Geoff Cutmore - Morning Thoughts

A Fund Manager that tries What he Buys...

Andy Brough, Fund Manager at Schroders, doesn’t need my support, but I’ll offer it anyhow. Nice to have a money manager on the programme who makes a point of trying what he is buying. After this morning’s Squawk we now know Mr Brough shops at both M&S and Sainsbury, and watches Sky. Of course all of this came out in the course of the programme as we discussed his current investment approach. For the record, he is sceptical about the opportunity for private equity to wring more value out of Sainsbury, and was puzzled about what any probe into Rupert Murdoch’s media empire and his holding in ITV might prove. He did not see the Ofcom referral as a reason to reduce his holding in Sky!

Kudos also to Mr Brough for owning up to a 12% holding in McAlpine.

He says the FTSE 100 is heavily dependent on oil and the banks – as the oil price goes up, and without bad news the market can drip higher. However, Andy is getting nervous about leverage in the markets. He thinks the yields on shares and property portfolios in the U.K. are starting to look unattractive. He is concerned that consumers and investors are taking on more debt because they believe that they will be rewarded by continually rising asset prices, but are not getting paid for that risk.

China’s markets fell out of bed this morning. Is it a coincidence that we also spoke about risks of overheating in Latvia? If you like delving into unconventional market analysis some of my friends in the charting world are pointing me to the work of Martin Armstrong. In his 8.6 year cycle analysis written decades ago Feb 27th 2007 is marked out as a turning point. Most would choose to pass on by, but I am (being a journalist) a sucker for theories that appear to contradict the ‘conventional’ wisdom.

Other highlights this morning: Oliver Stonner, Cominvest suggests caution if you have been fortunate enough to have money in Vietnam.

Christian Gattiker-Ericsson, Julius Baer suggests: Energy stocks –National Oilwell Varco, XTO Energy and Total; Proctor & Gamble over Cadbury and Danone; and insurers – Swiss Re, ING, Aflac, Hartford Fin. Serc.

Feedback welcome - here.