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The Financial Ironmonger Blog No 23/2019

The Financial Ironmonger Blog No 23/2019

Every week our guest blogger, David Oakes of Mosaic Money Management (aka The Financial Ironmonger), shares with us his take on some of the major UK and overseas macro and political events that shaped the previous week.

Please be reminded the value of investments, and the income from them, may fall or rise. The views expressed in this article are those of the author at the date of publication and not necessarily those of Chelverton Asset Management Limited or Mosaic Money Management. The contents of this article are not intended as investment or tax advice and will not be updated after publication unless otherwise stated.


Theresa May finally resigned as leader of the Conservative party on Friday, although the lack of a letter leaves one slightly suspicious, so grimly has she stuck to the office. In one of those peculiarities that only the British could come up with, she remains Prime Minister until a new leader is elected, who then takes on that role. Briefly, the eleven current contenders get whittled down to just two, who are then voted on by the 120,000 members of the party, in the country.

It is probably the least representative group of people in the country in terms of any sort of diversity, and is very firmly in favour of Brexit, the harder, and sooner the better. They are therefore likely to elect a leader who promises them just that, storing up untold problems for the not too distant future, since there is no way that Parliament will agree, and Brussels certainly won’t.

I am afraid that my 100-1 runner never left the stalls, (Liz Truss); maybe she feared exposure of her back-story. Not so two of the other confirmed contenders who admitted smoking opium in one case, and cocaine in another. A third runner suggested bunging £1bn to the people either side of the non-existent Irish border, “to help smooth their objections”, confirming the highly dangerous hallucinatory powers of such drugs. Some kind of result is expected by the end of July, but it is unlikely to be the major reset that is needed.

The Donald was in London this week, even the BBC having to admit that the 250,000 protestors numbered fewer than 10,000, apparently due to adverse weather conditions. In two short years, he has seen off the leaders of the major western democracies, Merkel, May and Macron, and has nothing left to prove, hence his rather more conciliatory tone with most, bar the Mayor of London, who he regards as a cretin, a view shared by others outside his immediate circle. Or perhaps it was meeting the Queen that ameliorated his behaviour; remarkable to think that she has met thirteen American Presidents, almost a quarter of the total number.

His views on Brexit are well known, and I suspect will have an increasing influence on the outcome, given that he cares not a fig for the EU; the Irish-American link may prove decisive in sorting out the border issue; Leo Varadkar was the only European leader he specifically set out to meet.

Meanwhile, a cautionary tale from the City, where Neil Woodford was forced to suspend dealings in his £3.7bn equity income fund, down from a peak of £10bn in 2017. His style was to buy out of favour UK stocks and to combine these with early stage investments in unquoted companies, which cannot exceed 10% of the fund.

When investors redeemed their units, which they are entitled to do on a daily basis, it proved easier to sell the quoted stocks, but, in the end, neither could be sold at the required rate, hence “gating” the fund to prevent a fire sale. To be fair, the attribution analysis shows that the unquoted stocks outperformed their listed brethren, but it was a mistake to mix the two, in the same fund.

Queue the predictable, faux, outrage from people who were never warned of this danger, and the inevitable ill-informed comment carried by what one might have assumed to be responsible news organisations. I didn’t agree with his investment style trying to pick recovery stocks, since I think that there are large sectors of the economy that are fundamentally challenged, and will not survive in their current format, of which retailing is an obvious example.

It is likely to bring further unwanted regulatory interference from people who are clueless, such as politicians looking to make a name for themselves. Given time, and common sense, his portfolio can be unwound, but the idea that all investments must be liquid is just madness. Even cash on deposit has fallen victim in the past, as any depositor in Northern Rock will remind you. It is only a matter of time before a tracker fund, using the full replication method, gets stuck on a liquidity sandbank.

I hope Woodford Investment Management recovers, albeit with a more enlightened group of investors; we need someone like him to commercialise the great science we develop into success stories.

Mrs May, meanwhile, thinks that she can spend her last few weeks in office by building her legacy; all the things she promised to do three years ago of which none have been achieved. Price tag a cool £10bn, which the Chancellor has sensibly blocked. Cheaper to head for the opium.


David joined Manchester stockbroker Henry Cooke, Lumsden in 1977 and after becoming a member of the London Stock Exchange in 1984 held a number of senior positions within the firm including Managing Director of the in-house fund management company and member of the Executive Committee.

After senior appointments at Cazenove Fund Management and latterly Mercater Capital Management, David joined Mosaic Money Management in 2013. He has successfully managed private client and fund portfolios for over thirty years and has particular expertise in providing a multi manager service to his loyal client base.

The Financial Ironmonger is a hat-tip to Ironmonger Lane, the location of Chelverton’s London office.