Most Wednesdays, John or I attend a business group for lunch at a café.
It’s a chance to get away from the trading screen and see how other businesspeople are navigating the economy.
We share what we’re seeing in financial markets. Others have different perspectives. And there’s plenty of banter back and forth.
The other week, our liquidator had returned from a month away.
‘Have you been busy shutting down companies?’ I jested.
No, he had been travelling in the US and the UK.
‘You notice a difference in attitudes…’ he was telling me. ‘In both countries, I used Uber. The driver in San Francisco was a recent migrant from the Middle East. He was excited and ambitious for his future in America. He was talking about growing a business and bringing his family to the US to join him.
‘In London, it was very different. The driver was also a recent migrant from the Middle East. But from the moment we got into conversation, he was complaining about the lack of government support. He thought he would be able to receive more government benefits.’
Uber Taxi, London. Source: Uber
These experiences and others gave him a parting view on both countries.
The UK is grappling with slow growth and relevance. The US is moving ahead rapidly.
Naturally, as investors, we want to capture economic growth. We also like the capital safety of developed markets.
Yet, thus far, only about 15% of our portfolios are in US positions. Around a third are in the UK.
Of course, this does not mean that 33% of are holdings are actually based in the UK. As a financial centre, London is the listing home for companies all around the world. Some of our positions are in international mining and pharmaceuticals with head offices in Australia and other countries.
But it is also true that Europe has been a focus for us because it is easier to capture value there.
The US markets are pored over by armies of analysts. Stocks there attract a premium. And the US dollar has been strong for a long time now.
I do think Britain will reinvent itself in time, particularly now it is outside of the EU. It remains a popular destination for highly skilled migrants. And the tax settings for many businesses are very favourable.
Meanwhile, we definitely want to take a bigger slice in America.
This poses the question of where? Our technology positions have had a great ride. Even more traditional, consumer-discretionary picks like General Motors [NYSE:GM] have enjoyed yearly stock-price growth of over 37%.
Well, this will be the question for today’s post.
Could it be time to look at more tech in US markets? Or is it time for contrarians with opportunities in the struggling listed real-estate sector?
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