Argonautica

“A bull market for assets but not for asset managers”, is how we might look back at the past few years. The active fund management industry has been in trouble, caught in a pincer movement of pressure on fees and higher regulatory costs. Moreover, the bull market in assets has been concentrated in the US and specifically its technology stocks. As investors could just access beta to this phenomenon more cheaply through passive products, they did not need active managers who charged a higher fee but…

Let us return to the Stone Age.1 For the past few weeks our Neanderthal ancestor has stayed almost exclusively within the safety of his modest limestone cave. Against his natural libertarian instincts our caveman reluctantly agreed to assiduously limit his outdoor activity to brief forages for wood and fresh water. The tribal elders insisted on these rules: they argued that it would buy time for the community to better understand the unfamiliar fresh external threat. But if they now knew more, this…

“We already know that” says my son as I explain we are about to witness the destruction of economic activity and levels of unemployment (furlough aside) not previously seen since the Great Depression. He is not worried by the lack of an immediate cure or vaccine for the virus, which may mutate and subsequently return. He responds with glee at the prospect of the “lock down” extending for months, denying him school for the summer term. When I tell him that the steepest share price falls since the…

News that UK banks will now freeze shareholder returns - following a Bank of England warning - will pile further misery on investors relying on income from dividends to fund their retirement. With yields on cash and government bonds at record lows, the case for equity income should, based on historic yields, be more compelling than ever. However, the equity investor is the fall guy in any crisis: the owners of the business are the last in the queue to be paid; and even if there are surplus profits,…