Cover of MoneyWeek magazine issue no 598

Aiming high

20 July 2012 / Issue 598

Where to get a juicy income


  • Sir Terry Leahy should lead the Bank of England
  • Does outsourcing ever work?
  • What the bear market guru is buying now


Stocks pass the test of time 

In our interview this week, Russell Napier notes that for the first time in his career he is finding that fund managers are “flummoxed”. They have no idea what is going on, or what to do about it. The point is nicely proven by Alex Hammond-Chambers in the annual report of the Hansa Trust (a niche special situations trust heavily invested in a marine services company operating in Brazil).

Alex has been knocking around the City for 40-plus years and never has “the outlook been more uncertain, the tea leaves more difficult to read”. The fundamentals of markets are constantly being trumped by politicians and central bankers, making it all but impossible to know how to invest.

But in all the mess, Alex thinks there is one safe haven. It isn’t gold or wine or bonds. It’s equities. In times of both deflation and inflation, good companies have the “ability and flexibility” to protect their balance sheets, profits and dividends in a way that other asset classes don’t. Russell agrees. Equities, he says, are run by people, and if they are run by good people, that makes them adaptable enough to survive over the very long term.

• Read the full editor’s letter here: Stocks pass the test of time.