Three years ago in this space I noted that Dow Theory had given an important technical signal on 23 November 2007 indicating that the US equity market had entered “a primary down trend”. Although the equity market looked temporarily oversold, what it appeared to mean, if you believed in such things, I suggested, was that “investors should be preparing for a market whose underlying trend from here is down, not up”. Well, that didn’t turn out to be a bad call, as the Dow Jones index subsequently fell by 50% to its March 2009 low, and as of last week was still trading 15% below its level at the time the signal was given.
Author: Jonathan Davis
Author, columnist and investment professional.
Trying Not To Be Too Clever
Before he became a rich and admired preserver of investors’ capital, Jonathan Ruffer had, by his own account, two unsuccessful spells as a barrister. It is not long into our interview (for The Spectator) that I gain a clue as to why this seemingly harsh self-assessment might be true. We have been discussing the credit crunch, which he publicly predicted was on its way well before it hit – the Queen and others mystified by why nobody saw it coming was clearly not a client – and how governments and policymakers should best respond to it.
Q and A: Jonathan Ruffer
What follows is the edited transcript of my interview with Jonathan Ruffer, the founder of Ruffer Investment Management (now Ruffer LLP). It forms the basis of my recent article in The Spectator. The firm’s flagship Total Return fund, which aims to provide consistent positive returns in all market conditions, has trebled in value (dividends reinvested) since its launch in 2000.
Grumpy Old Men Do Have Their Uses
It is no surprise to see sections of the media working up steam about the latest comments made by Charlie Munger, the original grumpy old man of the investment world. Although best known as Warren Buffett’s long-standing business partner, Mr Munger passed out summa cum laude from Harvard Law School in 1948, and, before teaming up with Mr Buffett, had already carved out a successful career as a lawyer, property developer and investment manager.
Barbarians at the Gates of Complexity
I don’t know how much time Lehman Brothers’ traders spent reading the bank’s copy of Edward Gibbon’s The Decline and Fall of the Roman Empire, which raised £2,375 for creditors at Christie’s last weekend. I recommend the much shorter The Collapse of Complex Societies by Joseph Tainter, which might have helped them understand their own decline and fall. The sack of Rome, who’s 1,600-year anniversary also occurred last month, was of course, perpetrated by the “barbarians at the gate”. But the fact does not explain why the sophisticated society of ancient Rome, with its advanced weaponry and powerful armies, fell victim to a less developed people.
Q and A: Michael MacPhee (Baillie Gifford)
Small funds and investment trusts that fly below the media radar can sometimes offer better returns for discerning investors than many bigger and better known counterparts backed by heavy marketing spend. One example is Mid Wynd International, a £60m investment trust managed since 1998 by Michael MacPhee, a partner at Edinburgh-based Baillie Gifford. The trust, which targets stocks that are too specialist to sit comfortably in Baillie Gifford’s two larger investment trusts, Scottish Mortgage and Monks, has returned 75% over ten years, three times the return of the FTSE All-Share index over the same period. Michael MacPhee gives his latest views in this Q and A.
Jonathan Davis 