims to generate materially higher risk-adjusted returns, net of fees, than is generally available in the equities market over the medium term. Priced monthly. Provides retail investors access to the Montaka Global Fund.
Unlisted from $1million

Montaka Global 130/30 Fund

Global
Provides the opportunity to benefit from both the gains of extraordinary businesses and the declines of deteriorating businesses through a global equity active extension strategy, which has the potential to significantly outperform the broader equities market over time. Seeks to generate double-digit annual average returns, net of fees. Daily priced.
Unlisted From $1 Million

Montaka Global Fund

Global
Aims to generate materially higher risk-adjusted returns, net of fees, than is generally available in the equities market over the medium term. By invitation only.