EDITOR'S LETTERMerryn Somerset Webb
Want to get rich or stay rich in difficult times? This week’s magazine is packed with ideas on how you can do that. We look at Japan (still one of the best places to be invested). We look at gold (you must have some). We appraise a new emerging-market investment trust from Stewart Investors (which I like). And in our cover story we look at how you might make money from TV.
However, it’s worth noting that many of this week’s suggestions reference the past. We look at how gold has behaved in times of inflation and war, and at how today’s valuations compare to those of the past in various markets, for example. None of these things tell us exactly what the future will bring. But they certainly give us some handy hints.
That’s a lesson that the managers at Abu Dhabi airline Etihad are about to have to learn again. For some years now it has followed what CNN calls a “novel strategy” of investing in equity stakes in other airlines including Alitalia (now bankrupt) and Air Berlin (just filed for bankruptcy).
The important point to note here is that there is nothing remotely novel about the strategy. Anyone who was financially sentient in the late 1990s will remember that it was exactly the same (McKinsey-approved) approach that Swissair followed in the years running up to 2001 – and the one that nearly brought it down too. Owning lots of little stakes in smallish European airlines that have no more market power than you do was a really bad idea 20 years ago and it turns out that it is a really bad idea now too – without even the excuse of it being a new idea. Do a reality check with the past before you invest.
With that in mind you might turn to our strategy page to see how history suggests stockmarket investors should react to geopolitical conflict (not very much) and to our greatest investors in history series for five top tips on how to invest from Fidelity old timer Joe Tillinghast. History suggests he knows what he is doing.
Finally, you might think about the courses today’s students are taking. STEM courses are all the rage (everyone’s desperate to do something vocational). But odds are that future success belongs as much to those who grasp the cycles of the past as to those who understand the technology of the future. It’s easier to get into Cambridge than it is to get a spot on Love Island (17,000 applications against 80,000). And shifting fashions mean that history is one of the more straightforward degree courses to get onto (33% acceptance rate in 2014). Something for the contrarians – and any advisers to Etihad – among you to ponder.