Last week my small — and newly politically engaged — son asked me a question. Can men run countries too, he asked. Of course they can, I said, frantically grasping for an example of political gender equality to offer him in modern Britain, given that we live in Scotland (where all political leaders are women) and that neither Jeremy Corbyn nor Tim Farron seemed to be in with a chance of running anything.
So there is one piece of good news from this election. If Theresa May’s career turns out to be shorter than she expected I might soon be able to show the boy that, with a bit of effort, men can make it to the top too.
The other bit of good news is that the union is now safe. I have been looking for a clip from Question Time last year in which I promised a worried audience member that there would be no second referendum in Scotland. She didn’t look convinced at the time. I think she would be now. The SNP’s share of the vote in Scotland has fallen from 50% to 37%. Nicola Sturgeon can spin that as a triumph as much as she likes. It isn’t. No indyref2.
The next bit of good news is that the election campaign itself and final result make it clear just how uninterested the general population is in the mechanics of Brexit. Journalists care, politicians care and a lot of City people and academics care hysterically. Most other people don’t – which is why this “Brexit election” featured very little conversation about Brexit.
They generally want a reformed relationship with the EU. Some of them hoped to force that from the inside. Some hoped to impose it from the outside. But as long as there isn’t too much drama they can take it either way. Someone explained this to me in the context of a mediocre restaurant. You order the chicken. You get the fish. They both have roughly the same kind of sauce on them. You don’t bother to send it back. You just want to get on with eating.
We will find out more about why people voted as they did over the next few days but an interesting snippet to back up the chicken/fish view comes from Sky Data. Asked what were the most important factors in their vote, 23% of those surveyed said health, 20% said the economy and a mere 14% said our relationship with the EU.
Look at it like that and you can see that the biggest mistakes in this campaign were made by those – Nicola Sturgeon, Nick Clegg and of course Theresa May – who assumed that number would be a lot higher and acted accordingly. That didn’t work out for obvious reasons: if you have already started on the fish you don’t want someone constantly at your elbow badgering you to demand the chicken.
So if our hung parliament isn’t about Brexit, what is it about? I think the same things that Brexit was a symptom of. That means a genuine desire for politicians to take action to deal with all the long term problems facing the UK: high debt, low productivity, low wages, over-powerful corporations, stupidly high house prices, the asset bubbles caused by modern monetary policy and the total lack of a plan to deal with the expenses and practicalities of an ageing population. That sort of thing.
From an investor’s point of view understanding this really matters. I’ve written here before about my expectations of tougher taxes on wealth and a less accommodating regime for large companies. Labour’s rally this month makes all that more, not less likely in the longer term (although in the shorter term the stalemate might bring us some unexpected policy stability).
So in this politically charged climate, how do you invest? This brings me neatly to the question I asked you last week. If you had to buy something now knowing you couldn’t sell it for ten years (think of it as a lock-and-leave asset) what would it be?
I have had more interesting emails from you on this than on any question before. Thank you. The first thing to note is two things that didn’t come up. One, backing up my argument above, was Brexit — the only person who mentioned it as a factor in long-term investment decisions was Irish. And the second was buy-to-let.
This is amazing. At any other point in my career had I asked the lock-and-leave question, I guarantee that more than 50% of the answers would have insisted that the best long-term investment – always, anywhere and forever – would be residential property. Government action on tax relief and stamp duty means you don’t think this any more. No one mentioned it at all.
Instead, your emails show a brilliant recognition of a core point I often make here. New and exciting sectors can disappoint investors if they buy in when they are overpriced and growth doesn’t compensate. Old and dull sectors can thrill if they are bought cheaply and don’t decline as fast as expected.
Some of you are still buyers of tobacco and oil on that basis (Shell is a favourite, given its expansion into renewables – I hold it myself – and Russia crops up in the discussion of oil prices just because it is such a cheap market). Some of you reckon there is still life in the old-school financial sector. The same goes for agriculture: old fashioned farming might not be exciting, but agritech surely is.
You’ve sent several excellent suggestions on the data sector and biotech, personalised medicine and healthcare in general — the latter can hardly go wrong over a decade — with many of you settling on the low-cost Vanguard Health Care Fund.
I’m going to come back to more of your suggestions next week and look at the shifting sands of sector rotation in more detail. In the meantime, there is one default fund out there for all of you feeling wrong-footed by our endless elections and uncertain about the future – RIT Capital Partners. Several of you mention that you hold this global investment trust (as I do) for its hugely diversified portfolio (currencies, hedge funds and individual equities) and its excellent long-term performance. Think of it as the lazy person’s lock-up-and-leave.
• This article was first published in the Financial Times