When I last wrote about the markets it was to warn of impending doom and to mock that eternal optimist, Ken Fisher. Well, so far, Ken is on the right side of history.
The FTSE remains anchored around 7,500 and the divis keep coming. The price of Brent has gone above $60 which is a bit of a mystery in that this stimulates non OPEC production, especially from shale in the US. I wonder if Saudi Arabia is supporting the price to get a better price when they float their company (Saudi Aramco)? Anyway the rise has not frightened the horses in the broader economy and has done no harm to the price of Shell or Geopark, a South American explorer listed in New York in which I have a very small holding.
I haven’t done anything since I last wrote except to reinvest dividends in my SIPP and ISA holdings. Two of the funds I hold have been active. MP Evans continues to buy back their own shares and cancel them. They must have bought almost two million and are prepared to pay over £8. Meanwhile my relatively new acquisition (July 2017), Manchester & London Investment Trust are selling their own shares.
Surely one of them is doing something wrong? Not necessarily. MPE think their shares are worth nearer £11 than £8 which justifies their purchases and also it saves them paying dividends on the shares that have been cancelled. M&L are selling shares that they previously bought but held in treasury instead of cancelling. When they judge their share price to be too heavily discounted they buy them and then sell them when the discount narrows – icing on the cake for their investors. The discount was more than 20% at the end of last year and now is 11%.
Gifford Combs, manager of The Pacific and General Investments Fund, wrote to his investors recently on the theme of “the waiting game” a game I like too. He advocates taking positions that may take years to unwind profitably but which eventually pay off handsomely. Investing in stocks has and always will be a boring long term investment.
I recently went to hear Ken Fisher at an ‘Ask me any question’ session at the FT offices. I pass on to you a few of his pronouncements: business will decide Brexit, in that all large businesses in the 27 will rally and insist their governments make a deal; in terms of emerging markets South Korea is a buy and India certainly is not!; too much debt at 0% is a good thing. He would be borrowing tons! He has no interest in buying gold which he says unless you can time the market (and who can?) is a mug’s game.
He could not answer the over arching question about when is the bull market going to end!
I know that a bit of Ken Fisher bashing is something CB enjoys too. However, in defence to Ken Fisher is there anyone who can tell you at this moment when the bull market will end ? The question was actually a pretty silly one by someone who clearly had little understanding of what drives markets.
Be fair and give the guy his due, he has been spot on so far in contrast to those who have been expressing doubts about the strength of the present bull market. What he DID say to his investors was to maintain the faith in the global market for now as the bull market was likely to extend further still in his view. That he saw no meaningful signals AS YET that would warrant the start of a bear market that would force him to pull the exit lever.
To date he has delivered excellent results for his faithful flock and I can see no reason to kick him in the shins. You might not like him but there is no need to make him out like someone fickle who does not know what he is talking about. He did call the end of the dot-com bubble six months before it actually happened and got his clients out. They chastised him for having done that until the market suddenly turned and cratered. To me he has done more than I expected. Please do let us know when you find a fund manager who can tell you when the top of a market has been reached………