I have always believed that in business and investing this is a good maxim to follow. I know that the early bird is said to catch the worm, but it is also said that the second mouse gets the cheese, and for me that is a more persuasive argument. It is less do or die, and mistakes will be less costly. Certainly my approach can result in missing part of a gain, and also incurring more of an exit loss, but so what, when interest rates are close to zero achieving a present target of 8% should be very acceptable, and I prefer the sleep at night time.
During the last couple of months I have been in and out of hospital, but prior to setting off down this road (of an indeterminate length) I had the time to revisit my various portfolios to consider their make-up and what might happen to the stock markets in my absence. I have always been a great advocate of technology funds, but felt very uneasy about the valuations being placed on many of the American “FAANG” businesses. Going forward, what would be the relationship between the dollar and sterling, and surely an American Presidential election and Brexit would definitely cause major waves? Now throw Coronavirus into the mix and you have in my book the recipe for a real Macbeth witches’ cauldron. So, time to be cautious.
To me, being cautious meant holding a much larger percentage of cash and gold, reducing the technology funds, whilst increasing the global green and sustainable funds. This I did whilst retaining my ITM power and Ceres Power hydrogen shareholdings just to retain a little bit of excitement. Looking at my portfolios this morning, the last two months would seem to have treated me fairly generously, with I Shares Global clean Energy putting up a magnificent performance, and the sustainable funds definitely falling into the “steady as she goes” category. Thank goodness I reduced the tech funds. So, as it stands at the moment, I do not see any pressing urgency to make any more changes. Time to stand and observe whilst we see just how our political masters around the world can rock the boat further.
You can probably tell that I am very curious about which fuels will become the driving force of the future and take over from carbon-based propulsion. It will probably end up being a mixture of battery, hydrogen and an as yet unknown agent. I recently read that around 70% of the worlds trade is carried by sea freight and that modern ships’ engines can be converted to run on hydrogen. In a similar fashion many lorry engines have already been converted. An aircraft has recently been successfully trialled capable of carrying two hundred people long distances. This must surely mean that the big drive will be to capture liquid hydrogen using the excess production of solar, wind, and tidal generated electricity. This is why, rightly or wrongly I keep my toe in the water with ITM and Ceres.
Back to more mundane matters, there is one particular fund manager that it would seem difficult to ignore, and that is Baillie Gifford. Whichever sector you look at, there they are, leading the way. It would be interesting to know the formula they have used in the selection of their fund managers. At the moment you cannot go far wrong just backing Baillie Gifford.
As a fourteen year old I worked on deep sea trawlers fishing off Iceland and if we had been fishing to the West of Iceland then it might occasion the return through the Pentland Firth on the way back round to Hull. The Pentland Firth can be notoriously rough and with certain tides it can create a whirlpool, so great caution had to be taken to get the timing right before making this transit. This is how I feel about today's investment environment, it is the time to be cautious.
Best wishes and good luck with your investments.
Founder & Chairman