HindeSight Investment #99 April 2023 - Newsletter - Read Here
HINDESIGHT DIVIDEND UK - PORTFOLIO #1 APRIL 2023
It’s that last Sunday of the month again when I have to try and collate my thoughts and put together the HindeSight letter, hoping that the intra-month note sending will give me some hope of a starting point. “What are we getting from your soapbox this time?”, an ex-colleague texted me this week. Think he is on a gifted subscription so I will cut him off when I get round to it! The HindeSight Letter is primarily an investment letter, but from “my soapbox”, I do often make observations that include current geopolitical advents with some historical comparatives, hopefully with some relevance to investment as well, of course.
From the size of my note library, April has been a relatively quiet month. The war in Ukraine drags on, though largely forgotten by the media. The crisis of regional bank failures in the US seem ongoing but ‘contained’ amid a waterlogged month for UK weather. Whether by self-experience or the history books, much of our recorded timeline give clear evidence of the cyclical nature, be it war, inflation, banking crises, political crises or calm periods. “Those who ignore history are doomed to repeat it” and all that.
I suppose that assumes people haven’t learnt from their own experience or benefited from history’s teachings rather than most people with limited experience and who haven’t read much history in the first place! You would have thought with the aging demographics in the world that it would be less so. I had lunch recently with an old friend visiting from the US, who is the treasurer of a large financial concern, at the ripe ‘old’ age of 64. When he was questioned by the board for his actions in pulling large multiple deposits from US regional banks during the month to avoid the obvious issues, he replied, “It’s not my first bank failure(rodeo)”. Of course, he should have been retired by now, not able to make those prescient decisions from the beach, but maybe there is hope after all. Understanding history’s cycles should allow us to realise that at the peaks and troughs, many events and situations will in time ‘mean revert’. We are clearly going through a low cycle point in quality and trust in politicians as a whole, admittedly quite a stretched low point in the UK, with both the incumbent Conservatives and the incoming Labour party, a disgraceful shamble of mediocre, at best. But, in time this will change for the better and history books may give them a brief mention from future obscurity. Although, of course, some events are tragically stable like the number of mass shootings in the US (more than four dead or injured) at almost two a day on average with change in gun controls still not happening. Difficult to understand for the rest of us that the US is classed as the home of the civilised world!
One of the prime drivers for the HindeSight UK equity model is understanding that the large capitalised companies in the FT350 indices go through cycles, much like the basic sine wave function. There are many metrics to measure that variance but one of the most simplistic, yet revealing is a measure of the company’s market capitalisation value versus the full capitalisation of the index.
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