- In China, if you are a one-in-a-million person, there are 1,360 other people like you1;
- The top 28% of India’s population by IQ is greater than the whole population of North America1;
- By 2050 the world will have an additional 2 billion people, totalling 9 billion, looking to sustain themselves and improve the way they live with the same finite resources;
- In as little as 15 years, the demand for food, water and energy will rise by 35%, 40% and 50% respectively2.
The FTSE 100 reached an all-time high in March breaching the 7000 mark, surpassing its previous peak achieved on the eve of the millennium when, fresh from university, I started working in the City of London. This illustrates that it can take a long time for the stock market to recover from a crash like the bursting of the tech bubble. But is it really representative of an investor’s experience since 1999 – have we been treading water for sixteen years? In short, the answer is no.
A more realistic measure of the investment return of UK’s largest listed companies is the total return, which includes the reinvestment of dividends. By that measure, £100 would have fallen in value after the dot.com crash but would have recovered its original £100 value by the end of 2005 and since then grown to c£168.
Two of the world’s biggest pension funds have decided that hedge funds do not represent value for money and are too complex to monitor. The hedge fund universe has had its worst year since 2011 which has triggered Calpers in the US and PFZW, the Dutch healthcare workers’ pension fund and Europe’s second largest in asset size, to cull their exposure. They felt that performance did not justify fees and were critical of the attitude of the industry towards society and the environment. MASECO also avoids hedge funds and we are comfortable with the decision – costs matter to your bottom line return and hedge funds are expensive vehicles. Finally, if you don’t know how the “black box” is investing your money then the investment journey could be a scary ride, especially in a market downturn. Over an investment time horizon we truly believe in our evidence based approach for our clients’ funds.
“Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.”
I was reminded of this whilst covering some retirement wealth planning recently, this is Mr Micawber’s recipe for happiness from the novel “David Copperfield” by Charles Dickens. How does one achieve this end result of happiness in retirement after the remunerated professional years are over? Most are familiar with the parable of the Tortoise and the Hare (it is also the name of our monthly investment newsletter) and it is the same concept of slow and steady wins the race when it comes to building a capital sum for the future. This means the earlier one starts with an investment or savings plan the better.
Nobody wants to invest a lump sum just before share prices fall. With global stock markets hitting new highs this is a valid concern for an individual looking to invest; especially given interest rates are still at very low levels. However if we assume investors, unlike speculators, are not concerned about the next week or quarter but are putting capital to work for medium to long term objectives such as to fund their retirement years – should timing the market be a consideration?