"They tend to move together": Plato’s Chanel Stuart-Findlay on the hidden risks in markets

“Investors following very different strategies can end up backing those same companies and themes, and when sentiment turns, they tend to move together,” she says.

It’s a problem Plato’s systematic approach is designed to address. The firm has distilled 20 years of stock-picking experience into stock selection criteria it applies to thousands of companies every day, while working to keep its strategies diversified across companies, countries, sectors and styles.

That process recently led Plato to Dutch banking giant ING Groep, which Stuart-Findlay says combines strong fundamentals, improving sentiment and an undemanding valuation. Meanwhile, German software company SAP has been climbing the firm’s rankings, despite fears about AI disrupting the software sector.

In this Q&A, Stuart-Findlay explains why Plato took profits in US oil refiner Valero Energy after a 100%-plus run, shares the chart that reminds her to think long term, and reveals the Ray Dalio lesson she believes every new investor should learn.

What's your most recent investment and why?

One recent addition to our portfolios is ING Groep (NYSE: ING), one of Europe's larger banks.

At Plato, our process favours companies that tick several boxes at once, and ING ticks some important ones. The fundamentals are strong. Lending is growing, fee income is growing faster than at most large European banks, and it's earning a very healthy return on shareholders' capital. 

Sentiment has improved, with analysts meaningfully raising profit forecasts over the year. And the valuation isn't demanding, trading in line with peers, while offering generous capital returns through dividends and buybacks.

Like any bank, it is sensitive to the economic cycle, but we think the valuation is reasonable for the risk.

Which investment did you add to your watchlist this week?

How much time have you got?

Our watchlist is a little longer than most, because we’ve used technology to capture 20 years of Plato’s stock-picking experience into criteria we apply to thousands of companies every day.

If I had to pick one that has been moving up our rankings, it would be SAP (NYSE: SAP), the German software giant. Software stocks have struggled amid fears that AI could disrupt their businesses, yet SAP's latest results surprised investors, with its contracted cloud business growing 26%. 

Building an AI demo is easy, but integrating AI safely into a large business is much harder, which could favour established players like SAP.

What is the most recent investment you have trimmed or sold and what drove this decision?

We don't just look at how attractive a stock is, but also how much risk it adds to our portfolio. A good example is Valero Energy (NYSE: VLO), a large independent oil refiner in the US. It's up more than 100% since the start of the year, and while we like to let our winners run, we are also mindful of how much risk we're taking in any single stock, so we've taken some profits.

What's your favourite chart or data point from this week?

It’s been a particularly volatile few weeks in equity markets, and this chart was a good reminder of the importance of taking a longer-term view. Returns can swing widely over short periods, but the longer you stay invested, the less short-term market swings tend to matter.

What was your weekly high – a standout market moment or highlight?

Last Thursday the US market fell more than 4% in a single day. The highlight of the week was that by Wednesday, it had recovered most of that fall and was back above where it started the previous week. While swings like these are certainly something to be mindful of, these periods also matter most for sticking to the fundamentals and a disciplined process.

What was your weekly low – a market disappointment or challenge from the week?

The increasing concentration in equity markets has been a long-standing issue, but another challenge that was again highlighted this week is how different investments are starting to look increasingly alike under stress. It's no longer just a handful of US tech stocks riding the AI story. 

The sell-off hit the recent winners, the stocks that swing most when markets move, hardest, and the rebound lifted them most. Investors following very different strategies can end up backing those same companies and themes, and when sentiment turns, they tend to move together.

At Plato, we spend a lot of time ensuring our strategies are diversified across companies, countries, sectors, and styles. The past week certainly highlighted the importance of this diversification.

What first drew you to markets or this sector and what continues to keep you inspired today?

As a kid, maths was my passion, and I was fortunate to be introduced to programming at quite a young age, which was rare at the time. But it wasn't until I started working at a bank after studying finance that I discovered that I could combine all three of these interests in a career in systematic equities. That inspired me to return to university for a postgraduate qualification in quantitative finance, and I haven't looked back since.

What keeps me inspired is that there is always more to learn. I haven’t been bored for a single day of my career, and I don’t think I ever will.

What's one piece of advice you'd give to new investors?

One lesson I’ve taken from experience is the importance of learning from your mistakes by building rules that stop you from repeating them.

As Ray Dalio puts it, "Pain plus reflection equals progress." When an investment doesn't work out, take the time to understand why. Was your original assumption wrong, had market behaviour changed, or was there a risk that you missed?

The real value comes from using those lessons to improve your investment process. Over time, they become repeatable rules that remove emotion from investing and lead to more consistent decisions and outcomes.

How do you unwind when you're not thinking about the market?

Other than spending time with my family, I exercise most days and love challenging myself by entering different events. I've tried everything from cycling and rowing to running and HYROX. I'm not particularly good at any of them, but I love a challenge and find it incredibly inspiring to be surrounded by people who are.

Rapid fire! 🔥

What is your favourite investing book?

Ray Dalio's Principles, both for investing and life.

What is your favourite investing or finance/markets-related podcast?

What’s the first thing you read each morning?

What is your favourite restaurant?

What’s something people are surprised to learn about you?

I'm a bit of an amateur genealogist and have traced my family history back 17 generations, using everything from centuries-old archival records to modern DNA analysis.

Think there’s a better pick? Prove it. Share your rapid-fire book, podcast, and daily read in the comments.

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