INVESTMENT STRATEGY
BAILLIE GIFFORD
INVESTING ON
THE BRIGHT SIDE
WIDESPREAD PERSONAL
GENETIC TESTING
WOULD BE GREAT FOR
HUMANKIND, BUT
NOT SO GOOD FOR BIG
PHARMA
James Budden says ignoring pessimistic predictions and focusing instead on
long-term themes is vital for generating sustainable, market-beating returns
A
lmost all economists and
business commentators
are doomsayers. Think
Robert Peston, a man who made
his reputation revelling in the
great financial crisis and who
has stood in judgement on every
drama ever since. These people
fill our screens with grim tales
about soaring debt levels and
deficits, Chinese bubbles and hard
landings, taper tantrums and the
dire consequences of Grexits
and Brexits.
In turn, professional investors
and fund managers express
caution and warn about volatility
ahead. They take a short-term
view, avoiding risk assets or at
the very least they stick close
to the alleged haven that is the
benchmark. This can lead to a
state of investment paralysis.
A fear of failure ensues, with
managers forever looking over
their shoulders, listening for the
rumble of the train. As a result,
they can impose a high price for
14
low volatility on their clients.
It need not be thus. There is
a different way. You can look
forward and ignore the noises
behind you and around you. But it
takes a certain kind of investment
manager to do this and in turn to
grasp the opportunities that lie
ahead further down the road.
Their research should be
more about the future than the
past. Their thinking should be
less about the downside and
more about the upside. Their
views should be less dogmatic
and repetitive and more
imaginative and creative. Their
portfolio construction should be
determined not by the benchmark
but by company fundamentals
and prospects.
When it comes to stock
selection, it should be all about
backing the winners and not just
avoiding the losers. They should
buy and hold and not buy and sell.
Time is a vital ingredient. You
need time to think if you are to add
value for clients. You should have
time to ride out volatility caused
by people and events outside of
your control. Armed with this
philosophy, the world could seem
a brighter place.
We live in a world of fantastic
and exponential change. The
old corporate order is being
disrupted quicker than one might
imagine. New technologies are
savaging supposed safe sectors
and increasing investment
opportunities as a result. Markets
are genuinely global and countries
matter less.
It is a hugely enthralling
time to be a growth