Introducing Anke N. Richter, CFA

I fell into it more by accident when I started at JP Morgan in London in the credit department. For me the most fascinating is that markets are not like maths. It is not always 1+1=2. While markets are not irrational (only occasionally), they do not follow a strict logic like maths. We do our best to analyze markets and come up with good recommendations, but we learn every day and markets surprise us.

I don’t think it has really changed over time, it starts with solid fundamental analysis. Does the business model make sense and most importantly are cash flows generated? And the old rule still applies, don’t buy it if you don’t understand it. Also there is no such thing as “ This time it is different”.

Probably the Great Financial Crisis with Lehman going under and the Sovereign Crisis. These were situations where I saw things happening which surpassed my imagination. So my advice: Just because you have not seen it before, does not mean it cannot happen.

A big trend is private credit which has developed outside of the public market. Going forward, it will be interesting to see how AI shapes credit investing.

I think the growth in private credit will continue and it will be an important market. AI is obviously a big topic for investors. Is it a bubble? Which part of the AI value chain should one invest in? Hyperscalers, chipmakers, neoclouds, datacenters etc. I have published a large report on datacenters this summer where I looked at the risks and opportunities but also developed a valuation framework for bonds to guide investors. As the sector is very young and investors are still learning about it and have yet to find a valuation framework, we think there are investment opportunities, but you need to be selective. The report has our top picks.

Probably the biggest misconception is that equity markets are exciting, and bond markets are boring.

Numbers are important but they are backward looking. When we think about investments, it is about how a company will perform in the future That means we need to have a view about the market, the competitive environment, the strategy etc which are qualitative in nature.

Credit spreads are not very generous, although all-in yields look attractive with the rise in rates. As credit spreads are tight, we believe that quality is still the place to be. We like to buy subordinated paper of strong issuers, we think the risk-return relationship is favorable.

The fall of Enron. Still to this day people are talking about how amazing management presented at events. The lesson is there are managements which are really good at presenting, but not very good at managing a company. And there are managements which are terrible at presenting, but really good at managing a company. Unfortunately, you only know with hindsight which one is the case.

Independent research is important in order to have also a different perspective, but there is not much available. General problem with research: everybody wants it, nobody wants to pay for it.

Think for yourself. Just because somebody works in a big American bank does not mean that they know what is going on. Not everybody who publishes research is good at their job.