January 13, 2023 • 45 mins
Not many investment trusts made a positive return last year. The Ruffer Investment Company did -- partly by using strategies not open to the retail investor but also using ones that are. In this week’s Merryn Talks Money, the firm’s Investment Director Alexander Chartres talks host Merryn Somerset Webb through what worked for Ruffer in 2022 and what might work in 2023.
Chartres’s key point is the world has changed. He says the global economy is in the process of being “fully rewired,” which means investors must reconsider the fundamentals behind all of their investments. He also says China is changing; there are hot and cold wars on the go all over the world: big BIG government is back; and there is financial repression ahead — so maybe buy some gold.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
John Hello, Hello, Now listen, we've got there's so much
in the chat with my main guest, Alex Charters. This week.
We covered the entire world, pretty much every market and
even get to gold. But there's one thing that we
that we mentioned in our chat, but we don't follow up,
and I wish I had followed up with them, But
now I think about it, I really it doesn't matter
(00:20):
that I didn't because you're slightly obsessed with it as well,
which is venture capital and private equity and how potentially
incorrectly private companies are priced inside portfolios, in a particular
inside investment trust portfolio, because I know that's what you've
been writing about recently. Yeah, this is one that feeling
(00:42):
slightly exercised about because my my guts at war with
my brain slightly on it. The main point is that
it's a private assets private companies. Venture capital private equity
has obviously been a huge part of the bubble either
there's been an awful lot of money and old in
to it. Institutions have had it sold to them as
(01:03):
this amazing diversifier and they've been more than happy to
embrace it because one of the incentives for investing in
this stuff as you get to make up the value
that you put on it. So that means that whenever
there's a down market, everything else in the portfolio has fallen.
But you can point to your private assets and say,
look they're not falling. In fact, they've gone up in
the last quarter. And everyone's happy to engage in that
(01:25):
collective delusion because it means you don't ever have to
tell a client that the portfolio is going down. So
there's been lots of male incentives, there's been hoping of
the zero interest rates, lots of venture capital is obviously
in kind of like tech and kind of bubble areas anyway,
so I can totally totally see the private assets need
to fall a lot in private valuations need to follow
(01:48):
a lot. Okay, well, let let me stop be there
to say that and highly agree with you. And one
of the things that always slightly amused me of the
last few years has been this idea that we should
pay more for any particular you note of growth in
a private company than we should in a public company,
more for a unit of growth in an unproven company
or a new company than we should in an older,
(02:08):
proven company, which all seems to me to be incredibly bizarre,
because it feels to me that we should pay much
more per unit of growth in a company that we
know something about, that we understand, that has a track record,
than in one that we know very little about. So
it's always been such surprising to me that we're not
surprising given me a wider environment of the bubble and
low interest rates, but on a rational level, private companies
(02:30):
should be worth significantly less in the main, in the
main the public companies. Yeah, and they used to be.
I mean that this is all part of the bubble phenomenon.
It's like, there's there's two things that stand one which
is the people paying more for private companies in public ones.
That's that's a bubble phenomenon for definite in terms of
the multiples. But also and the the idea that the
(02:52):
aliquidity is actually a good thing rather than a bad thing.
That sort of is that they I've literally seen this
argument change during the bubble period, where it's been actually
it's a good thing that you don't know what the
price is and that you can't sell because that stops
you from selling at the bottom. So it's like this
it's like a kind of psychological benefit that you're getting
from it. Yeah, but there's kind of the job of
(03:14):
fund managers and be a private equity or listed obviously,
it's their job to not sell at the bottom, isn't it.
I mean, you know, so we shouldn't need to put
in place artificial mark to prevent them from doing it.
Literally their job. It's a bit like what we said
about Richie seen that last week. You know, that's your job,
just your job, not a special promise, just you. But
(03:35):
I mean, but so yeah, I mean, I think that
it's been an extremely bubbly area capital. The Rosschild Investment
Trust is one of the standout ones that have been
getting kind of discussed. And my only question is whether
those the risk that people start to over egg what's
going on and oversimplify what's going on, because I guess
(04:00):
apartently feels that looking at this so to take specifically
the Telegraph obviously high profile shared column quest or wrote
up broker note that had been released a bit online
the earlier mentioning the no the amount of private assets
in the portfolio had gone up significantly and the big
risk was that this would get written down at some point,
(04:20):
and that probably wasn't in the price of the portfolio,
the things that the share price of filled by ten
percent on the day that that article was published, like
a month after this had come out, and you know,
I mean so much for the efficiency of stock markets, etcetera. Well,
it worries me, John, I tell you, it worries me
because I wrote about that and the SHAP price didn't
(04:42):
fall by champercent. One am I suddenly less influential than
question exactly. So put me into a whole world of
introspection and stress. Well it supposed it, Dift says. You
didn't say selling by a different fund, which was the
other thing about this column. They sort of said, well,
it's not. It's not doing the same thing is say,
capital gearing or rower. But with all due respect to
(05:03):
the you know, the Telegraph journalist, I would say that
that's not what sets out to do. And it's also
not I've never mentally categorized it in the same place
as those other funds. Those those other funds are kind
of almost funds that you expect to do well in
a beer market, which is written is more a kind
of you know, shouldn't take too much of a kicking
in a beer market, rather than one that's actively going
(05:25):
to go up. So I mean this is all kind
of you know, what have angels dancing a pin head?
But I suppose my point is, you know, is trading
at something like a twent discount now, And one of
the things I think you probably have to look at
is how much experience to these managers who ultimately because
we can't value private companies, so a lot of the
question is like, how much do you believe the actual
(05:48):
managers these funds are any good at selecting this stuff?
And where you've got I think that's where you've got
to kind of start thinking about, well, is there a
difference between saying the teams that's somewhere light writ capital
and the teams that somewhere like soft Bank, which seems
to be you know, seems to pilehead first any whatever
golf is laid on their plates. And I think that
that's the kind of the difference, and that's possibly where
(06:11):
maybe some slightly more observant investors might be able to
find opportunities. Now. I don't know, John, I think you're
you're varing into as long as it's a good company
who cares about the price terror No, no, no, I'm
not thinking about that. I'm thinking, I'm thinking, if you've
trained that descount a state that stated discount enough like
(06:32):
say twice or secent, and remember again, I'll take that
because it's a good example. I mean, Red's kind of
historic descount. I mean retreated a premium for like five
or six years. Um, So I'm just saying that price
and then quite a lot. So what you're what you're
saying is that the I think what you're saying is
(06:52):
that the mispricing of the private equity portfolio is it
in the price of the investment trust basically, so we
don't need to worry about it anymore. Yeah, I mean
I think there is a there's a that's kind of fair.
There is a real problem with the pricing of private
companies inside inside collective vehicles, in that you know who
can possibly value them, how do you know what it's worth?
So all you can do is I mean you're guessing, right.
(07:13):
All you're doing is you're taking the prices of similar
listed companies. And sometimes there isn't a similar listed company,
or isn't there isn't a wide enough group of similar
listed companies, or there hasn't been another private company that's
had a you know, an event of some kind that
offers you a price that that you can't really come
up with something that's that's ideal, So you you stick
a pin in the air, you you look around at
(07:34):
similar companies and you make a vague price, and you
do that maybe every six months. So there's always going
to be a lag. And even with the lag, you
know that the prices is still very unlikely to be correct.
It's just the best guess. But then of course it's
the best guess in the public markets as well. So
this is a This is not a straightforward area. And
I don't think you can expect companies to adjust the
(07:54):
prices of the private companies in their portfolio more than
you know, what's a quar to absolute max once every
six months seems reasonable, So you know that Again it's
the job of the market too, as you say, at
a discount into the discount of the enemy of the
investment trust, to reflect that this is not unreasonable. I mean,
but I think this is the other benefit investment trust obviously,
because you can get that pricing of all liquid assets.
(08:20):
And you know, if you do believe, as you know
broadly do that even if they're not efficient markets are
the best collective guests at the value of an asset
at any given point um. Then you know the nice
name of investment trust as you can get in and
out even if they underlying as it's are liquid um.
But yeah, I mean I think that's it's not I
(08:40):
suppose it's I'm just finding an interesting when you think
about it, because it kind of on the one hand,
my Baily sense thinks are look just you know what
everything needs to bump to the ground, and you know,
the likes that can the kind of really stupid things
like the companies that invested in f t X without
even thinking about the due diligence um, you know, and
(09:01):
for like an awful law of trouble. But I do
feel as if there's a tiny bit of maybe that
is a kind of bideo with the bathwater of scenario
or going on in here. Okay, and you've been writing
about this, haven't you. So everyone should now go and
read John's newsletter Money Distilled, and pick up all the
rest of the information on this, and then you can
decide for yourselves whether you want to go out and
(09:22):
buy shares in our I T because everyone else is
too negative or if you think, as John's barest sign
believes that everything to just burn to the ground. Thanks John,
Thanks Mail. Welcome to Marin Talks Money, the podcast in
which people who know the markets explain the markets. I'm
(09:44):
Marrin's some Setweb. This week, our guest is Alexander Charters,
investment director at Rufer. Alex specializes in gear politics and
in the investment implications of changes in gear politics. He's
got a particular focus on European politics and on U S.
China relations. And here's the co manager of two of
roughest flagship funds. Not many fund managers managed to make
(10:05):
a positive return last year. The Rougher Investment Company did
up around five per cent or so last year, roughly
flat year to date so far. It's not a very
long year yet, but given what we went through last year,
it's quite impressive to have made a little, not to
have lost quite a lot. So I started out by
asking alex what lessons did he, as a reasonable performer
last year learned from it. It was a really extraordinary
(10:29):
year on so many fronts, and it's it's difficult to
know where to start. The real world shocks were, of course,
what helped exacerbate the market shocks, and we had the
biggest land war in Europe since nine. We had China's
extraordinary experience with COVID. We had the biggest global energy
crisis since the seventies, and for Europe it was the
(10:50):
biggest ever. And then of course you have inflation at
multi decade highs, the fastest rate hiking cycle in decades,
and it made for a pretty toxic environment for almost
all conventional assets. In fact, equities had their worst year
since two thousand eights, bonds much longer, and of course
balanced portfolio's traditional stock bond portfolio sixty forty in common parlance,
(11:15):
was down nearly so there were very few places to hide.
Three quarters in a row. Actually, the first three quarters
of last year you could find almost no conventional assets,
so you really had to be using alternatives and in
our case, derivatives to ride out the storm. And those
are the primary reason we were able to generate a
(11:35):
positive return in last year's extraordinary cluster crisis. But Ruffer
was kind of ready for it, right And honestly, you
couldn't predicted the exact way the process crisis was going
to turn out, But you know, as a company you've
been talking about the everything bubble, you've been talking about
the terrible mistakes made in monetary policy, you've been talking
about the consequences that you expected from that, the main
(11:56):
one being inflation. So it shouldn't been no surprise to
you and your colleagues that most of the things that
happened last year happened regardless of the triggers energy crisis
were in Ukraine, et cetera. Obviously, we didn't know exactly
what the various triggers would be. We didn't know that
COVID was going to happen when it did, or that
the Ukraine War was definitely going to happen when it did.
(12:17):
But what you have been able to see for a
number of years is the way that under the bonnet
the global system has been rewiring itself to be more
inflation prone and more volatile, and so higher inflation, more
volatility were for us questions of when not if. And
of course you had the one two of the COVID
(12:38):
crisis and then the Ukraine War last year, and those
really were great accelerations in terms of the stimulus. In
the first instance, they dumped into the system the supply
constraints they're applied. And then more supply issues, particularly around
energy and commodities last year, and they revealed that rewiring
under the bonnet, and we think that's all investors have
(13:01):
really got to be focused on going forward, because it's
a very very different environment to the one they've all
been used to. Well, let's talk a little bit more
about last year before we move on to the hell
that might be this year. Was the use of derivatives
that that have saved you last year. Tell us a
little bit more about that. One of the great things
about being an unconstrained asset managers that we can buy
(13:22):
anything anywhere, anytime, as long as it's to support our
core objectives, which are to preserve capital and grow it
in any market conditions. And precisely because as you suggest,
we've been worried about the risk of inflation and therefore
an end to ultra low rates, and that this would
force a reversal of the everything bubble where essentially all
(13:43):
conventional assets have gone up together. Um, you'd find a
world where high cross asset correlations, in other words, everything
was then falling together would leave no places to hide.
And that led us to a mix of derivative protections.
So first of all, we wanted to own options on
higher interest rates, and they were the principal driver last year.
(14:05):
We also wanted credit derivatives because credit looked extremely expensive,
and that's pretty correlated with equity declines, so eff equities
for credit spreads tend to go up. And we also
wanted direct protections on downside inequity markets, both at an
index level and an individual stock level, and they all
contributed to performance last year. And the other thing that
(14:27):
you very publicly did in the portfolio and have talked
about a lot over the last night of the last
ten years or so, I think you've been been talking
about this holding indicted linkets, long dated inflation linked bonds.
You've been holding them for a long time on the
expectation that they will be one of the things that
would protect you when when the horrible day came, which
you did last year, but that didn't quite work out.
(14:48):
Right now, I think that's a very diplomatic diplomatic on
these way of describing the ultralong dated UK inflation linked bonds,
which are the longest dates of their kind in the world,
were down I think more than bitcoin last year. Gosh,
and that is really quite something, isn't it? That? That is?
That is quite something. Now, I should point out a
(15:09):
couple of things. First of all, we fully expected the
bonds to decline, likely sharply, and that's why we'd hedged
them carefully with these interest rate options, and those interest
rate options more than offset the declines in the inflation
link bonds in the strategy. So that's the first important caveat.
They were hedged. It's true though, that they felt more
(15:31):
than we expected. You'd anticipate when rates go up if
you've got extremely long dated bonds with the jargon very
high duration, which simply means they're very sensitive to changes
in interest rates. Says rates go up, the bond prices fall.
We would have expected more of an offset from the
second component of the way you value an inflation link bond,
(15:53):
and that is the inflation expectation. And the remarkable thing
there in despite every thing that's happened over the last
couple of years, is that long term inflation pricing remains
pretty much the same as where it was pre COVID,
So you've got no compensation in that element of the bond,
and as a result, they would just punish for being
long dated bonds. Needless to say, given our view the
(16:16):
world there's more inflation prone and volatile going forward. We
think that long term inflation pricing looks very complacent and
we would expect it to rise and that will be
the environment that's good for those bonds. Okay, Well, that
brings us from very neatly into three. And the main
topic that you know, the everyone was talking about, and
(16:38):
we'll talk about all year, is inflation. Where it goes
from here? Does it stay high, does it go low?
Is the biggest risk is suddenly defl disinflationary environmental possibly
near There are some people out there already talking about
outright deflation. As prices come down very suddenly, you know,
let's say that all the problems inside the supply chain,
you know, gradually fixed themselves, and we see things loosening
(16:58):
up already, right, we see it, and of being rates
and all that kind of thing, we can see things
beginning to loosen up. We begin to see a full
off in the demand that came from the ridiculous fiscal
stimulus of the pandemic. And let's say there's also not
a further energy pricess. You know, we listened on the
news this morning hearing that petrol prices are back where
they were pre the war in Ukraine. So all these
(17:20):
things come together, the inflationary problem disappears pretty much overnight.
No thanks, by the way to the central banks, because
it's actually no way that their interest rate increases could
have worked for already, So only thanks to them that
naturally these things happen. That's kind of the biggest, biggest surprise,
potential surprise of the year. Possibly. Um, well, you're right
(17:41):
on the central bankers mot and of course that won't
stop them taking credit for it in just the same
way they took credit for multiple decades of low and
relatively stable inflation for reasons that we would say we're
largely beyond their control. But we think that there is
a disinflationary wave coming this year. You're already seeing it
in the falling rates of inflation. So prices are still
(18:01):
going up, but at a reduced level. And the energy
story you talked about is part of that. But the
real question now is around recession and around China's reopening
and the effect this has on the path of central banks,
because inflation, alongside central bank action is absolutely what's top
(18:25):
and mr market's mind, and the truth is two reminds
us maximum humility in this sort of environment is required.
The truth is, no one actually knows how China's reopening
is going to impact global inflation. Of course, if it
pushes it up, that potentially means that the FED will
have to stay tighter for longer because inflation pressures may
(18:46):
be more resilient than the market expects. The bottom line
at the moment is that the market is effectively pricing
a Goldilocks story for this year. So it's expecting that
either a recession will be avoided or it will be
very shallow. That the Fed won't go as high as
it says it will in rates, that inflation will drift
(19:08):
back down towards targets as the central banks hope and
pray it will. That is pretty optimistic, and there are
obviously a lot of things that can go wrong with that. Okay,
So as far as you're concerned, shallow is basically the
new transient shallow and Goldilocks probably is the new transient. Look,
it's definitely not out of the question. But as the
(19:29):
experience of history shows, when you've got inflation that goes
above about five, getting it back down sustainably to two.
The average central bank target typically takes years because it
finds its way into corners of the system. Now, to
be absolutely clear, our thesis is that inflation is going
to be volatile, not that it's just going to go
(19:51):
up and stay up. And that's really important, and that's
one of the reasons we think that this disinflationary wave
is so important this year, because you're going to hear
all lots of people if it happens saying, ah, the
transitory story was right, the central banks have got it
back under control. Nothing. See here, folks, We can go
back to all the most popular trades of the last cycle,
(20:11):
and we think that's dangerous because there will be plenty
of opportunities for some of those assets to rally. But
if you think that over the longer run inflation is
going to be even modestly higher than it was in
the post credit crunch era, that means a lot of
the most popular strategies are simply not going to work
as well as they did. Well, I'm going to take
that as as an incredibly positive comment. Now, listeners, listen
(20:35):
carefully to this. You might have an opportunity to get
out of some of those text stalks you wish you'd
got out of the late twenty twenty one at a
higher present you can get today if people believe things
that Alex thinks, they shouldn't believe that, right, Alex, Yeah, Look,
there's there's plenty of opportunity if soft landing appears and
for some reason the Fed does flinch. But look, the
(20:56):
reality is, we think the Fed is going to be
tighter for joy than the market thinks, that inflation pressure
will be more persistent, even though prices are coming down
this year, and that over the long run, you need
to be reconsidering the fundamental basis of a lot of
those strategies. So Alex, let's stop there and go back
and look at why it is that you think that
inflation is going to be much more volatile than it's been. Now,
(21:18):
let's accept that there's a disinflationary wave coming. I agree
with You're seeing a lot of the things that have
driven up inflation over the last couple of years beginning
to fall off. We're beginning to clear losely and supply
jay and all this kind kind of thing. But is
it not possible that inflation would just come down to
I don't know, say two or three percent and kind
of stay there for another couple of years. Wouldn't it
be nice? Why would that not happen? Well, probably because
(21:40):
the settlement that underpins those extraordinary low and stated inflation
numbers for the last first years or so is being unpicked,
and it's being unpicked in some cases pretty quickly. The
obvious space to start is probably the Ukraine War, because
it's an example of the kind of breakdown in world
order that we've been worried about for a long time.
And obviously China is the biggest player in the deflation
(22:03):
engine in terms of the additions to supply that drove
low prices in the last generation, and both China and
the Western Bloc are now interested in strategic security and
supply chain resilience is much more important. Resilience is going
to increase cost pressures. Remember, wars, both hot and cold,
both tend to be inflationary, so world orders a big
(22:24):
part of it. On the domestic front, you can see
that the Thatcher Reagan settlement that favored the small state,
free trade, a lower taxes is on its way out,
and in its place you have return of big government
with activist fiscal reflexes that at the first whiff of
grape shot pressure on the public's purses, you have calls
for more subsidies, price controls, fiscal stimulus. We've seen it
(22:48):
obviously with energy, which has been a huge shock for people.
But you can hear the clamor also for mortgage help
in many countries as the era of free money ends,
and that's one of the central facts of our time,
that suddenly debt matters again. And then, of course, on
that note, you've got aging with huge bills for pensions
and health and social care, so the pressure on government
(23:09):
finances is going up. Just as rates start to go
up more and demand more payment for interest rates bills.
You've got deglobalization. All of these huge long term factors,
not to mention wartime economics around issues like climate change
mean higher inflation pressure and more volatility. It's interesting on
(23:30):
government spending, isn't it. I mean, in the UK, for example,
we never seem to get government spending down much below
thirty five cent of GDP, but we've never in the
past managed to get it up much above thirty eight
of GDP for very long. But looking at the promises
that the government is making Now, as you say around
everything from the cost of living crisis to the NHS,
but social care, etcetera, it's almost impossible to imagine as
(23:53):
keeping that tax take below fort going forward. I think
that's fair, But the reality is, when you can't raise
enough money through taxes to pay your bills, what a
you're gonna do? When you're going to square the circle
through financial repression, And that in plain English means they're
going to try and keep inflation and the rate of
normal economic growth well ahead of the rate of interest,
and that's going to erode the value of money, and
(24:14):
that's how they're going to pay these bills. So it's
a bad environment for savers. And you can see the
kind of things already that are characteristic of financial repression.
So if you think about all of these plans for
your pension pots, when the government says, wouldn't it be
nice if this money was funnel towards these important infrastructure projects,
(24:35):
this will be a kind of compulsory part of your
your pension allocation potentially in future. This is how they
trap money in areas that they want it directed, not
that are good for your long term preservation of wealth. Yeah,
it effectively becomes a kind of tax, doesn't it end.
It's the kind of government policy that would out very
neatly with the order enrollment system, which I had think
(24:56):
has been absolutely brilliant so far, you know, effectively provides
it at a quite retirement for everyone and work in
the UK until possibly the government starts at that should
be put into our own productive investments in whatever it is.
People should remember with all of the obsessive focus on
is that they're going to do this, is that they're
going to do that. The central issue is we've just
(25:18):
seen clearly that central banks are not masters of inflation.
It's an emperor's new clothes moment over the last couple
of years, and the long term forces that have led
to this disinflation era are very clear. They're going into reverse.
That changes the symmetry of risk going forward. But remember
central banks job is not primarily to control inflation. That
(25:40):
might be what their legal mandates say. They're therefore possibly
plus or minus unemployment or growth target here or there.
But central banks were founded to help governments manage their
debt and that is their central function today as it
always has been. The Bank of England. That's the templates
for most modern central banks was found in sixte to
(26:03):
help the government get away its debt in order to
pay for a rebuilding in the Royal Navy falling a
drubbing by the French. Central banks are there to help
manage government finances, not to protect your money. It's interesting,
and we would expect them to become more political now
than they've been in the past. We've had this sort
of era where we have been allowed to believe, or
allowed ourselves to believe that central banks are entirely non political.
(26:26):
There they are there, they are out there, nothing to
do with the government, not listening to any brea ministers
or chances, just getting on with their core job of
keeping inflation. Look that pretends is kind of garner, isn't it. Yeah,
And they're in a window of political opportunity at the
moment because they've done this extraordinary tightening, the fastest tightening
we've seen for a generation. But the real economy isn't
(26:48):
feeling the pain of that yet, So there's a window
for them to get their hikes in before the political
pressure to ease really comes in with a vengeance. Because
they're not politically insensitive what what they say and what
we're going to see this year is going to be
really important. Are the FED, the e c B, the
Bank of England, the b O J. Are these banks
(27:11):
really prepared to inflict serious real economy pain against an
already febra backdrop in order to push inflation back to target?
Or will we see the kind of kite flying that
we've already had from senior people at the I m
F where suddenly you hear, well, maybe maybe a central
bank inflation targets should actually be three or focus two percent?
(27:34):
Pretty arbitrary, isn't it? Why? Why are we obsessed with
getting it back there? Now? That that might be right,
But it's a very important sign, just as the price
controls and the clamor for fiscal steamers are of the
direction of travel and it's not towards lower inflation on
a structural basis. Well, the twoth sad thing is interesting,
isn't it. I'm going to go off topic here here
I go. John and JOHNA and I were looking at
(27:56):
this last year and trying to figure out don and
trying to agre out exactly where this two percent target
came from. Where did the idea that two percent is
the correct rate of inflation for a developed economy come from.
And we looked and looked, and of course it's almost
impossible to find the academic research to back this stuff up.
And I eventually found an article in a now defunct
magazine called The Status from I think nineteen four that
(28:20):
referred to the original research, which was about developing economy
is not developed, and referred to two percent as being
an appropriate rate. I'm going to dig that out and
I will try and find it for you, and I
will put a link somewhere on the Bloomberg website. And
a column of minx is absolutely fascinating, Yes, so so interesting.
I mean, as far as central banks go and the
(28:40):
markets this year, inflation is important obviously because it dictates
how tight they keep policy. And over the short term,
the big risk going forward, we think it's still around
liquidity in the market, so how much money is there
available to chase assets? And you've got to remember not
only that rates have gone up very sharp plea, and
we haven't felt the full effect that yet, partly because
(29:03):
we haven't reached peak rates yet, but also because they're
trying to run down their balance sheet holdings of assets,
and that means just the moment that yields are already higher,
they're going to start trying to dump more and more
government bonds into the market for investors to absorb. So
there's a real challenge for liquidity and um that's that's
(29:26):
a big risk going into your alongside the recession risk
to earnings, which is one of the reasons we're very
low in equities at the moment, feel very low in equity.
So you hold some equities obviously, so what do you hold?
How does that work? I mean, if we if we
take your your view that inflation is going to be
very volatile, then there may still be quite a long
way for the longer duration assets to fall to say
(29:47):
growth docks, which feed a horrible couple of years and
were horrible years. Should I say, value performed significantly last
year and there's now a view which I keep hearing,
that the growth stocks have fallen enough, the big UK
to U S tech is on their way back. Enda
you know now is the time to buy example, But
if you're right, which by the way I think you are,
that's just not true. Is it barely gun? Well? Last
(30:10):
year was in many ways pretty orderly, So we think
the everything bubble has started deflating. You had the most
extreme and liquidity fueled extensions of that taking the hit first.
So I think the crazy crypto activity, non fungible tokens
the spack universe, a bonfire of the acronyms, and the
(30:31):
real hit, The real shock for a lot of people
was bonds because obviously your principal offset for most people
as we as we mentioned at the top, didn't work.
It was correlated with equity. So the bond shock was
really the bigger one because equity draw downs the scale
we saw last year aren't that uncommon, even though it
was a bad year. Bonds draw downs on that scale
are extremely uncommon. But there's still plenty of pain for
(30:55):
assets that haven't yet felt the full effect of those
high yields, and those would include heavily leveraged things like
private equity, venture capital, corners of property. There's plenty of
pain still to go. And of course, in terms of equities,
remember all of the damage last year at a market
level was d rating. In other words, investors prepared to
(31:17):
pay play lower multiples for earnings of companies, but the
earnings themselves haven't fallen yet, and indeed, earnings estimates are
still pretty buoyant, although they're coming down. So this year,
if the recession arise, it must be the most widely
forecast recession in history. But let's assume recession does arrive
(31:38):
this year, earnings risk is very material. If the economy
goes into recession, earnings always go down. That's not going
to be good for equities. And so as far as
we're concerned, we've got only about ten ten ten in
equity cash equity, but on a net basis is zero
because we have derivative hedges on the other side of it. Okay,
(32:00):
so what are you exposed to at the moment. We've
got the ultralong dated in the Excellent bonds and quite
a lot of shorter dated inflation protected bonds. We've got
similar things in the United States thirty year tips, which
we've been trading recently. We've got a position in oil,
We've got quite a lot of derivatives still. We've got
(32:22):
four and a bit persent in golds and a few
other bonds, and we've got a very large cash and
a near cash position, and we built that up over
the course of last year to give us the firepower
we wanted in expectation of dislocations starting to appear as
liquidity was sucked out of the market at a record rate,
and we were able to use that, for example, in
(32:43):
the back end of last year when the UK guilt
market went into meltdown after the Trust quarteng budgets, and
we were able to trade some of those ultralong dated
UK and excelling bonds quite well. But last year, the
best conventional asset you could own was dollar cash. All
other conventional assets fell. Cash has a very powerful value
(33:04):
in a high risk environment, gives you a lot of optionality.
We are keen to have some of that. It's interesting,
there isn't it where we often write about how didn't
times like this to hold cash and exactly that you
must think of it in terms of its optionality and
yours try not to think about the amount of purchasing
power you're losing in real terms. And I looked back
to the nineteen seventies, which is the last time we
(33:26):
had an environment for the similar to this, you know,
finance for oppression, ongoing crisis, et cetera. And there were
very few periods in the nineteen seventies when rates on
deposit accounts were not high enough that you were breaking
even in real terms. You haven't occasionally, but the majority
of the time, if you'd held cash, you've broken even
in real terms. By the end of the year, completely
(33:48):
different environment. We look back on the seventies of being
a terrible time for savers, but relative to where we
are now, that were fantastic, extraordinary. Okay, So let's talk
a little bit about the goal, because as you know,
I'm very keen on gold, and I think everyone should
hold gold in their portfolios, and I've written several columns
explaining over the years why bitcoin is absolutely not the
(34:10):
new gold because it has none of the characteristics that
gold has that make it so valuable as a form
of money. Now, you might not necessarily agree with that,
because you have in the past had a position in bitcoin,
so you must have thought it had some potential for something,
if not necessarily, to be the new gold. But let's
put that aside. You probably don't want to talk about that.
Let's stress a long time. So let's talk about why
(34:33):
you all four or five of their portfolio and gold
relative to our historic waiting that's pretty low. One of
the reasons that's the case is that last year, when
it was actually even lower, and we expected gold to
take a hit as rates went up, and that's exactly
what happened. Fundamentally, over the long term, you want to
own things that the government can't print or it's harder
(34:54):
for them to steal your savings, and gold is absolutely
part of the mix. At the moment, it's some joining,
a bit of relief as the week of Dollar comes
into play, and there's expectation on the market's parts of
easing up of rates further out into the back end
of this year, but long term, long term doesn't really
make any any difference. This is a short term argument
(35:16):
for keeping your position slightly lower than it would have
been over the longer term. If we're in a volatile
inflation politically difficult and inflation the environment, geopolitical risk is
going up, Inflation risk is going up, pressure on government
finances is going up, financial repression risk is going up.
All of those things over the long run should be
(35:37):
good for gold. We've got a mix between bullion and
gold miners, which off you leveraged exposure. Of course, last year,
with very high energy and labor costs, they had a
bad time. That's why we've been reducing them. But it
starting to look interesting again. You've seen that in the
market action. I think it tells you a lot that
global central banks are picking up gold are quite a
(36:02):
clip at the moment. Yeah, I saw that the Chinese
Central bank buying quite a lot. Interesting. Um. You know,
we often talk about what is money and what isn't money.
I was went into a school quite recently and I
was talking to them about the nature of money, and
I was give them a few different things. When I
go and do this a cow Reachelleach and give them
the paper money, and I give the a little fingerful
of those shredded dollar bills that you can you can
(36:25):
get from the central bank in the US, and ask them,
you know, which of these things is money? And the
answers are really interesting. But we always get back to
the end. If if people believe it's money, it's money,
and gold is the only thing that people have consistently
believed his money for for thousands and thousands of years, right,
which effectively makes it money. And it's let's just go
back a little bit and pick up on what you
(36:45):
said about about China. Massive changes underway there which could
end up being inflationary, could end up being deflationary. Took me,
took me through how that works. Well. The shift in
China is not to be underestimated for a few reasons.
So on the inflation deflation, it's one of the key unknowns,
as I mentioned, in terms of how it interacts with
central bank policy making this year and therefore for markets.
(37:08):
If it is driven by all the classic Chinese leavers,
like real estate development, it's going to be commodity intensive
that might feed through more directly into inflation numbers. You've
also got to remember they've got three years of accumulated
savings waiting to be spent, and I read that the
totality of those savings is more than UK GDP. So
(37:29):
if you think about the experience of Western countries as
they did reopen, the argument would be that it is
going to be more inflationary. Of course, we don't know
what the shape of Chinese activity will be after three
years of COVID, where they will be permanent scarring, whether
it will be less real estate and commodity intensive, So
(37:49):
the impact is is uncertain, but the fact of the
pivot at all is potentially very significant because remember at
the Congress last year, the communist past where g secured
his third term and appeared to double down on all
his signature policies, including zero COVID. The market really took
(38:09):
fright and what we've had since then is the most
extraordinary series of policy u turn. So not only have
they scrapped zero COVID overnight despite all the medical constraints
like low proportion of properly vaccinated over eight s and
all the rest of it is, they've also scrapped the
leverage ratios for developers and a huge number of other
(38:32):
things like easing up on tech platform crackdowns, or at
least some agencies have. So there does appear to be
quite a significant pivot, and that's mirrored in the diplomatic
space where China's tried to build bridges with Australia, a
more emollient New Year address from Mr G and a
appearance from him at the Barley summits with the G
twenty last year, and that does suggest that there after
(38:54):
some breathing space. Now that may of course indicate the
severity of the domestic situation in China, but I think
what you can have confidence in is that they are
determined to make the reopening big bang of success, because
particularly with health problems, they can't afford for it not
to be, So that's very interesting in terms of who
profits from a China reopening. Alex You and I were
(39:16):
at a conference together a few months ago, and one
of the speakers, Jim Melon, He was talking about the
technological revolution, and one of the things he was saying
was how disappointing it had been that over the last
decade or so, we've had these huge technological leaps forward,
and we've kind of wasted them all by watching dancing
dancing nurses on TikTok and playing on Facebook and that
kind of thing. We haven't used the technology that we've
(39:38):
developed in such a way as to improve productivity and
improve our lives. Now, when you look at that, do
you think, well, possibly there's something in the idea that
we could have had a productivity revolution of the last decade.
We haven't, but we could now have won over the
next decade as we start to embed our innovations properly
(39:59):
into our economy. Yes, it's definitely possible in some areas
that will happen. I mean, it's worth remembering though technology
is often used as the sort of torpedo to the
more inflation pressure arguments the idea that those sorts of
productivity gains are going to prevent any recurrence of more
inflation pressure. Let's remember that many of the biggest game
(40:23):
changing technologies happened in periods of much more elevated inflation.
You know, I'm not just talking about the combustion engine.
I'm talking about aviation, I'm talking about dawn of the computers.
I mean, these are all things that happened outside of
the extraordinary deflationary era we've been in for the last
generation and around which all of the most popular portfolio
(40:45):
strategies are built. So we're not gloomy at all about
technological prospects. In many cases, they're extraordinarily exciting. It's just
that one they're not likely to overwhelm the return of
the big state, the deglobalization forces, the more politicized central banks, aging,
and pressure on labor markets as wage journalists get more
(41:07):
power with relatively smaller pools of labor. It's unlikely that technology,
at least in the immediate future, is going to be
able to overwhelm all of those structural factors. And it's
also the case that technology was the market darling in
that deflation era because it was the one area you
could consistently get growth. And we're simply saying that if
(41:30):
there is a bit more inflation and nominal growth around
and a bit more volatility, different things are going to
work in the new era. Okay, well, let's talk briefly
about what the retail investors should now do. I mean,
obviously the first thing that you do is rush out
and by rougher because you just explained us where that's
a good idea. But outside that, a lot of the
strategies that you use inside the fund and not really
(41:52):
available to the ordinary retail investors. So if you can
put yourself in their shoes and look out over the
next say five years, what kind of sector or area
would you be invested in? So you know, you worry
quite rightly about hot wars and cold wars, and we
can see that the risk of that happening everywhere and
even Japan is now there's now building an offensive military capability,
(42:15):
which is which is worrying for all sorts of people.
And you worry about demographics obviously, worry about labor shortages.
So is it the fence stocks, is it robotics? Is it? What? What?
What is it? That you would think to yourself over
the next five years, this is somewhere where a retail
investor has just got to be. Every era has its uh.
It's kind of dominant class of ideas, doesn't you know
(42:37):
if we went back to the S and PS ten
largest companies, would at least half of them would be
oil um. You know, at the end of the eighties
nineties it was Japanese banks, and then in two thousand
TMT bubble you had all the tech names, and then
a lot of them were Chinese. At the start of
the last decade, and on the eve of twenty two
(43:02):
and the Zegon vendor, as Schultz described it, it was
all tech, wasn't it. And I think that the less
of the last couple of years is that matter matters again.
You know, it shortages a real You can't print energy,
and in order to fulfill big visions around energy transitions,
(43:22):
you need a lot of commodities. So to us, there
is still value in energy and other commodities I mentioned earlier.
We've got a bit of oil at the moment. On
a long term wealth preservation against financial repression basis, inflation
protected bonds, you'd expect me to saying gold are important.
There's definitely going to be value around in maybe small capture,
(43:45):
Pan or the UK. I think the difficulty is standing
here at the start of three facing the kind of
liquidity risk we think you've got, and the sort of
recession risk that seems likely this year, and the uncertainty
around the impact of mine is reopening. You don't want
to have huge conviction directionally at the moment. This is
(44:05):
a period for maximum humility, and our entire philosophy is
based around not getting it completely wrong rather than getting
it completely right. So when we're building a portfolio, Marian,
we're not going around thinking here are the best ideas
on a five year view. We're building a portfolio which
should protect and grow capital regardless of what happens in
(44:26):
the market. Um and hopefully this environment is a very
good example of how that's powerful. Alex, thank you, thank
you so much for joining us today. Hugely appreciate it.
Thank you, Marian. Thank you for listening to this week's
Marin Talks Money. We will be back next week in
the meantime. If you like on you show, please rate,
(44:47):
review it and subscribe wherever you listen to your podcast.
Thank you very much for doing that. This episode was
hosted by Meat marrism Set Web. It was produced by
Summer Sadi, editing and sound designed by Blake Maples. Special
thanks to you, Alexander Charters, of course, and to John
Steppic And finally, do not forget to sign up to
John's daily newsletter, Money Distilled. In it. He gives his blood,
(45:08):
sweat and tears to tell you what you should be
doing with your money. The least you can do for
us is to read it. The link is in the
show notes
John Hello, Hello, Now listen, we've got there's so much
in the chat with my main guest, Alex Charters. This week.
We covered the entire world, pretty much every market and
even get to gold. But there's one thing that we
that we mentioned in our chat, but we don't follow up,
and I wish I had followed up with them, But
now I think about it, I really it doesn't matter
(00:20):
that I didn't because you're slightly obsessed with it as well,
which is venture capital and private equity and how potentially
incorrectly private companies are priced inside portfolios, in a particular
inside investment trust portfolio, because I know that's what you've
been writing about recently. Yeah, this is one that feeling
(00:42):
slightly exercised about because my my guts at war with
my brain slightly on it. The main point is that
it's a private assets private companies. Venture capital private equity
has obviously been a huge part of the bubble either
there's been an awful lot of money and old in
to it. Institutions have had it sold to them as
(01:03):
this amazing diversifier and they've been more than happy to
embrace it because one of the incentives for investing in
this stuff as you get to make up the value
that you put on it. So that means that whenever
there's a down market, everything else in the portfolio has fallen.
But you can point to your private assets and say,
look they're not falling. In fact, they've gone up in
the last quarter. And everyone's happy to engage in that
(01:25):
collective delusion because it means you don't ever have to
tell a client that the portfolio is going down. So
there's been lots of male incentives, there's been hoping of
the zero interest rates, lots of venture capital is obviously
in kind of like tech and kind of bubble areas anyway,
so I can totally totally see the private assets need
to fall a lot in private valuations need to follow
(01:48):
a lot. Okay, well, let let me stop be there
to say that and highly agree with you. And one
of the things that always slightly amused me of the
last few years has been this idea that we should
pay more for any particular you note of growth in
a private company than we should in a public company,
more for a unit of growth in an unproven company
or a new company than we should in an older,
(02:08):
proven company, which all seems to me to be incredibly bizarre,
because it feels to me that we should pay much
more per unit of growth in a company that we
know something about, that we understand, that has a track record,
than in one that we know very little about. So
it's always been such surprising to me that we're not
surprising given me a wider environment of the bubble and
low interest rates, but on a rational level, private companies
(02:30):
should be worth significantly less in the main, in the
main the public companies. Yeah, and they used to be.
I mean that this is all part of the bubble phenomenon.
It's like, there's there's two things that stand one which
is the people paying more for private companies in public ones.
That's that's a bubble phenomenon for definite in terms of
the multiples. But also and the the idea that the
(02:52):
aliquidity is actually a good thing rather than a bad thing.
That sort of is that they I've literally seen this
argument change during the bubble period, where it's been actually
it's a good thing that you don't know what the
price is and that you can't sell because that stops
you from selling at the bottom. So it's like this
it's like a kind of psychological benefit that you're getting
from it. Yeah, but there's kind of the job of
(03:14):
fund managers and be a private equity or listed obviously,
it's their job to not sell at the bottom, isn't it.
I mean, you know, so we shouldn't need to put
in place artificial mark to prevent them from doing it.
Literally their job. It's a bit like what we said
about Richie seen that last week. You know, that's your job,
just your job, not a special promise, just you. But
(03:35):
I mean, but so yeah, I mean, I think that
it's been an extremely bubbly area capital. The Rosschild Investment
Trust is one of the standout ones that have been
getting kind of discussed. And my only question is whether
those the risk that people start to over egg what's
going on and oversimplify what's going on, because I guess
(04:00):
apartently feels that looking at this so to take specifically
the Telegraph obviously high profile shared column quest or wrote
up broker note that had been released a bit online
the earlier mentioning the no the amount of private assets
in the portfolio had gone up significantly and the big
risk was that this would get written down at some point,
(04:20):
and that probably wasn't in the price of the portfolio,
the things that the share price of filled by ten
percent on the day that that article was published, like
a month after this had come out, and you know,
I mean so much for the efficiency of stock markets, etcetera. Well,
it worries me, John, I tell you, it worries me
because I wrote about that and the SHAP price didn't
(04:42):
fall by champercent. One am I suddenly less influential than
question exactly. So put me into a whole world of
introspection and stress. Well it supposed it, Dift says. You
didn't say selling by a different fund, which was the
other thing about this column. They sort of said, well,
it's not. It's not doing the same thing is say,
capital gearing or rower. But with all due respect to
(05:03):
the you know, the Telegraph journalist, I would say that
that's not what sets out to do. And it's also
not I've never mentally categorized it in the same place
as those other funds. Those those other funds are kind
of almost funds that you expect to do well in
a beer market, which is written is more a kind
of you know, shouldn't take too much of a kicking
in a beer market, rather than one that's actively going
(05:25):
to go up. So I mean this is all kind
of you know, what have angels dancing a pin head?
But I suppose my point is, you know, is trading
at something like a twent discount now, And one of
the things I think you probably have to look at
is how much experience to these managers who ultimately because
we can't value private companies, so a lot of the
question is like, how much do you believe the actual
(05:48):
managers these funds are any good at selecting this stuff?
And where you've got I think that's where you've got
to kind of start thinking about, well, is there a
difference between saying the teams that's somewhere light writ capital
and the teams that somewhere like soft Bank, which seems
to be you know, seems to pilehead first any whatever
golf is laid on their plates. And I think that
that's the kind of the difference, and that's possibly where
(06:11):
maybe some slightly more observant investors might be able to
find opportunities. Now. I don't know, John, I think you're
you're varing into as long as it's a good company
who cares about the price terror No, no, no, I'm
not thinking about that. I'm thinking, I'm thinking, if you've
trained that descount a state that stated discount enough like
(06:32):
say twice or secent, and remember again, I'll take that
because it's a good example. I mean, Red's kind of
historic descount. I mean retreated a premium for like five
or six years. Um, So I'm just saying that price
and then quite a lot. So what you're what you're
saying is that the I think what you're saying is
(06:52):
that the mispricing of the private equity portfolio is it
in the price of the investment trust basically, so we
don't need to worry about it anymore. Yeah, I mean
I think there is a there's a that's kind of fair.
There is a real problem with the pricing of private
companies inside inside collective vehicles, in that you know who
can possibly value them, how do you know what it's worth?
So all you can do is I mean you're guessing, right.
(07:13):
All you're doing is you're taking the prices of similar
listed companies. And sometimes there isn't a similar listed company,
or isn't there isn't a wide enough group of similar
listed companies, or there hasn't been another private company that's
had a you know, an event of some kind that
offers you a price that that you can't really come
up with something that's that's ideal, So you you stick
a pin in the air, you you look around at
(07:34):
similar companies and you make a vague price, and you
do that maybe every six months. So there's always going
to be a lag. And even with the lag, you
know that the prices is still very unlikely to be correct.
It's just the best guess. But then of course it's
the best guess in the public markets as well. So
this is a This is not a straightforward area. And
I don't think you can expect companies to adjust the
(07:54):
prices of the private companies in their portfolio more than
you know, what's a quar to absolute max once every
six months seems reasonable, So you know that Again it's
the job of the market too, as you say, at
a discount into the discount of the enemy of the
investment trust, to reflect that this is not unreasonable. I mean,
but I think this is the other benefit investment trust obviously,
because you can get that pricing of all liquid assets.
(08:20):
And you know, if you do believe, as you know
broadly do that even if they're not efficient markets are
the best collective guests at the value of an asset
at any given point um. Then you know the nice
name of investment trust as you can get in and
out even if they underlying as it's are liquid um.
But yeah, I mean I think that's it's not I
(08:40):
suppose it's I'm just finding an interesting when you think
about it, because it kind of on the one hand,
my Baily sense thinks are look just you know what
everything needs to bump to the ground, and you know,
the likes that can the kind of really stupid things
like the companies that invested in f t X without
even thinking about the due diligence um, you know, and
(09:01):
for like an awful law of trouble. But I do
feel as if there's a tiny bit of maybe that
is a kind of bideo with the bathwater of scenario
or going on in here. Okay, and you've been writing
about this, haven't you. So everyone should now go and
read John's newsletter Money Distilled, and pick up all the
rest of the information on this, and then you can
decide for yourselves whether you want to go out and
(09:22):
buy shares in our I T because everyone else is
too negative or if you think, as John's barest sign
believes that everything to just burn to the ground. Thanks John,
Thanks Mail. Welcome to Marin Talks Money, the podcast in
which people who know the markets explain the markets. I'm
(09:44):
Marrin's some Setweb. This week, our guest is Alexander Charters,
investment director at Rufer. Alex specializes in gear politics and
in the investment implications of changes in gear politics. He's
got a particular focus on European politics and on U S.
China relations. And here's the co manager of two of
roughest flagship funds. Not many fund managers managed to make
(10:05):
a positive return last year. The Rougher Investment Company did
up around five per cent or so last year, roughly
flat year to date so far. It's not a very
long year yet, but given what we went through last year,
it's quite impressive to have made a little, not to
have lost quite a lot. So I started out by
asking alex what lessons did he, as a reasonable performer
last year learned from it. It was a really extraordinary
(10:29):
year on so many fronts, and it's it's difficult to
know where to start. The real world shocks were, of course,
what helped exacerbate the market shocks, and we had the
biggest land war in Europe since nine. We had China's
extraordinary experience with COVID. We had the biggest global energy
crisis since the seventies, and for Europe it was the
(10:50):
biggest ever. And then of course you have inflation at
multi decade highs, the fastest rate hiking cycle in decades,
and it made for a pretty toxic environment for almost
all conventional assets. In fact, equities had their worst year
since two thousand eights, bonds much longer, and of course
balanced portfolio's traditional stock bond portfolio sixty forty in common parlance,
(11:15):
was down nearly so there were very few places to hide.
Three quarters in a row. Actually, the first three quarters
of last year you could find almost no conventional assets,
so you really had to be using alternatives and in
our case, derivatives to ride out the storm. And those
are the primary reason we were able to generate a
(11:35):
positive return in last year's extraordinary cluster crisis. But Ruffer
was kind of ready for it, right And honestly, you
couldn't predicted the exact way the process crisis was going
to turn out, But you know, as a company you've
been talking about the everything bubble, you've been talking about
the terrible mistakes made in monetary policy, you've been talking
about the consequences that you expected from that, the main
(11:56):
one being inflation. So it shouldn't been no surprise to
you and your colleagues that most of the things that
happened last year happened regardless of the triggers energy crisis
were in Ukraine, et cetera. Obviously, we didn't know exactly
what the various triggers would be. We didn't know that
COVID was going to happen when it did, or that
the Ukraine War was definitely going to happen when it did.
(12:17):
But what you have been able to see for a
number of years is the way that under the bonnet
the global system has been rewiring itself to be more
inflation prone and more volatile, and so higher inflation, more
volatility were for us questions of when not if. And
of course you had the one two of the COVID
(12:38):
crisis and then the Ukraine War last year, and those
really were great accelerations in terms of the stimulus. In
the first instance, they dumped into the system the supply
constraints they're applied. And then more supply issues, particularly around
energy and commodities last year, and they revealed that rewiring
under the bonnet, and we think that's all investors have
(13:01):
really got to be focused on going forward, because it's
a very very different environment to the one they've all
been used to. Well, let's talk a little bit more
about last year before we move on to the hell
that might be this year. Was the use of derivatives
that that have saved you last year. Tell us a
little bit more about that. One of the great things
about being an unconstrained asset managers that we can buy
(13:22):
anything anywhere, anytime, as long as it's to support our
core objectives, which are to preserve capital and grow it
in any market conditions. And precisely because as you suggest,
we've been worried about the risk of inflation and therefore
an end to ultra low rates, and that this would
force a reversal of the everything bubble where essentially all
(13:43):
conventional assets have gone up together. Um, you'd find a
world where high cross asset correlations, in other words, everything
was then falling together would leave no places to hide.
And that led us to a mix of derivative protections.
So first of all, we wanted to own options on
higher interest rates, and they were the principal driver last year.
(14:05):
We also wanted credit derivatives because credit looked extremely expensive,
and that's pretty correlated with equity declines, so eff equities
for credit spreads tend to go up. And we also
wanted direct protections on downside inequity markets, both at an
index level and an individual stock level, and they all
contributed to performance last year. And the other thing that
(14:27):
you very publicly did in the portfolio and have talked
about a lot over the last night of the last
ten years or so, I think you've been been talking
about this holding indicted linkets, long dated inflation linked bonds.
You've been holding them for a long time on the
expectation that they will be one of the things that
would protect you when when the horrible day came, which
you did last year, but that didn't quite work out.
(14:48):
Right now, I think that's a very diplomatic diplomatic on
these way of describing the ultralong dated UK inflation linked bonds,
which are the longest dates of their kind in the world,
were down I think more than bitcoin last year. Gosh,
and that is really quite something, isn't it? That? That is?
That is quite something. Now, I should point out a
(15:09):
couple of things. First of all, we fully expected the
bonds to decline, likely sharply, and that's why we'd hedged
them carefully with these interest rate options, and those interest
rate options more than offset the declines in the inflation
link bonds in the strategy. So that's the first important caveat.
They were hedged. It's true though, that they felt more
(15:31):
than we expected. You'd anticipate when rates go up if
you've got extremely long dated bonds with the jargon very
high duration, which simply means they're very sensitive to changes
in interest rates. Says rates go up, the bond prices fall.
We would have expected more of an offset from the
second component of the way you value an inflation link bond,
(15:53):
and that is the inflation expectation. And the remarkable thing
there in despite every thing that's happened over the last
couple of years, is that long term inflation pricing remains
pretty much the same as where it was pre COVID,
So you've got no compensation in that element of the bond,
and as a result, they would just punish for being
long dated bonds. Needless to say, given our view the
(16:16):
world there's more inflation prone and volatile going forward. We
think that long term inflation pricing looks very complacent and
we would expect it to rise and that will be
the environment that's good for those bonds. Okay, Well, that
brings us from very neatly into three. And the main
topic that you know, the everyone was talking about, and
(16:38):
we'll talk about all year, is inflation. Where it goes
from here? Does it stay high, does it go low?
Is the biggest risk is suddenly defl disinflationary environmental possibly
near There are some people out there already talking about
outright deflation. As prices come down very suddenly, you know,
let's say that all the problems inside the supply chain,
you know, gradually fixed themselves, and we see things loosening
(16:58):
up already, right, we see it, and of being rates
and all that kind of thing, we can see things
beginning to loosen up. We begin to see a full
off in the demand that came from the ridiculous fiscal
stimulus of the pandemic. And let's say there's also not
a further energy pricess. You know, we listened on the
news this morning hearing that petrol prices are back where
they were pre the war in Ukraine. So all these
(17:20):
things come together, the inflationary problem disappears pretty much overnight.
No thanks, by the way to the central banks, because
it's actually no way that their interest rate increases could
have worked for already, So only thanks to them that
naturally these things happen. That's kind of the biggest, biggest surprise,
potential surprise of the year. Possibly. Um, well, you're right
(17:41):
on the central bankers mot and of course that won't
stop them taking credit for it in just the same
way they took credit for multiple decades of low and
relatively stable inflation for reasons that we would say we're
largely beyond their control. But we think that there is
a disinflationary wave coming this year. You're already seeing it
in the falling rates of inflation. So prices are still
(18:01):
going up, but at a reduced level. And the energy
story you talked about is part of that. But the
real question now is around recession and around China's reopening
and the effect this has on the path of central banks,
because inflation, alongside central bank action is absolutely what's top
(18:25):
and mr market's mind, and the truth is two reminds
us maximum humility in this sort of environment is required.
The truth is, no one actually knows how China's reopening
is going to impact global inflation. Of course, if it
pushes it up, that potentially means that the FED will
have to stay tighter for longer because inflation pressures may
(18:46):
be more resilient than the market expects. The bottom line
at the moment is that the market is effectively pricing
a Goldilocks story for this year. So it's expecting that
either a recession will be avoided or it will be
very shallow. That the Fed won't go as high as
it says it will in rates, that inflation will drift
(19:08):
back down towards targets as the central banks hope and
pray it will. That is pretty optimistic, and there are
obviously a lot of things that can go wrong with that. Okay,
So as far as you're concerned, shallow is basically the
new transient shallow and Goldilocks probably is the new transient. Look,
it's definitely not out of the question. But as the
(19:29):
experience of history shows, when you've got inflation that goes
above about five, getting it back down sustainably to two.
The average central bank target typically takes years because it
finds its way into corners of the system. Now, to
be absolutely clear, our thesis is that inflation is going
to be volatile, not that it's just going to go
(19:51):
up and stay up. And that's really important, and that's
one of the reasons we think that this disinflationary wave
is so important this year, because you're going to hear
all lots of people if it happens saying, ah, the
transitory story was right, the central banks have got it
back under control. Nothing. See here, folks, We can go
back to all the most popular trades of the last cycle,
(20:11):
and we think that's dangerous because there will be plenty
of opportunities for some of those assets to rally. But
if you think that over the longer run inflation is
going to be even modestly higher than it was in
the post credit crunch era, that means a lot of
the most popular strategies are simply not going to work
as well as they did. Well, I'm going to take
that as as an incredibly positive comment. Now, listeners, listen
(20:35):
carefully to this. You might have an opportunity to get
out of some of those text stalks you wish you'd
got out of the late twenty twenty one at a
higher present you can get today if people believe things
that Alex thinks, they shouldn't believe that, right, Alex, Yeah, Look,
there's there's plenty of opportunity if soft landing appears and
for some reason the Fed does flinch. But look, the
(20:56):
reality is, we think the Fed is going to be
tighter for joy than the market thinks, that inflation pressure
will be more persistent, even though prices are coming down
this year, and that over the long run, you need
to be reconsidering the fundamental basis of a lot of
those strategies. So Alex, let's stop there and go back
and look at why it is that you think that
inflation is going to be much more volatile than it's been. Now,
(21:18):
let's accept that there's a disinflationary wave coming. I agree
with You're seeing a lot of the things that have
driven up inflation over the last couple of years beginning
to fall off. We're beginning to clear losely and supply
jay and all this kind kind of thing. But is
it not possible that inflation would just come down to
I don't know, say two or three percent and kind
of stay there for another couple of years. Wouldn't it
be nice? Why would that not happen? Well, probably because
(21:40):
the settlement that underpins those extraordinary low and stated inflation
numbers for the last first years or so is being unpicked,
and it's being unpicked in some cases pretty quickly. The
obvious space to start is probably the Ukraine War, because
it's an example of the kind of breakdown in world
order that we've been worried about for a long time.
And obviously China is the biggest player in the deflation
(22:03):
engine in terms of the additions to supply that drove
low prices in the last generation, and both China and
the Western Bloc are now interested in strategic security and
supply chain resilience is much more important. Resilience is going
to increase cost pressures. Remember, wars, both hot and cold,
both tend to be inflationary, so world orders a big
(22:24):
part of it. On the domestic front, you can see
that the Thatcher Reagan settlement that favored the small state,
free trade, a lower taxes is on its way out,
and in its place you have return of big government
with activist fiscal reflexes that at the first whiff of
grape shot pressure on the public's purses, you have calls
for more subsidies, price controls, fiscal stimulus. We've seen it
(22:48):
obviously with energy, which has been a huge shock for people.
But you can hear the clamor also for mortgage help
in many countries as the era of free money ends,
and that's one of the central facts of our time,
that suddenly debt matters again. And then, of course, on
that note, you've got aging with huge bills for pensions
and health and social care, so the pressure on government
(23:09):
finances is going up. Just as rates start to go
up more and demand more payment for interest rates bills.
You've got deglobalization. All of these huge long term factors,
not to mention wartime economics around issues like climate change
mean higher inflation pressure and more volatility. It's interesting on
(23:30):
government spending, isn't it. I mean, in the UK, for example,
we never seem to get government spending down much below
thirty five cent of GDP, but we've never in the
past managed to get it up much above thirty eight
of GDP for very long. But looking at the promises
that the government is making Now, as you say around
everything from the cost of living crisis to the NHS,
but social care, etcetera, it's almost impossible to imagine as
(23:53):
keeping that tax take below fort going forward. I think
that's fair, But the reality is, when you can't raise
enough money through taxes to pay your bills, what a
you're gonna do? When you're going to square the circle
through financial repression, And that in plain English means they're
going to try and keep inflation and the rate of
normal economic growth well ahead of the rate of interest,
and that's going to erode the value of money, and
(24:14):
that's how they're going to pay these bills. So it's
a bad environment for savers. And you can see the
kind of things already that are characteristic of financial repression.
So if you think about all of these plans for
your pension pots, when the government says, wouldn't it be
nice if this money was funnel towards these important infrastructure projects,
(24:35):
this will be a kind of compulsory part of your
your pension allocation potentially in future. This is how they
trap money in areas that they want it directed, not
that are good for your long term preservation of wealth. Yeah,
it effectively becomes a kind of tax, doesn't it end.
It's the kind of government policy that would out very
neatly with the order enrollment system, which I had think
(24:56):
has been absolutely brilliant so far, you know, effectively provides
it at a quite retirement for everyone and work in
the UK until possibly the government starts at that should
be put into our own productive investments in whatever it is.
People should remember with all of the obsessive focus on
is that they're going to do this, is that they're
going to do that. The central issue is we've just
(25:18):
seen clearly that central banks are not masters of inflation.
It's an emperor's new clothes moment over the last couple
of years, and the long term forces that have led
to this disinflation era are very clear. They're going into reverse.
That changes the symmetry of risk going forward. But remember
central banks job is not primarily to control inflation. That
(25:40):
might be what their legal mandates say. They're therefore possibly
plus or minus unemployment or growth target here or there.
But central banks were founded to help governments manage their
debt and that is their central function today as it
always has been. The Bank of England. That's the templates
for most modern central banks was found in sixte to
(26:03):
help the government get away its debt in order to
pay for a rebuilding in the Royal Navy falling a
drubbing by the French. Central banks are there to help
manage government finances, not to protect your money. It's interesting,
and we would expect them to become more political now
than they've been in the past. We've had this sort
of era where we have been allowed to believe, or
allowed ourselves to believe that central banks are entirely non political.
(26:26):
There they are there, they are out there, nothing to
do with the government, not listening to any brea ministers
or chances, just getting on with their core job of
keeping inflation. Look that pretends is kind of garner, isn't it. Yeah,
And they're in a window of political opportunity at the
moment because they've done this extraordinary tightening, the fastest tightening
we've seen for a generation. But the real economy isn't
(26:48):
feeling the pain of that yet, So there's a window
for them to get their hikes in before the political
pressure to ease really comes in with a vengeance. Because
they're not politically insensitive what what they say and what
we're going to see this year is going to be
really important. Are the FED, the e c B, the
Bank of England, the b O J. Are these banks
(27:11):
really prepared to inflict serious real economy pain against an
already febra backdrop in order to push inflation back to target?
Or will we see the kind of kite flying that
we've already had from senior people at the I m
F where suddenly you hear, well, maybe maybe a central
bank inflation targets should actually be three or focus two percent?
(27:34):
Pretty arbitrary, isn't it? Why? Why are we obsessed with
getting it back there? Now? That that might be right,
But it's a very important sign, just as the price
controls and the clamor for fiscal steamers are of the
direction of travel and it's not towards lower inflation on
a structural basis. Well, the twoth sad thing is interesting,
isn't it. I'm going to go off topic here here
I go. John and JOHNA and I were looking at
(27:56):
this last year and trying to figure out don and
trying to agre out exactly where this two percent target
came from. Where did the idea that two percent is
the correct rate of inflation for a developed economy come from.
And we looked and looked, and of course it's almost
impossible to find the academic research to back this stuff up.
And I eventually found an article in a now defunct
magazine called The Status from I think nineteen four that
(28:20):
referred to the original research, which was about developing economy
is not developed, and referred to two percent as being
an appropriate rate. I'm going to dig that out and
I will try and find it for you, and I
will put a link somewhere on the Bloomberg website. And
a column of minx is absolutely fascinating, Yes, so so interesting.
I mean, as far as central banks go and the
(28:40):
markets this year, inflation is important obviously because it dictates
how tight they keep policy. And over the short term,
the big risk going forward, we think it's still around
liquidity in the market, so how much money is there
available to chase assets? And you've got to remember not
only that rates have gone up very sharp plea, and
we haven't felt the full effect that yet, partly because
(29:03):
we haven't reached peak rates yet, but also because they're
trying to run down their balance sheet holdings of assets,
and that means just the moment that yields are already higher,
they're going to start trying to dump more and more
government bonds into the market for investors to absorb. So
there's a real challenge for liquidity and um that's that's
(29:26):
a big risk going into your alongside the recession risk
to earnings, which is one of the reasons we're very
low in equities at the moment, feel very low in equity.
So you hold some equities obviously, so what do you hold?
How does that work? I mean, if we if we
take your your view that inflation is going to be
very volatile, then there may still be quite a long
way for the longer duration assets to fall to say
(29:47):
growth docks, which feed a horrible couple of years and
were horrible years. Should I say, value performed significantly last
year and there's now a view which I keep hearing,
that the growth stocks have fallen enough, the big UK
to U S tech is on their way back. Enda
you know now is the time to buy example, But
if you're right, which by the way I think you are,
that's just not true. Is it barely gun? Well? Last
(30:10):
year was in many ways pretty orderly, So we think
the everything bubble has started deflating. You had the most
extreme and liquidity fueled extensions of that taking the hit first.
So I think the crazy crypto activity, non fungible tokens
the spack universe, a bonfire of the acronyms, and the
(30:31):
real hit, The real shock for a lot of people
was bonds because obviously your principal offset for most people
as we as we mentioned at the top, didn't work.
It was correlated with equity. So the bond shock was
really the bigger one because equity draw downs the scale
we saw last year aren't that uncommon, even though it
was a bad year. Bonds draw downs on that scale
are extremely uncommon. But there's still plenty of pain for
(30:55):
assets that haven't yet felt the full effect of those
high yields, and those would include heavily leveraged things like
private equity, venture capital, corners of property. There's plenty of
pain still to go. And of course, in terms of equities,
remember all of the damage last year at a market
level was d rating. In other words, investors prepared to
(31:17):
pay play lower multiples for earnings of companies, but the
earnings themselves haven't fallen yet, and indeed, earnings estimates are
still pretty buoyant, although they're coming down. So this year,
if the recession arise, it must be the most widely
forecast recession in history. But let's assume recession does arrive
(31:38):
this year, earnings risk is very material. If the economy
goes into recession, earnings always go down. That's not going
to be good for equities. And so as far as
we're concerned, we've got only about ten ten ten in
equity cash equity, but on a net basis is zero
because we have derivative hedges on the other side of it. Okay,
(32:00):
so what are you exposed to at the moment. We've
got the ultralong dated in the Excellent bonds and quite
a lot of shorter dated inflation protected bonds. We've got
similar things in the United States thirty year tips, which
we've been trading recently. We've got a position in oil,
We've got quite a lot of derivatives still. We've got
(32:22):
four and a bit persent in golds and a few
other bonds, and we've got a very large cash and
a near cash position, and we built that up over
the course of last year to give us the firepower
we wanted in expectation of dislocations starting to appear as
liquidity was sucked out of the market at a record rate,
and we were able to use that, for example, in
(32:43):
the back end of last year when the UK guilt
market went into meltdown after the Trust quarteng budgets, and
we were able to trade some of those ultralong dated
UK and excelling bonds quite well. But last year, the
best conventional asset you could own was dollar cash. All
other conventional assets fell. Cash has a very powerful value
(33:04):
in a high risk environment, gives you a lot of optionality.
We are keen to have some of that. It's interesting,
there isn't it where we often write about how didn't
times like this to hold cash and exactly that you
must think of it in terms of its optionality and
yours try not to think about the amount of purchasing
power you're losing in real terms. And I looked back
to the nineteen seventies, which is the last time we
(33:26):
had an environment for the similar to this, you know,
finance for oppression, ongoing crisis, et cetera. And there were
very few periods in the nineteen seventies when rates on
deposit accounts were not high enough that you were breaking
even in real terms. You haven't occasionally, but the majority
of the time, if you'd held cash, you've broken even
in real terms. By the end of the year, completely
(33:48):
different environment. We look back on the seventies of being
a terrible time for savers, but relative to where we
are now, that were fantastic, extraordinary. Okay, So let's talk
a little bit about the goal, because as you know,
I'm very keen on gold, and I think everyone should
hold gold in their portfolios, and I've written several columns
explaining over the years why bitcoin is absolutely not the
(34:10):
new gold because it has none of the characteristics that
gold has that make it so valuable as a form
of money. Now, you might not necessarily agree with that,
because you have in the past had a position in bitcoin,
so you must have thought it had some potential for something,
if not necessarily, to be the new gold. But let's
put that aside. You probably don't want to talk about that.
Let's stress a long time. So let's talk about why
(34:33):
you all four or five of their portfolio and gold
relative to our historic waiting that's pretty low. One of
the reasons that's the case is that last year, when
it was actually even lower, and we expected gold to
take a hit as rates went up, and that's exactly
what happened. Fundamentally, over the long term, you want to
own things that the government can't print or it's harder
(34:54):
for them to steal your savings, and gold is absolutely
part of the mix. At the moment, it's some joining,
a bit of relief as the week of Dollar comes
into play, and there's expectation on the market's parts of
easing up of rates further out into the back end
of this year, but long term, long term doesn't really
make any any difference. This is a short term argument
(35:16):
for keeping your position slightly lower than it would have
been over the longer term. If we're in a volatile
inflation politically difficult and inflation the environment, geopolitical risk is
going up, Inflation risk is going up, pressure on government
finances is going up, financial repression risk is going up.
All of those things over the long run should be
(35:37):
good for gold. We've got a mix between bullion and
gold miners, which off you leveraged exposure. Of course, last year,
with very high energy and labor costs, they had a
bad time. That's why we've been reducing them. But it
starting to look interesting again. You've seen that in the
market action. I think it tells you a lot that
global central banks are picking up gold are quite a
(36:02):
clip at the moment. Yeah, I saw that the Chinese
Central bank buying quite a lot. Interesting. Um. You know,
we often talk about what is money and what isn't money.
I was went into a school quite recently and I
was talking to them about the nature of money, and
I was give them a few different things. When I
go and do this a cow Reachelleach and give them
the paper money, and I give the a little fingerful
of those shredded dollar bills that you can you can
(36:25):
get from the central bank in the US, and ask them,
you know, which of these things is money? And the
answers are really interesting. But we always get back to
the end. If if people believe it's money, it's money,
and gold is the only thing that people have consistently
believed his money for for thousands and thousands of years, right,
which effectively makes it money. And it's let's just go
back a little bit and pick up on what you
(36:45):
said about about China. Massive changes underway there which could
end up being inflationary, could end up being deflationary. Took me,
took me through how that works. Well. The shift in
China is not to be underestimated for a few reasons.
So on the inflation deflation, it's one of the key unknowns,
as I mentioned, in terms of how it interacts with
central bank policy making this year and therefore for markets.
(37:08):
If it is driven by all the classic Chinese leavers,
like real estate development, it's going to be commodity intensive
that might feed through more directly into inflation numbers. You've
also got to remember they've got three years of accumulated
savings waiting to be spent, and I read that the
totality of those savings is more than UK GDP. So
(37:29):
if you think about the experience of Western countries as
they did reopen, the argument would be that it is
going to be more inflationary. Of course, we don't know
what the shape of Chinese activity will be after three
years of COVID, where they will be permanent scarring, whether
it will be less real estate and commodity intensive, So
(37:49):
the impact is is uncertain, but the fact of the
pivot at all is potentially very significant because remember at
the Congress last year, the communist past where g secured
his third term and appeared to double down on all
his signature policies, including zero COVID. The market really took
(38:09):
fright and what we've had since then is the most
extraordinary series of policy u turn. So not only have
they scrapped zero COVID overnight despite all the medical constraints
like low proportion of properly vaccinated over eight s and
all the rest of it is, they've also scrapped the
leverage ratios for developers and a huge number of other
(38:32):
things like easing up on tech platform crackdowns, or at
least some agencies have. So there does appear to be
quite a significant pivot, and that's mirrored in the diplomatic
space where China's tried to build bridges with Australia, a
more emollient New Year address from Mr G and a
appearance from him at the Barley summits with the G
twenty last year, and that does suggest that there after
(38:54):
some breathing space. Now that may of course indicate the
severity of the domestic situation in China, but I think
what you can have confidence in is that they are
determined to make the reopening big bang of success, because
particularly with health problems, they can't afford for it not
to be, So that's very interesting in terms of who
profits from a China reopening. Alex You and I were
(39:16):
at a conference together a few months ago, and one
of the speakers, Jim Melon, He was talking about the
technological revolution, and one of the things he was saying
was how disappointing it had been that over the last
decade or so, we've had these huge technological leaps forward,
and we've kind of wasted them all by watching dancing
dancing nurses on TikTok and playing on Facebook and that
kind of thing. We haven't used the technology that we've
(39:38):
developed in such a way as to improve productivity and
improve our lives. Now, when you look at that, do
you think, well, possibly there's something in the idea that
we could have had a productivity revolution of the last decade.
We haven't, but we could now have won over the
next decade as we start to embed our innovations properly
(39:59):
into our economy. Yes, it's definitely possible in some areas
that will happen. I mean, it's worth remembering though technology
is often used as the sort of torpedo to the
more inflation pressure arguments the idea that those sorts of
productivity gains are going to prevent any recurrence of more
inflation pressure. Let's remember that many of the biggest game
(40:23):
changing technologies happened in periods of much more elevated inflation.
You know, I'm not just talking about the combustion engine.
I'm talking about aviation, I'm talking about dawn of the computers.
I mean, these are all things that happened outside of
the extraordinary deflationary era we've been in for the last
generation and around which all of the most popular portfolio
(40:45):
strategies are built. So we're not gloomy at all about
technological prospects. In many cases, they're extraordinarily exciting. It's just
that one they're not likely to overwhelm the return of
the big state, the deglobalization forces, the more politicized central banks, aging,
and pressure on labor markets as wage journalists get more
(41:07):
power with relatively smaller pools of labor. It's unlikely that technology,
at least in the immediate future, is going to be
able to overwhelm all of those structural factors. And it's
also the case that technology was the market darling in
that deflation era because it was the one area you
could consistently get growth. And we're simply saying that if
(41:30):
there is a bit more inflation and nominal growth around
and a bit more volatility, different things are going to
work in the new era. Okay, well, let's talk briefly
about what the retail investors should now do. I mean,
obviously the first thing that you do is rush out
and by rougher because you just explained us where that's
a good idea. But outside that, a lot of the
strategies that you use inside the fund and not really
(41:52):
available to the ordinary retail investors. So if you can
put yourself in their shoes and look out over the
next say five years, what kind of sector or area
would you be invested in? So you know, you worry
quite rightly about hot wars and cold wars, and we
can see that the risk of that happening everywhere and
even Japan is now there's now building an offensive military capability,
(42:15):
which is which is worrying for all sorts of people.
And you worry about demographics obviously, worry about labor shortages.
So is it the fence stocks, is it robotics? Is it? What? What?
What is it? That you would think to yourself over
the next five years, this is somewhere where a retail
investor has just got to be. Every era has its uh.
It's kind of dominant class of ideas, doesn't you know
(42:37):
if we went back to the S and PS ten
largest companies, would at least half of them would be
oil um. You know, at the end of the eighties
nineties it was Japanese banks, and then in two thousand
TMT bubble you had all the tech names, and then
a lot of them were Chinese. At the start of
the last decade, and on the eve of twenty two
(43:02):
and the Zegon vendor, as Schultz described it, it was
all tech, wasn't it. And I think that the less
of the last couple of years is that matter matters again.
You know, it shortages a real You can't print energy,
and in order to fulfill big visions around energy transitions,
(43:22):
you need a lot of commodities. So to us, there
is still value in energy and other commodities I mentioned earlier.
We've got a bit of oil at the moment. On
a long term wealth preservation against financial repression basis, inflation
protected bonds, you'd expect me to saying gold are important.
There's definitely going to be value around in maybe small capture,
(43:45):
Pan or the UK. I think the difficulty is standing
here at the start of three facing the kind of
liquidity risk we think you've got, and the sort of
recession risk that seems likely this year, and the uncertainty
around the impact of mine is reopening. You don't want
to have huge conviction directionally at the moment. This is
(44:05):
a period for maximum humility, and our entire philosophy is
based around not getting it completely wrong rather than getting
it completely right. So when we're building a portfolio, Marian,
we're not going around thinking here are the best ideas
on a five year view. We're building a portfolio which
should protect and grow capital regardless of what happens in
(44:26):
the market. Um and hopefully this environment is a very
good example of how that's powerful. Alex, thank you, thank
you so much for joining us today. Hugely appreciate it.
Thank you, Marian. Thank you for listening to this week's
Marin Talks Money. We will be back next week in
the meantime. If you like on you show, please rate,
(44:47):
review it and subscribe wherever you listen to your podcast.
Thank you very much for doing that. This episode was
hosted by Meat marrism Set Web. It was produced by
Summer Sadi, editing and sound designed by Blake Maples. Special
thanks to you, Alexander Charters, of course, and to John
Steppic And finally, do not forget to sign up to
John's daily newsletter, Money Distilled. In it. He gives his blood,
(45:08):
sweat and tears to tell you what you should be
doing with your money. The least you can do for
us is to read it. The link is in the
show notes
Host
Merryn Somerset Webb
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