Thoughts from Douglas….
A politician complaining about the media, is like a fisherman complaining about the sea. (Enoch Powell).
On a personal level I am sick and tired of the media trying to sway me one way or another by presenting me with their opinions and not the facts. I am entitled to make up my own mind. I represent myself and family and what “I believe” to be good for the country.
Similarly, if politicians are going to serve any purpose at all, they should be capable of taking a step back from the media and come to their own conclusions based on the facts, then vote for the well-being of the people they represent. They should not be swayed by big money and promises of heaven in the future. Unfortunately, today there aren’t many politicians that I would trust with my cat, let alone the country!
Recently, I expressed my confusion as to what would be the result on the economy of the creation and distribution of the vast amount of money released over the last couple of years by the treasury. Yet again one of our knowledgeable Saltydog subscriber’s came to my rescue. Thanks to Mark, who explained the following.
“The money-printing that you allude to used to be called an expansion of the money supply; and before that, an inflation of the stock of money. It is the origin of the term ‘inflation’.
At that time, people understood that if you inflated the money supply (as the U.K. and many other countries have done to address the credit crunch, and more recently, the pandemic), rising prices and rising wages were sure to follow. In fact, money supply figures were routinely reported on the news until about thirty years ago. This is something we have lost sight of, hence our surprise that prices are now rising rapidly. The only real surprise is that it has taken this long for all that money printing to feed through to consumer / retail prices!
Of course, ideally, we would rather have avoided the situation where hundreds of billions were created out of thin air. The State is now obliged to repay that money to the Bank of England, which will merrily and unimaginatively “un-create” it. In other words, the taxes which we pay out of our hard-earned income will now simply go up in digital smoke for years to come. On the plus side, that is disinflationary in its effect, but it does seem a shame that the money couldn’t be spent on new hospitals and schools instead. What price low inflation?”
The last year has proved extremely difficult for investors using funds to grow or protect their pensions and wealth. The markets are up one day and down the next.
Sectors are in favour and then they are not. The American tech stocks seem unassailable on their ladder to unsupportable prices, then they are not. First the American Fed is going to lift interest rates then it is not, and one of the consequences is that Sterling falls dramatically against the value of the dollar. All is confusion, when all these tricky events occur at similar times.
‘today there aren’t many politicians that I would trust with my cat, let alone the country!’
Then if that is not bad enough, throw in the Covid Pandemic and Putin’s unforgivable War in Ukraine. Previous great fund managers that had enjoyed considerable success across many sectors (like Baillie Gifford, Nick Train, Fundsmith and many others) suffered considerable setbacks, or at least the investors in their funds did.
There were however some areas that not only managed to keep their head above water, but actually made gains. These are the ones we have discussed many times over the last few months.
They are those funds invested in Global Energy and in Commodities. Originally my thoughts were along the lines that commodities would be needed to support the development of modern technology, and energy would need to be developed to support green sustainability. Initially this did prove to be the case and these funds moved nicely ahead.
Then along came Putin’s appalling and unjustified war in the Ukraine. This resulted in sanctions being applied on Russia by the West. As a consequence, carbon-based energy and commodities have become difficult to source resulting in soaring prices, this is reflected in the value of funds invested in these areas. The following funds have consistently shown up in Richard’s Saltydog weekly numbers in the specialist and global sections:
- TB Guinness Global Energy
- Schroder ISF Global Energy
- JPM Natural resources
- BlackRock Natural Resources.
These are the funds that I personally like, but there are a number of others.
Those of you that have read my previous articles will know that I am heavily into hydrogen as a fuel for the future. ITM Power, Ceres, HydrogenOne Capital Growth, and L&G Hydrogen Economy ETF being funds and shares that work and invest in this arena.
Well, recently these have taken a back seat and have fallen slightly in value depending on when they were purchased. I do not know why this should be the case, as hydrogen generation and storage get plenty of good press. Nevertheless, facts are facts, so I have sold half of my holdings in each of these funds and will wait and see what the future brings.
In the last few weeks “Infrastructure” funds have taken a strong position at the top of our Specialist Sector page. I admit to not knowing much about these funds, and where they invest, so that is a task for the immediate future. If any of you has this knowledge, I would be grateful to hear from you.
On a personal level, in the last two years, I have had four operations to replace my aorta and main arteries with woven Dacron tubing, and last week it was all signed off as a success. What magicians these surgeons are. Now I have another challenge, and that is to get my driving licence back from the DVLA. I rather fancy that this might take as long as my operations and involve more pain!
Best wishes and good luck with your investments.
Douglas. Founder & Chairman