Cherchez l’argent, and the Swiss get rattled
by Doug Brodie
1. Silicon Valley Bank – this picture explains all. Banks take in deposits from you and I, then lend that money out to borrowers. They make money by the margin in between what they charge the borrower and pay the saver. SVB got its sums wrong.
2. Oil has been priced through the roof over the last year, all the oil majors have been making record profits, yet the worst performing currency in the G10 group of major nations is the Norwegian Krone:
3. Switzerland has 243 banks that hold circa $6.5 trillion, though it’s GDP is only $800 billion. It has the second highest per capita GDP at $86,850, yet it’s fourth largest bank, Credit Suisse, has just needed to be bailed out by the government to the tune of $54 billion.
4. Bank assets globally increased from $143 trillion to $183 trillion over the last ten years, up 28%, yet the four biggest US banks lost $52 billion in one day last week – Thursday March 9th. Over reaction?
5. “ jo aasaanee se milata hai vo aasaanee se chala bhee jaata hai “ is (apparently) easy come, easy go in Hindi. In the ten days to 2nd February, one of the ten richest people on the planet, Gautam Adani, lost over $100bn. That is more than the annual GDP of the 147 poorest countries in the world.
Country …IMF estimate of GDP, World Bank estimate, UN estimate
6. F&C Investment trust is a FTSE100 constituent worth £5.2 bn, it is over 155 years old and was started in the same year as the last public hanging in the UK. It is managed by Paul Niven who went to the same university as me, Strathclyde, and the hanging took place a 12 minute walk from my office in Chancery Lane. It’s largest company holding is Apple, at £83 million and its smallest is Cosco Shipping at £105,000. It received £77 million in income last year, paid out £69 million in dividends and has £97.5 million in revenue reserves (plus £4.2 billion in capital reserves). It’s a big trust!
7. Times are tough? Global cocaine production has reached record levels following the pandemic lockdown, rising 35% between 2020 and 2021. However consumption in Australia peaked in 2020 then fell by 50% in the following year. The expansion of consumption in Ukraine has fallen drastically since the invasion by Russia. Antwerp remains the gateway to Europe for cocaine smugglers. Online delivery to consumers in Antwerp is now faster than takeaway food delivery. #JustSnort?
8. Our core research database covers 31 investment trusts over the past 36 years, tracking 4,464 different dividend payments, and all 300 companies that have appeared in the FTSE 100 over the last twenty years, plus every dividend those companies have paid. Kseniia is our data analyst, and although there’s a difference between English and Ukrainian, numbers and excel spreadsheets are the same. Every investment trust in the database has made every dividend payment expected, none have drawn a blank.
9. Filling in that free time: it costs £1,650 to spend a week in Switzerland with Jagged Globe doing an introduction to Alpine Mountaineering – suitable for summer hill walkers. 4 nights in an apartment, 3 nights in mountain huts and 6 days guiding and instruction. The cost can be met by holding 9,572 shares in M&G at a cost of £17,500, current yield 9.49%.
10. If you’re walking in the Alps with Jagged Edge you need to watch where you put your feet. Chenavari Toro is an investment trust with a published yield of 14.12%. We don’t use it, we don’t have any clients holding it, we don’t include it in our research pool. It is a €uro priced share, its objective is “investing and trading in asset backed securities”, and its largest holdings are Taurus, SpRED and Shamrock. Like eating in a Korean restaurant, it’s safest to stay away from things you don’t understand. If Mr Buffett could grow his enormous investment wealth by ‘ignoring 7 foot fences and looking for 1 foot poles to step over’, we think that’s a sound strategy with your life savings, when there’s no Plan B.