Reflecting on the role of an adviser

Thomas John Watson, Sr. (February 17, 1874 – June 19, 1956) was the chairman and CEO of International Business Machines (IBM)

The role of an adviser is not simply to provide answers; it is about helping clients ask the right questions. This has always been my core philosophy for how I approach my advisory relationships. 

I have been working in an advisory role since 2005, starting in wealth management advising private clients, followed by my move into the institutional side advising companies and trustee boards on all aspects of investment strategy.

As I reflect on the role of an adviser and one’s responsibilities to clients I ask myself the question ‘what is good advice?’. After all, we live in an uncertain world and nobody has the ability to tell the future, no matter how persuasive some people can be. Read More

Trump, animal spirits and a lesson from Rafa Benitez

Video: Donald Trump Full Press Conference (16/2/17) – It’s fair to say he got a lot of things off his chest!

Donald Trump continues to dominate the headlines, the latest reason being his press conference last Thursday. (See link to transcript) One thing the guy is not short on is confidence, deluded or otherwise. A month into the job he’s already talking about the “incredible progress” he has made.

“I don’t think there’s ever been a president elected who in this short period of time has done what we’ve done.”

The press conference, which is quite entertaining in a weird way, has been picked apart for a variety of reasons. However, from a market perspective what I find it unnerving is Trump’s reference to the recent stock market euphoria as a barometer for how well he is doing. Read More

Leadership and the toughest decision of all

It would seem that Arsene Wenger – current Arsenal manager and a legend of the football world – and our Taoiseach Enda Kenny are faced with a similar dilemma. Cling to power and risk ruining whatever reputation they hold or accept the time has come to step down. 

The subject of leadership is vast but it is now widely accepted that emotional intelligence is an integral part of being a great leader. There are a number of definitions of emotional intelligence but the core component is self-awareness. Read More

Decision making and ‘the door test’

In life, faced with an infinite amount of possibilities and incomplete information we tend to rely on our own personal metrics for making decisions, whether it be on investments, our career and even love. Of course, sometimes our judgment is driven by subconscious biases, even when we think we are consciously making decisions. Read More

‘Foreigners’ stealing British football jobs?

The passing of the BREXIT bill last week brings the UK’s exit of the European Union ever closer, a move that will help the British Parliament stem the hordes of ‘foreigners’ coming to their shores. No more stealing British jobs!

One man that will be happy is the less than articulate Paul Merson, an Arsenal legend who now works as a Pundit on the popular “Soccer Saturday” football show. Part of Merson’s charm and what makes him entertaining is his own struggles with the English language. Still, his rant in early January about foreign football managers depriving British managers of opportunities is the kind of nonsense that feeds this anti-immigrant propaganda. (See Video Link)

“Why does it always have to be a foreign manager” Merson asked Soccer Saturday host Jeff Stelling about the appointment of the Portuguese Marco Silva as the new Hull Manager on January 7th 2017. “What is this geezer any different from Gary Rowlett?” (Merse English involves the use of “what” instead of “how” and for you foreigners “geezer” is cockney slang for a guy). Read More

Human Capital: An asset class in its own right

You are wealthy. You just haven’t realised it yet.

The traditional way people think about their wealth tends to focus on their accumulated financial assets, i.e. savings, investments, pension, property or any other claim on ownership. Think of this as your financial capital.

However, this is only one part of your overall wealth. The other component, often overlooked, is your human capital. Where financial capital is your accumulated monetary and physical assets minus liabilities, human capital is effectively your future earnings power.

In “Lifetime Financial Advice: Human Capital, Asset Allocation, and Insurance” – written by Roger G. Ibbotson, Moshe A. Milevsky, Peng Chen, CFA, and Kevin X. Zhu—the authors note that “the largest asset that most human beings have, at least when they are young, is their human capital—that is, the present value of their expected future labour income.”

Investing in your human capital

In 2009, I remember chatting with a good friend who was in Blackhall Place training to be solicitor at the time. Despite years of education – Primary Degree and Postgraduate Degree – he was becoming disillusioned by the fact he was still struggling financially, living off the basic pay trainee solicitors typically earn over their three years of qualification. He was tired of being broke and so he began to question whether all this education and training was worthwhile. Read More

Thoughts on Donald Trump’s “America First”

“Protection will lead to great prosperity and strength” – Donald Trump

Donald Trump has many people worried. For whatever Trump may have said to win the election, nobody is really sure what he stands for. The celebrity billionaire is new to politics, something which makes him a huge unknown.

Therefore, on Friday the world looked to Trump’s inauguration speech (see link) with much anticipation for signs of what might lie ahead over the next four years. It is fair to say that the protectionist rhetoric which defined the speech has sparked concerns about the direction of US policy under a Donald Trump presidency.

“America first” in a protectionist world

Certainly, the new President of the United States has made his position crystal clear with his promise of “America first”. But is this any different to any other US President? America – rather the United States of America, since America is a continent not a country – always puts itself first. They are the world’s only superpower for a reason.

Trump reaffirmed that “Together, we will determine the course of America and the world for many, many years to come.” The US has always tried to define the direction of the world order, protecting their free market capitalist ideals, with military force when needed.

Still, while the US has always put itself first they have done so within a world order which has promoted free trade, the exporting of globalisation with American corporations colonising new territory. Globalisation has played a big role in economic development since 1980, as countries moved away from protectionist policies and became more integrated in the global economy.

However, while the US still wishes to project its ideals on other countries, Trump appears to have dramatically shifted from this outward policy of globalisation.

Income inequality has been the most negative by-product of globalisation with gains unevenly distributed. As Deutche Bank recently pointed out “globalisation has been increasingly divisive at a national level with big winners and losers within individual country borders”. The report (Annual Long-Term Asset Return Study) shows that labour’s share of GDP has fallen over the period 1980-2015 and real wage growth has “stalled”.

Donald Trump seized on the discontent of those many aggrieved Americans that feel left behind by globalisation. It was an easy story to peddle, even though the issue of globalisation is a complex debate with many facets.

“From this day forward, it’s going to be only America first, America first. Every decision on trade, on taxes, on immigration, on foreign affairs will be made to benefit American workers and American families. We must protect our borders from the ravages of other countries making our product, stealing our companies and destroying our jobs.”

Trump’s speech was a rally call for his supporters who believe he can rejuvenate the US with a more protectionist economic policy. Not only more jobs, but higher quality and higher paying jobs. It sounds great for Americans, but how will he achieve it? Is lowering US corporate tax rates and imposing tariffs really going to create a wave of high paying jobs and contribute to a fairer distribution of wealth? It will be ironic if it is the billionaire who changes the system for the better.

“Make America Great Again!”

“Make America Great Again!” is a catchy slogan but what does that really mean?

  • Is a Great America a nation that reaffirms its dominance in the world motivated by self-interest, power and the almighty dollar?
  • Is a Great America a nation that sets the standard for tackling inequality? Currently, the top one-tenth of one percent owns almost as much wealth as the bottom 90 percent.
  • Is a Great America one that promotes basic rights such as food, shelter, education and healthcare for every citizen? In 2015, there were 43.1 million people in poverty in the US, according to the US Census Bureau.
  • Does a Great America stop locking up their people? Think about the fact the US has 5% of the world’s population but they have an estimated 25% of the world’s prison population. The land of the free!
  • Surely a Great America is one that leads the world in tackling the bigger issues such as climate change, promoting peace and halting the nuclear arms race? The US spent $598 billion on military spending in 2015, accounting for almost 38% of global military spending, according to the Military Balance 2016 report released by the International Institute for Strategic Studies.

Whether you like him or not these are the issues that Donald Trump should be judged on over the next four years. Those who are outraged by the election of Donald Trump must realise that it is the failing of previous governments which has made this moment possible. Barrack Obama was elected on a wave of optimism that real change was coming; he was far more inspiring than Donald Trump, an orator of the highest standard. Yet, beyond being a personable President, it is hard to argue that Obama affected real change. In fact, one could argue that his biggest failing is the election of Trump by not building a more inclusive society.

As for the impact on markets, opinion remains divided. Since his victory in the November 8th election, equity markets have rallied on speculation of lower corporate taxes, relaxed regulation and infrastructure spending. However, the free market capitalists would not be happy to see the world’s most capitalist nation revert to protectionist policies.

Two billionaires divided on Trump effect

Bill Ackman, the founder and CEO of Pershing Square Capital Management LP, a hedge-fund management company, remains bullish on the outlook for the US economy under Donald Trump. In a presentation last week Ackman said he is convinced that ‘Donald Trump will be very good on the economic side’ and he believes 4% GDP growth is possible for the US economy. ‘It is a bullish development from an investment perspective. Donald Trump is CEO of the biggest business in the world, America’.

Ackman expects corporate taxes to be cut significantly, the implementation of a massive infrastructure program and a more business friendly commercial environment in general. Already, the hedge fund manager has seen business confidence pick up and the CEOs he is talking to are more confident about the economic outlook. However, Ackman did caveat his view with the threat to trade if Trump followed through on his protectionist rhetoric.

Meanwhile, another billionaire, George Soros, the chairman of Soros Fund Management, has called Donald Trump a “con man” and is much less optimistic on Trump’s cabinet. Asked whether Trump would divide or unite America, Soros said “Obviously he will divide because he considers that he embodies the will of the people and therefore anyone who disagrees with him is not really the people”.

“He stands for a government that is the opposite of a free market system”. So far, Soros has been on the wrong side of the Trump rally but he remains adamant that Donald Trump will not be good for the markets. “I don’t think the markets are going to do very well. Right now they’re still celebrating. But when reality comes, it will prevail.” (See full interview: A Conversation with George Soros at Davos 2017)

European Central Bank President Mario Draghi gave the best response on Donald Trump’s comments to date: “Let’s see what the real policies are following these statements. I’d rather comment on policies and policy actions than just statements.” Until then, it really is just speculation.

ECB monetary policy: key comments from Draghi

Following the European Central Bank’s latest monetary policy committee meeting, ECB President Mario Draghi reassured investors of his commitment to do more if needed to achieve “a sustained adjustment in the path of inflation consistent with its inflation aim”.

Interest rates to stay low: The ECB committed to keeping interest rates at record lows beyond December 2017, the current end date for their asset purchase programme. Draghi confirmed: “We continue to expect them to remain at present or lower levels for an extended period of time, and well past the horizon of our net asset purchases.” Read More

Jumping in the deep end in Mexico

Las ruinas mayas

Tulum, Mexico. Hola, me llamo Vicente. ¿Cómo estás? My host family, a Mexican couple around 60 years old, Laura and Eduardo, smile at me as they welcome me in Spanish, little of which I actually pick up. Mild panic sets in as I realise the scale of the challenge I’ve signed up to for the next few weeks. I have just left my friend and the plush first world comforts of his place in California; what was I thinking, I wonder?

Mi familia mexicana

After exhausting my best Spanish phrases, with much use of the word “Si” when the family extended the conversation, I retired to my room, basic but comfortable. Alone, I penned a few thoughts on my arrival. “No choice now but to immerse myself in Spanish. Mañana, school begins!”

The following morning breakfast conversation with my non-English speaking host was made more interesting by the fact I had to explain that their electric shower was giving me electric shocks. After receiving the response “No me gusta electrica” from Laura a number of times, I could see Google translate would have to get me out of this bind. Eventually, she got the message and someone was called to come fix it. No more electric shocks!

Chizen Itza – one of the 7 wonders of the world

The lure of the sun and a break from the dreary Irish weather was a big reason for going to Mexico but it was primarily to immerse myself in Spanish, with the added benefit of being somewhere new and exciting. Tulum is a lovely beach town in the Yucatan Peninsula, an area blessed with beautiful Caribbean coastline and a rich Mayan history, much of which I got to experience. Not the worst place in the world to learn Spanish!

As for my starting point, I dabbled a little with Spanish over the summer but it was really just the months leading up to Christmas where I put in a little bit of effort into learning the basics, some lessons in tandem with a useful language app. However, I was starting from scratch – I studied French in school – so by the time I got to Mexico I was jumping in the deep end of the learning curve.

Estudiantes y Maestros

I signed up to the Meztli Language School in Tulum, based on some good reviews online. Arriving there, after getting lost of course, I was immediately taken by the place, an outdoor school among the trees with four or five Mayan style work stations for small groups of students.

The analysis of my level in order to determine the class I would join was done by a teacher by the name of Mauricio, exactly what I picture in my head of what a Mexican would look like. Long black hair and a quintessential Mexican style moustache curled at the edges, that not even Tom Selleck could compete with. Great guy, played second division Mexican football for a year. Football became a regular topic of conversation!

Temas de conversación

Starting Friday December 30th, I took 3 hours of classes every day, excluding the weekends, with my last day on Jan 13th. There were typically 3-4 people per group with 2 hours grammar with one teacher followed by a conversational class with another teacher from 11am-12pm. For the last three days after making good progress I changed to individual classes to learn a bit quicker before I came home. These classes were more intensive, helping to build on the work from the earlier lessons.

In addition, I did an hour to two on my own or with a friend from class every day. I met a few like-minded people also looking to learn in a fun way. One of the great benefits of travelling is the people you meet, a natural form of networking where you gravitate to like-minded people, a far cry from the often forced networking in the corporate world.

El cocinero

As well, I participated in the school’s cooking classes and the salsa class which were all in Spanish and I even played football one night. Todo espanol! Even on the three hour bus journey to Chetzen Itza I made use of the time to listen to Spanish audiobooks.

I would say by the fifth day there I was starting to use Spanish much more comfortably with my Mexican family and the locals. By mid-way through my second week, coupled with a deeper knowledge of the area and some new amigos, I was starting to feel at home in Mexico. If I didn’t know how to say something directly in Spanish, I was at the point where I could find another way to try and explain what I was looking to say.

Estudiantes y Maestros

Don’t get me wrong, I am still at a relatively basic level but I’ve reached a level where I can at least converse. But more importantly, I have reached that level where it is enjoyable and I want to continue learning the language. After my experience in Mexico it is clear that to learn the language quickly you have to live in the country where it is spoken. Immersion is the quickest way to fluency. Hardly a revelation, but it has peaked my interest in pursuing further adventures in South America.

Half way through January and for many those aspirational resolutions made at the turn of the year are now a distant memory. If travel reminds me of anything, it is that the value of freedom is grossly undervalued. There is a craving for certainty in our society but it is in the unknown where life gets interesting, albeit more challenging as uncertainty provokes anxiety.

Søren Kierkegaard, the 19th century Danish philosopher wrote: “When I behold my possibilities, I experience that dread which is the dizziness of freedom, and my choice is made in fear and trembling.”

Life is about embracing those possibilities, however scary they may seem! I jumped in the deep end in Mexico and floated in style…

La Reserva de la Biosfera de Sian Ka’an

End

Señor V

World Bank forecasts higher global economic growth

The World Bank has embraced the early year optimism on the outlook for the global economy. In their latest quarterly economic report, the World Bank forecasts a moderate acceleration in global economic growth, up from an estimated post-crisis low of 2.3% in 2016 to 2.7% in 2017, as “obstacles to activity recede among emerging market and developing economy commodity exporters”. Read More