Speaker 1: John. Things are beginning to break, aren't they. We've talked
Speaker 1: about how interest rates rise after interest rates who've been
Speaker 1: falling the main for kind of footy years or so.
Speaker 1: Everything is geared around interest rates being lower, going lower. Still.
Speaker 1: Entire industry is sectors, and particularly the entire financial industry.
Speaker 1: This is what they're used to. And it's turned around
Speaker 1: interest rates beginning to go up. Stuff beginning to break it.
Speaker 1: Maybe the first clue was, you know, the LDI thing
Speaker 1: under the short lived trust government. Stuff beginning to break.
Speaker 1: And then credit sees definitely broken. Yeah, yeah, fairly comprehensively broken.
Speaker 1: And then there is just tiny little things, more kind
Speaker 1: of cracks at the moment, but things that you look
Speaker 1: at and you think, well that might turn into a fracture,
Speaker 1: you know, and then it might actually break looking at
Speaker 1: So Scottish Mortgage, let's talk about Scottish mortgage. Let's talk
Speaker 1: about Scottish mortgage. Now this is barely give it as
Speaker 1: a fantastic company. Scottish Mortgage has always been an absolutely
Speaker 1: brilliant trust. And we've talked about it for years and
Speaker 1: we've written about it for years, and I hold it
Speaker 1: my portfolio. I don't know if you do it. Pretty
Speaker 1: much every retail investor in the UK does hold it,
Speaker 1: and it's made this extraordinary name for itself on the
Speaker 1: back of investing in growth companies mainly tech but you know,
Speaker 1: let's just call it growth super high growth, both listed
Speaker 1: and unlisted, with this idea that you know, you should
Speaker 1: hold unlisted companies as well as listed if you're going
Speaker 1: to be an exciting growth growth spaces. Because companies don't
Speaker 1: list like they used to, they stay private for much longer.
Speaker 1: There's lots of exciting stuff going on down there, and
Speaker 1: so why should you differentiate between the listed and the unlisted?
Speaker 1: And maybe this week we kind of found out. I mean,
Speaker 1: there's a there's all been a logic to that, but
Speaker 1: I think the well, there's there's a couple things. The
Speaker 1: philosophy that went or goes with Scottish Mortgage and similar companies,
Speaker 1: but Scottish Mortgage in particular, is that one about all
Speaker 1: of the tons in the stock market come from like
Speaker 1: a handful accompanies. Four percent, yes, and so you should
Speaker 1: just buy the four percent. One reason I've always slightly
Speaker 1: struggled with that theory is how do you choose the
Speaker 1: four percent? But Scottish mortgage did a very good job
Speaker 1: of it, for right to interest rates started to rise. Yeah. Well,
Speaker 1: one of the things they always said, and let's not forget,
Speaker 1: by the way, on this podcast that we did it
Speaker 1: interview TOMPs later become manager of that fund eight weeks ago,
Speaker 1: nine weeks ago and maybe longer than that, but relatively
Speaker 1: weakning within the last three months. We interviewed him and
Speaker 1: one of the things he said was that because of
Speaker 1: this idea that all the returns come from four percent
Speaker 1: of the companies, everything in his portfolio was the wrong price,
Speaker 1: the wrong price. So the majority of the stuff in
Speaker 1: the portfolio was grotesquely overpriced because it would never end
Speaker 1: up being part of that four percent. But the companies
Speaker 1: in the portfolio that are the four percent were hideously underpriced.
Speaker 1: So nothing in the portfolio is the correct price. But
Speaker 1: the risk, of course is that the four percent aren't
Speaker 1: in there. Yeah, I mean, that's that is kind of
Speaker 1: what I've always felt the fundamental problem with that app
Speaker 1: which but I think I suppose the weird thing is
Speaker 1: it's also it's the diametric corpus of passive investing and
Speaker 1: buy an an index. It's sort of the ultimate technically
Speaker 1: speaking an active investment in some ways to say there's
Speaker 1: only like, you know, kind of lessons to a fifth
Speaker 1: licensed five percent of companies actually make all of the tons,
Speaker 1: and I am the person who can choose those points
Speaker 1: um and then but then you're also kind of delving
Speaker 1: amid the area that you think they're most likely to
Speaker 1: come from, but the promise that that area kind of
Speaker 1: largely thrives under certain conditions, and then those conditions are changing,
Speaker 1: I don't know what. And then growth appears in other areas,
Speaker 1: all that surprise growth and the energy industry price growth
Speaker 1: in oil. But it's growth, right. But the problem is
Speaker 1: Gottish mortgage, and it's not unique gottig mortgage. Of course,
Speaker 1: is that with listed equities, you know the price. You
Speaker 1: don't have to worry about what they're worth because the
Speaker 1: market tells you. You You might not agree with the market. Yeah,
Speaker 1: but the market gave you the price, and it gives
Speaker 1: it to you every day, multiple times every day. No
Speaker 1: one can ever be in any doubt what the price is.
Speaker 1: Now with the unlisted investments, nobody knows the price. Nobody knows.
Speaker 1: The press who can possibly know what these things are worth?
Speaker 1: Nobody knows. So there's always the suspicion in the market
Speaker 1: right now, when thing's going down that maybe they they're
Speaker 1: on the books at the wrong price. No one cares,
Speaker 1: No one cares what you value a private equity investment out.
Speaker 1: When everything's going up up a lot is great. We
Speaker 1: like up a lot, right, we don't need any precision
Speaker 1: up a lot, hooray, right, yes, But when things are
Speaker 1: going down and the valuation is down a little bit,
Speaker 1: down a little bit, like, well, that's not enough any
Speaker 1: more precision than that? Is it down a little bit down?
Speaker 1: The medium matters it down a lot, and it was
Speaker 1: not downe a lot? Why is it not down the
Speaker 1: same as your listed investments? What's the difference? You invest
Speaker 1: in the same stuff, right, yeah, So why why would
Speaker 1: your unless the portfolio and not have gone down as
Speaker 1: much as your listed portfolio? And now I'm worried. Yeah,
Speaker 1: And I mean it's entirely understandable because the other problem
Speaker 1: is that because they're not unless these companies don't benefit
Speaker 1: from the one thing that well, there's a reason we
Speaker 1: like public markets and they're very good. Yeah, they're good.
Speaker 1: Are putting prices on things relative to everything else, So
Speaker 1: you're not getting the ways to make modes along with
Speaker 1: these unlisted companies. And then of course there's all kinds
Speaker 1: of things you can do. UM, but you can do
Speaker 1: all kinds of things to fight your fighters. But the
Speaker 1: other thing is that there's also not accusing anyone of
Speaker 1: that by the way, no, absolutely no basic stuffy leaning
Speaker 1: for years. They know what they're doing. But but but
Speaker 1: but it's a difficult environment. There's no actual answer. Yeah,
Speaker 1: and it's the other problem is that the kinds of
Speaker 1: companies that aren't listed are also smaller, and they're far
Speaker 1: more vulnerable. And so I I, you know, I would
Speaker 1: I don't have the data to hand. I am assuming
Speaker 1: that politician sounds like politician you can't recall it hasn't
Speaker 1: seen that full story earlier. They only told him the
Speaker 1: story today. It wasn't the time to investigate properly. We
Speaker 1: always go drinking a Friday. But they know the the
Speaker 1: unlisted start it's probably has a higher propensity to go
Speaker 1: to zero and unlested stuff. And the problem is that
Speaker 1: this is the kind of environment where stuff goes to zero.
Speaker 1: I think that's I actually think that's the main problem
Speaker 1: with this UM And as you said, doesn't just apply
Speaker 1: Scottish mortgage. It's all of the unlisted moment and our
Speaker 1: ideas in a little trouble at the moment too. You're
Speaker 1: about forty percent unlisted, you know. Anyway, Um, watching weight,
Speaker 1: watching weight. Things are breaking, but you know one has
Speaker 1: to failed. Sorry for I don't know, yes, probably sorry
Speaker 1: for that. The chair of Scottish movies you had to
Speaker 1: stand down this week, you know, and then she another
Speaker 1: victim a rising interest rates. Yeah, well this is it.
Speaker 1: It's it's interesting how you can say that the ultra
Speaker 1: low rate environment didn't just create Um, it's all like
Speaker 1: financial bubbles. There's a lot of tan gentle kind of
Speaker 1: bubbles that you know you can think of. I mean,
Speaker 1: I mean, I think there's a sattweeze sort of look
Speaker 1: to where you can say that Nicholas Durgeon's career is
Speaker 1: a kind of ultra low interest rate phenomenon. Um. You know,
Speaker 1: it's it's just interesting shity step down along at the
Speaker 1: same time as you know, credit sweet and all the
Speaker 1: rest of them are going bankrupt. So maybe perhaps I
Speaker 1: am reaching, but I think, well, now there's another one
Speaker 1: to wait and watch. There's a lot of watching and waiting.
Speaker 1: There was a lot of watching the day for those two.
Speaker 1: I mean, I think that we've we've had like a
Speaker 1: kind of like a fired blanket thrown over volatility, like
Speaker 1: in all areas of our life since the Great Financial Crisis, UM,
Speaker 1: in the form of kind of like ultra low interest
Speaker 1: rates and complete safety rails on the government bond market,
Speaker 1: the can equity markets, and that kind of suffocation of
Speaker 1: volatility has got to come out somewhere UM. And I
Speaker 1: think a lot of explains the whole sense because I
Speaker 1: was writing to the readers the other day, so it's
Speaker 1: talking to them about what decade is it most like?
Speaker 1: And you know, whiteb the twenty tents so flat and
Speaker 1: kind of miserable, really compared to even some of the
Speaker 1: late sixties and seven or so, even some time period
Speaker 1: like the seventies, which was nihilistic but quite energetic. It
Speaker 1: was the twenty tents was nihilistic and totally lacking in
Speaker 1: energy right in By the way, people don't tell me
Speaker 1: if you'd say night nihilistic or nihilistic nihilistic that's a
Speaker 1: good point. Moving on, sorry maybe, um Yeah, so where
Speaker 1: it was it? Yeah, I was just kind of coughing,
Speaker 1: So I was just going off in like a flight
Speaker 1: of fancy there. But but basically, yeah, this idea that
Speaker 1: almost as a like social mood has been kind of
Speaker 1: crushed as well, and that's enabled these kind of long
Speaker 1: periods of just trend following, whether that trend is Scottish
Speaker 1: nationalism or whether that trend is something like Scottish mortgage
Speaker 1: or growth triumphing over value. And so now that that's
Speaker 1: the interests are going up and they're kind of like
Speaker 1: putting bombs under things. A lot of the if you like,
Speaker 1: the philosophical offshoots of a lower interest rate era are
Speaker 1: also blowing up. Yeah, there's a book in that, John,
Speaker 1: I think are right. I think I think that the
Speaker 1: shift in interest rates doesn't change our economic life, it
Speaker 1: changes our political life, and it changes our cultural life.
Speaker 1: Follow on that, Uh, I think it's probably healthy. I
Speaker 1: absolutely agree, But I also think that that we need
Speaker 1: more than a podcast with us. We'll go for a
Speaker 1: drink when we're done here, Okay, the idea right, Moving on,
Speaker 1: Welcome to Marin Talks Money, the podcast in which people
Speaker 1: who know the markets explain the markets. I'm Marin Sumset Web.
Speaker 1: This week our guest is Ian Lance Temple Bar investment
Speaker 1: Trust portfolio manager. Now he is the exact opposite of
Speaker 1: John and I have just been talking about. He is
Speaker 1: a genuine value investor. I started by asking about a
Speaker 1: blog he wrote recently, the tankle of which was just
Speaker 1: stop selling UK equities. The numbers to us that there
Speaker 1: is a huge, a NonStop outflow from the UK equity market.
Speaker 1: So I asked Ian to tell us exactly what is happening.
Speaker 1: I think there are a couple of things. One of
Speaker 1: them is it's a long term phenomena, which is that,
Speaker 1: as I mentioned in the blog, if you went back
Speaker 1: to the nineties, I used to run balanced pension funds
Speaker 1: at a firm called Gartmore, and back back in those days,
Speaker 1: the big balance pension funds used to have about fifty
Speaker 1: five percent of their allocation in UK equities and probably
Speaker 1: another twenty percent or so in overseas equities. And that
Speaker 1: meant two things. Number one is they were massively overexposed
Speaker 1: to equities per se. But number two, they were probably
Speaker 1: massively overexposed to the UK. And then of course along
Speaker 1: comes two thousands. We have two things. We have the
Speaker 1: eputy markets go down quite aggressively. Interest rates also come down.
Speaker 1: That means the liabilities on the pension funds go up,
Speaker 1: so complete tastrophe for lots of pension funds and they
Speaker 1: were basically forced to adjust their positions quite aggressively. And
Speaker 1: what they did was they cut their exposure to equities,
Speaker 1: in particularly they cut their exposure to UK equities. And
Speaker 1: we have a chart in the in the blog which
Speaker 1: sort of tracks the decline of ukits from about fifty
Speaker 1: five percent down to it I think about five percent now.
Speaker 1: That's been the sort of long term trend. And then
Speaker 1: I think the secondary issue is just colossal barishes about
Speaker 1: the UK economy and that that probably started around the
Speaker 1: time of Brexit. And then you know, we've had we've
Speaker 1: just given investors, haven't we loads of excuses to be
Speaker 1: negative on the UK over the last few years that
Speaker 1: you know, the number of prime ministers we've had, the
Speaker 1: number of chancellors, we've had, the strikes in et cetera,
Speaker 1: et cetera. It is just sort of twenty four seven
Speaker 1: negative sentiment towards the UK. So I think I think
Speaker 1: that's been a factor as well, probably thrown in with
Speaker 1: the fact that the UK has high exposure to sectors
Speaker 1: that people don't really like or haven't really liked until recently,
Speaker 1: so banks, energy miners, and it's got low exposure to
Speaker 1: sext as people do like so technology. So I think
Speaker 1: that's probably the sort of the background to it all.
Speaker 1: There's a lot of fun back here. Let's go let's
Speaker 1: go back a bit when the bench of the fun
Speaker 1: started selling all their equities. If we accept that they
Speaker 1: were overexposed to equities in the first place, but one
Speaker 1: of the reasons they started selling equities as a whole
Speaker 1: was because they felt they needed to do a little
Speaker 1: bit more liability matching, so they moved into bonds in volume. Right,
Speaker 1: So Land involved selling a lot of equities, which in
Speaker 1: itself we can argue about whether that turned out to
Speaker 1: be a good idea or not, but maybe that that's
Speaker 1: the subject for another day. That's what they did. But
Speaker 1: why was the majority of these equity sales in the
Speaker 1: UK market? What made them think for themselves, if we're
Speaker 1: getting get out of equities, we need in particular to
Speaker 1: get out of the UK. It's almost a change in benchmark.
Speaker 1: So back in the nineties, bench funds used to follow
Speaker 1: something called the caps medium, which which is a bizarre
Speaker 1: benchmark because it basically it just looked at all other
Speaker 1: farm managers. So you were just benchmark in yourself against
Speaker 1: other farm managers. Other farm managers have fifty five cent
Speaker 1: in the UK, then you did. And I think over
Speaker 1: time we drifted away from that, we more towards these
Speaker 1: market cat weighted industries. So people began to look at
Speaker 1: you know, MSCI World for instance, and if you look,
Speaker 1: if you do look at MSCI World, you know, the
Speaker 1: figures today are that the US market is seventy percent
Speaker 1: and the UK market is about five percent. And so
Speaker 1: I think there was that people basically moving towards that benchmark.
Speaker 1: And one of the things that I say in the
Speaker 1: blog is I think that is just crazy because what
Speaker 1: that means is that people are forced towards having a
Speaker 1: large percentage of their assets in large markets and a
Speaker 1: small percentage in small markets, rather than a large percentage
Speaker 1: in cheap markets and a small percentage in expensive markets.
Speaker 1: And to me that just seems completely and utterly counterintuitive. Yeah,
Speaker 1: so what it does if you're hugging global benchmark flate,
Speaker 1: there's what you're doing is buying a whole pile of
Speaker 1: stuff that has already gone up and selling stuff that
Speaker 1: hasn't gone up yet. I mean, it seems that of
Speaker 1: slightly mad everybody who is following exactly the same momentum
Speaker 1: strategy exactly right. It's yeah, completely and utterly counterintuitive in
Speaker 1: my opinion. Again, there's a nice chart in this blog,
Speaker 1: and it basically just tracks returns of eperty markets against
Speaker 1: the valuation of the valuation measure is effectively a sort
Speaker 1: of market capture GDP. And then it's the subsequent returns
Speaker 1: over the next twelve years. And the our square of
Speaker 1: the chart is about point nine or you know, I'm
Speaker 1: supposed to put that in simple terms, that there is
Speaker 1: a very very close correlation between valuation inverse correlation between
Speaker 1: valuation and subsequent returns subsequent twelve years returns from eptew markets.
Speaker 1: And why people therefore would literally do the opposite of
Speaker 1: what that chart implies and actually overallocate to expensive markets
Speaker 1: and under allocates to cheat markets is just beyond me.
Speaker 1: It's one of the maddest things in markets that you
Speaker 1: actually just had to say that, So you actually had
Speaker 1: to say aloud that there is a relationship between the
Speaker 1: price you pay and the future returns that you make.
Speaker 1: That is something that has been so completely gotten in
Speaker 1: markets for the last decade, they were actually having to
Speaker 1: remind people that the entire history of markets proves their
Speaker 1: valuations matter absolutely, right. Do you ever do you ever
Speaker 1: read the Credit Squeeze Investment Returns hand but when that
Speaker 1: comes out, you know that that that comes out. I
Speaker 1: have it right here, right here on my desk, the
Speaker 1: Credit Squeee Global Investment Returns Yearbook twenty twenty three exactly.
Speaker 1: And so so that thing is that thing is that
Speaker 1: it's just a study of exactly what we've just been
Speaker 1: talking about. Isn't it the fact that you know, you
Speaker 1: you buy lowly value markets, or you buy lowly values,
Speaker 1: you know, equities within those markets, and you subsequently make
Speaker 1: higher returns not on not on a six month basis
Speaker 1: or a one year basis, but but on a sort
Speaker 1: of ten year basis. You know, there's a very very
Speaker 1: strong correlation. And perhaps what I just said actually answers
Speaker 1: that conundrum, which is that I don't know, maybe ten
Speaker 1: years is just way too long for people these days.
Speaker 1: Maybe people are that their time horizons are much much shorter,
Speaker 1: and therefore sort of taking a bet that expensive markets
Speaker 1: can get even more expensive. Well, I mean that's been
Speaker 1: reasonably fair for some time. You know, if you look
Speaker 1: at you and I I think would have said two
Speaker 1: years ago, five years ago, eight years ago, goodness me,
Speaker 1: the valuation gap between the US and the UK is
Speaker 1: getting out of control. You want to be shifting back
Speaker 1: into the UK. But if we'd been doing that, obviously
Speaker 1: we would have been the ones who looked stupid, if
Speaker 1: that were the ones who looked stupid. Because the UK
Speaker 1: market one hundred continued to basically flatline and the US
Speaker 1: market continued to go up, So this valuation got wider.
Speaker 1: Gap got wider and wider and wider. And you now
Speaker 1: talk to people, younger people obviously, who believe that it
Speaker 1: is perfectly normal and natural for there to be a
Speaker 1: huge valuation gap between the UK and the US. And
Speaker 1: if you say to them, actually, this only happened a
Speaker 1: couple of decades ago. It used to be valued in
Speaker 1: roughly the same way that that's entirely new news. That's
Speaker 1: right again. We you know, we have a chart which
Speaker 1: looks at the looks at exactly that the difference in
Speaker 1: valuations between the two markets, that is back over fifty years,
Speaker 1: and I think you know, for most of that period
Speaker 1: the average was about fifteen cents something like that, and
Speaker 1: then last couple of years you're right, it blew out
Speaker 1: to about forty five percent, and so you're right, you know,
Speaker 1: it's a relatively new phenomenon, and what's the gap now?
Speaker 1: It is it's a little bit less because you know, surprise, surprise.
Speaker 1: Actually last year the SMP was down twenty percent and
Speaker 1: the UK was up four percent, So so it's probably
Speaker 1: about forty percent, but it's a way way wider. And
Speaker 1: I think the other thing that I would add is
Speaker 1: cause that's the average for the market. If you look
Speaker 1: within the market, there are things within the market that
Speaker 1: are much much cheaper. So there is, as I said,
Speaker 1: quadlock going on here. But one thing I think we
Speaker 1: can say, probably for sure with the fifty one hundred
Speaker 1: is that the selling of UK equities maybe about the
Speaker 1: perception of the UK economy as a result of breakcast,
Speaker 1: but it's certainly not about the performance of the companies
Speaker 1: as a result of breakit because the UK large have
Speaker 1: been performing extremely well, right they have. And I think
Speaker 1: you know, another thing I mentioned in the blog is
Speaker 1: that there are lots of companies within the UK market
Speaker 1: that have virtually no exposure to the UK economy, and
Speaker 1: yet they are valued at massive discounts to their the uspers.
Speaker 1: So the example within the energy sector, the example I
Speaker 1: uses BP today trays on about five times earnings. X
Speaker 1: X on trays on about ten times earnings. You know
Speaker 1: that those are very very similar companies with very very
Speaker 1: similar drivers to their profitability, and yet one trays at
Speaker 1: half the valuation of the other. And yet and if
Speaker 1: we picked up BP and dumped it in America, rehead
Speaker 1: corded it with the share price double. Well, you know,
Speaker 1: interesting thing you should they should say that BP had
Speaker 1: results about about six weeks ago, and there are a
Speaker 1: couple of things. The number one is they basically said
Speaker 1: they were going to slow down their move into renewables
Speaker 1: and invest more in upstream. But the stop went up
Speaker 1: about thirty percent in the following sort a few weeks,
Speaker 1: and that was attributed to US buying, interestingly, and the
Speaker 1: management team. Interestingly, the CEO did his road show around
Speaker 1: the US. The CFO was in the UK, and the
Speaker 1: CEO went around the US, and there was as I said,
Speaker 1: the share probably went up a lot and and apparently
Speaker 1: that was that was US buying. So that's, you know,
Speaker 1: just an interesting anecdotal point. And do you think they
Speaker 1: were buying Um, I know you have, you have no
Speaker 1: idea what I've interested in your opinion. Do you think
Speaker 1: they were buying because they looked at and thought this
Speaker 1: is extremely cheap, or they looked at it and thought,
Speaker 1: we've known this as cheap for a while. But they're
Speaker 1: backing away from renewables lass transition and focusing on what
Speaker 1: they're actually really good at is a positive. Yeah. I
Speaker 1: suspect they looked at the change in strategy and thought, actually,
Speaker 1: that's a positive because even the company, even the company
Speaker 1: themselves talk about returns in the upstream area being significantly
Speaker 1: higher than returns in the renewable era. So I suspect
Speaker 1: the US investors looked at that change in actually and thought, actually,
Speaker 1: that's a good thing. And then they looked at the valuation.
Speaker 1: I thought, my god, I can buy this for about
Speaker 1: halfway one I'm paying for Excel. Interesting And because when
Speaker 1: when you were talking earlier, you were talking about the
Speaker 1: UK market being stuffed full of companies that people have
Speaker 1: not been keen on for a little while. So we've
Speaker 1: had what you might call it an ESG discount on
Speaker 1: the UK market, but the conversation around ESG is changing
Speaker 1: really fast. You'll have noticed that, I certainly have. You know,
Speaker 1: if we go right back to the beginning of the
Speaker 1: war in Ukraine, when suddenly defense doc turned from somethingl
Speaker 1: something and evil and filthy to a social good. And
Speaker 1: now again people are looking at the energy companies and
Speaker 1: the commodity companies, and particularly commodity is pointing out that
Speaker 1: we can't possibly have an energy transition without being really,
Speaker 1: really very commodity heavy. And of course we can't maintain
Speaker 1: our living standards in the short, medium and possibly long
Speaker 1: term without being a little politer to the fossil fuel companies.
Speaker 1: So that ESG discount is beginning to narrow as well. Yeah,
Speaker 1: I completely agree with that. I think i'd also make
Speaker 1: one other point, which is that the the ESG pressures
Speaker 1: of the last sort of five to ten years on
Speaker 1: these companies is the main part of our positive thesis
Speaker 1: on the sector. In other words, the companies have basically
Speaker 1: just been told you've got to stop investing in fossil fuels,
Speaker 1: and they have. So, you know, a couple of statistics
Speaker 1: for you. Aggregate capex for energy companies is down seventy
Speaker 1: five percent adjusted for GDP over the last decade, isn't
Speaker 1: it incredible? And for the equivalent for minors again, this
Speaker 1: is adjusted for GDP going up down sixty seven percent.
Speaker 1: And you know you don't need to you don't need
Speaker 1: to be a genius to work out you can't cut
Speaker 1: your capex by that amount and expect to production levels
Speaker 1: to remain at the same at the same rate, and
Speaker 1: surprise prize, they haven't. So you know, so production has
Speaker 1: gone down across the companies and demand despite everyone's expectation
Speaker 1: that demand for demand has not gone down. So people
Speaker 1: are forecasting that oil demand in the fourth quarter of
Speaker 1: this year will be one hundred five million barrels a day.
Speaker 1: So in others it keeps going up. All the one
Speaker 1: keeps going up, oil production keeps going down. It's really interesting,
Speaker 1: isn't it, Because we've been told for years, And the
Speaker 1: first thing you tell analysts when they start training in
Speaker 1: the city is that when it comes to commodity is
Speaker 1: and energy of the solution to high prices is high pricess.
Speaker 1: You know, high prices or solve their own problems. Because
Speaker 1: as prices rise, capex rises, supply rises, and down we
Speaker 1: go again. And this is the first cycle in my career,
Speaker 1: and I'm guzzing in yours as well. When high prices
Speaker 1: are not the solution to high prices. Yeah, fascinating, isn't it,
Speaker 1: Because you're you're you're absolutely right, you know, you've some
Speaker 1: people describe it as a sort of capital cycle down
Speaker 1: though the fact that returns go up and that should
Speaker 1: attract more investment into the sector and that eventually that
Speaker 1: shows the seeds of oversupply. And you're right, this is
Speaker 1: the first one I've seen where that market mechanism has
Speaker 1: failed because at these sorts of returns that they're making,
Speaker 1: the companies should be investing hugely and they're not. You know,
Speaker 1: even in the last year or so, we've not really
Speaker 1: seen kpex go up amongst either the energy companies or
Speaker 1: the or the mining companies. And it's kind of hard
Speaker 1: to see how, you know, in the absence of a
Speaker 1: massive global recession, it's kind of hard to see how
Speaker 1: that situation, that supply demand situation resolves itself. Interesting. But
Speaker 1: let's go back to the energy company. Because you hold
Speaker 1: for Shell and BP, don't you do you worry about
Speaker 1: because what we're really talking about here is the political environment, right,
Speaker 1: But We've been talking about the political environment in terms
Speaker 1: of supply and demand, but the other element of the
Speaker 1: political environment around the big energy companies is the windfall taxes,
Speaker 1: and that you know, it may be that these companies
Speaker 1: can continue to make a vast amount of money out
Speaker 1: of the rising present and crimp to supply of their goods,
Speaker 1: but we can't be absolutely sure that the government is
Speaker 1: going to allow them to keep that money for the moment.
Speaker 1: I don't. The reason I don't is because it goes
Speaker 1: back to this point about the fact that BP and
Speaker 1: She'll make a relatively small amount of their profits in
Speaker 1: the UK, and therefore the government can only tax those
Speaker 1: profits that are made in the UK. So when they
Speaker 1: were hit with the windfall tax last year, it was
Speaker 1: basically about one percent of profits. It wasn't very significant.
Speaker 1: But what it did do, back to our conversation of
Speaker 1: a few minutes ago about the capital cycle, is it
Speaker 1: basically elongated the capital cycle, because within months we had
Speaker 1: announcements from BP, Shell, Total Harbor Energy all saying bless it,
Speaker 1: we're cutting back on norc oral investment. So you know,
Speaker 1: I mean, it's just a crazy policy for the government
Speaker 1: to be following because you know, the answer to the
Speaker 1: energy crisis that people facing at the moment is more investment.
Speaker 1: We need more supply, and for them to basically hit
Speaker 1: the companies and naturally force supply down, it's just a
Speaker 1: crazy policy in my opinion. Okay, so you'll hang on
Speaker 1: to those those two big old companies, you know, the
Speaker 1: other the other thing there. And as we stand today,
Speaker 1: BP is trading on five times this year's earnings. And
Speaker 1: because and you know, given and the yeld of five
Speaker 1: percent or so, pretty much the same for Shell, And
Speaker 1: because they translate nearly all their profits into cash, that's
Speaker 1: a that's a kind of about twenty percent free cash
Speaker 1: flow yield. So these companies are still even though even
Speaker 1: though they've gone up in the best forming sector for
Speaker 1: the last couple of years, because the earnings keep going up,
Speaker 1: because community prices can keep going up, they still look
Speaker 1: very very lowly value to us. So fascinating dynamic, isn't
Speaker 1: it that in these sectors that people have been ignoring
Speaker 1: for so long, share prices can can basically double and
Speaker 1: valuations can fall at the same time because the rise
Speaker 1: and earnings is so unexpected to the market. And yeah,
Speaker 1: and yeah, people, people clearly don't believe these levels of
Speaker 1: profits are sustainable. I think people still look at them
Speaker 1: in the way that they used to that the assumption
Speaker 1: is that, you know, we must be at peak oil prices,
Speaker 1: because that's the only thing that explains PEP trading on
Speaker 1: a on a pe of five. That people just think
Speaker 1: the ear is is now at its peak and it's
Speaker 1: going to go down. And for the reasons we've just discussed,
Speaker 1: you know, I'm not convinced that is the case. And
Speaker 1: one of the dividend eels on these stops at the
Speaker 1: moment about about five percent, But don't forget, they're buying
Speaker 1: back huge amounts of their stock as well, So so
Speaker 1: you're getting a five centiveen and yield, but you'll probably
Speaker 1: get another five six seven percent in terms of share
Speaker 1: buybacks as well. Why do they buy back instead of
Speaker 1: just paying out a special dividend. But I mean, I
Speaker 1: know it's different in the institutional world, but certainly in
Speaker 1: the retail world, I think people would prefer a special dividend,
Speaker 1: and particularly if they're holding stock slates this as incomparabader.
Speaker 1: I'm not sure, to be honest with you, why why
Speaker 1: they favor buybacks? Over over special difference. I think mechanistically
Speaker 1: they're very similar to each other, aren't they. But you know,
Speaker 1: I don't really know the answer. Sum Yeah, but one
Speaker 1: puts cash in our pockets and the other doesn't. Doesn't,
Speaker 1: but I guess it increases the value of the business
Speaker 1: over time. Don't know. If you looked at another blog
Speaker 1: that I wrote on on this issue share buybacks, and
Speaker 1: I just used the example of Next, which very briefly,
Speaker 1: if you invested one hundred quid in Next in two
Speaker 1: thousand and one, it was to day be worth one
Speaker 1: thousand and eight hundred pounds, despite the fact that the
Speaker 1: top line has only grown in line with uk GDP,
Speaker 1: and it's been through three recessions due throughout that period.
Speaker 1: And the answer is share buybacks. They brought back over
Speaker 1: sixty percent of their shares. An issue, they only do
Speaker 1: it when the shares are cheap. So when what Simon
Speaker 1: Wolfson does is when when the shares are cheap, he
Speaker 1: will basically buy about stop. When the shares get expensive,
Speaker 1: he turns it off and then actually Mary and he
Speaker 1: pays a special dividend at that point in time. Okay,
Speaker 1: but if he keeps doing that indefinitely there'll be nothing left.
Speaker 1: O the way, at some stays you you Mary and
Speaker 1: will own the last share in Next and it'll be
Speaker 1: worth five billion quid. I mean that is slightly my
Speaker 1: problem with buy back. You know that has to be
Speaker 1: the natural end game. Is the disappearance of the number
Speaker 1: of shares. Yes, yeah, this is true, but you see
Speaker 1: my point over over the last twenty years. But for
Speaker 1: shareholders in Next who didn't sell, you know, it's been
Speaker 1: a very very successful policy. Now I do see that,
Speaker 1: And how is the Next looking at the moment? Would
Speaker 1: you buy that in the portfolio? Just a bit too
Speaker 1: expensive for us? Actually, as you know, we have a
Speaker 1: strong value bias. So actually we own mark suspenses within retail,
Speaker 1: but we don't own Next. Okay, I want to go
Speaker 1: back to mark suspenses. That's interesting. But first, when you
Speaker 1: say that you're a strong value bias, and I know that,
Speaker 1: what are the parameters if you say something's a bit
Speaker 1: too expensive for us? I mean Next is obviously a
Speaker 1: company that you thoroughly approve of. What is it invaluation
Speaker 1: terms that make something too expensive? Way you're looking at
Speaker 1: in terms of its cash flows? You looking at on
Speaker 1: a pe basis, Is it a price to book. What
Speaker 1: tells you something is a little too expensive for us? Okay,
Speaker 1: So without maybe getting too technical, So too technical, please,
Speaker 1: no technical, give a big picture. I'll go board. I
Speaker 1: will try to basically, what we what we try to
Speaker 1: do is we assess what's called a company's long run
Speaker 1: normalized earnings pounds. So what that means is we look
Speaker 1: at where we think the earnings can get back to
Speaker 1: on a five year basis. So we're typically are buying
Speaker 1: stocks which are going through a sort of temporary downturn
Speaker 1: in their own is either as a result of the
Speaker 1: economic cycle or maybe because of a blunder the company
Speaker 1: has made. So we'll basically assume a recovery. We convert
Speaker 1: accounting earnings into cash earnings, and then we basically will
Speaker 1: apply multiple to that and we will come up with
Speaker 1: what we think is roughly the intrinsic value of the business.
Speaker 1: So what do we think is the business worth on
Speaker 1: a five year basis? And if we can buy something
Speaker 1: at about half that soon others about one hundred percent upside,
Speaker 1: then that's normally attractive for the portfolio. Okay, and Martin
Speaker 1: and Spencers fits into that criteria at the moment yeah,
Speaker 1: it certainly does. Actually so a share price in Marks
Speaker 1: and Spencers today one pound forty. The management have given
Speaker 1: out targets for where they think the sort of margins
Speaker 1: of the businesses can get. So got two businesses here.
Speaker 1: We've got food retail business and we've got a clothing
Speaker 1: and home business. So they basically think food returning about
Speaker 1: four percent margin, clothing and home about ten percent. And
Speaker 1: we agree with those figures. They should be able to
Speaker 1: get to those if they do make those margins that
Speaker 1: that gives you about twenty seven pm earnings, So you know,
Speaker 1: put stick that on I don't know, twelve thirteen times
Speaker 1: or something, that would give you about about three quid
Speaker 1: for the intrinsic value of the business. And as I say,
Speaker 1: share price today about one pound forty. So that's, in
Speaker 1: our opinion a potential doubler and I've obviously I've massively
Speaker 1: simplified it there. But that's how we think about value.
Speaker 1: We don't think about value in terms of priced a book.
Speaker 1: I've been trying to do some research for you in
Speaker 1: I did go to Marks and Spencers to day before
Speaker 1: yesterday because I keep reading in the fashion magazines. By
Speaker 1: the weekend magazines anyway that you know, markus Spencer's jeans
Speaker 1: at the thing right now. So I was walking past
Speaker 1: Marks and Spencer at the other day and I went
Speaker 1: and I did buy a pair of jeans. But unfortunately
Speaker 1: I can't tell you any more than that because my
Speaker 1: house is such a tip I brought them home and
Speaker 1: put them down somewhere, and I've been meaning to try
Speaker 1: them on before we had this conversation, so I could
Speaker 1: tell you whether you're doing the right thing or not,
Speaker 1: because obviously it's all about the genes right in. Oh well,
Speaker 1: on a serious point, or is it all about the food?
Speaker 1: I mean, the food business is good, and you know
Speaker 1: with that link cover with the cardo, I think it's
Speaker 1: now a very very good business. Very briefly, the issue
Speaker 1: with the clothing and home business was that they had
Speaker 1: a gray, big, long tale of stores which are unprofitable,
Speaker 1: and they they basically had no online business. So going
Speaker 1: back to the next, you know, next to spent a decade,
Speaker 1: hadn't they establishing next directory? And Mark's basically had no
Speaker 1: online business at all. And they've effectively gone about solving
Speaker 1: both of those issues. So, believe it or not, the
Speaker 1: clothing of home business is now the number two online
Speaker 1: online retailing business in the UK behind next Directory, so
Speaker 1: that you know they've ticked that box and they have
Speaker 1: shut down lots of the unprofitable stores. So that's this
Speaker 1: is kind of the mechanism that you can see to
Speaker 1: the improving profitability in our opinion. Okay, and what's the yield?
Speaker 1: I've got a lot of income invest deserve. They're listening
Speaker 1: to us. The yield is not great because they're sort
Speaker 1: of they're coming off a recovery, coming off a tropho.
Speaker 1: This is about two cent. Yeah, it's not all bad,
Speaker 1: is it. It is not all bad. It's not it's
Speaker 1: not it's not a disaster. But yeah, I want to
Speaker 1: go briefly back to mining before we get to the
Speaker 1: elephant in the room, which I read listeners can probably
Speaker 1: guess by now with the elephant in the rooms. But
Speaker 1: let's go back to to mining. What's your top holding
Speaker 1: in the mind any sector? Anglo American? Yeah, what's good
Speaker 1: about Anglo American. It's a similar it's a similar thesis
Speaker 1: to the energy companies, and it is this idea that
Speaker 1: the industry as a whole has basically been beaten up
Speaker 1: by politicians and ESG Investors has, as I said earlier
Speaker 1: on capex for the industry is down sixty seven percent.
Speaker 1: Anglos has got another dimension, which is that they were
Speaker 1: probably one of the less efficient of the big miners
Speaker 1: if you went back five or six years ago. So
Speaker 1: if you compare them to Billetin or Rio, they were
Speaker 1: less efficient than them, and they spent the last few
Speaker 1: years taking costs out improving their profitability. They have they're
Speaker 1: still very very disciplined in terms of capital spend. So
Speaker 1: we just like the all companies, we haven't seen the
Speaker 1: capolic spenders start to go up. And there is there
Speaker 1: is one added dimension to this, where which is whereas
Speaker 1: we can say probably that over time demand for fossil
Speaker 1: fuels goes down. I think you can make a structural
Speaker 1: growth case, can't you, with a lot of the materials
Speaker 1: that they produced becaultously. They produced lots of the things
Speaker 1: that we're going to need if we're going to transition
Speaker 1: to a to a greener world, so namely copper and
Speaker 1: things like that. So so again it kind of feels
Speaker 1: there like there's a structural demand in the in these
Speaker 1: types of things that they produce, and yet supply is
Speaker 1: just not keeping up with that increasing structural demand, and
Speaker 1: you know, normally one would therefore expect prices to go
Speaker 1: up as a result of that. Yeah, I wonder if
Speaker 1: we can really say that demand for oil is going
Speaker 1: to fall. I think we could probably say that demand
Speaker 1: for fossil fuels is a percentage of global energy demand
Speaker 1: will fall. But as global energy demand just keeps going
Speaker 1: up and up and up. Um. You know, let's say
Speaker 1: that the fossil fuels that we use to provide our
Speaker 1: energy globally falls from the current level of what's at
Speaker 1: about eighty percent to seventy five percent, but the absolute
Speaker 1: volume of fossil fuels that we use, and there's something
Speaker 1: very dramatic happens very soon, it's still going to go up, right, Yeah,
Speaker 1: I think I think you're probably right. And I think
Speaker 1: you also have to think about where is the increase
Speaker 1: in demand for energy usage coming from. Is basically coming
Speaker 1: from areas like China and India and in Africa, And
Speaker 1: in those regions, you're going to see an increasing demanding
Speaker 1: fossil fuels, aren't you, as as demand continues to grow. Yeah,
Speaker 1: So I think we have we have to be careful
Speaker 1: about about thinking that fossil fuel demand is actually going
Speaker 1: to fall just because we'd like it to the world works,
Speaker 1: is this? Yes, no fair point, right, Let's come to financials.
Speaker 1: So a large part of their portfolio is in financials
Speaker 1: one way or the other. And you've got a couple
Speaker 1: of big holdings in banks. You've gotten at worst, you've
Speaker 1: got standard charters. And the wonderful thing about these is
Speaker 1: that they're going to be significantly cheaper today as we
Speaker 1: talk than there were a couple of weeks ago. Now,
Speaker 1: we're not going to we're not going to delve too
Speaker 1: deeply into whether we're in the middle of a banking
Speaker 1: crisis or not in a banking crisis, and whether our
Speaker 1: entire financial system is going to collapse, and whether you
Speaker 1: and I should not be talking but attempting to figure
Speaker 1: out how to put our entire net worth in bitcoin.
Speaker 1: We're not going to delve into that. I just wanted
Speaker 1: to ask you about the banks that you do hold
Speaker 1: and how confident you feel in their well being. Yeah,
Speaker 1: pretty confident. This is a sort of dangerous conversation we're having,
Speaker 1: aren't with because but you know, by the time this
Speaker 1: podcast airs, things could have changed dramatically. Things are moving
Speaker 1: so fast at the moment. I suppose the serious point
Speaker 1: that O make is the all of these banks, all
Speaker 1: of the UK banks, have spent about the lost fifteen
Speaker 1: years improving the state of their balance sheets. For all
Speaker 1: of them, the financial crisis was a near death experience,
Speaker 1: and confidently was for the regulators of the government, for
Speaker 1: the country, et cetera, et cetera. And as a result
Speaker 1: of that, thing's dramatically changed. So the management teams across
Speaker 1: all of them are totally different and not in you know,
Speaker 1: it's not Stread Godwin, et cetera, Restera still running these things.
Speaker 1: It's Alison Rose running that West group, who is you know,
Speaker 1: much more conservative. The balance sheets are much stronger, the
Speaker 1: lending books are much much stronger. So take an example
Speaker 1: of of n West of the loans to value ratio
Speaker 1: and the mortgage book is about fifty three percent. So
Speaker 1: house prices could go down quite a long way for
Speaker 1: you know, before that would start to cause trouble. And
Speaker 1: again that would be just completely different from what we
Speaker 1: had during the financial crisis. And you know, they're very
Speaker 1: tightly regulated. They have correpty Tier one ratios of sort
Speaker 1: of fourteen percent and more they have very strong liquidity ratios.
Speaker 1: So you know, my personal view is that what's going
Speaker 1: on in the world at the moment shouldn't affect these banks.
Speaker 1: It's a it's always hard to call, because George Soros
Speaker 1: used to have that expression reflexivity didn't heed whereby movement
Speaker 1: in share prices can actually influence things, and in this
Speaker 1: case it could be movement in share prices eventually spooks
Speaker 1: depositors who start to withdraw their deposits. So so it's
Speaker 1: always hard to say these things with banks, you know,
Speaker 1: for definite. But from from where I'm sitting at the moment,
Speaker 1: I think these things are they're still well capitalized, and
Speaker 1: they are and at the moment they're actually the prossibility
Speaker 1: is going in the right direction. Again, you know, who
Speaker 1: knows that that that might change. And the valuations bearing
Speaker 1: are still very very low. So if you just let's
Speaker 1: just go across the three that we own, that West following,
Speaker 1: you know, following the markdown last week, it's now on
Speaker 1: a price earnings ratio five times Standard Chartered six times
Speaker 1: Barkley's four times give it and yields for your income
Speaker 1: investors that West eight cent standards a bit lower three percent,
Speaker 1: Barkley's six and a half percent. And for those who
Speaker 1: you know, for those who like price to books point
Speaker 1: seven point five point four, so trading a discounts to
Speaker 1: Price to book as well. So they you know, they
Speaker 1: to us they're much much better businesses than they used
Speaker 1: to and they're still very lowly valued. And the tube
Speaker 1: of they get, you know, based on what we were
Speaker 1: discussing earlier, the tube of the get, the greater the
Speaker 1: future returns, right should be, yeah, should be. As an aside,
Speaker 1: house prices you said they had they could go down
Speaker 1: a long way before we had to worry about the
Speaker 1: stability of any of the banks. Have you got a
Speaker 1: view on where UK house prices might there's the horribly
Speaker 1: unfair questions not your area, but but lately is your
Speaker 1: area if you're invested in UK banks, it is? It is?
Speaker 1: I mean, So I write another I won't call it
Speaker 1: a blog. It was more of a white paper last
Speaker 1: year actually, and it was called Reversion to the long
Speaker 1: run mean and and and it literally just asked the
Speaker 1: questions that if you take actually valuations, bond yields, house
Speaker 1: prices and you basically take them back to their long run,
Speaker 1: you know, their long run averages. That that has some
Speaker 1: quite significant implications across across all of those things. So
Speaker 1: so for you know, for US extis, usxty should be
Speaker 1: down fifty percent on more, you know. But I mean,
Speaker 1: I finally love the bondial ones actually come come true
Speaker 1: very very quickly, hasn't it? Because bond yields back then
Speaker 1: were one and I was saying, you know, long run
Speaker 1: bondyls are normally about four or five cent, and here
Speaker 1: we are, you know, and here we are back at
Speaker 1: four or five percent. And the other one that I
Speaker 1: mentioned was house prices. I mean, you know, house prices
Speaker 1: looked very very expensive on a long run basis, and
Speaker 1: I just said that could be one of those things
Speaker 1: that eventually mean reverts back to its long run average.
Speaker 1: I have, I have kind of no reason to assume
Speaker 1: that that it won't. And again, if it does, you know,
Speaker 1: house prices should be probably thirty or forty percent lower
Speaker 1: than they are to day nominal terms or real terms. Yeah,
Speaker 1: nominal terms. Yikes. Yeah, that's not a prediction. But I suppose,
Speaker 1: I suppose I'm just saying that almost Why why wouldn't
Speaker 1: they Why why shouldn't why shouldn't ext markets mean reverts
Speaker 1: to their long run average valuations and bondeal town house prices.
Speaker 1: And we know what drove these things above substantially above
Speaker 1: their long run averages, right it was you know, it
Speaker 1: was low interest racing, it was contentated easing, etc. Et cetera.
Speaker 1: Now to the extent that all those things are now
Speaker 1: going away, why why wouldn't these things mean revert to
Speaker 1: the long run averages? Well, now I agree with you,
Speaker 1: but I have to spend a lot of time on
Speaker 1: this podcast trying to goad people into making, you know,
Speaker 1: making excitable forecasts about house prices, and just be clear,
Speaker 1: you have not made a forecast. I get that. But nonetheless, nonetheless,
Speaker 1: I think think forty was said nominal as the furthest
Speaker 1: we've gone so far. So congratulations to both of us
Speaker 1: on that. Thank you. Listen. Last question, last question, I'm
Speaker 1: holding you down. I'm not leaking out of the house
Speaker 1: for a decade. You're not going to be able to
Speaker 1: trade again. You're going to beake gold or bitcoin. Oh,
Speaker 1: gold gold definitely. Do you have any gold in the portfolio.
Speaker 1: We own two gold miners. Actually, we own Barrack Barrack
Speaker 1: Resources and New more mining. Point number one actually sorry
Speaker 1: to be boring here, but similar thesis to the energy
Speaker 1: and and and Anglo Americans, which is, you know that
Speaker 1: they if you went back ten years, they just they
Speaker 1: were just awful businesses. They were doing big mergers, they
Speaker 1: were spending too much, et cetera, et cetera. And then
Speaker 1: you had come of massive management change. Obviously price gold
Speaker 1: prices fail, and they're now going through this cycle at
Speaker 1: the moment where they have much much better capital, discipline,
Speaker 1: costs much lower et cetera, et cetera. So you know,
Speaker 1: big tick in the box there. But also it is
Speaker 1: very interesting in a week like last week when lots
Speaker 1: of are you know, more cyclically orientated things are going down,
Speaker 1: is you know, those things just act as a fantastic hedge,
Speaker 1: so that those share prices were going up last week
Speaker 1: whilst everything else was going down, And obviously the gold
Speaker 1: price was going up last week as well, wasn't it.
Speaker 1: So you've got the hedges in their portfolio in the
Speaker 1: films of goal, and of course in terms of the dividend,
Speaker 1: because you know, a good dividend is one of the
Speaker 1: greatest hedges we've got against chaos and against inflation, isn't it.
Speaker 1: It certainly is. Yeah, it certainly is. I mean again,
Speaker 1: this is you know, you're you'll you'll remember the days
Speaker 1: when the income sector in the UK was I think
Speaker 1: one of the most popular sectors wasn't absolutely money. Those
Speaker 1: days are coming back. I'm pretty convinced of it. I
Speaker 1: hope you're right. I hope you're right. But but you know,
Speaker 1: the serious point is that in the long run again
Speaker 1: again actually this is in your in your credit sueet
Speaker 1: book that you've got there. In the long run, I
Speaker 1: think dividend yield is about half of your total return. Yep. Yeah,
Speaker 1: but we just got we got used to that environment
Speaker 1: in which ext's were going up twenty percent a year,
Speaker 1: and I think people just thought, well, who on Earth
Speaker 1: and he's dived and yield? When your ex's are going
Speaker 1: up twenty percent a year, we can just sell some capital. Now,
Speaker 1: if we're moving back to an environment when we can't
Speaker 1: rely on ext's going up to any percent a year,
Speaker 1: then maybe divn and yield does become important again. And
Speaker 1: I think your other point is right is I think
Speaker 1: you know, historically given and yields has proved to be
Speaker 1: a good inflation head as well. If you can start,
Speaker 1: if you can start with your diven and yielding sort
Speaker 1: of four or five percent, that gets your reasonable way there,
Speaker 1: doesn't it? It does. It does to basically keeping up
Speaker 1: with inflation. Yeah, well with inflation at temps enter and
Speaker 1: it gets you halfway there. But it's an awful lot
Speaker 1: better start than nothing, right, So Ian, I think we
Speaker 1: better wind it up. But I think I can come
Speaker 1: and sum up what you said to us in one sentence,
Speaker 1: which is that you know, history tells you you have
Speaker 1: to buy cheap stuff and lots of stuff that's cheap now,
Speaker 1: so you know, maybe buy that stuff not the other stuff.
Speaker 1: Would that be fair? I think that's a very good summary. Perfect. Perfect.
Speaker 1: I don't know where we bother with the whole half
Speaker 1: an hour, we could just do it like that. Thank
Speaker 1: you so much for joining us today. We hugely appreciate it.
Speaker 1: That's a pleasure. Thank you for listening to this week's
Speaker 1: Marin Talks Money. We will be back next week in
Speaker 1: the meantime. If you like our show, rate review and
Speaker 1: subscribe wherever you listen to your podcasts, and please do
Speaker 1: so positively. Will you'd appreciate that a lot more than
Speaker 1: anything else. This episode was hosted by me Maria's Sumset Web.
Speaker 1: It was produced by Samersadi, additional editing by Desta wonder Rad,
Speaker 1: special thanks to Ian Lancer and to John Steppock of course,
Speaker 1: and finally, a weekly reminder to sign up to John's
Speaker 1: daily newsletter, Money Distilled. You will like it. The link
Speaker 1: is in the show notes