(Thanks to Charlie Morris of ByteTree Research for this chart sourced from Bloomberg).

Some of us prefer to skirt the theological debates and approach the subject of gold with a pragmatic perspective. We like to own gold when the times suggest we need the qualities that gold brings and not to own it (or quite so much of it) at times when we do not.

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The 21st century has so far proved to be a golden age for gold. Assuming you think that price is the appropriate measure, between 1999 and 2002 the UK’s Chancellor of the Exchequer famously sold a big chunk of the country’s gold reserves at an average price of $275/oz. The price today is $4,300 an ounce, or more than 15 times higher, an opportunity cost of $50bn, give or take a dollar or two.

The gold price has been higher of course, touching an all-time high of $5,300 at the end of January this year. The subsequent sell-off saw the price drop to around $4,000. Since then it has rallied by around 15%. Some say that what we have witnessed is the end of a hugely speculative bubble, driven by a lot of dumb money moronically chasing higher prices at the tail end of a purely momentum-driven cycle.

Others are still predicting that the price is on course to reach $5,000, $10,000 or some even higher figure beyond that (if you are a “true believer” it sometimes seems that there is no price high enough to justify selling). Whether or not you have been on board with the bull market of the last 25 years, the issue of which school of thought is directionally correct could not be of more importance.

I know which side I am on. You don’t need to be a small government libertarian to worry about the current state of the world. Over-indebted governments on a scale never before seen in peacetime; persistent above target rates of inflation in many developed economies; a series of ongoing geopolitical conflicts that threaten the international postwar settlement; the loss of the Cold War peace dividend and demographic pressures that are triggering unprecedented cross-border migration and political polarisation - these are all conditions that work in gold’s favour.

At a time when most governments are struggling to control their public finances, rising bond yields (both nominal and real) are clearly signalling that financial risks are rising. While higher real interest rates are traditionally a headwind for gold, other things being equal, that negative is not enough to offset the greater number of positives on the other side of the trade (and that is before you start to factor in the erratic and costly misadventures of the current American President).

George Bernard Shaw, although a socialist, had this to say about gold 98 years ago, shortly after Britain was forced off the Gold Standard: “You have to choose between the natural stability of gold and the honesty and intelligence of members of the government. And, with due respect to these gentlemen, I advise you, as long as the capitalist system lasts, to vote for gold”.

Is the capitalist system going to last? Well, it is certainly facing some significant challenges, but its demise is not quite imminent, I would venture. But even if it is, that is not necessarily an argument for abandoning gold. It may be no coincidence that some of the most important buyers of gold recently have been central banks of authoritatarian regimes, and China in particular. Gold’s popularity transcends ideological differences.

In my view it seems pretty clear that are the decline in the price of gold this year is just a correction to an ongoing bull market that over-extended short term. 2025 was gold’s best performing year since 1979 and it was inevitable that it would become overbought at some point. That is the way of things in markets.

The reason that gold is unpopular with practitioners of academic finance is that it is impossible to value with conventional discounted cash flow techniques. But just because something cannot be valued to two significant places does not mean that it has no value. The arguments for holding gold have been known for centuries and, looking at the state of the world and the price of conventional assets, have rarely been stronger than they are today.

Yes, it is true that there must be a price at which gold will no longer go on rising in price. Back in 1980, when gold peaked after an exponential rise to $850/oz, one market commentator cutely observed that “the market seems to be pricing in World War Eight”. It turned out then that the market had been rigged, but that is not the case today - at least not yet.

The reality is that the world’s most developed economies are on a path to financial repression, the suppression of interest rates for debt mitigation reasons, which is negative for the dollar and inflation, toxic for bonds, but still net positive for gold (and periodically perhaps, bitcoin). It is hard to see that fundamental backcloth changing any time soon.

As to whether you should own bullion, or more highly geared and riskier gold mining companies, the simplest answer is both, depending on your tolerance for volatility. Needless to say, this is just my view. It is not investment advice. DYOR etc*. But one way or another, you do need to have a view on the “barbarous relic”.

• Do Your Own Research.

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From an economic perspective his well-defined personality and ability to communicate effectively are not trivial characteristics. Sentiment can play a part in stimulating both political futures and economic activity and the contrast with the dreariness and gloomy rhetoric of the Starmer/Reeves government could not be more marked, nor more overdue.

Whether the little we yet know about his plans for government add up to much is another matter. There is nothing wrong with trying to ease the daily pressure of living costs for worthy working people - which has been his stated priority so far (VAT off electricity bills, a bus ticket price cap, help for pubs) - but doing so without having a credible strategy for creating a more sustainable economic future risks becoming just an exercise in futility.

Futility has been the constant theme running through the decisions make by Starmer and Reeves in their two years at the helm of the British economy. It is one thing having economic growth as a priority, quite another to then make a series of decisions that directly stand in the way of that growth being achieved, which has been in essence the story of the faltering Starmer interlude. Futility also marked the latter stages of the Tory government that preceded it.

Burnham might talk about having ten-year plan but one of the constant themes of the past 20 years of British governments has been a chronic inability to live up to the challenge posed by addressing the endemic problems of the British economy - inherently inflationary, import-dependent, grotesquely centralised, lacking modern infrastructure and chronically underskilled.

To quote the always excellent Janan Ganesh in the Financial Times:

Britain has not balanced its fiscal budget since the millennium. It was still running a deficit on the eve of the banking crash in 2008, after a decade and a half of uninterrupted economic growth. Each region runs a deficit save London and the South East. The welfare state takes up more of national output than it did pre-Thatcher. The UK borrows more expensively than Greece. It has proportionally more social housing than France or Germany. The tax burden is up. According to the “baseline” scenario of the UK fiscal watchdog, public sector net debt will touch 300 per cent of GDP in the 2070s.

The tragedy is that the problems we face - and indeed the solutions we need - have been analysed to death. Diagnosis is the easy part. What we need is a coherent and rational strategy for reversing years of relative decline and then a real push to focus on long term delivery rather than short term fixes, however politically awkward implementing the tougher decisions might be.

Will Andy Burnham be able to do that? Pitching his programme as an explicit antidote to everything that Margaret Thatcher was about is not a great start. She certainly made some big mistakes - centralising most decisions towards Whitehall, failing to replace the council houses she sold off, underfunding the Health Service and stubbornly pursuing the poll tax in the face of all sensible advice.

Yet these errors were more than made up for by her laser-like focus on improving the competitiveness of the British economy, curbing the obstructive powers of the trade unions, investing in roads and hospitals and cutting taxes to incentivise wealth-creating entrepreneurs. The Falklands victory and the mixed blessing of North Sea oil gave her the momentum to carry out a radical agenda that was most definitely needed after the misery of the 1970s oil crisis years.

As many pundits have already noted, Andy Burnham has made an explicit rhetorical target of reversing Thatcherism and rejecting Blairite neoliberalism, an essentially nostalgic backward look at the perceived achievements of long ago Labour governments. Even if he can put flesh on that rhetoric, such a programme seems destined to fall short in what has become a vastly different, more complex and multipolar world.

And the central challenge of how to pay for all these worthy sounding objectives without raising taxes or frightening the bond markets remains. No government is going to make much progress without a coherent plan to streamline public spending and reverse the alarmingly persistent increase in public sector debt the country has allowed since the global financial crisis, while simultaneously creating the conditions for higher rates of economic growth.

All too often in recent years analysts have concluded that “we wouldn't start from here” when discussing the future of the UK. But start somewhere with the biggest issues - feeble productivity, the demographic time bomb, the need for higher defence spending, reform of the bloated public sector and a welfare dependency crisis - we must.

Can Burnham rise to the level of events? The fair-minded will say “give him a chance”. But, unhappy though the prospect may be, the likelihood is that it will take an economic crisis, not simply a new government leader with a warmer personality and improved communication skills, to produce the necessary reset. That is certainly the lesson of our postwar history.

Source: Sharescope 29th April 2026. Note this is a log scale. The blue line is PCT'‘s share price over 10 years, the black line UK CPI, the red line a UK all-gilts fund and the second line the FTSE All-World index.

Ben Rogoff, the fast talking manager of the Polar Capital Technology Trust (ticker: PCT), whose share price has doubled in the last year, and risen tenfold over ten years (see the chart above), is in top form in our next forthcoming podcast as he explains:

• why he has gone all in on AI as a theme in his fund;

• how agentic AI has finally arrived (ahead of schedule);

• why in his view AI valuations are rich but still not extreme;

• His thoughts on Open AI, Anthropic and the (not quite so) Mag Seven.

He reiterates that the key to making investors money in this tech cycle is moving fast and dodging the losers as much as finding the winners in a turbulent and volatile market where this week’s favourite (software anyone?) can be next week’s dog.

Listen out too for the just released podcast episode in which Steven Marshall, the founder and manager of the £870m market cap Cordiant Digital Infrastructure investment trust (ticker: CORD) is:

• quietly building up a portfolio of mobile towers, data centres and fibre optic networks in some of Europe’s fastest growing economies;

• clocking up consistent double digit annualised returns from above inflation contracts to provide what he calls “the plumbing” of the Internet and now AI;

• regularly buying more shares to add to is existing £15m personal investment, but;

• remaining frustrated by the persistent (but narrowing) discount at which the shares of the trust are trading, restricting his scope for new investment.

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All our podcast episodes are free and available on every leading podcast channel, but subscribers to the Money Makers newsletter (£120 per annum) can also access other valuable content, including:

• Financial historian Edward Chancellor weighs in with his take on the importance of avoiding the losers as the AI arms race between the hyperscalers and big tech companies intensifies;

• We have added four more of our independent in-depth profiles of London-listed investment trusts - J.P.Morgan Claverhouse (JCH), TwentyFour Income Fund (TFIF), Patria Private Equity (PPET) and Blackrock American Income (BRAI);

• My colleague Stuart Watson takes a deep dive into two current themes in the investment trust world - the persistent wide discounts on renewable energy trusts and the growing adoption of enhanced dividend policies (that seem to work in practice, but not in theory);

• See all the slides from my recent presentation with fund manager Peter Hewitt at the Master Investor show in London (the recording is available on our podcast channel too);

• Subscribers also receive our regular comprehensive summary of all the most important news, results and performance data from the previous week’s trading in the investment trust sector.

To find your way to the podcasts, or to trial a subscription to the Money Makers newsletter, why not visit money-makers.co? 1

The annual Master Investor Show, a must go daylong event hosted by hedge fund investor Jim Mellon, is taking place this Saturday (April 25th) at the Business Design Centre in Islington in London. I will be one of the speakers looking to provide independent (and hopefully sensible) answers to some of the questions high on investors’ minds.

I will be joined onstage for this Q and A session by my friend Peter Hewitt, a recently retired investment trust fund manager who has almost as many years of experience under his belt as I do (75 years or so between us ). More importantly, we have no axe to grind and no conflicts of interest to deter us from attempting to answer straight questions with straight answers, where we have them…..

The session will be recorded and later released as a special edition of the weekly Money Makers podcast. We will be answering questions such as these:

• How to invest sensibly in the age of Trump?

• Have we changed our portfolios since the Iran War started?

• What have we been buying so far this year (and why)?

• What have we been selling (and why)?

• Do we own gold - and if so how much and for what purpose?

Turning to investment trusts, the UK listed funds that are our speciality:

• Has activist Saba Capital been a force for good or not? What will they do next?

• Do investment trusts have a viable long term future?

• If so which trusts are most likely to survive or fail?

• Which investment trusts have managed their discounts well (or badly)?

• Any special situations that look interesting at present?

There are lots of other excellent speakers, including Jim Mellon himself, who was in cracking form last year. You can find more about the event from this link and the list of speakers here. To obtain a free ticket simply use the code MONEYMAKERS when prompted.

With a little while to prepare, I looked for inspiration to an anthology of eulogies that someone had recommended to me - and what an inspiration it proved to be. The book is called Well Remembered Friends, edited and compiled by an English novelist and poet called Angela Huth, and published in 2004 by John Murray.

The good news is that there is nothing morbid about eulogies. There are 110 in this collection, each one only a few pages long, and most of the speakers were as keen to emphasise the joy that their subjects had given them as they were to reflect the sadness of having lost them. What distinguishes a eulogy from an obituary, Huth notes, is that they are written by someone who has known the dead person well and are, by their nature, emotionally charged.

That can make them difficult to pull off, as eulogies are delivered in front of many others who knew the subject well and have to strike a delicate balance between being both truthful and admiring. Or, as she puts it:

Hard choices of what to include and what to leave out must be made, cliches must be avoided. While foibles can be alluded to in the name of honesty, difficulty lies in listing the character’s many virtues without making him or her sound too saintly. Then there is the question of tone; should there be jokes, for instance? If they are relevant and serve to illuminate some part of the dead person, most people feel they should.

She quotes John Sparrow, the former Warden of All Soul’s College, Oxford, from his eulogy to the writer and historian Harold Nicolson:

Time assuages our grief in terms of wrong way, by teaching us to forget. The better way is by remembering. For if we can soon up an image of the friend we have lost and keep that image undimmed before the mind’s eye, then we shall not have lost him altogether. That, I take it, is the purpose or one of the purposes of a memorial service.

The subjects included in the anthology are mostly well known figures from many different spheres of life. The first is Winston Churchill’s tribute to Neville Chamberlain, the man he replaced as Prime Minister in 1940 (now that was a tough gig!). But there are also actors, writers, artists, comedians, sportsmen, politicians and designers (Hardy Amies is one of a handful who feature twice), as well as some less well known names of those who died young or prematurely.

The eulogists cover an equally broad spectrum of mostly well known names, from Alan Bennett to John Major and Alec Guinness, from Seamus Heaney to Martin Amis and Isiah Berlin. Some of them are obviously more uplifting than others, but what you get are some lovely words as well as jokes and heartfelt, sometimes heartbreaking, tributes.

As a eulogy only runs to a few hundred words in most cases, this is a perfect book to dip into and I defy you not to be heartened by the experience. It is a great source of anecdotes as well, if those are your thing. I liked this phrase from the eulogy given by the journalist and popular historian of espionage Ben Macintyre at the funeral of his schoolteacher father, who, he recalled, “insisted on keeping an open mind, an open door and an open bottle for whoever might chance along”. He goes on:

Watching my father dance Highland reels was an unforgettable sight. Arms akimbo, and emitting strange whooping noises, he could whirl his partner around with great panache, graceful courtesy and studied incompetence. In fact, my father knew only too well how to dance these complicated jigs, which can leave the unwary feeling hopelessly humiliated and in mortal danger, but it was part of his style to feign ineptitude in order to make his invariably nervous partner feel more confident.

Doesn’t this make you feel you know this man? And doesn’t it restore just a little faith in humanity, at a time when so much of the world’s news is quite bleak? Although it is by its nature a chronicle of death, Well Remembered Friends is an uplifting read and for that reason, as well as its manageable chapter lengths, a welcome addition to your bedside book collection.

A few years ago I wrote a chapter about him in my first book Money Makers, a series of detailed profiles of some prominent professional investors. I updated it for the second edition 13 years ago by which time he was close to retiring.

Of course we know a lot more about emerging markets investment today than we did when John Templeton persuaded him to help launch the first diversified emerging markets funds back in the 1980s, with many spills and thrills along the way. It has been an extraordinary growth phenomenon for which Mobius can take a lot of the early credit.

Here is a pdf of the chapter.

It might seem a curious way to praise a book by calling it a sleep assistant, but the requirements of late night reading are different from normal daytime or evening ones. My next nomination in this series, the battered, much thumbed paperback you can see here, is the work of the British humourist and biographer Craig Brown and it really is a perfect book to dip into pre-sleep.

The idea behind One on One is to chronicle unlikely meetings that have taken place in the past between famous people from different walks of life. Each of these meetings is described in a short two or three page segment. One of the two participants then appears in the next segment as well, this time meeting with someone equally interesting or unlikely.

Thus we move from the day that Marilyn Monroe met the Russian leader Khrushchev in Hollywood to the day that Khrushchev ended up in a shouting match with a notorious drunk, the British Labour politician George Brown. Other improbable meetings include those between Nancy Reagan and Andy Warhol, Igor Stravinsky and Walt Disney, Sigmund Freud and Gustav Mahler, Tsar Nicholas II and Harry Houdini, the escapologist.

There are 101 such episodes in total, each one of them written to be precisely 1001 words long (this conceit, it is only fair to say, is a rather pointless bit of showing off by the author). Many of the meetings are simply curiosities, while others can claim some historical significance, like the occasion when a young Hitler was nearly run over. All are related with humour and a keen eye for a telling anecdote or detail.

This is very much designed to be a fun book, full of moments, rather than a scholarly tome - exactly the kind of lightweight soothing material that a tiring late night reader needs.

Here is a footnote from a segment about the day that the Royal Family were forced to sit through a lengthy wartime reading of poetry by Britain’s best known poets, designed apparently to boost morale, but sufficient, by the time the famed T.S.Eliot started reading from his largely impenetrable poem The Waste Land, only to send the young Queen Elizabeth and her sister into fits of giggles.

Brown provides a deadpan footnote:

The British royal family traditonally views artists and writers and artists as more to be endured than enjoyed. Queen Elizabeth’s father-in-law, King George V, perhaps the most philistine of all monarchs, once came across a painting by Cezanne at an art exhibition. “Come here, May” he said summoning his wife, “This will make you laugh”.

His son King George VI commissions John Piper, well known for his stormy, boarding pictures, to paint a series of Windsor Castle. The artist duly delivers the pictures, but hears nothing. Some time later, he is presented to the King at a a garden party. “Ah yes, Piper”, says the king. “Pity you had such awful weather”.

If you think that is interesting or amusing, you will probably love the book. One critic, in the Sunday Times, summed it up as follows: “One on One is entirely work of non-fiction, and a very thoroughly researched one, too, while still as funny and perceptive as anything else Brown has given us”. It is all of that. The book won scores of Book of the Year plaudits when it came out in 2011, and it does not date.

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The movement of the S&P 500 (SPY, in blue) and US Treasuries (TLT, in red) since the start of the Iran war at the end of February. Source: Sharescope.

Untangling the complex paths that may unfold from here is not so easy, given the inherent unpredictability of the US President, and the widespread presumption that he has not only failed to think through the likely consequences of his actions, but is also seemingly unable to hold to a consistent position for more than 24 hours at a time.

Even though investors by now should be accustomed to this modus operandi, which Trump almost alone appears to believe is evidence of his great negotiating skills, the confusion and uncertainty it engenders for almost everyone else only adds to the practical difficulties of responding to his latest pronouncements. Even historical precedents, often so useful in keeping a sense of perspective in moments of crisis, provide less than normal help with such an impetuous and unreliable character.

According to the latest edition of the annual Global Investment Returns Yearbook, the work of three well regarded finance academics, Trump has already earned himself one distinction, that of presiding over the most significant market disruption of all time linked to trade disputes. The run up to Liberation Day last April was responsible for that, even though the consequences and impact of his unilateral (and recently declared illegal) tariffs turned out to be a little more benign that some initially feared.

Now the President is in pursuit of wreaking similar disruption with his military exploits. With tariffs, the biggest victims of his trade policy were for the most part his country’s largest trading partners, and the biggest loser from them economically almost certainly the US itself (as theory might predict). If you take the relative performance of the US equity market reaction as evidence, that has certainly been the case.

With the Iranian war, the danger is that something similar might end up happening. Once again it is the allies of the United States who are suffering most from the fallout of the Iranian conflict. Iran’s threat to close the Straits of Hormuz has been particularly damaging to such staunch but oil import-dependent partners as Japan and South Korea as well as to the longstanding Arab oil producing allies on the other side of the Gulf.

While Trump has this week announced a pause in his plans to use his military to stifle Iran’s oil exports, it will be very difficult, as William Hague explains in a forensic analysis of Trump’s mis-steps in The Times of London (subscription may be required), to extract a negotiated solution that can be reasonably said to have justified allowing this war to escalate in the way that it has.

And in the meantime, even if oil prices now stabilise, the lasting consequences of such historically blind and unpredictable behaviour will continue to be felt in greater risk aversion and distrust between the world’s most powerful nation and its suffering allies and trading partners.

In the recently published Global Investment Returns Yearbook, Professors Dimson, Marsh and Staunton update their research into historical style factors such as momentum, size and value. For the next few years, it looks like investors will have to steady themselves for a continuation of what is now clearly definable as a damaging new destabilising factor, the Trump effect, from which very few winners (apart from Putin’s Russia) can be easily discerned.

The financial markets have given an unequivocal verdict - higher bond yields, falling equity markets - on the merits of the Iran war so far. They may well revert to some kind of normal trajectory if any kind of agreement to pause the war can be reached. But that will do only so much to undo the heightened risk factor that the Trump effect has embedded into market prices.

It is legacy of sorts, I suppose.

If you are interested in investment trusts, then please consider listening in to the Money Makers podcast, which I host weekly, or subscribing to the Money Makers weekly newsletter. More details at www.money-makers.co.

The Topix index is up 10% since the results came in and 25% over the last twelve months, shrugging off the surprise imposition of tariffs by President Trump in 2025 and the inevitable subsequent questions it raised about the reliability of the US as a trading and security partner.

iShares MSCI Japan Monthly Hedged ETF (ticker: IJPH) vs MSCI World index, UK CPI. Source: Sharescope.

I have been broadly positive on the Japanese stock market for many years, prompted in part by the incisive analysis of Peter Tasker, a longstanding Tokyo strategist who co-founded a boutique specialist fund management firm Arcus Investment Management some years ago.

I remember in particular this prescient article in the Financial Times in 2013 highlighting the potentially decisive change that the election of Shinzo Abe was going to make to pull the Japanese economy (and stock market) out of its long period of stagnation.

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That proved to be the turning point for Japanese equities and while the returns to external investors have been partially offset by the persistent weakness of the yen against the dollar (and many other developed market currencies), there is no disguising the clear uptrend in the Topix index since it low in 2012 (note that this is a log scale chart).

Topix index since 2008. Source: Sharescope.

Tasker’s recent thoughts, written shortly ahead of the election, provide a useful summary of how to think about the market now, and one imagines have only been enhanced by Takaichi’s comprehensive victory. The bullish response to the election looks well founded. Yes, there has been a lot of positive share price momentum already, but for investors with a medium to long term horizon the prospects are encouraging, assuming Takaichi can deliver on her policies successfully.

With the LDP having crushed its opponents and winning more than 75% of the vote, there is going to be little domestic opposition, and only some combination of over-reach and/or negative external developments (a geopolitical crisis or global recession, for example), seem likely to derail her progress.

Yen vs US dollar since the 1970s. Source: Macrotrends

I discuss these opportunities and risks with Nicholas Weindling, the manager of the J.P.Morgan Japanese investment trust, in the latest episode of the Money Makers podcast, out today (Feb 21st). Among several arguments, he makes the point that the revolution in corporate governance in Japan, one of the key drivers of the stock market’s more recent recovery, still has a long way to run.

Listen to the podcast

There are plenty of positive trends: more companies are paying dividends out of surplus cash: the web of corporate cross-holdings continue to be unwound; takeovers are now possible (though their frequency is still relatively limited) and the number of listed companies (still roughly similar to the US) is finally starting to fall. The change in governance habits and attitudes is set to continue.

With inflation now, after three decades of deflation, finally a reality, the Japanese are beginning to invest in stocks again, rather than simply hoarding their cash. Corporates’ return on equity is rising and valuations, while they have normalised, are still not demanding. The Topix index, which finally exceeded its 1989 high in August 2025, trades on a PE ratio of around 15-16x.

All of which are positives.

The major uncertainties surround the future course of bond yields and the trajectory of the yen. The latter is a conundrum. The yen looks chronically undervalued, as it has done for years. The rate against the dollar is north of 150 when in purchasing power parity terms it should probably be in the 90s. No wonder record numbers of tourists are visiting Japan and consumers are fretting about the high cost of imported food.

The weakness of the yen is no accident of course. Japanese interest rates are slowly edging higher, but monetary policy has been a source of friction between the government and central bank in the past. Tasker thinks it is significant that Abe’s Minister of Finance has now been appointed the deputy prime minister in Takaichi’s government.

Japan notoriously has mountains of debt, but 90% of its bonds are held by Japanese investors, it runs a healthy current account surplus, and is one of the largest creditor nations among developed economies, so unlike the UK the country is not reliant on the “kindness of strangers” to sustain its fiscal position. It can therefore probably live with some increase in net funding costs.

Put this altogether and the strategic case for investing in Japanese equities looks strong. As the chart suggests, the equity market looks somewhat overbought, being around two standard deviations above trend, but longer term it stands to benefit from the emerging trend of capital moving away from the US, as well as higher domestic corporate earnings and those continued governance improvements.

It is unlikely that the authorities will want to see the yen revalue in a dramatic way, but it is certainly possible that the direction of travel for the yen is about to change as interest rate differentials with other leading currencies widen.

Fellow commentator David Stevenson thinks that the monthly hedged iShares Japan ETF (ticker: IJPH) is as good a way to play the trend as any, if you are still worried about the currency risk. The two UK-listed investment trusts that specifically target corporate governance changes as a strategy (NAVF and AJOT, the first of which I own) also look well placed, particularly if the currency does now strengthen.

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Not everything I post here will be about the financial markets, as there is much more to life than that. This is the first of a short series about books that I keep by my bedside for last thing reading at night. I will offer other book lists as well to cover different categories, including investment.

To qualify for a place in this privileged bedside position, a book in my view (a) needs to be capable of being read in clearly defined short segments, long enough to finish but short enough not to detain; and (b) can be reliably certain to induce a smile or some other agreeable sensation to end the day.

Like most people, I suspect, reading something long and substantive may well send you to sleep, but the downside is that you are unlikely the next day to remember what you read the night before and have to start over to pick up the thread. If Dostoevsky and the human condition are your thing, late night reading is not recommended. It will take even more weeks to finish.

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My tastes, as you will see from this series, are considerably lighter. First up is a collection of P.G.Wodehouse short stories. The one by my bed is an omnibus edition of Jeeves stories, which I see was published as long ago as 1972. That is how long they have been making me laugh and, familiar as they are, they are still a joy today.

This one includes such Wodehouse classics as The Great Sermon Handicap (one of my favourites), The Purity of the Turf and Jeeves and the Impending Doom. ‘Plum’, as he was commonly known, remains the prince of phrase-makers among twentieth century authors and his short stories are a doorway into a world of pure escapism. There are many other collections of his short stories, including his popular golfing tales.

P.G.Wodehouse holds a special place for me, as he was indirectly responsible for the biggest break I have experienced in my life, which was winning a scholarship to Winchester College, one of the UK’s oldest and most revered private schools. Asked to name the greatest writer of English prose, while most of the other candidates wrote earnestly about Dickens, Austin and George Eliot, in my innocence I dashed off five pages of praise for Plum and obviously somehow struck a chord with the examiners, fellow fans all.

What books do you keep by your bedside? As will be clear from other posts in this series, I have several more that meet the criteria I have set out above, but I recognise that others may have different ideas about what constitutes the ideal preparation for a good night’s sleep.

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This has been a dramatic few weeks in the developing story of artificial intelligence. For those who follow the financial markets, we have seen significant declines in the share of four of the so-called Magnificent Seven after they announced in their latest results huge increases in their annual capital expenditure on AI development as the arms race to dominate the emerging industry accelerates (a race that not all of them can possibly win).

This week also a new model release from Anthropic, Open AI’s most prominent competitor, triggered a sell-off in software company shares with a new agentic model capable of “synthesising data and analysis, running teams of coding assistants, and functions akin to product management”, all functions that software companies currently provide.

At the same time we learnt that Nvidia, which makes the great majority of the most advanced AI chips, is reported to be reviewing its earlier announced plans to invest up to $100 billion into OpenAI as credits against future chip orders from its biggest customer, a form of circular financing that carries awkward echoes of earlier financial crises.

Both OpenAI and Anthropic need huge amounts of capital if they are to win the race to dominate the natural language foundation model market. Even with multi-billion dollar support from their biggest customers, they urgently need IPOs to finance the mind-boggling sums they are committed to investing. They have a vested interest in talking up the scale of their achievements and ambitions.

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For the general reader, however, probably the most important announcement of the week came in the form of a long (NB very long) article by Dario Amodei, the founder of Anthropic, warning, firmly but unhysterically, of the dangers of the world moving ahead too far too fast with the development of AI, before all the necessary safeguards have been identified and implemented.

Here is how he kicked off his 14,000 word article, entitled the Adolescence of AI:

As I wrote in Machines of Loving Grace, powerful AI could be as little as 1–2 years away, although it could also be considerably further out.⁶ Exactly when powerful AI will arrive is a complex topic that deserves an essay of its own, but for now I’ll simply explain very briefly why I think there’s a strong chance it could be very soon.

My co-founders at Anthropic and I were among the first to document and track the “scaling laws” of AI systems—the observation that as we add more compute and training tasks, AI systems get predictably better at essentially every cognitive skill we are able to measure. Every few months, public sentiment either becomes convinced that AI is “hitting a wall” or becomes excited about some new breakthrough that will “fundamentally change the game,” but the truth is that behind the volatility and public speculation, there has been a smooth, unyielding increase in AI’s cognitive capabilities.

We are now at the point where AI models are beginning to make progress in solving unsolved mathematical problems, and are good enough at coding that some of the strongest engineers I’ve ever met are now handing over almost all their coding to AI. Three years ago, AI struggled with elementary school arithmetic problems and was barely capable of writing a single line of code.

Similar rates of improvement are occurring across biological science, finance, physics, and a variety of agentic tasks. If the exponential continues—which is not certain, but now has a decade-long track record supporting it—then it cannot possibly be more than a few years before AI is better than humans at essentially everything.

In fact, that picture probably underestimates the likely rate of progress. Because AI is now writing much of the code at Anthropic, it is already substantially accelerating the rate of our progress in building the next generation of AI systems. This feedback loop is gathering steam month by month, and may be only 1–2 years away from a point where the current generation of AI autonomously builds the next.

This loop has already started, and will accelerate rapidly in the coming months and years. Watching the last five years of progress from within Anthropic, and looking at how even the next few months of models are shaping up, I can feel the pace of progress, and the clock ticking down.

So far so good for productivity, you might think, but Amodei, who left OpenAI over concerns that it was prioritising commercial factors over its original definitely social purpose, goes on to lament, without he says wishing to be a “doomsayer”, the unpreparedness of governments and industry players to tackle the challenges that such an imminent development will bring.

Dealing with the threat of bad actors using AI to launch cyber warfare, or dangerous drug epidemics, or autonomously developed weapons, is one thing. The risk of AI machines themselves learning to mount these assaults themselves may sound like science fiction, but fiction, Amodei insists, it is not. He lists five major concerns which I won’t summarise here (but do please read his piece) and steps that he thinks could be taken now to mitigate the dangers.

This is his conclusion:

Humanity needs to wake up, and this essay is an attempt—a possibly futile one, but it’s worth trying—to jolt people awake. To be clear, I believe if we act decisively and carefully, the risks can be overcome—I would even say our odds are good. And there’s a hugely better world on the other side of it. But we need to understand that this is a serious civilizational challenge.

To worry about the impact of AI is hardly a new perspective - it is as old as the subject itself - but coming now, at this particular point in time, there is increasing urgency about confronting the issue, even if financial markets with their narrow focus on future returns are not the place to find realistic answers.

Share

AAS share price (blue)/total return (red) vs UK CPI inflation (solid line), plus 2+/- standard deviation channel and the discount history (bottom panel). Source: Sharescope.

Who’s on the podcast

This week on the podcast I talk to Gabriel Sacks, the lead manager of Aberdeen Asia Focus (ticker: AAS), an investment trust that invests in smaller companies across Asia (excluding Japan). The trust, managed for many years by a team led by Hugh Young, who retired in 2023, has capitalised on the strong performance of Asian economies since its launch in 1995, with an average rate of return of 12% per annum over the last ten years and (notably) relatively low volatility compared to its peers.

We talk about the many challenges and opportunities that Asian emerging markets offer, the impact of AI across the region, style issues and the divergent fortunes of India, Taiwan and China, the largest economies in the region. We also review the trust’s performance and its efforts to bring its discount down into single figures. The chart shows the ten-year track record and illustrates how the narrowing discount has sent the shares outside their two standard deviation historical channel, suggesting that positive momentum may pause at some stage.

This is the 318th podcast in the series, following its launch in the dark days of the Covid pandemic in 2020. There is a full archive of past episodes on the Money Makers website. I am pleased to have been named Broadcaster of the Year for the past two years in the AIC’s annual media awards.

Listen to the podcast

In the newsletter this week

• All this week’s trust and market news

• Our latest in-depth trust profile

• Discount, share price and NAV movements

• Recent issuance and buybacks

• Z-scores (‘cheap’ and ‘expensive’ trusts)

• Good reads, videos and other recordings

Click on the button below to find out more about subscribing to the newsletter (£120 a year), which provides a comprehensive summary of all the relevant news and market and share price data that an investor in investment trusts might need, updated weekly and published on Saturdays.

This week that includes more than 25 significant news items, the 30 best and worst performing trusts in share price and NAV terms, plus the 30 trusts with the most anomalous looking discounts compared to their historical average. In addition there are regular editorial features, including guest columns and our popular independent trust profiles.

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Some extracts from the latest weekly round up

(1) Latest trust profile

Our most recent trust profile features Aberforth Geared Value & Income (AGVI), one of the few trusts that still uses zero dividend preference shares (ZDPs) to leverage its portfolio. The roughly 200 editorially independent profiles we have completed offer inquisitive investors detailed context and a starting point for further investigation. We don’t produce subsidised or sales-led research, but offer a factual summary and independent assessment of a trust’s history and potential.

Among the trusts and topics covered recently are Achilles Investment Company (AIC), Baillie Gifford’s SpaceX holdings, BH Macro (BHMG), Ashoka WhiteOak Emerging Markets (AWEM), Onward Opportunities (ONWD), Aberdeen Asian Income (AAIF), Allianz Technology (ATT), Baillie Gifford China Growth (BGCG), Impax Environmental Markets (IEM), Scottish American (SAIN) and Seraphim Space (SSIT).

(2) Sector average discount

After another volatile week, the investment trust index, which includes around 180 of the stocks in the FTSE All-Share index, was down around 0.5% over the five preceding trading days. Losers and gainers were evenly matched for the second week running. The average discount widened slightly, reversing the recent trend towards 12%. Gold bounced back a little after its big selloff, while bitcoin fell further to its lowest level since the Trump presidency began.

Trusts with geared exposure to gold and precious metals and technology plays unsurprisingly dominated the list of decliners, while Chrysalis (CHRY) and HgCapital (HGT) were also notable fallers. Asian trusts and some specialist property trusts headed the list of gainers, while BH Macro (BHMG) also performed well. This week, there were more than 90 share price moves of 2% or more, split equally between winners and losers.

(3) Videos and recordings

In my latest supplementary recording for subscribers, I spoke to Edward Cartwright, the CEO of Arcus Investment Management, a specialist in Japanese equities, about the outlook for Japan and the future of Baillie Gifford Shin Nippon (BGS) following several years of dire performance.

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Investment Trusts Handbook

The 2026 version of the Investment Trusts Handbook has now been published and can be ordered here. This latest edition is the ninth in the series, with more than 300 pages of articles, analysis and data by more than 20 contributors, including regular experts such as John Baron, Andrew McHattie, Ben Conway and Alex Davies. The theme for this year’s edition is “remaking the case for investment trusts”.

This year, in addition to our regular panel of investment trust professionals, I have added a forum in which four experienced chairs of trusts give their views on governance and investment trust performance. Among many other features, I also look at how far share buybacks impact discounts, one of the most debated issues of the last 12 months, and reflect on the impact of hedge fund Saba Capital’s campaign in the investment trust sector. A reminder that you can download a free e-book version from the Harriman House website.

Appendices

Subscription costs

Repeat monthly or annual subscriptions have been frozen at the current rate for three years, as a thank you for your loyal support. We continue to urge subscribers who pay by PayPal to switch their payments to Stripe, a more reliable payment system.

Check out the newsletter

Note: about the charts

The charts I show typically have one or more of these elements.

• The share price performance (blue line)

• The total shareholder return (red line)

• A comparison with inflation, as represented by the Consumer Price Index (black line)

• 50-day and 250-day moving averages (to illustrate momentum)

• A chart showing the movement in a trust’s discount over time

• The RSI (relative strength indicator), a two-week overbought or oversold indicator

A reminder that without knowledge of your individual circumstances and tolerance for risk, it is not possible to make specific investment recommendations. However, all our opinions are honestly held, and we have no conflicts of interest arising from commercial considerations.

EGL share price (blue)/total return (red) vs FTSE All-Share index (black, jagged) and UK CPI inflation, plus the discount history (bottom panel). Source: Sharescope.

Who’s on the podcast

On the podcast this week, I talk to Jean-Hugues de Lamaze, manager of the Ecofin Global Utilities and Infrastructure (ticker: EGL), a unique vehicle in the investment trust universe that invests in the shares of utilities and infrastructure companies rather than directly into infrastructure assets. We discuss the outlook for this strategy in the light of potentially falling short term interest rates, higher commodity prices and AI-magnified electricity demand.

The trust has performed well over the ten years since launch, with an NAV total return of 10.9% per annum, outperforming both the FTSE All-Share index and global infrastructure and utility indices over that period. The discount is currently tight at around 5%. The trust has a 3.5% dividend yield. Despite two sharp drawdowns during Covid and the higher interest rate move in 2022-23, its beta (sensitivity to equity market moves) and volatility are relatively low at 0.6 and 6%, respectively.

This is the 317th podcast in the series, my having launched it in 2020. There is a full archive of past episodes on the Money Makers website. The AIC has named me Broadcaster of the Year for the past two years in their annual media awards.

Listen to the podcast

In the newsletter this week

• All this week’s trust and market news

• Our latest in-depth trust profile

• Discount, share price and NAV movements

• Recent issuance and buybacks

• Z-scores (‘cheap’ and ‘expensive’ trusts)

• Good reads, videos and other recordings

Click on the button below to find out more about subscribing to the newsletter (£120 a year), which provides a comprehensive summary of all the relevant news and market and share price data that an investor in investment trusts might need, updated weekly.

This week that includes more than 25 significant news items, the 30 best and worst performing trusts in share price and NAV terms, plus the 30 trusts with the most anomalous looking discounts compared to their historical average and our regular editorial features.

Join the Money Makers Circle

Some extracts from the latest weekly round up

(1) Latest trust profile

Our most recent trust profile examines private equity trust discounts, following last week’s strongly worded letter from Asset Value Investors to HarbourVest Global Private Equity (HVPE). The roughly 200 editorially independent profileswe have completed offer inquisitive investors detailed context and a starting point for further investigation. We don’t produce subsidised or sales-led research, but offer a factual summary and independent assessment of a trust’s history and potential.

Among the trusts and topics covered recently are Achilles Investment Company (AIC), Baillie Gifford’s SpaceX holdings, BH Macro (BHMG), Ashoka WhiteOak Emerging Markets (AWEM), Onward Opportunities (ONWD), Aberdeen Asian Income (AAIF), Allianz Technology (ATT), Baillie Gifford China Growth (BGCG), Impax Environmental Markets (IEM), Scottish American (SAIN) and Seraphim Space (SSIT).

(2) Sector average discount

The investment trust index, which includes around 180 of the stocks in the FTSE All-Share index, was down around 0.7% over five trading days, as of Friday lunchtime. Losers and gainers were evenly matched. The average discount has been slowly edging in towards 12%, its narrowest level for about a year.

The bid for Life Science REIT (LABS) put it at the top of the list of winners, while the sharp market moves on Thursday saw Seraphim Space (SSIT) and precious metals and commodity trusts sell off after their very strong recent runs, no doubt with some profit-taking thrown in. There were more than 25 moves of 2% or more on both sides of the ledger, a relatively high proportion.

(3) Trust of the week

My attention last week was caught by seeing Geiger Counter (GCL) at the top of the investment trust performance rankings. An old favourite of Nick Greenwood, the former manager of MIGO Opportunities (MIGO), this trust is a good example of why we should not pay too slavish attention to the “scale is vital” argument that has raged around the investment trust sector over the last few years. Andrew Worne, head of investment trusts at the broker Cavendish, makes exactly this argument very well in the latest edition of the Investment Trusts Handbook (continues).

(4) Videos

In my latest video for subscribers, I take note of the latest development in the Home REIT (HOME) saga, where the Serious Fraud Office has made arrests in its investigation into what it says is a suspected £300m case of fraud and bribery.

Join the Money Makers Circle

Investment Trusts Handbook

The 2026 version of the Investment Trusts Handbook has now been published and can be ordered here. This latest edition is the ninth in the series, with more than 300 pages of articles, analysis and data by more than 20 contributors, including regulars such as John Baron, Andrew McHattie, Ben Conway and Alex Davies. The theme for this year’s edition is “remaking the case for investment trusts”.

This year, in addition to our regular panel of investment trust professionals, I have added a forum in which four experienced trust chairs give their views on governance and investment trust performance. Among many other features, I also look at how far share buybacks impact discounts, one of the most debated issues of the last 12 months and reflect on the impact of Saba Capital’s campaign in the investment trust sector. A reminder that you can download the e-book or a PDF version on the Harriman House website.

Appendices

Subscription costs

Repeat monthly or annual subscriptions have been frozen at the current rate for three years, as a thank you for your loyal support. We continue to urge subscribers who pay by PayPal to switch their payments to Stripe, a more reliable payment system.

Check out the newsletter

Note: about the charts

The charts I show typically have one or more of these elements.

• The share price performance (blue line)

• The total shareholder return (red line)

• A comparison with inflation, as represented by the Consumer Price Index (black line)

• 50-day and 250-day moving averages (to illustrate momentum)

• A chart showing the movement in a trust’s discount over time

• The RSI (relative strength indicator), a two-week overbought or oversold indicator

A reminder that without knowledge of your individual circumstances and tolerance for risk, it is not possible to make specific investment recommendations. However, all our opinions are honestly held, and we have no conflicts of interest arising from commercial considerations.

One of the advantages of being a pragmatic, common sense investor is that it frees you from the need to take sides in theological disputes about the best way to invest, or whether to adopt a monetarist or Keynesian approach to macro-economic issues. The latter in particular is mostly a tedious distraction; monetary and fiscal policy are both important factors, but neither in my experience has a monopoly of explanatory power.

That said, I have always followed the comments of Tim Congdon, still the UK’s best known monetary economist, with close attention, from the distant days when he was working for a securities firm in the City. More recently, he was early and initially almost alone in predicting the surge in UK inflation following the Covid pandemic, something which the Bank of England was shamefully late in spotting and acting on.

His latest analysis of the monetary aggregates he sums up this way:

The main points are that money growth has blipped up a bit in the Eurozone and the UK, while in the USA the boom in money market mutual funds (a kind of “money”) continues. With money growth stable in the two big developing countries (China and India), the message for 2026 is “at least trend growth of demand and output at the world level”. This is not a forecast of a boom, but it is certainly not a forecast of recession.

That, combined with some tentative signs that the checks and balances in the US constitution are beginning to work to moderate some of President Trump’s wilder initiatives, give me the feeling that one can reasonably hope that this year will probably not be the one in which the markets run into serious trouble, despite many narratives that suggest it will.

Of course there are many other risks to take into account, with geopolitical developments at the top of the list (see the gold price for details). A weak and submissive Federal Reserve under a new chairman, the unwinding of an AI bubble, a Japanese bond crisis, or a serious blow up in the private credit markets are all factors that could ignite a dangerous sell-off in the equity or bond markets, or both.

Why is not in doubt, however, as even the monetarist Prof Congdon admits, is that the fiscal position of many countries around the world is driving them towards a fiscal crunch that governments (and their electorates) seem unable or unwilling to prevent. To quote him again:

As we emphasized several times last year, the USA’s public finances are suffering. Not only is the debt growing rapidly, but the maturity profile of the debt is shortening and the risks of monetization (and so of more inflation) are rising. In fact, the MMMF (=money market fund) boom is an aspect of that…….

But the USA is far from being the only nation suffering from excessive public debt. Japan has long had a higher ratio of gross public debt to GDP than the USA, but the situation has been manageable with very low government bond yields. With debt at over twice GDP, short-term interest rates of virtually zero and long-dated yields of under 2%, the ratio of debt interest to GDP is under 2%. This is easy to fit into the fiscal arithmetic.

But the new Prime Minister, Takaishi Sanae, wants to widen the budget deficit despite the enormous debt and the bond markets are unhappy. The 30-year Japanese government bond yield has moved out from about 1½% in January 2023 to over 3½% today. Of course, if the debt is 250% of GDP and the average interest rate on it is 3%, debt interest payments are 7½% of GDP. A burden of this size is not at all easy to fit into the fiscal arithmetic.

The UK and many other European countries are in a similar bind, as are the Chinese, meaning that the risks of triggering a bond market revolt and/or a local currency crisis somewhere in the world are slowly and dangerously mounting the longer that underlying symptoms remain untreated.

Stronger than expected growth in the US may well keep the markets intact this year (and on balance I suspect will), but reflecting on past market history, it is impossible not to think that an above average dose of defensive dry powder in portfolios remains essential.

Please feel free to share this post; for access to the Money Makers podcast (free) and the Money Makers newsletter (all about investment trusts; £120 a year), go to www.money-makers.co

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I already produce a range of material about investment trusts, my professional specialism, but after four decades of City experience I find that have other things to say as well, beyond what’s in my weekly Money Makers podcast and newsletter. This Substack is where you will find not just what is coming up in those other places, but more new content besides.

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Look out for the following:

• Short notes on current developments in financial markets;

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• What’s coming up in the podcast, newsletter and YouTube channel.

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Broadening the reach

I was early into podcasts, starting mine more than five years ago, in the depth of the initial Covid crisis, but I have been slower to jump on other innovations in the modern multi-media world, and especially into producing regular shorts for the proliferating range of media channels that now link writers and their audience.

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