Perspectives
Ukraine, Energy & Inflation
March, 2022
It is a truism that the Russian economy is dependent upon energy exports, principally oil, for its balance of payments. According to the International Energy Agency (IEA) Russia accounts for 5 million barrels a day on world export markets some 12% of total demand. That export success is not matched by an equal desire for […]
Sanctions in a digital world
March, 2022
For the past two weeks we have read daily reports of new financial sanctions that have been imposed on the Russian state, Russian companies and Russian individuals by countries in the West. It may surprise you to know that more than half of Russia’s central bank reserves are actually not covered by any sanctions as […]
The confusing of risk and uncertainty
February, 2022
When investing, it is important to differentiate between risks and uncertainties. Uncertainties, in the words of the former US Secretary of State Donald Rumsfeld, are unknown unknowns. Risks, on the other hand, are known unknowns. For example, if you were planning to collect a friend or family member from the airport, the probability that their […]
Not all that glistens is gold
February, 2022
Many investors have become obsessed with interest rate rises in the short term and on how this affects the valuation of a company. We have written many times over the past decade that until interest rates provide, or are forecast to provide, a positive real return on a multi-year basis, not a lot has really […]
Drink Deep or Taste Not
February, 2022
“A little learning is a dangerous thing, Drink deep, or taste not the Pierian spring.” Alexander Pope, “Essay on Criticism” (1711) Augustan poetry may not be to your taste, but Pope’s rhyming couplet contains a truth that is often forgotten by investors. It is important to know and understand what you are invested in and […]
Context is vital when investing for the longer term
January, 2022
As January draws to a close one point has confused many investors: why is my portfolio value down whilst the Footsie 100 has risen? This observation is a valid one over this short period and we feel it needs explanation and putting into the context of history. Firstly, the geographic breakdown of our strategies is […]
Stockmarket Volatility
January, 2022
Investment management is a discipline founded on mathematics, however there are so few mathematical certainties within it. Rather, investors are usually dealing with probabilities; things that might happen based on our best estimates of a range of contingent variables. There is however one mathematical relationship which is fundamental; that between “price” and “yield.” Yields move […]
Time in the market versus timing the market
January, 2022
Investors are taught that markets are unpredictable, that past performance is no guide to the future! Why then is past performance used by the average investor when making fund selection decisions? The following example is rather old but holds true today and provides an insight into why the Tacit thought process steers clear of forecasts. […]
Diversification is good and bad for long term returns
December, 2021
Imagine you are a schoolteacher. You are looking for a new job and there are two alternatives. The first involves a small school – there are 20 pupils, admitted for their ability. It isn’t an easy job. You will be responsible for keeping a very close eye on the children, analysing their every move, every […]
Why has the velocity of money been falling whilst QE is expanding?
December, 2021
The velocity of money measures how many times a pound or dollar is spent. It is a good indicator of whether firms and consumers are confident enough to go out and spend. It can therefore act as a barometer of economic growth. The more transactions in an economy, the healthier the economy. Conventional economic theory […]