The sharp sell-off in Government bonds last week has left some investors, so one bond market strategist told the FT last week, “shell shocked at the speed of the rise in yields”. Hmmm: if that is the case, it seems that the investors in question would do well to consider a crash course in financial market history. A good place to start would be More Money Than God, Sebastian Mallaby’s splendid analysis of modern hedge fund experience, published earlier this year. The chapter on the events of 1994, a year when bond markets cracked in spectacular fashion, is particularly relevant.
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A Year for the Strange and Unusual
Looking back over the behaviour of the financial markets this year, the one thing that can be said with confidence is that they have not lost their inordinate capacity to surprise. The month of September was a good case in point. Not only did it turn out to be a barnburner of a month for equities, reversing the poor performance more typically associated with the month, but it also saw equities, bonds and gold all rise in value at the same time, the first time that this affront to market normality has happened since the 1930s.
An Exercise in Character Analysis
Does it make a difference as a fund manager how well qualified you are? This intriguing question is raised by an new piece of academic research that looked anew at the question of whether a manager holding a CFA (Chartered Financial Analyst) or MBA is likely to produce superior returns in a fund. I am grateful to the publication Index Investor for alerting me to the findings of a recent research paper* on this topic by Oguzhan Dincer, Russell Gregory-Allen and Hany Shawky.
Q and A: Colin McLean
Colin McLean founded the fund management house SVM Asset Management, based in Edinburgh, 20 years ago and was one of the professional investors featured in my book Money Makers. An experienced stockpicker, in this Q and A he describes his current thoughts on the markets and how he is positioning his portfolios.
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.
Jonathan Davis 