Anytime someone has been successfully analyzing the markets for decades, I pay attention to their deep dives. Paul Zummo has been doing thoughtful, useful market analysis for JPM for three decades.
This is from his recent “Anniversary Insights.”
Here are 10 often-overlooked insights to help you make better investment decisions:
1. Be a skeptic.
Approach due diligence from the perspective of where does the offering “break”?2. Volatility isn’t your enemy.
Allocators often focus too much on manager volatility; in a portfolio context, it’s rarely the challenge.3. Focus on the tail.
Being “uncorrelated” is nice; being uncorrelated in the tail is powerful.4. Have the courage to make mistakes.
Mitigate unnecessary risks but take calculated bets.5. Just say no.
You’re more likely to regret making a failed, poorly conceived investment than missing a good one.6. Basis kills.
Be aware of misalignment between your longs and shorts, as two bets are riskier than one.7. Don’t be afraid to run into fires.
Some of the greatest investment opportunities and manager access are sourced during dislocation.8. It’s only a great investment if you can hold it.
Stress test not only the portfolio but also how the business, financing and counterparty risk hold up under material market pressure.9. The opposite of a long isn’t a short.
Great short sellers are wired differently; don’t expect success on the long side to necessarily translate to a successful short book.10. Don’t make logical decisions based on flawed information.
Take the time to ensure quality inputs and appreciate the flood of biased information during market extremes.
Check out “10 simple but powerful aspects of due diligence,” numbers 11-20 on this list; and “10 reminders to help you stay a step ahead,” nos 21-30 also from the full list of 30…
Source:
JPMAAM’s Pearl Anniversary Insights: 30 “pearls” of wisdom from our last 30 years
by Paul Zummo
JPM, April 2025
