So much of what I normally write is about digesting multiple factors, processing them, drawing on experience and finding some conclusions. But of course today we’re all struggling to even define the ingredients, let alone make the cake.
From a business owner perspective, planning is nebulous. I spoke to 2 separate people this week who sit on the Exec Committees which feed into FTSE100 Boards, and found it strangely reassuring that they are finding it as hard to plan as I am! One of these firms – City-based – is now talking about not sending its people back until January. Gulp. 9 months of home working….. (Maybe I should get my act in gear and paint the drab wall behind me, which features large in my increasingly enervating Zoom calls! As well as stockpile gin.) From my perspective, obviously the lack of open schools effectively keeps me at home until September (stockpile more gin). And even for some of the team who live in London, the prospect of public transport means no-one is in any rush to get back soon. So the conclusion here is... hmmmm...? Talk about it again next week??
From an investment perspective, this morning the FTSE100 is telling me it’s all OK, rising again to show gains of nearly 6% just this week. Travel stocks have jumped on news of so-called transport corridors opening up with Greece, Turkey and Spain, who decide they can’t live without our larger post-lockdown sunburned British bodies on their beaches. (At this point I bow to Mr Mackay Senior’s audacious purchase of EasyJet shares one month ago. He is now flying high and having his moment of triumph, after I told him he was ‘off his trolley’. But reader beware – his risk profile would make a fund manager weep! Do not try this at home...)
In broader global news, we wait for US employment data, out later today. Economists are forecasting a horrendous 20% unemployment figure for May, with a sobering 8.3 million jobs estimated to have been lost. And this V-shaped recovery thingy still feels premature to call from where I’m sitting. So diversify, diversify, diversify…
Poetry in numbers
Very rarely would I suggest that anyone reads a fund manager’s annual report. Unless I was being malicious. They are normally tedious affairs, written with an audible sigh by someone wearing a brown cardigan, ticking the governance boxes and chucking in piles of data and bottom-covering statements. But this week (in a sure sign I am bored beyond belief and going slightly insane) I chose to read one.
The Scottish Mortgage Investment Trust is the UK’s largest investment trust, and its value has risen to a hardcore £11 billion, with holdings in firms such as Amazon, Tesla, Netflix and the ghastly but vital Zoom. Over the last 10 years, investors have enjoyed returns of about 500%. (Almost as good as Mr Mackay Senior, but with a tad less risk.) Their annual report, published after the crisis hit, is actually very good reading – I recommend it. Here’s an excerpt, written by portfolio manager James Anderson in pages 13 – 14 of the report:
"It is far harder to identify how and why the pandemic has changed our views. Generally it’s perilously early to do so. It’s also dangerous to focus solely on one event however terrible. Two years ago this report quoted the late, great Hans Rosling. He frequently cited a global pandemic as his greatest fear. But he also warned that unusual and negative events warp our minds: ‘if we are not extremely careful, we come to believe that the unusual is usual: that this is what the world looks like.’ At some point he emphasised that we need to return to ‘the secret, silent miracle of human progress’."
Unusual in its eloquence, the report is a reminder that behind all the industry’s bullsh1t and the OCFs, NAVs, Sharpe, Sortino, alpha, beta and gobbledygonkygizzwozzery, investing is simply the act of backing innovation, development and human progress. And amidst all the global chaos, anger and uncertainty, I find that concept something strangely uplifting to hold onto.
Have a lovely weekend everyone. I am reluctantly watching Star Wars films with my son, in a cloud of confusion. No matter how many times he explains it, I cannot understand for the life of me how number 1 is in fact number 4, and how 3 and a half comes in between 7 and 8. And how is the sexy one with the big nose related to Darth Vader again? Or is he Darth Vader? Does Darth Vader talk like that because his nose is always bunged up? It was far easier when we just had to coo over the Ewoks and watch Hans get it on with Leia...
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