By Alec Hogg
A benefit of being in the world’s financial centre is the access it affords to talent of the very highest quality. In my line of work, that’s rather important.
Yesterday was an example when I went along to a presentation at the venerable Schroders, a financial institution that is still family-owned a couple of centuries since its founding.
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Schroders has a stonking £375bn in assets under management (significantly bigger than SA’s GDP) so can afford to hire the very best in the world. I shouldn’t have been surprised at its classy chief economist, Keith Wade. But being exposed to an articulate presenter whose right on top of their game is always a pleasant surprise. Especially when he unpacked issues that are confusing everyone else.
For instance, the way the stock markets reacted after Brexit and the Trump victory. Pundits had warned that Armageddon would follow if these unlikely events happened. But as we now know, the US and UK share markets actually went in the opposite direction, surging to new highs.
Wade gave the best explanation I’ve heard: Economists and other soothsayers forgot the most important thing. The majority voted for change, and they expect this change will be for the better. So they’re not exactly about to run for cover or cut back investing (or spending) if the thing they wanted has actually happened.
Of course the Vox Populi may have miscalculated. An emotional, erratic, self-absorbed Donald Trump does seem to be doing his best to blow himself up along with the political establishment. But predicting the future has never been an exact science. So best keep an open mind but watch developments closely.
I was also heartened by veteran Schroders portfolio manager Stephen Langford’s ringing endorsement of two stocks we hold in the Biznews Global Share portfolio. Langford told us his team doesn’t always agree with the views of Berkshire Hathaway chairman Warren Buffett, but they are very much on the same page when it comes to the Oracle’s two favourite stocks of the moment – Apple Inc and IBM.
Like Buffett, the Schroders team has been aggressively accumulating shares in the two companies in anticipation of a substantial re-rating. Partly because they will be re-assessed as the swing back to value investing gathers momentum. But more for another reason: Langford wouldn’t share his fair value price for the two stocks, but did say they are “phenomenally cheap.”
Always nice to be riding shotgun with some of the best jockeys in the business. A prod, perhaps, if you haven’t yet replicated our portfolio. Or at the very least, get yourself a slice of Apple and IBM while they are still terrific value.
