Merryn Talks Money Buy and Hold is Dead. Billionaire Michael Spencer on Why Good Investors Trade A Lot.
Mar 21, 2025
Michael Spencer, a UK billionaire and the mastermind behind ICAP and Nutshell Asset Management, breaks down modern trading strategies. He argues that the traditional buy-and-hold philosophy is outdated, emphasizing that trading costs have drastically decreased. Spencer delves into the significance of private investments and how AI can enhance decision-making. He critiques American market overvaluation while advocating for reforms in the UK to boost competitiveness. It's a fascinating take on adapting to new market dynamics!
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Nutshell's High-Turnover Active Strategy
- Nutshell Asset Management uses a novel, high-turnover active trading strategy.
- It buys stocks when cheap and sells when expensive, processing global data on thousands of stocks in real-time.
Low Trading Costs Favor Active Trading
- Trading costs today are microscopic compared to the past.
- High turnover strategies can generate alpha if execution and commissions are minimal.
Passive Investing Hurts Price Discovery
- Passive investing undermines market price discovery by allocating capital without stock valuation.
- Extreme momentum builds up as passive investors pile into overvalued stocks indiscriminately.