저자: NickTrain · 외국인
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Nick Train은 투자는 본질적으로 투기적이며 시장가격은 알려진 정보를 이미 반영하므로 미래는 알려지지 않은 것에 의해 움직인다고 주장. 소수의 큰 아이디어(약 6개)와 집중 포트폴리오, 워런 버핏식 장기 보유를 강조. 영국 주식은 ARM 매각 사례처럼 가치 유출이 있었으나 Experian, Rightmove 등 글로벌 경쟁력 있는 기업이 있다고 주장. AI는 데이터 보유 기업에 기회가 될 수 있다고 봄. 자신의 최근 성과 부진은 인정하며 장기 관점을 강조.
다듬은 글
So, welcome to the latest Moneywise UK podcast. I'm George and I'm your host. And today I'm really delighted to be talking to Nick Train. Now, Nick co-founded Lindelor Train back in 2000 and he has more than 40 years experience in investment management. He's the portfolio manager of the Finsbury Growth and Income Trust.
And this trust celebrates its 100th anniversary this year. obviously hasn't been running it for 100 years, but it is the anniversary. He also manages UK equity portfolios and jointly manages a global portfolio as well. Now, I guess this conversation continues something that I set out to do this year, which was fewer podcasts, but kind of conversations with people who I think have particular interesting stories.
They have experience and they have perspectives to share. So, I'm as say delighted that Nick's uh agreed to come along to this. Nick, welcome and thank you so much for joining me today. I always love to start uh what I say is get to know the person behind the kind of investment philosophy or just get to know the person.
So, anything I say, please correct me as we go through, but I think you spent 40 years in investment management. So, what originally attracted you to fund management and and what is it about investing that still excites you today? George, uh, thank you. Thank you for the introduction. I hope that it's a pleasure for you, for your for your listeners.
Yeah, I mean, Finsbury, as you say, 100 years old. I just lapped 26 years of responsibility for that investment trust. So, it's it's almost a quarter of the history of that of that company. I'm very proud of that, actually. I like longevity. I like durability in the things that we invest in and yeah I I'm I'm a little bit proud to still be in situ after that period of time.
Yeah. No. Um, it it's a good question and and I mean the job is so privileged in a way because because it [clears throat] allows you to be curious about the world, curious about history, curious about the future, and to try and derive judgments and forecasts from that just natural curiosity that I guess everybody has about the world that we live in.
I just happen to have been paid for it and I feel yeah very privileged for that. I mean I do think there's a couple of other factors here and and one that might sound a bit sort of porative or or disparaging to myself or or maybe other participants or professionals. I what what I would say is whatever anybody says about investment it is speculative.
It is speculative. Prices in the market know pretty much everything that can be known already and therefore it's only what is unknown that is going to move things in the future. And that makes it necessarily speculative. And I just observe in everybody uh and also in myself, you know, people enjoy a flutter.
Do do you know what? There is this gambling instinct clearly deeply embedded in homo sapiens. And again, you know, I say it's been a privilege. You know what fun to have been p obviously you've got to deliver results over time but what fun to speculate about the future the the more disparaging aspect personally maybe is that I I recognize in myself a certain streak of misliness.
Do you know what I mean? I I like the the sense of accumulating wealth for my clients obviously, but but you know, I'm participating in that. I like this idea of wealth compounding over time. I like the sense of owning even it's even if it's only partially owning something of enormous enormous an enduring value.
I mean so so for instance I mean we've had a my god we've had a very very tough time over the last three years with our investment in Dagio. I mean, it's just been horrendous. But but before this tough period for Diagio and still today, there's something in me that thinks on behalf of my clients, we own a piece of Guinness and a piece of Johnny Walker and one in every three bottles of Krug sold around the world.
You know, that goes to Diego's shareholders benefit as well. I I just that sense of owning something of of extraordinary scarcity and long-term value psychologically that's been important to me as well and I think has been a a motivator. How about that for an answer? I like that. Can I push back on something which which maybe we were going to cover further on and and and perhaps it's an unfair question and I and I do agree with you is that you know I I I've said in previous podcasts is is I do have a financial advisor and one of the reasons why I have a financial advisor is that I used to enjoy buying shares and and and you and I think you're right.
It's a it's that little bit of gambling isn't there? It's like, well, maybe I can, you know, do really really well if I buy the share. And and and [clears throat] I just felt for me that wasn't a healthy place to be. But I think it is it's one of those things I think I do want to talk to you about is that is there are we getting to a stage where people go, do you know what it's just safer for me to buy the index, you know, rather than, you know, saying like, you know, it's such a hard one, isn't it?
like as you say, Dagio or whatever. If I could just buy a Footsie 100, couldn't I? And and away I'd go. And how do you feel about that? Because that must be something that maybe you've been challenged on particularly because of this period of time where it's been difficult. Well, I mean, I too have a financial advisor and with the growing complexity, I I have to say more of of of tax.
Um, I I I felt that I, you know, that's not my expertise. I I I've definitely valued the advice I've received from an adviser about organizing my and my family's assets. So, absolutely. And the the second thing I would say is that fundamentally particularly in this polity of the United Kingdom, I think that individuals exposure to equity is tragically low.
you you know I I I really wish more people in Great Britain had exposure to the stock market and and to a degree to the UK stock market because I just think it would be so beneficial for the economy but also probably for people's long-term um savings outcomes to have have greater exposure to equity as as an asset class And absolutely I would not have any compunction about arguing that the the most appropriate first exposure to equity for the average investor is a passive product.
I mean absolutely I mean if you if you've got no equity having some equity that's already a risk so why take the very considerable further risk of of of concentration or just trying to pick stocks. I agree. But but let's encourage people to own equity. Maybe I'm not going to get into here possibly cuz I'm still not sure even now that I've got an answer to it.
I'm not going to get into the active versus passive for the more experienced investor. But all I would say all I would say is that I have felt personally duty bound honorabound throughout my career to invest alongside my clients. Um I own no passive um investments. The vast majority of my equity investment is held in the the shares of the product that you the the investment trust that you you mentioned.
earlier and you know I'm a bit disappointed by the performance over the last 5 years and I recognize that we take risk. I hope it's prudent prudent risk, but you know, you never know. But I don't want anybody to ever be able to say Nick Train wasn't taking the same or even more risk than I was. And I I you know, I felt that has really been an important principle.
If I'm here seeking to justify a fee that's higher for a passive fund and I'm seeking to justify that fee by taking more risk than an index fund, then my goodness, I need to be fully exposed to the downside as well as to the upside to on behalf of my clients. Does does that make sense? Yeah. No, and I think I think it is a really powerful thing because I I I think people are too polarized as to say one is right and one is wrong and and and as you say even if you're right at the start of your journey, just having some equity exposure is is is good and whether that is through a passive or whether you take a step into active, it's it's really more about encouraging people to go into there.
But it leads to I I do well or this this has been valuable for me throughout my my career. Pet Peter Lynch, the great Fidelity investor Fidelity Miguel Iran. Um Peter Lynch wrote a book. It's probably out of date now in a sense, but he wrote a book called One Up on Wall Street. And in One Up on Wall Street, Peter Lynch argued that the man or woman on the Street in many ways has as good an access to winning investment ideas than the highest paid analysts at investment banks.
And his argument was, you know, if you see a product or a service that you think works for you, then it's highly likely that the company that's delivering that product or service is going to be a good investment. And maybe you'll have a sense of that before the ivory tower analyst. Do you do you know what I mean?
And again, yes, let's agree everybody at the start of their journey passive is right. But that doesn't mean that smart people responding to their own perspective of the world around them can't also make very very good investment decisions even if they're not so-called professionals. I wouldn't want to discourage people from backing their perceptions of the world.
Yeah, of course. Putting all of their all of their net worth into just two speculative ideas, that that is a terrible idea. But but yeah, and I think that's that's such a good lesson, isn't it? It's like, you know, if you see something and you think, "Yeah, that's that's a really good idea and and I'm using it and I think then then why wouldn't you?" um one of the sorry this I I feel you know anyone listening to this that wasn't a question that was on here so I just threw that out out to you but it does lead onto this next question and and again I'm not sure I don't necessarily agree with this but I I do think that when we look at the UK and we look at against the US is that the UK stock market is sometimes characterized as kind of old economy relatively grown growth and obviously we've seen its share of the global kind of market diminish as the US becomes a larger part of the index.
Do you think that's fair? And what do you think investors may be overlooking? No, I do I do think it's fair and you know I I I I do you know I'm don't misconr you know I'm a patriotic Brit as well as being someone who runs UK equity strategies and like so many I I've wondered how is it that the UK's contrived not to participate it has a bit but not participate as fully as it might have done in this extraordinary period of wealth creation that's been led by the United States and um you know one looks at that that decision that was made and it's actually 10 years ago almost exactly 10 years ago British institutions sold out of ARM
um they sold it to the Soft Bank the Japanese soft bank subsequently listed ARM on NASDAQ not on the London stock market. If ARM had remained a London listed company and its share price has performed as well as it subsequently has, today ARM would be the second biggest company in the UK stock market.
And that's a huge chunk of value that in a sense the British economy, British investors have missed out on from a British company. You know, it's still headquartered in Cambridge. I mean, all of the intellectual properties there in the UK, but somehow our stock market, our institutions didn't weren't willing to to back it or were happy to take the takeover offer.
And yeah, I I it it is a disappointment. I you know and I think you know your [clears throat] your question is is absolutely pertinent and you know in a way I find it difficult to rebut it certainly relative to the not very adequate returns that I've generated over the last 5 years but but what what I would say is that I the question I ask myself is can I construct a portfolio made up of Lond London listed UK companies that offer my clients access to the big money-making themes in global markets.
And actually I I think we can and I think that there are any number of truly worldclass business franchises listed on the London stock market. very often with digital assets, digital strategies that it's not difficult to look at them and say, you know, you are as competitive at what you do as anything listed on NASDAQ.
And then you look and you think, well, the one thing that's different is that your valuation is rather different from the comparable NASDAQ one. And I don't know. I I I certainly don't feel you know, we we've got a big holding. Again, it hasn't done very well for the last three or four years. We've got a big holding in Experian.
I I don't know if you or your listeners know Experian, but you know that that is the world's biggest credit rating agency, including the biggest rating agency in the United States. And that company has more proprietary private data on more individuals in the world and more businesses in the world than kind of any other entity.
And Xperian is aggressively using its technology capabilities of which a very considerable technology prowess to you utilize harness AI tools to derive even more value from that data. That's a London listed company. It's the biggest of its type in the world. It's got a unique data set. It's got a huge opportunity presented by AI and yet the shares haven't done very well.
I've got to think that's a big opportunity. But can we cuz I'm going to jump a question a couple of questions actually cuz you talk about AI and everyone talks about AI, don't they? And and it's it's fascinating because some of the I think some of the companies that you own and I'm probably thinking more about right move perhaps it's a perception of the markets that they're they're a victim of of of AI whereas you've kind of argued oppositely to that.
What do you think because [clears throat] you know you talk about Experian you talk you know and I think you've talked a lot about right move as well. What do you think the market is misunderstanding? Because I guess the market is so focused, isn't it? Is that everything is about AI and everything is going to be changing because of AI and yeah, our whole world is changing, isn't it?
So I I I I'll try and answer that. Ju just uh and perhaps I was ahead of myself referring to Experian strategy visav AI but the point I wanted to make about Experian is is that that as you say there's a perception that the UK it's not my phrase is Jurassic Park you know it's just the the industry of the 20th century in graceful decline maybe too high a proportion of the UK stock market even today you could characterize in that way.
But but if you are a stock picker, and you don't have to be, but if you are, you can find a business like Experian that that I I don't think I'm imagining this that that is the global leader at what it does. I mean, you know, 23 out of the 25 biggest financial institutions in the United States rely hour by hour on experience, data, and software services.
It's it's an extraordinary global franchise that just happens to be listed on the London stock market and I wish there were more of them, but that that that's that's the key. I I I I do have a lot I I I can and maybe even should say about right move andor AI. Um, I mean I mean I don't want you to say that you're not allowed to say yesterday, I think it was yesterday, Anthropic announced a major joint venture with Salesforce in the in the United States and Salesforce's share price was up 20% or something on the announcement of this big strategic combination of Lord's AI brains with Salesforce's myriads of semicaptive corporate customers and the incredible and constantly replenishing business data on Salesforce's cloud platform.
Putting the two together creates a lot more value for Salesforce, but it also creates a lot of value for Anthropic Claude because it could take decades for them to access that business data and that client network. I mean, who knows how long that might take them. So, are there other businesses in the UK that have comparable deep deeply embedded digital relationships with their customers and huge data sets that smart AI could extract more value from?
Well, yes, there are. I mean, Xferin is one, but right move right move is another one. You know, if you've got 90% of all time being spent on a real estate portal in the UK being spent on Right Move, then no LLM, Chatg GBT, no one can have the same insight into what's going on between UK individuals interest and aspirations in the real estate market and the estate agents who list the properties.
I mean, it's just a unique space where, put it this way, I'm not at all surprised that Right Move has invested uh over the last couple of years and as a result somewhat depressed its profitability. Right move has invested in a service that it calls Ask Right move, which is essentially chatbt. I I in in very broad terms chat GPT but for the UK property market and you know I you don't know you don't know for sure but you know who's got the right to win delivering conversational AI powered search to you know millions upon millions of UK individuals.
Is it chat GPT or is it right move which already has this incredible place where all of the inventory is and all of the attention is right move share price has fallen over the last 12 months partly because of the investment that they have been making in their own AI capabilities but and and maybe you know who am I to say you know you you have to learn to be humble when share prices go against you.
But I I my colleagues crucially the company itself don't see any impingement on their business as yet from LLMs but they do see significant greater engagement both from agents and from customers as right move is deploying its own AI own AI tools. I just think the upside if right move can execute it's very very great you know and I yeah it's worth having an investment in
and I guess this comes to darting back to another question is you run this very concentrated portfolio I think just looking at the fact sheet that's kind of up in front of me I mean 84 4% is in the top 10 holdings. Um, and what gives you the confidence to kind of put so much capital behind relatively few businesses and then how do you how do you distinguish between genuine conviction and emotional attachment to to an investment?
And it's quite interesting actually kind of when you talk about right move is that it's very easy for I say in inverted commas for us to turn around to you and go well actually you know what a bad investment that's been but as you've spoken about it and and actually it's it's often what we don't see that is actually where the opportunity potentially lies isn't it?
So um and I guess you know I I don't know I'll let you answer this really but I guess the advantage of of a concentrated portfolio to some extent is actually it does get you to know those businesses really well but it would just be really interesting to to get your uh yeah to get your perspective around that.
Well, I and Michael Linsel um we we were both we were both exposed to Warren Buffett at a formative time of our careers and you know that that was such a I spent such a valuable exposure for me but that framework that that Barkshire Hathaway investing framework it was such a revelation to me and and really all I've ever wanted to do subsequently was to try and replicate that to the best of my abilities, which I, you know, has been proven.
I'm not in Buffett's league, but but but but that's that's what I've wanted. That's what I've wanted to to do. And yeah, you know, the the one of the key value ads for for for Buffett has been avoiding, sorry to use his silly word, diversification. I I mean, there's there's there's issues with running highly concentrated portfolios.
Believe me, there are issues with it. But but one of the almost certain ways to deliver mediocre returns is to have a a highly diversified portfolio of low conviction holdings which you often don't know very well. I I would I would say and yes, you're absolutely right. the the the Buffett view was you don't need many investments and as long as you have investments in substantive easy to understand robust businesses that can get through periods of difficult trading because every business will have a period of difficult trading at some point then you that's the basis for an investment for an investment strategy.
So, so to the extent that I wanted to quote copy Warren Buffett, that portfolio concentration, that was a key tenant of of his approach. I mean, the the the other thing I'll say, and I I don't know, I'll say it because I think it's it's interesting and it might strike, you know, a bell with your with your listeners.
Um I I mentioned a great um Fidelity money manager, Peter Lynch. um another great Fidelity money money manager closer to home, Anthony Bolton. And I always remember reading Anthony Bolton's book where he described stockpicking as like walking along a pebbly beach. He said like walking along a pebbly beach.
Every time I turned over a pebble or a stone, he said there was an investment idea hiding underneath that pebble. And I read that and I thought, goodness, that's not what it's like for me at all. You know, for me it's like I I'm walking on this golden sandy beach and I walk for [snorts] 50 miles and every so often there's a huge rock stack standing on the beach.
There's this vast boulder and I think, "Oh, yes, that's an investment idea." but they don't they've just never come very often for me. And I suppose I felt that I needed them to be really really obvious. And that's another reason why I've ended up with concentrated portfolios. And I get I keep jumping from from question to question because there is another one I was going to ask you, but I I want to ask you because I think this goes on really I guess there's two questions that kind of run into each other really now from what you've said and and I love that kind of finding those big boulders, you know, and and you know and one of the questions I was going to ask you about patience, but I'm going to leave that one to the next one.
But your philosophy is kind of about owning quality businesses for very long periods but valuation obviously still matters and it's really nice to hear your passion around the companies some of the companies you hold even if they have you know not necessarily done what you would have liked them to have done recently.
How do you decide to wait what you know when this big boulder how do you decide when a wonderful business has simply become too expensive or when a fallen share price represents a genuine opportunity than than a than a a warning. I guess listen I I guess I guess the honest answer is I is I don't know and I I I don't know probably anybody who who knows.
You know, it is it is intensely frustrating when you own something for a long time and it does really well and the valuation goes up a bit and then it has a difficult time and it can unravel some of you you think my goodness you know what an idiot I am. Why didn't I sell that or reduce that holding at the top?
And believe me that that that's been higher in our thinking over the last few years. But at the same time, at the same time, at the same time, it's so so so important, good to great businesses that can compound steadily over time that that the the the upside is so much greater than can be characterized by saying, "Oh, it should be trading on 17 times earning and it's now trading on 24 times earnings.
Perhaps I should sell it because it's now on 24 times earnings. This is not a fantasy. If you look back at great business franchises over time, the right PE multiple for a great business at any point in time probably ought to be 90 times earnings. Do you know you can actually work that out because you can look back and see the extent to which it's persistently surprised and done better than people expected over time.
And listen, no investment approach is foolproof. Everything has flaws. You But you've got to think about what your biases are. And my bias, our bias has been to say the world is a very big place. There's a huge opportunity particularly in digital businesses. run your winners because actually actually objectively even if you look at the United States stock market there aren't so many obvious winners.
There's a lot of mediocre businesses out there. Now it's a perfectly valid investment approach to say I'm going to trade the shares of mediocre companies. I I and that's a skill and some people are really really good at it. But but you know we own we own relics. We've owned Rlex for nearly quarter of a century.
At its peak the shares over the period we'd owned it. At its peak the shares were up nearly eightfold. You know fantastic. Sadly, over the last two years, two and a half years, the shares have not quite h haveved, but they've fallen a long way. We haven't sold any, and it's now only quadrupled over the period that we've owned it.
Terribly disappointing, but the really fundamental question, you know, how many companies in the UK stock market, certainly of any size, have quadrupled over the last 20 years? surprisingly few actually. And could Rellex resume its success as a share price? Listen, Relex's business has gone from strength to strength during this period of derating.
The business has grown more quickly currently than ever before. And yet, the shares have derated for understandable reasons. But I'm I'm not saying we're right. I'm not saying we're right about relics. I'm not saying we're right about the investment approach, but a business like Relex, particularly in the context of the UK stock market, that's rare.
It's proven over a quarter of a century its ability to generate wonderful returns from its owners. Why would I get shaken out of that? What What would I buy instead? That that's the way I'd think about it. Now, I'm just going to say I'm just going to say if this is of interest to you or anybody, um I keep mentioning books.
Um Jeremy Seagull, Stocks for the Long Run. Um classic book about why you should commit capital to equities over time. um in one of the earlier editions, it's not in the most recent edition of of stocks long long run, but in one of the earlier editions, he did um uh a a study of companies that had demonstrated the ability to grow their revenues, their sales at between 5 and 8% peranom.
not very rapidly, not very exciting, but just had persistently grown at 5 to 8% peranom. And he worked out on a post hawk basis, scientific statistical basis, that companies that have got the ability to grow in that steady, remorseless compounding rate deserve price earnings ratios of 30 or 40 times earnings.
Now, you know, I they're much more valuable than you might think. When we first bought Diagio, it was being valued at about 14 times earnings for exactly that sort of steady growth. And we took the view that Dio really worked for us for 20 years. by the way that that that was a classic example of a Jeremy Seagull type steadily compounding business easy to understand clearly the best brands of its type in the world and we can come back to Diagio but but just just to so so my framing was always well if Diego gets to 40 times earnings maybe it's too expensive I mean it never did but but that would have been the framework what I feel a lesson is that the growth businesses of the 21st century are digital businesses and they are that means that their requirement for stuff things capital it's lower you know that there just isn't so much physical stuff in these these these these these growth businesses which means that they generate even more cash out of their businesses than a DIA is able to do.
And it does seem to me therefore likely that the best digital businesses deserve even higher valuations than than we might have ascribed to a to a DIO. So sorry I maybe I'm rambling here but you asked a question about how do we think about value. Yeah. So there is a framework but there's also a bias and the bias is to say if you own something really really good ftting about short-term valuation is likely not to be that constructive.
Yeah. And I do feel and I never wanted to go into this to kind of push on on on performance and stuff and I'm going to slightly reframe this question because it talks really talks about our own human biases is that you know anyone who's looking at at at this trust and they look at since you've owned it against the benchmark and it's done phenomenally well well there's been a short-term you know what I view as a short-term period which has really affected that those those numbers over five and 10 years.
But I want to ask this question really is that you know you you hold it for a long time. You got really low turnover and then that there is this sense of a human bias. How do you know when patience is still and you you kind of talked about this a little bit. I just want to dig into it a bit. How do you know when patience is still the right response and then when evidence is telling you that your original thesis is wrong?
How do you kind of tackle that? Because I think that I think that's for anyone, isn't it? That that's for you, for me, you know, we we all have our own biases, don't we? We do. We do. So individual examples I I I don't know how valuable it is to approach it from that perspective but let's just say okay so so so Relax which we've owned for a very long period of time and the shares at their worst earlier this year had h haveved from their peak and that's a massive bad outcome and a big surprise for us.
We weren't anticipating it and you know there's some soulsearching as you can imagine as a result but when you look at how Rellex business has performed over this period when the share price at its worst had h haveved the growth rate of the company if anything had accelerated. And listen, we've got to be humble enough to recognize when a share price does something like that, you you you've got to say, well, why?
And could we be wrong? And I don't know. I mean, we we could be wrong, but the share price is a signal, but it's not the whole signal. you you've also got to consider how the company is performing as a business and how the company is performing relative to its stated strategy aims. And I think in the case of Rellex, the company is at least meeting, if not exceeding our expectations for its development as as a business.
So I've never had an instance thought about about selling out of that selling out of that that asset. Um I think that if if at RLEX's next set of results the company says oh well um our growth rate has slowed and it's slowed because there's a new AI entrant and it's taken away 5% of our customer base.
Now that would also be very bad for the shares but that that that you would have to fundamentally reconsider. Um so so the drive the driver has got to be the the performance of the business. Sometimes it's experience. Um listen I I don't know how this goes down and I I don't know that it's right. I don't know that it's right, but I've sort of with clients amongst ourselves, we we we've said to ourselves, if you if you had to put 100% of your wealth, I know this is a complete, you know, fantasy, but if you had to put 100% of your wealth in one of two companies for the next 20 years, and you couldn't sell at any point over that 20-y year period, and the two companies were Nvidia or Diagio, which one of the two would you commit all of your wealth to on the 20-year view?
Now, no one's going to fortunately has to answer that question. And maybe the answer is to own both of them or neither of them. I don't know. But what you do know about Nvidia is that it is in a rapidly evolving technology and they've done extraordinarily well at riding the wave of that technology. But who knows?
[clears throat] Who knows? But then I I look at Diagio, which okay, has had I mean Dio's revenues are are disappointing, but it's not like they've collapsed or anything. I mean it's it's a tough time for the company but but what's the likelihood that Guinness and Johnny Walker and Tankare and Captain Morgan and Lagavulin what's the likelihood that they're still going to be being consumed probably in higher quantities in 20 years time?
I mean, I I don't know for sure, but it seems quite likely that there truly is a durability in those in those cash flows from that company. And I I put it this way, I think it's a more difficult question to answer than people might think looking at the very recent share price performances. Yeah. And I mean, the next two questions are you'll be glad to know.
I'm not totally pushing on that, but I I think for anyone listening, I I think I think you're absolutely spot on. It's very easy for us to look in and go, "Oh, well, you know, this is what you should have known or what you should have thought or what." But actually, I think throughout this, you know, I've I've come across somebody who's very passionate about what they do.
I think patience is a really difficult one to to decide because you know if you think about and I guess you know it again it's an unfair thing is like you know I I can't remember what the average holding was in the 50s but it was something like 7 and a half years nowadays the average holding period is something like less than 5 months now obviously in the 50s trading on a stock market was a lot more difficult than it is today but even So, you know, that that questions what our average attention span or what our our patience is as individuals.
You know, we we we flip and flop, don't we? And and I think this trust is not there to be one that chases returns. And I think that's where your skill comes into this. And there will be periods where perhaps it's it's out of favor. So I just want to kind of put that as a kind of for people listening to it is I think just bear that in mind.
I want to talk to you [clears throat] about investment trusts. So hopefully this is this is a way from from that side but Finsbury Growth and Income Trust is celebrating 100th anniversary in 2026 from a fund manager perspective and and obviously you have funds and you've got the investment trust. What does the investment trust structure allow you to do differently and how should investors think about things such as discounts and gearing?
I think the most important thing for for me and for us has been the the the semi eternal nature of the of the the assets the savings that we've been entrusted with us. that I mean, you know, the company does do buybacks. The company has issued shares in the past that makes it look a little bit more like an open-ended fund, but fundamentally people perceive it as an eternal pool of capital.
And that I think it just it's just encouraged us for good or for ill to invest with the patients that that that you've just referred to. And and you're you're right. It's it's I yeah, I think it's the longer that you're invested in an excellent business, the better your chances over time of of earning fantastic returns.
I you know I think again I have to be so humble in the current circumstances but I do I do think that for many investors they're they're thinking in terms of how do I make the next 30%. That's a perfectly valid way to think about investment. But I mean genuinely we're thinking about could we treble or quintuple our investment in these companies over a 5 7 10 year period.
That does happen more often than maybe people recognize if you are invested in a value creating company with a with a growth opportunity that so that's the effect that that that we're looking we're looking to capture. Maybe I don't want to get into gearing and and and discounts because I mean it just it varies for individual for individual and for individual company to individual company.
But I I I tell you what I what I do think is a very attractive characteristic of investment trusts in general is the combination of having a non-executive non-executive directors who have got a regulatory responsibility to generate the best possible returns for for shareholders who will be looking out on shareholders behalf on expense ratios who will be looking out for obvious incompetence um from their portfolio managers.
You've got someone on your side with the board of an investment trust arguably that you don't have with a wi with with with a fund. And you know there is the ultimate sanction like any publicly listed company a a very poorly performing poorly managed investment trust can be taken over and you know that that's that's a valuable that's a valuable sanction as well.
So So I you know I I'm not sure funds versus investment trusts I'm not sure it's a complete slam dunk because there are advantages to both but but those are what I would say for for for investment trusts. Yeah. and and this whole journey and and I I think it's it's been good for you going through the through this this conversation, but I've come out with so much that you sort of said and I think there's a lot in there that I've kind of taken and I think that last comment you just said about you know it's very easy at the moment is that if I bought Bitcoin Bitcoin 10 years ago I would have made a fortune and if I bought Nvidia I've never pronounced correctly.
But anyway, if I bought that, however many years, I would have made a fortune. And I think that's what people I I remember in the '9s is that on average your returns were probably double digit. Now, you could argue inflation was quite high, etc., but you were getting double digit returns. But then all of a sudden [clears throat] towards the end of the '9s, you could get 100% returns on on things.
And I think our mind goes, well, 10% isn't enough. No, we want 100%. And so I think when you were saying about that kind of 30% it's it's it's almost like thinking and talking about history and stuff like and learning. So coming on to this last question is that I think this is such an important one is that you're someone who has so much experience.
You've gone through so much. So many I mean 40 years of investing is incredible when you when you think about you know first investment I ever did was in 1987 when I bought M&G's UK recovery fund just before we had the crash in 1987 and then you know and then I've seen you know 2000 and I've seen 2008.
So, you've obviously lived it, you've breathed it, you've been in there. What do you believe about successful investing today that perhaps you didn't understand when you started? Or or maybe what you you know, maybe it's maybe maybe it's the same when you started as it is today. We maybe we just view it differently.
I mean, this this may be a reflection of the the business that I started out in, but a learning for me. And I I'm I don't sense that what I'm about to say is as relevant as it might have been in my mind 25 years ago, say, or 30 years ago. Uh I I would say a really really important learning still though is that the companies that you're invested in matter so much more than macroeconomics.
When I first started out, partly the company I was working for, but partly the whole investment discourse seemed to be about inflation and interest rates and the money supply and not about what the assets were, the actual assets that the companies that you were investing in, what they owned and what the prospects were for them.
And I mean that that was a big Buffett learning, you know, for for me. And I I guess I still think that I still think Yeah. the caliber of the franchise you're invested in matters much much more than you know you know I think it's ironic, isn't it, that the UK stock market has actually had I wish we' done better has had a reasonable run under a Labor government.
I mean, you know, you're told, oh, the polit the politics are going to be unhelpful, but but actually, except with the benefit of hindsight, it's very hard to pin moves in stock market on political particular political parties. I mean, it it somehow doesn't seem so so relevant. I guess this is a backward-looking comment and maybe it's my last comment.
um a backward looking comment is that probably you know I let's see how much longer I do I do it for I mean you know we we need to have some investment performance we really do but but I' I've been doing it a long time and probably probably there were six big ideas in the course of that 40 plus years and that that that's all it took six big industry or individual company ideas.
Now, there are other people probably more successful than me who've probably had 6,000 ideas over that period. I and I'm not saying that that's not a way to do it, but it it can be done with just a handful of big ideas. Um, yeah. Yeah. You know, do you know what? As I say and I said it, you know, as I was going through here, what you've come across to me is someone who's very humble.
I think you've talked very honestly. You've talked about patience. You you've been honest in the journey and you know, I would point people to that longerterm performance because it is phenomenal. And yes, you know, if you if you you know, you your humility coming through here about, you know, you you know the pain of that short-term perform underperformance and it's not like you're sitting there going, you know, it doesn't matter because actually it does and and you're invested in it as well.
So, I just want to say look, thank you. I obviously I don't want to push you too much on that side and I just want to thank you because I think you've been really really honest and and and I'm going to come away from this with lots and lots of learning from that. So yeah, I just want to say thank you and anyone who is listening to this to the Money Wide podcast for the first time or whether you're a regular listener, please do share it because I think this is a great one to share and it obviously helps us to get to a wider audience.
And I'll give a link to the the trust um but I'll also put a link to some of the some of the books that have been mentioned as well. And I I think learning is such an important part of any investment journey. So thank you so much Nick for for for yeah just being really really open on this. Well done George.
It did turn out to be a pleasure for me. You never know at the start but um anyway no I thank you. I've enjoyed talking and um yeah um good luck. Um, thank you. It's a very underrated component in investment success. You can be Yeah. Yeah. Luck is important as well. Anyway, thank thank you so much. Thank you.
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