Under the sign of the Bear, these are good days for plastic bags and crusty uncles
CHRISTOPHER FILDES
Taurus the Bull sinks below the horizon and we must all adjust to life under the sign of Ursa Major, the Great Bear. It takes some doing. Some people in markets have never seen this sign before, and thought that it was just a bogeyman invented by their crusty uncles. They preferred to believe in the new economy and the new paradigm, which have gone the way of market fashions and are now the old hat. When OXL, the internet stock, climbed above £8, one of them tipped it to go to £13. It is now back to 8p and he has moved on. In his world, black plastic bags are in demand. You can see why Michael Cowan, who brought them to Britain, made a fortune, which he is now hying to defend in the divorce courts. City bonuses this winter broke records, some of the money spilled out into houses located within reach of the money factories, and prices, which seemed to be cooling down, took off again. I could find you a stucco villa with a swimming pool for £30 million, but do not hurry. If the bonuses do not come back, I am not sure that the buyers will. When the stock market broke in the 1980s (a crusty uncle writes) the house market broke too, but a year and a half later. That would give London house prices six more months. At that, they will have outperformed the euro, which was a bear market from the word go. Having lost a quarter of its value, it then bounced, but is now alleged, I promise you, to be suffering from foot-andmouth disease. To me it looks more like a case of Dead Cat Syndrome — meaning that when a cat falls off a tower block and hits the pavement, it may bounce, but it may not have been restored to life.
Reduce exposure
ONE blue-chip stock which may now be drifting is that of Alan Greenspan, hitherto revered as chairman of the United States Federal Reserve Board. 'We believe,' writes James Grant in his Interest Rate Observer, 'that the chairman has entered his own personal downtrend.' I should add that Mr Grant has a short position in this stock. Cutting interest rates again this week, Mr Greenspan could not calm the market, let alone save the world — a power with which he was, until recently, credited. One reason for the 'irrational exuberance' of which he complained when the market was soaring was the irrational belief that, if anything went wrong, he would always be there to put it right. Closer to home. Gordon Brown's stock is worth watching. Puffed as a solid (not to say prudent) investment, it may have peaked on Budget Day. Reduce exposure.
Boredom is better
BEAR markets have their winners, too. Cash is one. 'Cash is the best fire-break,' I wrote here ten months ago, 'keep close to it now.' It is not yet scarce, but it may be, especially if companies or even banks run out of it. Bright ideas will then be no substitute for it. Boring ideas may. If greed was good, boredom is better. Warren Buffett, who raised boring investment to an artform, has been buying shares in paint and carpets. Control your excitement, he says. Bonds are less exciting than shares. They just pay dividends. Gold has for years now been less exciting than bonds, though more people are buying more gold than ever. Only the Bank of England has to sell. Crusty uncles pass the tedium test and so, by definition, do stopped clocks. I was checking the time with one of them, who pointed out that as a matter of statistics, a stopped clock is more likely to be right than a clock which is a quarter of an hour slow.
All our fault
A DISSATISFIED investor claims to have kidnapped the mortal remains of Enrico Cuccia, for so many years the spider in Italy's web of finance. They will be returned, so the ransom note says, when the Milan stock market index next reaches 50,000. It is now below 38,000, having lost a quarter of its value in a year, and the investor is fed up. He must think that the old boy can rig the market from beyond the grave. We are all of us apt to complain of a swindle when our shares go down, thought not, of course, when they go up. If the index has not recovered by the year-end, this investor threatens to strike out against financial experts and journalists, who, he says, have contributed to his ruin. Mi dispiace, signor.
No cheques, please
I AM sure there has been some misunderstanding. Either the accounts of Hollis Industries are wrong or Geoffrey Robinson is wrong, so it must be the accounts. They say that he was paid £200,000 a year as chairman, but somebody might have written that in as a joke, rather like Auberon Waugh when he altered George Gale's name to Lunchtime O'Gale in the contents page of The Spectator. It is true that Mr Robinson signed the accounts, but he could not be expected to read every line, let alone the line about what he was paid. So there was nothing for him to declare, to the House of Commons, the Department of Trade's inspectors or anyone else. Now that pesky fellow Tom Bower has turned up papers from Robert Maxwell's empire (Hollis was a province) which could be construed as an invoice for £200,000 and as an order to pay it. Perhaps this, too, was a spoof, or perhaps the cheque bounced and Mr Robinson wrote it all off to experience, which must have been helpful when he became Paymaster-General and signed the government's cheques. Or perhaps his denial is modelled on President Clinton's: I did not have cheques with that man. Read all about it in the New Statesman (publisher and proprietor, G. Robinson).
Must fly
LUNCHING in Lombard Street, I was dismayed to find my fellow City scribes suddenly taking off like a flock of starlings. They would not wait for the coffee, let alone for the prospect of port and cigars. Now that their papers have abandoned their offices in Fleet Street and the City, they all had long journeys to make to distant destinations, east, west and south. It is as though they were missing their latchkeys, and were forced to look for them under the streetlamps of Poplar or Kensington, rather than in the place where they had been dropped and might be found. Not sharing their disadvantage, I accepted another glass of claret and sat tight.
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