The MoneyWeek Podcast: redefining the FAANG stocks for a new era

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Merryn Somerset Webb: Hello, and welcome to Money Magazine podcast. I am Merryn Somerset Webb, editor in chief of the magazine, and with me today is John Stepek. You know when there’s a lot going on and there’s really important stuff happening we push everyone else away and it’s just me and John because on most stuff John knows best, right, John?

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John Stepek: Absolutely. I’m totally on top of all of this stuff.

Merryn: Okay, good. Well, today we are going to make fun of Merrill Lynch instead of BlackRock.

John: That sounds good.

Merryn: So that’ll make a nice change. I want to talk today… That was me and of course we’re not going to make fun of everybody. They’re all much cleverer than us at these places and we must pay attention to what they say and what Merrill Lynch has put out this week is actually really interesting. It is really interesting. So for years now we’ve all been busily investing in the FAANGs. The Facebook’s, the Amazon’s, the Alphabets, etc. These big names, single stocks that we bought and we held for a decade and it simply… It could not go wrong.

So every time anyone’s been looking to make money over the last decade, they’ve turned to the FAANGs, bought them, held them and made money. And particularly in the pandemic or during the pandemic, these stocks did unbelievably well from the increasing digitisation of the economy. So in the pandemic, this group of stocks added over $3 trillion in market cap, so fairly extraordinary. Now, obviously anyone who’s been paying even the slightest little bit of attention to the market over the last six months will know that that has reversed.

That $3.2 trillion has completely disappeared and these really big tech stocks, even though they’re high quality stocks, even though they’re profitable and even though they in the main have fabulous businesses, have seen massive falls in their share price and of course we have all ended up slightly poorer for it. For example, Scottish Mortgage which has holdings in a lot of these companies. So we’re all poorer for it, what do we do now?

The answer from Merrill Lynch is to simply change the definition of FAANGs. So we now have FAANG 2.0 and the F, the A, the A, the N and the G stand for different things. Now, we could have a lot of fun here, John, where I ask you to guess what they all stand for, but that would be mean. What if you got it wrong? But, I don't know, we’ll just do one. We’ll do one. Okay, what do you think the F stands for in the new world? I’ll give you some clues.

FAANG 2.0 reflects a new world of geopolitical risks and resource/hard asset intensity. It’s within these areas of the markets that we find future value given the defining market rotations we expect. So what they’re talking about is a rotation from the areas that have experienced the most extraordinary returns in the last decade or so and that are now most vulnerable to high inflation and rising interest rates. So we had this really nasty bear market already and what clever people call long duration growth stocks and you very cleverly call jam tomorrow stocks.

John: Thank you.

Merryn: These are over. I know. We don’t call them FAANGs anymore. We have new FAANGs and we start with F.

John: All right. I’m going to… Can I give you two guesses?

Merryn: No.

John: Great.

Merryn: Okay, all right. Two.

John: It’s either fossil fuels or financials.

Merryn: Fossil fuels, although actually it’s only fuels because they don’t actually want to say the word fossil because that would be anti-ESG. And if we just say fuel, maybe they can pretend that there’s renewables in there, too, I guess.

John: But if we’re redefining the FAANGs, can’t we redefine ESG as well? You’ve already been talking about that?

Merryn: Yes, I think we’re definitely doing that. We’re definitely doing that. So fuels, aerospace, agriculture, and then there’s an N which is nuclear and renewables, which means they really could’ve put fossil up on the top F, but let’s not quibble. And then there’s G which is? Go on, what’s G?

John: Of course G is going to be gold.

Merryn: Yes.

John: It is quite interesting that they’ve actually gone there. The institutions don’t like being associated with gold. Generally, it’s a bit too flaky.

Merryn:Yes, but I think the key thing to note there is not so much that they’re suddenly all positive on gold, it’s just quite hard to find a G. You want to have your clever title, the new FAANGs, FAANGs 2.0 and you’ve got this G. So either the whole concept doesn’t work or you have to give it and then recommend gold.

John: And also, you’ve got Bitcoin.

Merryn: Welcome to equity research, everyone.

John: Yes, it’s a little bit contorted, isn’t it?

Merryn: It’s a little contorted.

John: I’ve just got all the… What is it? You’ve got gold and metal/minerals, which is… That’s conflating quite a lot of different things under one title.

Merryn: It really is. It’s getting a lot together. Right, so let’s… Why don’t we go back and have a look at this. So F for fuels. Geopolitical tension, strong demand, constraint supplies, underinvestment, a number of factors will keep energy prices elevated over the medium term. Do you know what? I think these people read MoneyWeek.

John: I think they might be onto something.

Merryn: I think they might be. In spite of the outperformance of the energy sector year to date, brackets YTD for those of us who aren’t used to abbreviations, the sector still accounts for just 3.7% of the S&P 500 market cap and that is well below its 13.4% weighting in 1990. That’s a really interesting comparison because economies are not as energy intensive as they were before. The average western economy uses a smaller percentage of energy GDP as it did previously. But, nonetheless, there is a huge difference between 3.7% and 13.4%, so…

John: And was it not, in the 1980s was it not like 30%? That was the peak of the proper oil bull market panic. But I think it was actually a really useful comparison because they do give you… I’m sure we’ve seen it with tech as well and you know that whenever you’re getting down to a historic low, then unless you’re talking about railways, which obviously have been pretty much wiped out, then it’s likely to bounce at some point. And unfortunately we haven’t phased out oil or coal or any of the rest yet.

Merryn: Yes, and it’s actually going back to what you were saying about ESG, how we can bring back fossil fuels into the ESG fold. There’s an article this morning in The Times about North Sea oil and how we really should be exploring a new field. And if this time Nicola Sturgeon started to be a bit more rational about this stuff, well, in fact, our government as a whole started to be a bit more rational about this stuff because actually getting oil out of the North Sea, getting domestic oil is a much lower emission business than importing it from abroad.

And we’re going to keep needing fossil fuels, particularly needing oil for a long time, maybe even coal, by the way. We need this stuff for a while and if the environmental impact of producing it at home is lower than the environmental impact to the world as a whole, not just to the UK because the world matters, right, to the world as a whole is lower if we produce it domestically, surely, surely we have a moral imperative to produce it domestically.

John: I agree. I do agree. I think what’s frustrating about all this is that you could’ve said this. Lots of people…

Merryn: And we did.

John: Yes, aye, we did. Lots of people spoke about the moral imperative of the US fracking, for example, because it stopped them from buying it from Saudi Arabia, which is not known for its ESG traits. What is it? Has it executed like 84 people since Monday and counting?

Merryn: 81 people in one day and three people as our PM flew in.

John: Yes, so…

Merryn: You want to get it from the North Sea or you want to buy it from them? I know what I want.

John: Exactly. So I think, yes, obviously we know this, but this is all just about [unclear] cycle and, as you say, that can U-turn very quickly. And so, yes, of course oil from the North Sea is environmentally and socially friendly and actually a better governed place to get it from than getting it from somewhere else. That makes sense.

Merryn: Yes, absolutely, and the G here is so important. One of the many with the ESG boom bubble is the utter neglect of the G in ESG. If we can get better G by doing things domestically, by keeping what we might consider to be dirty businesses transparently listed, from staying away from buying our intense energy needs for countries that have a horrible G, this seems like a good thing.

We’ve ignored this completely over the last decade and when fund managers look at G, do you know what they talk about? They’re talking about meeting regulations. They’re talking about regulatory compliance. They’re not talking about what ordinary people would think of as good governance.

John: Well, that’s a really interesting point because obviously the big sector where a lot of this is talked about is the commodities sector. And I started reading the book, the Bloomberg writer recently wrote about it and I can’t remember the name, the one about the history of the commodities sector. And the thing that really stands out is that it’s always been, up until very, very recently, private companies doing things that could be generally described as reasonably shady to get commodities from one place to another.

And it is that thing of operating in a non-transparent way because, well, it’s been easier to do and that really does highlight the importance of public markets in this, in governing this G side of things. So, yes, no, I think you’re right and I can see how we could completely rewrite the rulebook on this to come in line with, well, whenever there’s a bull market for the next ten years.

Merryn:Yes, well, as we said last week or the week before when we were last talking about there’s nothing like outperformance to turn something from a non-ESG stock into an ESG stock, which brings us neatly onto A, aerospace.

John: That’s a good way.

Merryn: Yes, a good way in.

John: Good, that one. I see what they’ve done there.

Merryn:Thank you. I’m so skilled. It’s practice. Defence stocks have outperformed the broader market YTD, we all know what that stands for now, by 19% amid expectations that heightened geopolitical tensions could lead to greater military spending. So there could be a lot of heavy lifting there. Germany has pledged twice its annual defence budget. The UK and others made less specific pledges, but obviously the UK is spending a lot already.

At a minimum, NATO requires each member to contribute more than 2% of GDP by a 2024 deadline. Defence spending is also climbing in Asia. Spending on cybersecurity will remain in a secular upswing. This is absolutely fascinating that it’s actually taken this war to make Germany push forward on defence spending. And I know that we’re not really allowed to talk about Donald Trump anymore who said a lot of blatantly idiotic things during his presidency, but he also said a lot of extremely sensible things.

And one of the things that he kept saying to Germany in particular was, why should we have to defend you? Why should we have to pay to defend you when you won’t up your defence budget and you are tying yourself to Russia by relying on Russia for fuel? You have to sort this out. Remember him saying that over and over again?

John: Yes. To be fair, lots of other US presidents had been saying it before him but just less noisily.

Merryn: Yes, he said it loudly, he said it noisily. Everyone ignored him or treated him like he was a madman, which maybe he was, but everyone says something sensible occasionally, so… And here we are today, what he was worried about has happened. Germany has decided to spend on defence. We’re already spending on defence. The rest of Europe is going to do it, too. Asia is at it. America is hardly going to cut back. So here we are looking at defence stocks which have risen dramatically so far this year, probably will drive very significantly further, and are now surely ESG stocks.

John: Yes.

Merryn: You could say they’re ESG because they’ve gone up, but I think we can make a case for it as well, right?

John: Well, defence has always been one of the trickiest ones on the whole ESG spectrum because you’re like, well, what happens if something…? It’s not difficult to say that it was the right thing to do to resist Hitler during World War II and if you didn’t have weapons that would be hard. But, again, it’s just another one of these things that illustrates the…of the whole ethical investing approach in many ways.

Merryn: It’s exemplified interestingly by the SNP in Scotland. It’s absolutely fascinating that the SNP are against nuclear weapons, they’re against war. We’re all against war and we’re all against nuclear weapons and no one wants them to be used. They’re against all the stuff. They’re a bit iffy on NATO, but they’d like someone else to defend them. They don’t want the weapons. They’ll make someone else have the weapons. They’d like to join the EU and be protected by those weapons, they just don’t want them here. So that’s like investing in an ESG fund and hoping that somebody else will keep producing the oil, isn’t it?

John: Yes, or like exporting all your emissions to China and saying that the air above Britain is greener.

Merryn:Yes, very unsound.

John: And having small children dig through your recycling somewhere, in a country somewhere else. Anyway.

Merryn:Electric cars full of metals dug out by small children elsewhere. Not nice. Anyway, let’s not go down that route because we’ll upset ourselves. Three weeks ago I think we had a cover story in the magazine on interesting defence stocks to buy, is that right?

John: Actually, we had it just before. I think it was January.

Merryn:Was it January? So just before…

John: So that, yes, that was something of a fluke, but we did have Putin on the cover with the Z gen thing. So it was pretty good timing, that one.

Merryn:Yes. Obviously just to make it absolutely clear to listeners, John and I do not approve of war or of the use of any weapons of any kind whatsoever.

John: No, we’re not big fans.

Merryn: But we do approve of defence.

John: Yes.

Merryn: Right, moving on to the next A, which is another type of defence, agriculture. The planet will need to produce more food in the next four decades than in the last 8,000 years. The Food and Agriculture Organisation’s, brackets FAO by the way, food price index hit an all-time high in January 2020. Equipment shortages, higher input costs, climate challenges and the burgeoning demand from the middle class also suggest more upside earnings potential from the global agricultural complex, ditto given the expected climb in agricultural exports from Russia and Ukraine.

Russia, I think everyone knows this by now, but Russia supplies around 20% of world wheat exports and Ukraine another 10% or so, so between them they are both massive players in the global food complex. Now, the first statistic there, more food in the next four decades than in the last 8,000 years, I would put there maybe, maybe not, in that I suspect that the FAO are using pretty out of date population forecasting numbers.

And we know from the massive fall in fertility rates in every developed country and an awful lot of developing countries over the last couple of years that the population is going to peak at a much lower level than we originally thought, so maybe that number is a little off. But, nonetheless, we’re talking about having to produce more food for a growing population.

We’re talking about a rising middle class, pandemic and war aside, still a rising middle class who are going to want to eat more protein and quite right, too. Then we’re talking about a bit of a supply crisis, fertiliser prices go up and the prices of tractors, etc, go up with everything else. And as supply becomes constricted, there’s a horrible war, so agriculture suddenly is the place to be.

John: Yes, agriculture’s always… I don’t have a natural affinity with farming and I always struggle…

Merryn: Yes, you urban Scots, you don’t, do you?

John: Yes. I just always struggle to understand when the best time to invest in this sector is and something like John Deere is one thing. The fertiliser producers obviously have gone up a lot, but it’s a much faster cycle than all the others… Like with mining and oil, it’s like the oil price goes down, metal prices goes down, the miners all shut down and then it takes them ages to start up again, so it’s quite a long cycle.

Whereas with agriculture, you get soybeans, which are popular. One year everyone plants soybeans, and then suddenly soybeans crash the next year and they plant something else. And, I don't know, I always… I get the investment case for it, but I always find it hard to think about exactly what to buy to profit from it.

Merryn: Yes, it’s also interesting because at the moment the suppliers into the agricultural market, the John Deere’s and the fertiliser producers, their input prices are going up so much.

John: Well, yes, because inflation is a big thing for them, too.

Merryn: Yes, so we talk a lot, as ever, about how all these companies have pricing power. But, as again we’ve said before, not everyone can have pricing power all the time.

John: It’s an extremely distorted underlying market as well because obviously so much is tied up with government intervention and subsidies and incentives and stupid things like the biofuel stuff in America, and it’s so…

Merryn: And the IHT breaks in the UK that make owning land so attractive for non-agricultural reasons. But I do think there might be one interesting aside to this and I’m sure we have many rich readers who have land and I’m sure that many of our rich readers who have land are busily talking about rewilding. And I think I read in a column the other day that these days nothing says I’m rich like I’m rewilding because it says, I’ve got land and I can afford to play with it.

John: Everything’s a status symbol, isn’t it?

Merryn: Yes, and what we’re seeing is that as we shift from the common agricultural policy in the EU and we shift to our own agricultural subsidy policy, a lot of that is based on environmental stuff. It’s not based on food production. It’s based on land stewardship and it’s based on biodiversity and all this kind of thing, and that’s fantastic as long as you have enough food.

John: Yes.

Merryn: Does there come a point when this endless, not endless but long-term trend in the UK moves away from using our land to intensively produce food and towards using it as a leisure product. So when the food price goes up we turn around and go, do you know what, actually all those nice little animals and insects living on that 50 acres over there are going to have to sod off because we need to grow more food? That will be quite an interesting dynamic. Do we see a change there over the next decade if this A in the new FAANGs becomes as urgent as some people are suggesting it might?

John: That’s quite… Yes, this does all play into that underlying theme of going from just-in-time world to just-in-case world where everyone needs to have their own supplies of everything. Yes, it’s not economically efficient at all, but the problem is that’s what happens when trust breaks down. And I don't know how long it will be before we resolve that because I can’t see any way that we can come out of the Russia Ukraine situation with Russia somehow being welcomed back into the global fold.

And I also think it’s really interesting that China did something of a U-turn yesterday and sent all of the Chinese stocks bouncing because they’ve come out and tried to reassure investors. Essentially, the underlying message is your property rights are okay and China is still on board with markets, we’ve just got a few things we need to sort out. Now, I think that’s probably quite a cynical move on their part because they’ve seen capital fleeing the country as people have woken up to how important property rights are.

But it’s interesting that that’s what’s happened. So, yes, I think this whole idea of, do you really own the thing that you think you own and can you really secure supplies of the stuff that you need, is going to just be… That is going to be one of the overriding themes for the next decade at least.

Merryn: Yes, I don’t suppose you remember, I’m having vague memories of a fund that invested in farmland in Ukraine about, gosh, ten years ago.

John: No, you’re right, there was.

Merryn: Do you remember that?

John: Yes, I remember. I can’t remember the name of it.

Merryn: Nor can I.

John: It was quite an Eastern European sounding name obviously. But, yes, that was at least ten years ago.

Merryn:Yes, I’m going to find out what happened to it. How fascinating.

John: I think it may have burnt out during the 2008 crash, but I could be wrong.

Merryn: Any readers who remember that, listeners who remember that, drop us a line because I remember writing about that because it’s always very difficult when you’re writing about farmland to find ways for ordinary investors to get into it, other than suggesting everyone goes off and buys their own croft in Shetland or something like that and there aren’t… around. It’s hard to find ways to invest small amounts of money in agriculture.

John: I’m sure that Jonathan Compton who wrote the defence stocks piece for us knows.

Merryn: He was involved in that?

John: Yes, I’ll drop him a line and see if he’s got anything useful he can tell us for the next couple issues.

Merryn: Okay, perfect. We’ll come back to that. Sorry, I know we’re not supposed to go off on private conversations in the middle of a podcast. We won’t do that again. But interestingly, by the way, we were just talking about deglobalisation and Russia being taken out of the economy, etc, in the context of agriculture. Here’s another guess for listeners. What is the value of the fossil fuels that the EU have bought since the invasion of Ukraine? How many billions worth of oil and gas have flowed into the EU from Russia in the last four weeks?

John: I have no idea, but it’s probably enough to pay for Germany to expand its annual defence budget to well over 2%.

Merryn: €9.1 billion. Yes, sanctions, eh? Right, moving on. N for nuclear and renewables, which is something that Germany obviously should be paying some attention to. Nuclear energy has the highest capacity factor of any energy source producing reliable carbon-free power more than 92% of the time, twice as reliable as coal or natural gas plants, and almost three times more than wind and solar plants. Wind and solar plants are really useless. Renewable energy use has increased since the pandemic induced major declines in all other fuels in 2020.

Long-term contracts, ongoing… plants and priority access to the grid underpin renewables growth. But I think we all know now that renewables are not going to take us to the other side of the energy transition alone, we have to have [use] nuclear. So that’s very important to invest, but I’m going to scourge over that because exactly how you invest in that is a complicated business and we will do a cover story on that in the magazine shortly. We’ve done them in the past, but I think it’s time to do another big one, don’t you?

John: Yes, I think that’s a good idea, and try to find something beyond uranium.

Merryn: Yes. What was the other…?

John: Very volatile.

Merryn: Thorium. Here’s another thing, if any readers or listeners can write to us about thorium and explain to us why it is that still we’re not talking about using thorium in nuclear plants because I understand that it works just as well, if not better, and comes with none of the risk that using uranium comes with. And I remember writing about this years ago and we were using uranium because it connected into the whole nuclear weapon complex.

So we were using uranium to create energy because it just works to do both at the same time. But if we’re going to start relying on nuclear energy long-term, why are we not using thorium? Scientists, write to us. Unless you have any input there, John?

John: Well, yes, no, because I remember actually the last time we talked about this, somebody did write to us about thorium again. And I remember that, yes, every time we write about nuclear, and we have written about thorium before, I think there are quite a few different designs. There’s quite a few different types. I don’t think it’s just thorium either.

So my gut feeling is that there’s probably a good reason why we’ve stuck with the type that we’ve got, but I would like to know more about the alternatives, particularly because the disposal of the waste thing is still an issue. I don’t… Again, it’s very difficult to get accurate statistics about nuclear I feel because there’s so many pressure groups on either side of it that want to…

Merryn: It’s so political, so political.

John: Aye, yes, it’s a bit like climate change from that point of view. But it would be useful to understand a bit more about why we have the current systems and we haven’t evolved onto something else. So, yes, readers, please send us your input to editor@moneyweek.com.

Merryn: Yes. Okay, the last one, your slightly convoluted G. Viewed as a safe haven. See, now there’s fudging it to begin with. Viewed as a safe haven. I would say it is a safe haven. Gold prices are up over 6% in 2022 and have posted the best February since 2016. And there’s growing worries over inflation and war, so of course because we recommend stuff that is already going up, gold it is.

John: It’s had a terrible March low, let’s be honest.

Merryn: Okay, onto metals and minerals. The electric vehicle, brackets EV, transition will be mineral intensive. A typical EV requires six times the mineral inputs of a conventional car according to the International Energy Agency and, disappointingly, they do not put brackets IEA after that. The high mineral intensity…

John: That would be patronising.

Merryn: That would be patronising. The high mineral intensity required for batteries could imply 40 times the current lithium demands by 2040 and we’ve written about this a lot. We’ll come back to gold in a tick.

But we’ve written about the metals and minerals required for the EV transition and of course we’ve written about the Amati Strategic Metals Fund, which plays directly into all of this, and you can see it of course in the rising price of everything going into electric cars. I think in the commodity peak last week the average electric car, just the components of it, were costing another few thousand dollars over the end of last year.

John: That’s because nickel went crazy, didn’t it?

Merryn: Nickel, exactly. Nickel went crazy. So all these things are very important. So I think that we are on board with the idea that if there is going to be even the effort there was before to the energy transition and it’s going to be increased and if we want to work on batteries, obviously you want to be in metals and minerals.

John: And I do think they have conflated two separate things there. Gold and industrial metals are two very different things, but obviously I think everyone should have a bit of gold in their portfolio.

Merryn: Of course they should.

John: The one interesting bit about all this is obviously almost all of this stuff has already gone up quite a lot.

Merryn: Yes. Well, actually, I’ll tell you what, let’s just give you the numbers here, okay? So since the beginning of the year, crude oil is up 34%. Agriculture average ETF up 10.4%. Gold even now is up 6% on the year. S&P 500, which uses some proxy for growth, down 12%. And there’s something else which is down 16%, which we really are not hearing much about these days.

John: What was that?

Merryn: Go on, guess. I’ll give you another clue.

John: It’s not the NASDAQ because…

Merryn: No. Its 14% was an all-time high of November 2021.

John: Is it…? Wait, no, November 2021. It’s not China, is it?

Merryn: Very popular with the young. Very popular with money launderers, criminals, people who want to challenge a bit of the money system.

John: Sorry. God, yes, Bitcoin. What am I thinking about? Of course it’s Bitcoin.

Merryn: There you go.

John: Yes, nobody’s really talking about crypto in either a positive or a negative way, which is quite interesting.

Merryn: No, not hearing much about the new gold.

John: Yes, gold 2.0. Some bugs there to iron out, I feel.

Merryn: Some bugs and they could easily be ironed out. We’re not going to make fun of that because this is the kind of thing we’re so often wrong about because we’re old.

John: Yes, it’s technology. I’m going to leave it to the experts.

Merryn: Yes. So for now we would just say that if you are looking for a long-term safe haven, obviously gold has not had a particularly good couple of weeks, well, actually week, but it did do what it was supposed to do when this all started. It protects you to a degree and if you have it in your portfolio as a ballast, as a hedge, I don’t think you’ll regret it in times of geopolitical conflict.

John: But there’s also ultimately the inflation thing and that has always been the case. One of the reasons it’s [spike] is because of the geopolitics, but it always does that and all the… I think assuming that Russia and Ukraine stay parked in Ukraine, and that sounds cold-blooded, etc, but it’s not, but the way the markets look at this, if it’s now. Either it spills over into World War III, in which case things are much, much worse or some resolution comes about where it doesn’t go beyond the borders of Ukraine.

I think that’s what the market’s currently pricing in and the little spasm of panic that we had was getting used to that. But the underlying fact that inflation is going to get to double digits in the western world this year is still a fact. It’s still going to happen. The Fed hasn’t really changed its approach to that. It raised interest rates to 0.25% yesterday from 0% and inflation to 8%.

Merryn: It’s not going to do it, is it?

John: It’s like, this is not aggressive, this is not Paul Voelker coming back from the dead. So, yes, I think there’s a very, very good reason to be holding gold, even though it’s dropped by $100 in the last week because the Ukraine premium has gone out of it. But the inflation stuff is still a huge issue.

Merryn: It’s still there. Okay, well, I think we’d better leave it there, but we express our gratitude to Merrill Lynch for this wonderful list that’s given us so much fun and also, by the way, which we thoroughly approve of.

John: Yes.

Merryn: We agree with most of this. Even though we mock a little, we agree with all of this and we’ve been writing about it in the magazine and regular readers will know for the last couple of years about this coming shift. So we’re sorry that it was highlighted by this horrible war, but these new FAANGs, F A A N G, fuels, aerospace, agriculture, nuclear renewables and gold/metals minerals, which we accept are very different things, but nonetheless it fits into the infrastructure of this. So we are pro all these things and in particular hold the gold as ballast. Not much of it. What do we normally say, John? Five to 10%?

John: Five to 10%, yes.

Merryn: Yes, and we will write more about all these sectors in the magazine over the coming weeks. And what’s the cover story for the magazine this week, John? I’ve forgotten. Straight out of my head.

John: Well, this week’s all about ISAs.

Merryn: Of course it is. It’s ISAs.

John: And partly about how it protects your portfolio from inflation with your ISA choices this year.

Merryn: Absolutely vital.

John: So that should be a good read. A nice thick magazine.

Merryn: It’s always a good read. Brilliant. Thank you, John. And for more from us, obviously do go to our website moneyweek.com. Do read the magazine this week. As John says, it’s got the ISA supplement in it. It’s an excellent read. If you want to follow us on social media, please do at MoneyWeek on Twitter or on Instagram. You can follow John and me on Twitter. I’m Merryn… What am I? @merrynsw and John is @john_stepek. Thank you very much and talk to you again next week.