Some random thoughts about individual trusts and markets.
Market overview
If the global economy is to avoid the hard landing that the markets seem to have convinced themselves it can, then it will be running in the face of some very strong historical experience. It is not just the inverted yield curve that has been flashing a warning about trouble ahead; all the leading economic indicators in the most widely followed series American investors follow have been suggesting a recession is coming, as the chart below suggests.
This series of the ten most important leading indicators that dates ...
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I am experimenting with a series of shorter videos covering specific asset classes and investment trust sectors. The notes this week include a video taking a fresh look at the bond market.
Bond market review This is the link to a short (14 minute) video looking at recent movements in the bond market. Anyone who is banking on an imminent peak in interest rates will have to be patient. The latest inflation figures in the UK and further resilience in the US economy means, if the markets are to be believed, that both the Bank of England (certainly) and the Federal Reserve (not quite so certa...
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I am experimenting with a series of shorter videos covering specific asset classes and investment trust sectors. The notes this week include the first of these, together with a short summary of my current thinking about the market cycle.
Market overview Once again I have reason to be grateful for technical analysis, which has kept me from making too grievous a mistake in thinking about the equity and bond markets so far this year. The essential message from the charts has been; don't rush to judgment and in particular don't buy too readily the argument that both equity and bond prices are...
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As promised I have posted here a topdown pictorial summary of market and investment trust performance in the first half of 2023, drawing on slides from a range of different sources. In due course I will record a video looking at trends and individual security performance in more granular detail.
To access the slides click on the link (not on the image) and use the password H12023. I am grateful to all the brokers and research houses which provide me with this raw material.
Q2 2023 market review as pdf
A reminder that without knowledge of your individual circumstances and t...
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I have added some further comments to some of the news that I summarised in the weekly podcast. Look out for my review of the year to date. It will be appearing shortly, for subscribers only.
MidWynd International The board of MidWynd International (MWY) surprised some market participants by announcing that, following the impending retirement of managers Simon Edelsten and Alex Illingworth later this year, they are taking the management contract away from Artemis and awarding it instead to Lazard Asset Management’s global quality growth team - this despite Artemis having earlier said that...
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The oldest story in the business
The oldest story in the investment business is that it is unhelpful to be sharing a consensus opinion. The behaviour of markets since the autumn last year has been a classic case in point. Those who were gloomy about equity markets and expected the declines of the first nine months to continue after the first leg of the rally from October onwards have been proved wrong as the equity markets have powered ahead, admittedly on narrow leadership, while all the predictions that bond yields would have to fall soon have also been confounded. Here we are - nine months...
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Consolidation = profit opportunity?
The trend towards consolidation in the investment trust sector is accelerating, as the latest spate of announcements from unloved or too small to survive trusts indicates. A useful note from Winterflood Securities this week highlights a number of other trusts that may be vulnerable to this trend. Using a series of filters, including limited liquidity, underperformance and persistent discounts, the brokers come up with a list of nine equity and five alternative asset trusts that they think could rightly be regarded as "sub-scale" and which boards might deci...
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Main markets in review You can find here a link to my latest big picture video review - a run through the main charts I track, including inflation, bond yields and leading equity indices. I will post another video looking at individual trust performance shortly. To access the video, which runs to 27 minutes, you will need to enter the following password when prompted. Password = X^uk3&t? This is the video link. (NB You cannot reach it by clicking on the image). The charts reinforce the message that the markets are still generally looking for direction, albeit with a number of equity indic...
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Private equity
The great debate about listed private equity trusts goes on. With some of the biggest trusts trading on persistent 40-50% discounts, the share prices either represent tremendous bargains or are advertising a warning that the sector is heading for a painful meeting with reality - but which is it? As regular readers will know, although I have long held a shareholding in HG Capital (HGT), I have never had much enthusiasm for private equity as a class. While happily acknowledging that private ownership in the right hands is often a superior business model, and the returns have b...
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Equity income compared I am of the view that boring old UK equity income trusts may perform quite well over the next few years, given that we seem set to move into a new investment environment in which dividend capacity becomes more highly valued than during the growth years of the post-GFC world. But which ones to choose? Here is a link to a comparison report I generated with the AIC's useful screener tool, looking at five of the bigger trusts in the sector. It reminds us how different the portfolios of the biggest equity income trusts can be, a point that came up in my recent conversations w...
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