Nick Train: digital will thrive, but pick well

Investing in digital doesn’t mean sticking solely to traditional tech firms, says fund manager Nick Train.

906_MW_P14_Guru
Nick Train,co-founder, Lindsell Train; manager, Finsbury Growth & Income Trust

Working out which businesses will survive and thrive in an age of digital disruption is far more important than worrying about whether shares are cheap or not, Nick Train tells Money Observer. Indeed, says the fund manager, the idea of defining stocks as "quality growth" or "cyclical value" is outdated "in the future all companies will be internet companies".

However, investing in digital doesn't mean sticking solely to traditional tech firms. Among Train's largest and most successful holdings are fashion chain Burberry and stockbroking platform Hargreaves Lansdown. The success of these companies which arguably look expensive on certain measures lies with their technology-centred strategies. This has "mattered much more to stockmarket investors than the valuations". Meanwhile, the share price of accountancy software firm Sage is down almost 20% this year, making it Train's worst-performing stock. But the fall is "nothing to do with valuation or rising interest rates", notes Train instead it is all about the challenges Sage currently faces in digitising its business.

Train isn't saying that money doesn't matter. "In the end, everything hangs on what is the true value of a corporation's future cash flows, discounted back to today's intrinsic worth," he notes in Portfolio Adviser. "It's just that during the 21st century to date, what looked expensive yesterday has turned out to be in fact far cheaper than most of us could imagine."

Recommended

The MoneyWeek Podcast: let's talk about bubbles
Stockmarkets

The MoneyWeek Podcast: let's talk about bubbles

Merryn and John talk about the many obvious signs of a bubble in certain assets, including tech stocks, TikTok, and stock-trading 12-year olds. It's c…
22 Jan 2021
Inflation is the easiest way out of this – just don’t expect politicians to admit it
Inflation

Inflation is the easiest way out of this – just don’t expect politicians to admit it

The UK government borrowed £34.1bn in December, a record amount for that month. Britain's debt pile now amounts to 100% of GDP. How are we going to pa…
22 Jan 2021
Eternal growth: how to invest in the future of the drinks industry
Share tips

Eternal growth: how to invest in the future of the drinks industry

Humans have been dabbling in tasty beverages for millennia. Jonathan Compton assesses the key trends in the sector and recommends seven hard- and soft…
22 Jan 2021
Why bonds may not be the safe haven they once were
Investment strategy

Why bonds may not be the safe haven they once were

“De-risking” by shifting your portfolio into bonds used to make sense. But not so much any more, says Merryn Somerset Webb. So what should you do inst…
21 Jan 2021

Most Popular

Why we won’t see a house-price crash in 2021
House prices

Why we won’t see a house-price crash in 2021

Lockdown sent house prices berserk as cooped up home-workers fled for bigger properties in the country. And while they won’t rise quite as much this y…
18 Jan 2021
Inflation is the easiest way out of this – just don’t expect politicians to admit it
Inflation

Inflation is the easiest way out of this – just don’t expect politicians to admit it

The UK government borrowed £34.1bn in December, a record amount for that month. Britain's debt pile now amounts to 100% of GDP. How are we going to pa…
22 Jan 2021
When will the US stockmarket bubble burst?
US stockmarkets

When will the US stockmarket bubble burst?

With US stocks more expensive than before the Wall Street crash of 1929, there are growing signs of “mania”. But what will push markets over the edge?
22 Jan 2021