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Investing on the edge but avoiding the buzz – Newton’s Clay

To counter this list of human foibles, Clay emphasises the value of consistency and an ability to think differently. “Having the freedom to be a contrarian when everyone is obsessed with the same thing is tremendously important,” he says. “But you can only do that if you have the right rules and the right boundaries in place.”

On the global equity income strategy, that means sticking to a framework that determines when a stock can be bought and when it must be sold. Only stocks yielding 25% above the market can come into the portfolio and they must be sold when the yield falls to equal or below the wider market.

“That means we miss out on most of those FOMO trades,” says Clay. “It imposes patience by default: we have to wait until the companies we like are cheap enough and then have to sell them – even if we don’t want to – when their valuations hit that cut-off point.”

For any investors, this kind of parameter-driven investing might be considered something of a burden – but Clay takes a different view. “It’s actually helpful,” he says. “Without those rules in place it can be really, really difficult to have the patience to wait until a favourite stock is appropriately priced. That’s especially so when it comes to investing in tech, where it’s always a case of the next big thing all the time forever.”

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