Jim Mellon: dividend stocks look cheap – but beware inflation
John Stepek talks to Jim Mellon ahead of the MoneyWeek Wealth Summit to get his views on some of the hottest topics in finance today.
Jim Mellon is one of Britain's best-known entrepreneurs and investors. His most recent book, Juvenesence: Investing in the Age of Longevity, written with Al Chalabi, is a layman's guide to longevity technology, and the potential advances we could see in the very near future in terms of living healthier, and significantly longer lives.
Jim will be at the MoneyWeek Wealth Summit on 22 November, talking about where he sees the most exciting investment opportunities right now. We caught up with him ahead of the big day to get his views on some of the hottest topics in finance today.
How concerned should investors be about the current political turmoil and if you had to choose one area that concerns you most, what would it be?
I don't think turmoil in politics is particularly important in itself. What I do think is important is that perceived inequality around the world is leading to disruptive riots and demonstrations. These all have different alternative narratives behind them for example, climate change, democracy in Hong Kong, Brexit, etc. But they are fundamentally all linked to low-grade life chances for young people.
What's your view on the increasing visibility of ESG (environmental, social and corporate governance) investing and what do you think investors should be considering with regard to its effect on their portfolios?
ESG is a trendy theme, but is essentially an investment-limiting one. Sure, invest in the zeitgeist, but don't restrict yourself to it.
Are there any individual markets or asset classes that you feel are highly overvalued right now? And any that look like good value or even bargains?
Tech stocks "forever growers" are way overvalued, but dividend stocks are way undervalued in the context of low or negative interest rates.
What do you consider to be the biggest long-term challenge right now to those saving for retirement?
Low rates of return mean people have to save right now, put more away and keep putting it away. Also people are going to live much longer. That's obviously not a bad thing, but it does mean that they will need to work longer.
Thinking about the investment and economic landscape, what makes you feel optimistic today? And what makes you feel pessimistic?
Wonderful opportunities abound today, in new industries including climate change, agritech and of course "Juvenescence"-style industries. Short term though, the world faces a big unravelling of debt and probably much higher inflation. In that context, gold and related investments are bankers.
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