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Hello, I'm a private investor from Edinburgh, UK. I run my own portfolio mainly long equities with some bonds. I've done some VC investing too- although it is very high risk and forms only a small part. My portfolio view is global income and growth.I also have investments in forestry and... More
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Little Deal Clincher
  • Peace, Hope And Progress Versus Strife, Despair And Calamity: Any Predictions How These Will Turn Out? 0 comments
    Jul 2, 2014 7:05 PM

     

    Peace, Hope and Progress versus Strife, Despair and Calamity: Any Predictions How These Will Turn Out?


    by The Little Deal Clincher on June 30, 2014

    June

    In June 2014, I attended the 105th AGM of the Scottish Mortgage Investment Trust PLC (NASDAQ:SMT), a fund of nearly £3 Billion of assets spread around the world with a total return objective. It's managed by Baillie Gifford (NYSE:BG) here in Edinburgh. As a small shareholder it's useful to meet who governs and directs one's portfolio from time to time and I would recommend attending such events on occasions, being an active shareholder is something a private investor should enjoy and not just for the coffee and sandwiches. I happened to know one of the directors as he's from where I grew up and another Professor John Kay is a regular columnist and worthwhile read in the Financial Times. The board are usually available after an AGM to pose a couple of questions over those cups of coffee I mentioned.

    What was of real use was the comments by the BG investment managers, James Anderson and Tom Slater who gave a long term perspective of remaining invested in quality equities mentioning the fund's solid performance from 2004-2014 (including the 2007-2009 financial crisis)-perhaps a view to be expected- however 10 years suits my perspective. They made comments that global Goliaths like Google have a lot of opportunities yet to exploit and the fund, as commented, by Professor Kay, doesn't become overly concern with global macro-economic concerns.

    They are enthusiastic on the continued opportunity for well managed companies particularly with a strong business model and global presence such as Google, Apple, Amazon and Rolls Royce all have in their respective markets to grow and generate substantial profits. This chimes with my view of every 24 hours 7 Billion people get up and do something with their day which generates a persistent demand which can be met by persistently good companies or organisations regardless of war, disease, disaster and economic collapse. The balance between" life goes on" and "the end is nigh" remains, although often battered, intact and resilient yet changeable over time too. Such is the nature of (a rules-based) free-enterprise global trading system serving humanity through the ages.

    So is trying to 2nd guess a time when a market downturn occurs pointless? Or are the differences this time around worth noting and acting upon?

    There are always many differing opinions of varying accuracy and intent, try http://seekingalpha.com for some or the message boards of www.iii.co.uk for plenty of company specific, market or macro-economic views. However, geo-political developments play their part with news regarding events in the Middle East in recent weeks unsettling investors, although indices like the S&P 500 have also achieved all-time highs in June.

    "Events, dear boy, events" is reputedly what former British Prime Minister MacMillan rather patronisingly said brought about change. Well it's amazing what a few months can produce. The tentative US-Iran rapprochement over talks about limited uranium enrichment for energy production with a lessening of sanctions has, with the emergent threat of the Islamist State of Iraq and the Levant (or Greater Syria- namely, ISIS), arisen the possibility of the US and Iran being in an alliance against ISIS becoming a physical reality through splitting an increasingly sectarian Iraq into 3 pieces. Sunni extremist ISIS may form an arch from central and western Iraq through swathes of eastern Syria, with Kurdistan declaring independence in northern Iraq and the South East of Iraq becoming an Iranian Shia protectorate or even province.

    How would this upset regional powers like Saudi-Arabia, Turkey and Israel? Would Syria split further too with Assad's Alawite Shia-offshoot minority remaining in place in Syria much to the West's dismay and Russia's satisfaction? Lest forget the Ukraine's eastern strife continuing unresolved also Asian territorial disputes festering and bubbling away in the South and East China Seas.

    Eurozone worries persist with financial reforms only slowly getting to grips with shadow banking trading, and excessive leverage or debt still abundant with companies and households in general, deflation still threatens more than inflation. A market set-back can happen easily yet remain elusive way longer than most can predict. Therefore I do like the optionality of cash but remain, like the BG managers of the SMT, invested in equities and searching for opportunities although value at these elevated market levels is harder to spot.

    IF, geo-political engagement just continues without further deteriorating, involving a sensible and supportive US , the rest of world can get on with life and its demands helping companies, like Google or Rolls Royce, to produce products and services people want and which benefit everyone, including shareholders in the Scottish Mortgage Investment Trust, for years to come.

    Thus, the balance between progress and calamity is a fine one. If you're interested in the future for yourself or your children, yet mindful of risks, embrace the potential of the new and enjoy what advances in civilisation that brings- gladly add to the demand and the balance will endure of peace, hope and progress over strife, despair and calamity. Namaste-as the Yogis say.

    LDC

    Disclosure: The author has no positions in any stocks mentioned, but may initiate a long position in GOOG over the next 72 hours.

    Additional disclosure: The other stocks mentioned such as Google or Rolls Royce in the text are held by the Scottish Mortgage Investment trust which is quoted on the London Stock Exchange by the ticker LSE:SMT

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