Category: Uncategorized

“Disagreeable data are streaming out of the computers of Becker Securities and Merrill Lynch and all the other performance measurement firms. Over and over and over again, these facts and figures inform us that investment managers are failing to perform”. So began Charlie Ellis’ landmark article in the Financial Analysts Journal back in 1975, describing why he believed that money management had become a “loser’s game”. The investment management business, he wrote, “is built upon a simple and basic belief: Professional money managers can beat the market. That premise appears to be false”.

The year’s batch of New Year market forecasts has been the usual source of interest. Not, obviously, because they tell you what is going to happen – the only thing we know for sure is that what is foretold will definitely not take place – but because of what the clues they give about market sentiment. However bullied, charmed or cajoled into making predictions, most professional forecasters in my experience know full well that the value of their forecasts is at nugatory at best.

The eurozone crisis is proving to be a wonderful political drama, with the most essential of all ingredients, as with all good drama, that the potential consequences of different outcomes are so serious. There is almost nobody in Europe, and increasingly beyond, who has not by now worked out that they stand to be adversely affected in some way or another, especially if the worst of all conceivable outcomes materialises. The fallout has reached capitals and markets all round the globe, from Washington to Beijing.

One of the aspects of the UBS rogue trader affair that seems to have escaped much comment so far is the role that organisational culture can play in high profile trading scandals. The common thread that runs through the Leeson, Soc Gen and UBS disasters is not just that management supervision and risk controls failed to stop the disastrous losses of their delinquent traders. An equal failure was that none of the traders felt able to confess to what they were doing in time to stop the losses escalating from an embarrassment to out and out disaster.

As the financial crisis continues to evolve, the Queen’s question at the London School of Economics – why have academic economists so little to contribute to predicting the course of events – continues to be all too pertinent. Robert Lucas, professor of economics at the University of Chicago and Nobel Prize winner for his seminal contributions to macroeconomics, proffered an answer in 2009.

Mark Slater, co-founder of Slater Investments, is one of the up and coming new generation of UK fund managers. His Slater Growth fund currently ranks as the best performing UK equity unit trust over one, three and five years, thanks mainly to a strong performance over the last two years, during which he has added further quantitative screening criteria to his original stockpicking methods. In this 40-minute audio interview, we discuss his methods, favourite stock picks and current cautious view on the market. (This item is for subscribers only).