The best investment decisions are almost always those that feel most uncomfortable at the time they are made. George Soros says he gets terrible backache when running his biggest positions. ‘If it ain’t hurting, it ain’t working’ is a good motto to put on your computer screen. Those who think Japan is an excellent home for their money at the moment (as I do) are very familiar with this phenomenon.
What do you want the stock market to do for you? Make short-term speculative gains, or grow your wealth over a period of years? My answer would be: ideally both — but the wealth part is by far the more important of the two. The-question is: what can a wealth-seeking investor do to minimise the risk of losses along the way? Here’s one technique that might help.
Aim — originally the Alternative Investment Market — is a curious entity that understandably excites conflicting responses. Since its launch in 1995, London’s ‘junior’ market has raised some £24 billion in new capital for smaller companies. But more than 70 per cent of companies listed on this relatively laissez-faire exchange have failed to make money for investors. A huge number have disappeared: the best taken over or promoted to the main market; many more simply insolvent; some spectacularly fraudulent. The official Aim index, which tracks the performance of its 1,100 constituent members, remains 27 per cent lower today than it was when Aim opened two decades ago — and it excludes companies that have gone south in the intervening years. Yet, paradoxically, Aim has also been a resounding success.
Is there a genuinely independent go-to guide for anyone who cares about the future of the UK economy but isn’t sure how to cast their vote in the Brexit referendum? Two-thirds of voters are said by unreliable pollsters to have made up their minds already, which leaves at least a third undecided. As the strident rhetoric and tendentious factoids of the two campaigns intensify, the need for dispassionate analysis could not be greater.
In a world where we’re heading for driverless cars, drones that deliver groceries to your back garden and smartphones that switch your lights and radiators on and off automatically while you are miles away from home, is it strange to think about handing over your money to a robot to look after? No, it’s not such a daft idea as it may first appear — and if the trend to robotise your finances gains traction, it will mean exciting opportunities for investors and potential trouble for the army of financial advisers and wealth managers who make a well-paid living looking after your money today.
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).