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Politics may change but our manifesto remains demonstrably consistent

Politicians may come and go but value investors strive to remain ever consistent in their approach – as you will see from this ‘new’ article created from paragraphs of previous ones. Only a few tenses are changed…

04/12/2019

Simon Adler

Simon Adler

Fund Manager, Equity Value

From ‘Why we have no view on the result of the June general election or any other’ – 4 May 2017

“Do you, as professional investors, have a view on the upcoming general election?” [During election time], it is a line we expect to hear with some frequency, here on The Value Perspective – though not, we fondly imagine, from any regular visitors to the site. They, we like to think, already know the answer to that question, which is … the only view we have on the upcoming general election, is we have no view.

Regular visitors might know this, for example, because they read our article Polls apart [in March 2015]. Having raised the possibility people might already be “feeling jaded by the constant procession of so-called experts speculating on who will and will not win the upcoming general election”, it asserted: “You might as well ignore anything any pundit has to say on the outcome.”

 

UK Election: Why you should forget politics and ‘vote value’ – 8 June 2017

A general election campaign that began as a presumed coronation is drawing to a close apparently rather more evenly balanced. One consequence of this is market commentators have felt able to speculate on what the different potential outcomes – a Conservative majority, a hung Parliament or an outright Labour victory – could mean for investors.

Here on The Value Perspective, we understand that politics can be an important consideration for many investors. After all, the political instability in countries in, say, Africa and South America can be disconcerting – especially when they lead to industrial unrest, strikes in key sectors such as power, the imposition of emergency measures and so on.

 

The US election win is yet another illustration the future is unknowable – 18 November 2016

As we wrote in Poll fault after [the 2015] general election, the future is unknowable – and yet the market can and does work itself into a state about hopes and fears that turn out to be wholly illusory. What is more, as we pointed out in Brexit’s double illustration, the perils of forecasting the future mean market consensus can often be caught out not once but twice.

So consensus failed to call correctly either the result of the EU referendum or that markets would actually move upwards over the following days. And exactly the same thing happened with the [2016] US election and its aftermath. And maybe, over the coming weeks and months, those consensus market views will still be proved broadly correct – who knows? Which of course is completely our point.

 

Why our thinking on ‘Brexit’ is not so much a view as a ‘déjà view’ – 19 April 2016

The confidence with which we express our view that, on matters such as forecasting election results, we should have no view has twin foundations – our well-documented suspicion of forecasts and those who earn a living from making them and our even more frequently expressed faith in value investing and its long-run ability, among other things, to turn bad headlines into good investments.

By focusing on the long term, we avoid buying into any prevailing opinions or other ‘noise’ that could influence portfolio decisions. We are mindful of their possible impact but can point to more than 100 years of history that shows an unemotional, valuation-based approach to investing should deliver over the long run – regardless of anything economic, political or any other forecasters might have to say.

Author

Simon Adler

Simon Adler

Fund Manager, Equity Value

I joined Schroders in 2008 as an analyst in the UK equity team, ultimately analysing the Media, Transport, Leisure, Chemicals and Utility sectors. In 2014 I moved into a fund management role and have had experience managing Global ESG and Pan-European funds.  I joined the Value investment team in July 2016 to focus on UK institutional and ethical-value portfolios.

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