The Garrulous Jay – Paper Prophets

I have been a regular reader of Stuart Kirk’s column in the Weekend FT pretty much since he returned to journalism after pressing the self-destruct button on his career at HSBC by calling out some of the nonsense linked to the ‘responsible investing’ bubble in 2022.

Three things distinguish him from many of his peers who write about the investment landscape. First, as the title of his column – Skin in the Game – implies, he puts his money where his mouth is by publicly disclosing how his pension is invested.

Secondly, he’s been at the coalface, having spent several years as a portfolio manager and in investment research. Thirdly, he has a mischievous sense of humour which appeals to The Garrulous Jay!

Nevertheless, the article he wrote last weekend served as a reminder that attaching too much weight to the words of the paper prophets that fill the pages of the financial press can be a risky and unrewarding approach to one’s own finances.

The article focused on Kirk’s decision to buy back into equities “almost a month ago” after moving his entire portfolio into cash in October last year.

The issue here is an obvious one which is that most people in their early fifties, or any other age for that matter, should not be ‘trading’ their retirement pot in and out of equities over a six-month interval. This runs directly counter to the time-honoured adage that it’s time in the market not timing the market that builds long-term wealth.

Credit to Kirk he concedes that he would have been better off sticking with what he had last year rather than trading out and back in again. This rather proves the point.

But the short-termism of his approach is further reflected in the way he reports his performance. When reflecting upon the “best thing” about being a money manager he states, “the numbers are the numbers and no amount of bullshitting can hide a quarter of underperformance”.

He goes on to say, “I was sitting with £643,000 in cash three weeks ago…and that’s increased to £685,000 now”.

My response…? “So what?!”

No fund manager should be judged on a single quarter, or even a single year, of performance. Nor should any investor judge their success based on a three-week gain, especially where, as Kirk admits himself, it was “another fluke” of timing on his part.

The problem here is that, as a hack, advocating doing nothing and writing week after week that the shockwaves in geopolitics are all just noise and the consequent gyrations in markets are best ignored, doesn’t sell papers.

Perhaps tellingly, Kirk goes on to rationalise his return to equities on a fresh conviction that “artificial intelligence…may finally be the real deal”. He observes that “the stories grabbing the headlines are all about the potential lack of computing power”.

So this is now a journalist basing his investment conviction in part of the words of other journalists writing about the tech topic du jour. Hmm…