Grant Cotty
Back to our peopleInvestment Trader | BCOM (FIN.), MBUS (FIN.), MBA
Biography
Grant is responsible for the execution of trades across the wide array of financial instruments carefully selected for our portfolios. Within this capacity, he also oversees the propriety trading systems.
Grant joined NZ Funds Management after completing his MBA at two globally recognized institutions: UNSW in Sydney and the Wharton School in Philadelphia. He also holds a M.Bus. and B.Com. from the University of Otago; both in finance. During his M.Bus., he completed a thesis on technical trading in the New Zealand and Australian markets. Grant’s previous experience included transacting both foreign exchange and interest rate products within the markets division of BNZ.
Approach
One only needs a casual interest in financial market to see that equity markets are too volatile. A central tenet of financial theory, the Efficient Market Hypothesis, states that prices should only react to new information. Given the relentless whiplash of financial markets, it is easy to see that volatility is not just the result of new information assimilating into prices. While finance academics have and will continue to argue this point, I have found more plausible explanations in other disciplines away from “traditional” finance, such as behavioural finance. Behavioural finance draws upon large parts of psychology, which have been extensively researched and documented, and models how people actually behave - not how some optimising robot would. Ultimately, the markets are run by people, and people are prone to have their decision-making process warped for a variety of reasons.
My investment approach is based on the assumption that people and the market are not always rational. While this irrationality can yield opportunity for short-term profits, the most consistent way to beat the fluctuations of fear and greed is to avoid them by taking a longer-term perspective. A longer-term perspective means doing the hard-work, finding good assets, and holding them through the inevitable market turbulence. To be a successful long-term investor requires three attributes: a depth of independent research to avoid the consensus; the conviction to hold good assets when they are out of favour; and, a risk management framework to minimise losses while the market corrects itself.
