James Anderson of Scottish Mortgage Paper

[Dod101]

I wish I could provide a link to James Anderson's recent paper on the effect of the Covid pandemic. As most will know he is a partner with Baillie Gifford and Co Manager of Scottish Mortgage. If anyone is interested I am sure it can be found by simply going to the BG website. It is not an easy read (at least I did not find it all that easy) but well worth the effort.

I recommend it.

Dod

[monabri]

I wish I could provide a link to James Anderson's recent paper on the effect of the Covid pandemic. As most will know he is a partner with Baillie Gifford and Co Manager of Scottish Mortgage. If anyone is interested I am sure it can be found by simply going to the BG website. It is not an easy read (at least I did not find it all that easy) but well worth the effort.

I recommend it.

Dod

Just out of curiosity, do you receive the BG magazine " TRUST" in hard copy? Although it can be browsed on their website, I like a hard copy.

[Dod101]

I wish I could provide a link to James Anderson's recent paper on the effect of the Covid pandemic. As most will know he is a partner with Baillie Gifford and Co Manager of Scottish Mortgage. If anyone is interested I am sure it can be found by simply going to the BG website. It is not an easy read (at least I did not find it all that easy) but well worth the effort.

I recommend it.

Dod

Just out of curiosity, do you receive the BG magazine " TRUST" in hard copy? Although it can be browsed on their website, I like a hard copy.

No but it might be a good idea if I did. I like BG very much. In some ways Nick Train is a sort of one man Baillie Gifford. I know they are quite different but often with the same end in sight.

Dod

[BrummieDave]

I wish I could provide a link to James Anderson's recent paper on the effect of the Covid pandemic. As most will know he is a partner with Baillie Gifford and Co Manager of Scottish Mortgage. If anyone is interested I am sure it can be found by simply going to the BG website. It is not an easy read (at least I did not find it all that easy) but well worth the effort.

I recommend it.

Dod

Dod, I suspect you're referring to this: https://www.bailliegifford.com/en/uk/in ... 23?p=12557

It is indeed comprehensive, and worth a read as you say.

[scrumpyjack]

Yes, very thoughtful piece.

Also they announced their latest results today. NAV +13.7% compared to their benchmark (All World index) -6.2%

Their ongoing charges are 0.36%

I'm certainly staying with them even though hugely overweight. Don't sell the winners!
https://www.investegate.co.uk/scot-mort ... 00059845M/

[Dod101]

Thanks to both BrummieDave and scrumpyjack for the link and the results respectively.

I must say that Baillie Gifford itself and the managers of Scottish Mortgage are prime examples of the sort of management and leadership which I would like from all investment trust managers. The reason I posted on this Board though was really to try to concentrate on the paper by James Anderson. His views are often unconventional and not all will be happy investing in Scottish Mortgage but whatever else, his views are thought provoking and so far he has not been proved wrong.

Dod

[bluedonkey]

Thanks for the referral to the paper. It is certainly a good read. I found this version easier to read on a laptop.
https://insight.bailliegifford.com//dat ... ment/16384

[Dod101]

This from James Anderson in the Scottish Mortgage announcement of their results to 31 March 2020

'Instead of embracing exponential growth, investors and asset allocators have fled. Performance chasing has its own evils but replacing it with endless rebalancing towards ‘value’ strategies backed by a blind conviction that reversion to the mean is inevitable has been an investment tragedy. It’s largely been prompted by misguided theorising. But the theory has been reinforced by the extraordinary grip that Warren Buffett has exercised over the investment world. Of course the very long term record of Berkshire Hathaway is brilliant, of course Buffett has a splendid way with words and the public, of course he doesn’t believe in the silliness of risk as divergence from the index. But Buffett’s success has sanctified a freezing of the investment narrative. Or as Buffett’s brilliant partner, Charlie Munger, puts it with the clarity of a 96 year old, too many investors are ‘like a bunch of cod fishermen after all the cod’s been overfished...that’s what happened to all these value investors. Maybe they should move to where the fish are’. So where will the fish be in the future?'

Does that not sound familiar and rather illustrates the likes of Mark Barnett?

Dod

[bluedonkey]

This from James Anderson in the Scottish Mortgage announcement of their results to 31 March 2020

'Instead of embracing exponential growth, investors and asset allocators have fled. Performance chasing has its own evils but replacing it with endless rebalancing towards ‘value’ strategies backed by a blind conviction that reversion to the mean is inevitable has been an investment tragedy. It’s largely been prompted by misguided theorising. But the theory has been reinforced by the extraordinary grip that Warren Buffett has exercised over the investment world. Of course the very long term record of Berkshire Hathaway is brilliant, of course Buffett has a splendid way with words and the public, of course he doesn’t believe in the silliness of risk as divergence from the index. But Buffett’s success has sanctified a freezing of the investment narrative. Or as Buffett’s brilliant partner, Charlie Munger, puts it with the clarity of a 96 year old, too many investors are ‘like a bunch of cod fishermen after all the cod’s been overfished...that’s what happened to all these value investors. Maybe they should move to where the fish are’. So where will the fish be in the future?'

Does that not sound familiar and rather illustrates the likes of Mark Barnett?

Dod

That's very good. Crikey, at this rate I'll end up a TR investor!

[Dod101]

I am primarily an income investor as any who have read any of my posts must know but for a long while I have felt that our world as illustrated by the HYP - P Board is ever shrinking, never more so than now. I have always liked to go for lower yielding but maybe more dependable income and for growth shares to sit alongside my income ones. I then sell some of the growth ones to fund the lower yielding income shares.

James Anderson's comments though in reference to BH reflects what I have felt about BH for a long while. It is invested largely in yesterday's economy and I think will be broken up when Buffett and Munger are no longer with us. They are both great investors, or certainly have been, but at their ages it is not surprising that they are not grasping tomorrow's opportunities.

The big investing themes of James Anderson, that Carbon/Fossil fuels are on the way out and renewables are moving in very quickly has some interesting implications for the income investor.

Clearly looking 20 years ahead (or maybe a lot less)

a) big oil had better get going with moving to renewables,

b) utilities need to be tested for their investment in renewables and

c) big pharma surely has also got to be a good place to be.

d) banks are not a good investment, but we knew that?????

e) the tobaccos are now becoming almost an irrelevance but maybe we had better hang in there, but watch for the results for Imperial Brands next week (19 May I think)

These are the issues I think which will drive my investment thoughts for whatever time I have left on this planet. It would be interesting to hear from others on the same theme.

Dod

[Bubblesofearth]

These are the issues I think which will drive my investment thoughts for whatever time I have left on this planet. It would be interesting to hear from others on the same theme.

Dod

I lot of the leading technologies of today (aka technologies of tomorrow) are difficult to access on the London market. Fine if you want to load up on financials, Pharma, oils but not for tech. We don't have a Microsoft, Google or Tesla.

I hold most of my equity wealth in FTSE 350 shares but am seriously considering moving a lot to a Global tracker.

BoE

[Dod101]

[quote="Bubblesofearth] I lot of the leading technologies of today (aka technologies of tomorrow) are difficult to access on the London market. Fine if you want to load up on financials, Pharma, oils but not for tech. We don't have a Microsoft, Google or Tesla.

I hold most of my equity wealth in FTSE 350 shares but am seriously considering moving a lot to a Global tracker.

BoE[/quote]

I will simply not do any topping up of oils, banks or tobaccos, and in fact may sell them down a bit if the opportunity arises and put the proceeds in to the likes of Nick Train's funds and maybe things like SSE, healthcare and so on. Scottish Mortgage does not see itself as a tech fund but rather an investor in 'disruptors'. I hold quite enough of it I think.

Dod

[Lootman]

I lot of the leading technologies of today (aka technologies of tomorrow) are difficult to access on the London market. Fine if you want to load up on financials, Pharma, oils but not for tech. We don't have a Microsoft, Google or Tesla.

I hold most of my equity wealth in FTSE 350 shares but am seriously considering moving a lot to a Global tracker.

In my view we have reached the point where a UK investor who expects good returns from investing in shares cannot restrict himself to UK shares no matter how "global" it is claimed that the large UK companies are.

This is even more the case for the HY/income investors who avoid anything with a medium or low yield, which therefore avoids growth shares and solid defensive shares like Unilever.

The under-performance of UK equities against the global market has become truly woeful. Hinder yourself further with a focus on value or yield just makes it worse.

A global tracker should be the core of everyone's strategy. Then around the edges you can have some fun with investment trusts like Scottish Mortgage, and some individual names. My biggest individual shareholdings are Berkshire, Amazon, MicroSoft, Apple and Google. I do have some UK names but the position sizes are smaller. US shares are now essential; UK shares are optional. I have felt this way for a number of years now, and am really happy that I reallocated away from the UK some years ago. I will soon get to the point where the only UK shares I hold are AIM shares and investment trusts.

[scrumpyjack]

One reason for investing in SMT is that they put a substantial portion into private companies and some of their biggest successes have been through that route. They are big enough to be able to participate in these companies and smart enough to go for the good ones.

They invested in Alibaba in 2012, before it went public in 2014. Their investment has multiplied at least 10 fold.

[flyer61]

Couple of Rec's given for posts that have given clarity to my own investment thinking. On the tobacco side of things I am waiting with interest to see the Imperial results. Expecting no negative surprises.

On the banks, I would just add look at the Bank Stock 600 index since the Financial crisis. If ever there was a more awful investment it is European banks in a negative rate environment. So for me it is now no oil, no banks.....starting to sound like Terry Smith!

[Dod101]

Couple of Rec's given for posts that have given clarity to my own investment thinking. On the tobacco side of things I am waiting with interest to see the Imperial results. Expecting no negative surprises.

On the banks, I would just add look at the Bank Stock 600 index since the Financial crisis. If ever there was a more awful investment it is European banks in a negative rate environment. So for me it is now no oil, no banks.....starting to sound like Terry Smith!

With Imperial Brands currently yielding over 12% you can see what the market expects. I wouldn't say I expect a cut but it would not surprise me and I am mentally prepared for one.

Dod

[Aminatidi]

In my view we have reached the point where a UK investor who expects good returns from investing in shares cannot restrict himself to UK shares no matter how "global" it is claimed that the large UK companies are.

I read a few investment forums and whilst I don't know the full history it's very noticeable that this forum seems to have a crazy bias to the UK.

Maybe it's the HYP thing which I don't entirely get but it really does jump out how little mention there seems to be of all those great US companies or the various trusts that hold them.

Income seems to be the be-all and end-all.

Maybe that's a demographic thing but it does stand out.

Terry Smith would have a field day

[Lootman]

In my view we have reached the point where a UK investor who expects good returns from investing in shares cannot restrict himself to UK shares no matter how "global" it is claimed that the large UK companies are.

I read a few investment forums and whilst I don't know the full history it's very noticeable that this forum seems to have a crazy bias to the UK.

Maybe it's the HYP thing which I don't entirely get but it really does jump out how little mention there seems to be of all those great US companies or the various trusts that hold them.

Income seems to be the be-all and end-all.

Maybe that's a demographic thing but it does stand out.

Terry Smith would have a field day

The FTSE is at a lower level now than 21 years ago. It has gutted itself through fat, unsustainable dividends.

It is somewhere between a bond proxy and an annuity.

[ADrunkenMarcus]

In my view we have reached the point where a UK investor who expects good returns from investing in shares cannot restrict himself to UK shares no matter how "global" it is claimed that the large UK companies are.

Agreed.

I have 18% of my portfolio in directly held American and European shares and expect that to increase over time. I am unaware of, for example, a UK equivalent of the same quality as MasterCard, or of Kone (the lift manufacturer). Even among my UK shares, they are internationally focused with the UK making up a small proportion of their business - with a few exceptions.

Best wishes

Mark.

[Dod101]

James Anderson's comments on Warren Buffett have got a two page spread in the Times this morning and picking up Lootman's theme, Anderson commented that it was profoundly depressing that he could find so few British companies to invest in. SMT has only one UK investment, Transferwise, an unlisted money transfer business based in London.

Apparently the value of the entire universe of UK listed companies is now less than Amazon and Alphabet combined. I am not knocking the UK just mentioning what is in the article.

Of course not all of us are looking for growth companies but clearly for many this is the only way to go. If I were working and building a nest egg for future retirement I know that I would not be building it through setting up a HYP!

Dod