This page summarises all the latest comments and articles posted to the site. It is updated regularly. It includes my latest columns in the Financial Times and Spectator, as they are published, and outside contributions from regular commentators such as John Kay.
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.
From an investment point of view, 2010 has been an interesting year so far. The first quarter was a strong one for equities, the second, though, was weak, as investor fears of a banking collapse in Europe surfaced. The third quarter has been strong. Equity markets spent much of July and August consolidating after their falls in late April and May but then lifted their skirts in September to produce a spectacular, if slightly unexpectedly, positive result for the quarter. Our global active funds returned 8.95% in sterling for the quarter. Their lower risk, balanced brethren returned 6.11%. There is now one quarter left to go. Traditionally, the fourth quarter of the year is a period of significant seasonal strength for equity markets, though often preceded by a wobble in October.
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.
Last week was a positive one. Equity markets broadened and mid to small cap stocks did well. Asian markets recovered. In particular, the euro gained significant ground against the US dollar rising by 2.93% over the course of the week. That recovery was helped by a significant improvement in the outlook for Spanish government bonds. The S&P 500 index, in US dollar terms, was up 1.45% making for a return of 7.27% in the month-to-date. Meanwhile, the MSCI Far East ex-Japan index was up 2.88% - a return of 7.32% in the month-to-date, also expressed in US dollar terms.
When the equity and bond markets are both pointing in opposite directions, as they are at the moment, it is fashionable to trot out this question: which market is the most reliable as an indicator of what lies ahead? Time was when bond market investors, being vigilant for inflation and potential default, and naturally concerned, like bankers, more with what could go wrong than what might go right, could claim with some justice that their prices did the better job of guiding investors' decisions.
Guy Monson is the London-based Chief Investment Officer and Managing Partner of Sarasin & Partners, the Swiss private bank and fund management business. Sarasin was one of the first fund companies to embrace global thematic investment. Guy is one of the professional investors whose views I monitor on a regular basis. In this Q and A, he makes the case for quality equities being the new "risk-free asset".