Hedge Clippings | Friday, 19 March 2021

After all the concern about rising bond yields and the threat of inflation, Jerome Powell, the chairman of the US Federal Reserve announced after the FOMC meeting this week that the plan is to keep interest rates where that are (near zero if you hadn't noticed) for the next three years.

This was not unexpected, but to actually state this is where interest rates will be until 2024 is extraordinary. Once upon a time Central Banks adjusted interest rates in response to the economic conditions prevailing at the time, or about to occur. Now it seems Central Banks set policy, and the market, or economic conditions, adjust to policy.

So much for the "free market" and capitalism. It sounds more like the message we'd hear out of the Soviet system in previous days, or China more recently.

Unsurprisingly, Powell said the recovery to date is due to low rates and the billion$ being thrown at the recovery. Hence, he stated that policy will remain "accommodative" until his employment and inflation goals are met. Those goals being maximum employment and stable prices.

Of course, that may be where the Fed's controls begin to falter. Although he expects inflation to rise above 2% in the near term, he wants to maintain it at an average of 2% in the longer term. But recovery, massive stimulus and full employment don't sound like a recipe for no wage rises, and therefore no or very low inflation.

Powell may well be able to keep a lid on things in the near term, but the likelihood of the economy and market dancing to his tune in the longer term are less certain.

News & Insights

Video interview with Alex Lee from Laureola Advisors

Is this the global macro landmine no one is talking about? by FiftyOne Capital

Hedge Clippings | Friday, 12 March 2021

Hedge Clippings has successfully avoided taking legal action against others, and generally avoided others taking action in the other direction. There could be all sorts of reasons put forward for both options, but we'd like to think it is not just the fact that one needs deep pockets to go to court - or even to threaten, or be threatened with, going in that direction.

Part of it would seem to be plain self preservation. The old saying that the "thinner the ice, the faster one has to skate" probably comes into it as well. One would like to think that one's attitude to business, and other people's money in particular, helps to keep Hedge Clippings out of the sights of ASIC at least.

So where is this particular ramble heading? It would appear James Mawhinney of Mayfair 101's fame is in a different camp as it were, which has ended up in ASIC taking Mawhinney to court. For those not familiar with the case, ASIC has alleged that Mawhinney's Mayfair 101 was "not dissimilar to a Ponzi scheme" as the funds raised from investors in Australian Property Bonds, the last product Mayfair launched, were used to pay investors in other Mayfair products.

That certainly sounds like, or sniffs of, a Ponzi scheme to us.

However, amazingly ASIC's lawyer did not allege conscious (our emphasis) dishonesty by Mr Mawhinney, rather that "his conduct is indicative of serious irresponsibility and disregard for his legal obligations". Such conduct presumably being responsible for many of Mayfair's investors putting, and losing, their superannuation balances - and in some cases their life savings - into Mayfair products.

Mawhinney for his part is claiming ASIC's actions are the cause of the problem, and having taken out large advertisements at the time in the national press to entice (sorry, to advertise) his products, is now on a campaign to shift the blame. Hedge Clippings can recall some of those advertisements, and also commented on them at the time, basically to the effect that "if something sounds too good to be true, it probably is" or "a fool and their money are soon parted".

But back to the start: Some people avoid risk, and thin ice. Others are attracted to it either by design or personality. Most in the financial services industry take pride in their integrity and their responsibility to managing other people's money, and do so as they would their own.

Then unfortunately there are others (fortunately only a few) who take a different view: They see the opportunity in managing other people's money, but then manage it as if it was their own.

One should never say never, for fear of getting egg on one's face, but Hedge Clippings has always had reasonable antennae for that end of the market, and we have tried to avoid and generally succeeded in excluding such funds (including Mr Mawhinney's Mayfair 101 on www.fundmonitors.com). Experience (aka old age and grey hair) might have helped as well.

News & Insights

Video interview with Jonathan Wu from Premium China Funds Management

Video interview with Charlie Aitken from Aitken Investment Management

Video interview with Richard Ivers from Prime Value Asset Management

Six Key Reasons to Invest in a Managed Fund by APSEC Funds Management

The Case for Asian Equities by Australian Fund Monitors

Hedge Clippings | Friday, 05 March 2021

Over the past couple of months the spectre of the re-emergence of inflation has spooked bond markets, which in turn has rattled equity markets. Or should that be the other way around? Either way, inflation that was seemingly dead and buried has shown signs of life, in spite of, or maybe because of, COVID and the varying effects it is having on economies around the globe.

Locally in Australia the short sharp recession we experienced has been replaced by a bounce back that could be likened to a bungee jump - thanks to the multiple and contrasting levers of the lock down, government support & stimulation, early super withdrawals, and travel bans that leave Aussies, normally inveterate overseas travellers, nowhere to go but... here.

So an economy that should be struggling isn't, and some sectors (retail, electronics, home wares, etc.) have never had it so good. Domestic tourism, which was facing oblivion at the height of the pandemic, is booming. The housing market, which was facing predictions of a major correction 12 months ago, is at record levels, in spite of the absence of its normal drivers of immigration, and overseas buyers.

Meanwhile, the RBA is determined to keep interest rates low and the system awash with liquidity. All of the above is creating conflicting signals, hence no doubt why equity markets are nervous. There has not been a widespread sell off or correction (yet), as each dip is being hailed by some as a buying opportunity, with others remaining in the market for FOMO.

Based on February fund performances received so far, the early indications suggest it was a difficult month: These kinds of markets make it as hard for active managers as they do for the longer-term investor, but as always, some will rise above the crowd. This week we checked in with Dean Fergie from Cyan Investment Management to see how his fund, which targets the IPO, small and medium cap sectors, had travelled over the past 12 months, and what he sees in his crystal ball for the year ahead. You can watch the video here.

News & Insights

New Funds on Fundmonitors.com

Video interview with Dean Fergie from Cyan Investment Management

Should equity investors fear higher bond yields? by Ophir Asset Management

Why I don't think we're headed for a correction by Montgomery Investment Management

Hedge Clippings | Friday, 26 February 2021

Last week - and since the start of the year - Hedge Clippings has been referring to the spike in Bond yields, and the potential for inflation to break out. Overnight on Monday we noted US 10 Year yields touched 1.38%, and by last night they'd spiked higher to touch 1.6414%.

It's not so much that interest rates are higher, more that markets anticipate future events (excepting of course if they're a Black Swan). And 1.64% isn't high by historical standards. It's what it indicates: Inflation, seemingly dead in the water for so long and, in spite of Jerome Powell's testimony during the week, the potential for a change in policy from the Fed. And that causes fear of firstly a "taper tantrum" as the fed reduces QE and the era of free money, and in the bigger picture a sector shift (already occurring out of high growth, back to value) and an asset shift away from equities.

It is worth remembering that the estimated dividend yield of S&P500 companies is only 1.48%, so as Risk-On starts to be replaced with Risk-Off, and the tech stocks lose their attraction, that differential, although small, becomes critical to investors.

Last week we interviewed Michael Frazis from Frazis Capital Partners, who on the back of a return of over 100% in 2020, was not only rewarded for his commitment to growth, but remains committed to it.

This week we looked at the other side of the growth vs. value "argument" when talking to Rob Swift from Delft Partners, who looked both forward and back at markets over the past 50 years to put the opposing view. The interview can be viewed here. Meanwhile Hedge Clippings is happy to sit on the sidelines, partly as we still remember 50 years ago and beyond (even if we sometimes struggle to remember last week!), and partly as our businesses, both Australian Fund Monitors and OLIVIA123, are completely committed to technology and the new economy.

Last week we also took a swipe at Zuckerberg's bully boy tactics, before Facebook did an Aboutface and changed their minds and agreed to share content and revenue with Australian publishers. Somehow he tried to Saveface by claiming the Government had made concessions, but we're pretty sure he didn't help his image along the way. Fake News maybe?

Meanwhile if anyone is still confused by the way markets have operated since the GFC, and the resulting introduction of QE and loose policy, we dug up this clip from the archives of "And Now for Something Completely Different", which, for the majority of mere investors, as opposed to market economists, pretty much sums it all up. It's vintage Clarke and Dawe, and a sad reminder we're no longer able to enjoy John Clarke's unique take on administrivia.

News & Insights

New Funds on Fundmonitors.com

Video interview with Dr Andrew West from Longlead Capital Partners

Video interview with Robert Swift from Delft Partners

The Most Volatile 12 Months in the Last 10 Years - How Did Active ManagersFare? by Australian Fund Monitors

Bubble, bubble, toil, and no trouble! by Montgomery Investment Management

Hedge Clippings | Friday, 19 February 2021

Markets and the economy

Markets, both in Australia and overseas, touched new highs during the week - albeit the ASX has lagged its US counterparts - furthering fears of being in "Bubble" territory. By mid-week Australia's share market had closed above 6900 points for the first time since February last year, and Wall Street's main indexes hit all-time highs, with investors piling into economically sensitive stocks on hopes of more fiscal aid to lift the world's biggest economy from a coronavirus-driven slump.

And no wonder - optimism over the rollout of a vaccination, Biden's US$ 1.9T stimulus (plus more to come), and locally, The Reserve Bank of Australia (RBA) flagging the need for ongoing and "very significant" monetary support in the aftermath of the COVID-19 crisis. The RBA released the minutes from its February monetary policy meeting where it made the call to keep the cash rate at its record-low 0.1 per cent and extend its quantitative easing (QE) program by A$100 billion.

In Australia, payroll jobs have recovered to the same level as they were a year ago, according to the latest Australian Bureau of Statistics figures, which showed that in the last fortnight of January the number of payroll jobs increased by 1.3 per cent nationally -- with almost every industry benefiting. More from ABC news

Bubble or otherwise, the combination of government stimulus, central bank policy and a "recovery springboard" suggested that there is, or was, a way to go yet. Maybe economic activity will increase to such an extent it will catch up to market valuations - as long as valuations don't keep leaping ahead (which it seems they will) unless...

No sooner had markets made their new highs than Inflation - which recently had only been the remotest and faintest of clouds on the horizon - or at least investors' collective consciousness - came along to spoil the party.

Following the US market's closure on Monday in observance of President's Day, 10-year US treasury yields surged to a one year high. As we flagged previously in Hedge Clippings, and as detailed in Longview Economics' detailed research and reviews of Charles P. Kindleberger's book "Manias, Panics and Crashes", bubbles end when easy money disappears, and with it the prospect of credit tightening and higher interest rates.

There's still going to be an argument for investing in the market, and particularly the "new economy" tech sectors as detailed by Michael Frazis of Frazis Capital Partners in this video interview we recorded earlier this week. As Michael explains, his performance of 108% in 2020 was driven by being FULLY invested in the future, and he explains risk as NOT having exposure in these sectors or themes for the longer term.

Which argument will win the day is yet to be seen. 10- Year Bond rates hitting a 12 month high might sound alarming, but 30-Year yields at less than 2.1% don't seem high historically.

Leaving markets alone for a moment, the media, and particularly Facebook and News Limited, have been in the news (apologies for the pun), with Facebook incurring the wrath of the Australian Government, which made headlines around the world for daring to stand up to the social media giant's bullying tactics. Scomo now has a bit of history standing up to outside pressure, albeit from China, rather than a corporation that according to the AFR wants to scoop up Australian advertising revenue to the tune of $674 million in 2019, while minimising profits to under $23m and paying minimal tax of less than $17m, and not paying a cent for content. Hedge Clippings isn't a user (or necessarily a fan) of Facebook, but they're in a tough spot. Give in to Australia's pesky demands and they'll open the floodgates of having to pay for content elsewhere.

Still on the News theme, it appears Kevin Rudd believes News Limited's Sky News is biased against left leaning views (and we presume therefore Labor politicians). Funnily enough, we didn't notice him complaining about the other side of the house when it comes to the ABC's political coverage.

At the end of the day, we assume that most people consume the news they want to hear - or believe, biased or not. If we agree with the news, or view, we believe it to be correct. If we don't, then of course it must be biased - or in Donald's case, "Fake"!

China has a simpler answer to the problem:

China is cracking down further on online speech, with the Cyberspace Administration of China issuing a requirement that bloggers and influencers have a government-approved credential before they can publish on certain topics.

That's enough of Hedge Clipping's views for the week, noting that Bill Michael, the head honcho of KPMG in the UK recently lost his job for suggesting there was no such thing as "unconscious bias" (calling it complete cr*p) and telling his (now ex) employees to get a grip and take control of their own lives.... Watch the video here and make up your own (biased or otherwise) mind.

News & Insights

Video interview with Michael Frazis from Frazis Capital Partners

Video interview with Chris Wheldon from Magellan Asset Management

RATES OUTLOOK 2021 - Getting ahead of the year ahead by Nikko Asset Management

Hedge Clippings | Friday, 12 February 2021

Overnight the Dow reached new highs, while the broader S&P500 and the Nasdaq hovered close to theirs, with investors anticipating further US stimulus, and optimistic about the effects of vaccinations taking effect. In addition, the number of Americans seeking unemployment benefits fell slightly last week to 793,000, although job cuts remained high despite a substantial decline in new COVID infections.

Although the US economy isn't travelling as well as Australia's (see next paragraph), maybe they're the first indications of light at the end of the tunnel. Reuters report that employment at small and medium sized business are rising slightly, and traffic to retail stores is improving since last year... more

Meanwhile, in Australia it's a case of What Recession? This week we noticed: Consumer confidence reaches its second highest level in 7 years. Housing market confidence: those with a mortgage confidence at decade high levels. Job ads lift 6.5% YoY; Job Vacancies hit 19-month high, all as detailed in this article from Comsec via The Bull.

But beware: Longview Economics' latest "Longview on Friday" newsletter (Subscription Only) focuses on the strong evidence for an asset bubble in global financial markets, although warning that bubbles can go on much longer than expected. Longview note that four things create a bubble, while one thing ends them: Bubbles burst when cheap money is removed. Inflation (or a resurfacing of inflation) remains a wildcard risk to current liquidity and the supply of cheap money.

Hedge Clippings can't see the end of easy money anytime soon, even if locally there's an end in sight to Job-Keeper (for most it ended in September last year) and that 85% of households, presumably awash or semi awash with cash, are facing having their normal mortgage repayments resume. Meanwhile, in NSW every adult is eagerly awaiting $100 worth of "entertainment vouchers" from the State Government, presumably timed to arrive (in Hedge Clipping's case, thankfully) after the end of Feb Fast.

It's not a term to be found in many economics 101 textbooks, but generally Australia's economy seems to be going gangbusters. The only cloud on the horizon might be that increased competition for labour might boost wages and thus inflation - but that paradoxically is what all the economists (and the RBA) are hoping for.

January and 12-month Fund Performance:

As February and March 2020 were severely testing, there'll be plenty of managers (and investors) looking forward to seeing their 12-month numbers starting from April 2020. That's still a couple of months away, but in the meantime the ASX200 Total Return recorded a negative 3.11% in the 12 months to the end of January. By comparison, the average actively managed Equity Based fund returned +8.62%, with Long/Short funds topping that at +10.67%, closely followed by Equity Long at 9.76%. These two strategies comprise around 60% of AFM's database, and you can get the full breakdown here thanks to our current "Free Trial" offer.

Finally, in case you're missing your daily dose of "The Donald" in the news - who no doubt helped Twitter to post record revenues, growing by 28% to US $1.29 billion in the last quarter of 2020 in what the CEO understandably said was an "extraordinary year" - from the BBC comes this 12 minute video which looks behind the news at what actually happened, or spearheaded the attack on the US Capitol on January 6th. Scary stuff.

News & Insights

The pivotal fight between China and the US is over the Microchip by Magellan Asset Management

4D's 2021 Outlook by 4D Infrastructure

Hedge Clippings | Friday, 05 February 2021

If 2020 was the year of COVID-19, then what will 2021 be remembered for?

If we are being optimistic there are a number of suggestions: Possibly the year of recovery? Given both the market and sections of the economy have recovered strongly, that's more than likely.

Or perhaps the year of vaccination? Very possibly, although it's unlikely (at least for most Australians) that it will be the year of unrestrained international travel.

Maybe, based on the gyrations and manipulation of various stocks caught in a so-called "short squeeze", it will become the year when small investors, enabled and encouraged courtesy of the use of social media and online apps, flexed their collective financial muscle against the big end of town, and in particular, hedge funds.

Except that no sooner had GameStop become a Game Changer than it looked like it is, or was, Game Over for those unfortunate retail punters (sorry, investors) who bought at the top, only to see their investment halve overnight, in a kind of financial game of musical chairs, or pass the parcel. Apart from the old age law that bubbles burst, or that balloons must eventually come down to the ground, according to the SMH the OECD is reported to be planning to rein in the retail frenzy. Which is good, as it will hopefully save at least a few inexperienced day traders. And those punters losing their government funded no fee broking account balances.

Hedge Clippings is not against the retail punter, nor are we against hedge funds who short poorly managed companies or those with yesterday's business models. Or, if it comes to that, heavy government regulation. We're not against free brokerage either, although we're a strong believer in the old adage that there's no such thing as a free lunch even though we've enjoyed a few long ones (in years gone past). If something's free, or too good to be true, there's normally a catch somewhere. A free broker selling information about their clients' collective order book to a hedge fund pays for the free trade deal, and thus tears before bedtime was the inevitable result.

There's a place for risk taking in a free market (although last week's fun and games could probably have taken place at the track, or casino, had it not been for social distancing rules) just as there are legitimate and sound reason for short selling. But we don't like market manipulation, be it artificially driving up a company's share price, or, as some of the more activist hedge funds do, intentionally driving it down in the first place. Could the extreme short squeeze happen again? Yes, provided the system allows for over 100% of a company's stock to be sold short (in GameStop's case this was over 140%). Or could it happen in Australia? Less likely for a couple of reasons, including a limit on the amount of short interest allowed.

There are those who would like to see short selling banned full stop. But that's an emotional view, not a practical one in our view. Shorting was developed as a way of reducing risk, although many now view it as risk taking. Shorting allows investors to have an opposing view, and when applied correctly can lead to fraudulent companies (remember Enron?) being found out. And if you ban shorting, do you also ban (or at least kill) option trading, as when an investor opens an option position it will generally lead to the option market maker hedging the other side of the trade, including depending on their position by having to buy, or short, physical stock.

Risk taking is an essential part of the market. Having both buyers and sellers allows the market to operate. Manipulation - either way - is not, hence the need for a sound regulatory framework, or playing field. Only allowing the game to be played at one end of the field is not the answer, irrespective of the fact that it's the little guy, or the big end of town, on the receiving end.

Finally, back to what 2021 might be remembered for? Hedge Clippings has noticed a significant change in the way crypto currencies are being viewed - and in the level of interest being taken in them from all levels of investors. A research report this week estimated that 1 in 4 Australians had traded a crypto currency, which in spite of the level of interest, seemed to be a high conversion rate of "lookers to bookers". No doubt driven by wild price moves, Bitcoin seems to take the limelight (including advertising on the side of a bus), but there's much more to crypto currencies than just Bitcoin. Going forward we'll investigate and provide an informed view from those who know and understand more about it than we do.
 

Closer to home at AFM, 2021 marks the launch of our new and updated www.fundmonitors.com website, and to mark the event we have thrown open access to our database to offer a free "no obligation" trial. Simply click here to take up the offer. Hang on, did we say there's no such thing as a free lunch? In this case there is, but not forever. We hope you'll try it, and in time you might just subscribe.

And if you don't like it, tell us. If you do, tell your friends and colleagues.

News & Insights

GameStop by Frazis Capital Partners

Making Sense of Nonsense by Delft Partners

Hedge Clippings | Friday, 29 January 2021

Deja Vu (all over again!)

There's been increasing chatter and comment regarding an impending bursting of the global equities bubble - and who knows, this week may have seen the first glimpses of such an event. However, the difficulties of actually picking the timing of the top of the market (or the bottom for that matter, although that's arguably easier as values become compelling) make it a dangerous exercise in practice.

Hedge Clippings has no doubt that there's plenty of froth around, as evidenced by the listing of over 272 SPAC (Special Purpose Acquisition Companies) which have raised US$88 billion since August 2018... of which 193 with $63 billion are still searching for a target... and with 219 raising US$73 billion in 2020 alone. Equally, valuations are indeed stretched by historical standards, albeit in large part by minimal or zero level interest rates.

There are plenty of fund managers who believe there's still value, and upside, to be had in some of the market darlings of 2020 such as Tesla and Afterpay, which are expected to represent the new economy of the future, and which have lifted fund returns accordingly. Just to make sure there's a market, plenty of other managers, who probably found 2020 more of a struggle, back the warnings of a bubble, and the potential for it to burst:

Consider this headline from the Sydney Morning Herald, as it was announced this week that the median price for a house in Sydney rose to over $1.2 million: "Australia is in one of the worst housing bubbles we have ever seen." Probably a correct call - but the timing wasn't that great, given the headline was dated 27 March 2015 - almost 6 years ago.

Or this piece from Kenneth Rogoff, Professor of Economics and Public Policy at Harvard University, and recipient of the 2011 Deutsche Bank Prize in Financial Economics: "How should one understand the disconnect between the new highs reached by global equity indices..." Quite correct, except that was published on 9th March 2015, again almost 6 years ago.

Which supports the old dealing room adage "right trade, wrong timing, equals a bad trade".

So are we seeing another example? (or as Rex "Moose" Mossop, ex Australian Rugby Union and Rugby League international once was quoted as saying, "deja vu, all over again") What is clear is that all the signs are there, except it would seem, the imminent prospect of higher interest rates to pop the bubble.

And we're certainly closer to the end of the dance than the beginning.

For those not familiar with Rex Mossop, or those who are but would like to rewind to some of his more classic on air bloopers, here's a link to news coverage of his passing in 2011. Our favourite would be his objection to nudists at his local beach on Sydney's genteel North Shore.

News & Insights

Regulation, Rates and Inflation - Risks to Watch in 2021? by Platinum Asset Management

Hedge Clippings | Friday, 22 January 2021

Bubble, Bubble, Toil and Trouble...

So the Donald has finally gone - or at least has left the White House - and thus a new era begins. History will judge both the man and his presidency, but he was, if nothing else, a paradox: Immensely divisive, yet at the same time he managed to unite those who believed him and his rhetoric as few others have been able to do.

Arnold Schwarzenegger compared his antics to those of Nazi Germany's Kristallnacht (or Night of Broken Glass) and maybe that provides an indication of his similarity with another with the same ability to unite, and divide, so comprehensively.

And so on to Joe Biden's term - the 46th President of the United States of America - however long that lasts at a time when "united" is hardly an apt description. In many ways his legacy will not only be how he manages to handle the medical crisis the USA faces, or the trillions poured into revitalising the COVID ravaged economy, but in how he manages to put the United back in to the States.

Sadly there are some Trump supporters who will never be a party to the unification, irrespective of how well Biden manages the health of the nation, or the economy.

Looking Forward, Looking Back

At this time of the year it is customary for Hedge Clippings to look back over the year just past, and forward to the next 12 months. Actually 11 months, as that's almost all that's left of 2021.

Looking back, it was a year that most will want to, but are unlikely to forget. At the same time as creating unforeseen challenges, there were undoubted winners, with actively managed funds being amongst them. While the ASX200 Accumulation Index did well to recover from the collapse of the market in February and March to close out the year just in the black, 1.40%, the average equity based fund in AFM's index returned just over 10% after all fees.

Full details are available here. We could spend significant time and space listing others who we would categorise as being on the positive side of the ledger, but Australia as a whole, thanks to some geographic good luck and swift action at nearly all levels of government, with the occasional hiccup, certainly did better than most in handling COVID.

Looking back is easy, so what about the future? There are warnings of an asset bubble, thanks to interest rates that are effectively zero, and the massive stimulation provided by governments the world over. Seeing as neither of these are going to change for the next 12-36 months at least, bursting the bubble is unlikely in the immediate future.

However, eventually inflation must rear its ugly head again, and as the era of easy money comes to an end that's when things will become interesting. Bubbles can't continue forever, and as we saw with the South Sea Bubble, 1929, 1987, the tech bubble of 1999, or the GFC, they normally end in tears.

The issue is the timing. Exit too early, and one is likely to miss out. Too late, and watch out. Diversification and keeping correlation between assets (including between funds) low should enable the middle "Goldilocks" course of not too much exposure to risk, and not too little to be navigated.

News & Insights

Video interview with Rob Hay from Collins St Asset Management

ESG Insights: Banks are putting the squeeze on fossil fuels by Nikko Asset Management

Hedge Clippings | Friday, 15 January 2021

Happy New Year, and welcome back to Hedge Clippings for 2021. Although it is still in that traditionally quiet time between Christmas and Australia Day, we hope you will excuse a briefer than usual commentary. You might even enjoy a briefer than usual commentary, but that would be a cruel comment this early in the New Year.

Whilst the world has been in turmoil since the last edition of Hedge Clippings, yours truly has been in slow motion, to say the least. A planned Christmas Day on the Northern Beaches was disrupted by the Avalon cluster, and planned visits to the beach or the golf course were disrupted by incessant rain. This left little choice but to watch in dismay at the antics of Trump and his supporters, and attempts by Boris to put a positive spin on the U.K.'s efforts to handle COVID.
 

It is difficult to use the words riveting or fascinating when describing either of the above, but at least the remote control allowed both to be switched off, with Twitter and Facebook each doing the honours as far as Donald's online exposure was concerned.
 

As such, plenty of time was spent reading. We can recommend Matthew Syed's "Black Box Thinking" (available as an audiobook), or for a different pace and a different era, the story of Edward John Eyre, the first European to traverse the coastline of the Great Australian Bight and the Nullarbor Plain by land in 1840-1841. Whilst Eyre's name is well known for his exploits in Australia, what is less well known is that in 1846 he was appointed Lieutenant Governor of New Zealand, and in 1861 he became acting governor of Jamaica. It's amazing how much time one has to discover such things when not engrossed in managed funds.
 

Speaking of which, fund managers have a challenging year ahead, both economically, politically, and navigating a market which some believe to be in extreme bubble territory. From a price perspective that may well be. However relative to interest rates at zero, and the guarantee of trillions of dollars of government support globally distorting the normal economic indicators, there are those that believe the party is likely to continue for a while yet.
 

One caveat to that may be the emergence, or re-emergence, of inflation as a reaction to rising interest rates as an antidote to easy money.
 

More than ever before 2020 will go down as a year of two halves, or possibly quarters, and not only based on COVID and economic activity. Managed funds will be divided into those that made the most of opportunities in 2020 and significantly outperformed market indices, and those that failed to do so. We will include more details and examples of these in future editions of hedge clippings, so "stay tuned" as they say.
 

It won't be the last time that we mention "there has never been a more important time for investors to be fully informed".