There is a good reason why we lack a definitive account of what characterises the end of bull markets, in the sense of a prescriptive set of conditions that must be met for such an outcome to be logically anticipated by investors. Such a set of rules would of course be self-fulfilling (and therefore worthless) if widely known and acted upon. Only with hindsight, when earnings and economic data are revised to accord with reality, do we typically discover for certain what should have told us the end was approaching. What we do know from historical precedent is that bull markets (a) tend to end with a whimper, not a bang and (b) are rarely triggered by specific causes that have been prominently highlighted for months in advance. Given their current dominance of the headlines, it seems unlikely therefore that either a new Greek crisis or a September interest rate rise from the Federal Reserve will be the trigger that abruptly brings the current bull market to an end.
Interviewing James Anderson is a lot more refreshing than grilling your average fund manager, as befits a man who runs one of the country’s most venerable investment trusts in a most unvenerable way. The Scottish Mortgage Trust, established in 1909 by Baillie Gifford, has been taken in a new and more adventurous direction under its latest managerial team, which pairs Mr Anderson, a historian, and Tom Slater, a computer scientist, as co-managers. (This is a fuller version of an interview which first appeared in the Spectator in its May 22nd 2015 issue).
If you accept that the primary interest of investors is to form objective judgements about the outcome of uncertain future events, then the forthcoming UK general election poses a particular challenge. This is set to be the hardest general election in living memory to predict. The range of possible outcomes for who forms the next government is unusually wide. Among other consequences, not one of the mainstream party leaders can be certain of still being in post by the autumn.
It is normally quite rare to come across professionals with hugely successful careers lobbing grenades in the direction of the industry that has brought them fame and fortune over many years. When did you last hear a magic circle City lawyer or a bulge bracket investment banker complaining about the level of fees that their firms charge? It doesn’t really happen. It’s a grown up world out there and you take what you can get. So it is both interesting and refreshing to hear Neil Woodford, one of the biggest hitters in the fund management industry, politely and firmly pointing out some of the ways in which the largest firms in his line of work come up short. (This is the full version of my interview with Neil Woodford for The Spectator, published March 7th 2015).
Pious hope of the week: the estimable Paul Johnson, director of the Institute for Fiscal Studies, says in The Times today that it would be
There is more meat than usual in Warren Buffett’s annual letter to shareholders, out today, including reflections by both Buffett and Charlie Munger on the fifty year history of their involvement in Berkshire Hathaway, and why it has been such an exceptional success. If you are so minded you can read this well-known story as an extended indictment of short termism in both corporate boardrooms and the marble halls of investment bankers (especially the latter). Both Buffett and Munger claim that their unique corporate model will enable Berkshire the company to outlive thier personal involvement for many years to come, although I suspect history may not be quite so forgiving.