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Ruffer LLP

March 31, 2021

The death of inflation has been greatly exaggerated. Its return will first scare, then maim, then ruin the traditional balanced portfolios have that served investors well for a generation. Investors need to prepare for a world of greater inflation volatility. And with it a monumental risk—bonds and equities falling in tandem.

The death of inflation has been greatly exaggerated. Its return will first scare, then maim, then ruin the traditional balanced portfolios have that served investors well for a generation. Investors need to prepare for a world of greater inflation volatility. And with it a monumental risk—bonds and equities falling in tandem.

Investors’ great fear

February 18, 2021

We all know that 2020 was an incredible, and terrible, year. The pandemic caused the worst recession for centuries, along with an appalling death toll and suffering. Meanwhile financial assets pushed ever upwards, surfing a wave of liquidity meant to counteract the impact of the pandemic.

We all know that 2020 was an incredible, and terrible, year. The pandemic caused the worst recession for centuries, along with an appalling death toll and suffering. Meanwhile financial assets pushed ever upwards, surfing a wave of liquidity meant to counteract the impact of the pandemic.

The chart below shows that it was also a record year for share issuance, surpassing even the heady days of 1999-2000.

January 21, 2021

Somewhere in a cupboard, I have a set of eight contract notes dated 8 January 1975, when I invested—upwards of £100 per holding!—in a range of UK equities. Reader, I called the bottom of the market—a dangerous thing for a young man to do.

Somewhere in a cupboard, I have a set of eight contract notes dated 8 January 1975, when I invested—upwards of £100 per holding!—in a range of UK equities. Reader, I called the bottom of the market—a dangerous thing for a young man to do.

December 14, 2020

The 60/40 portfolio has served investors well for the past 50 years (1). It has been the allocation of choice for traditional balanced portfolios—60% in equities for the good times, 40% in bonds for the bad (and for the yield).

The 60/40 portfolio has served investors well for the past 50 years (1). It has been the allocation of choice for traditional balanced portfolios—60% in equities for the good times, 40% in bonds for the bad (and for the yield).

The past 50 years have been characterised by falling interest rates, low inflation and low volatility. A superb environment for both bonds and equities. But we may be entering a regime change which could see these conditions reverse.

December 2, 2020

The unique shape of the Covid-19 crisis and accompanying recession has meant some industries have thrived while others have dived. In caricature, everyone now uses Zoom and Peloton, while offices and gyms were forced to close.

The unique shape of the Covid-19 crisis and accompanying recession has meant some industries have thrived while others have dived. In caricature, everyone now uses Zoom and Peloton, while offices and gyms were forced to close.

What does the K mean? Online shopping wins, traditional retailing loses. Commercial property such as offices and shops lose, but logistics warehouses thrive. City apartments struggle, suburbs with gardens boom. The digital economy beats everything.

November 18, 2020

The future looks even more uncertain than usual. Normally uncertainty translates into lower asset prices. But not this time. And with the prices of all assets buoyed by abundant liquidity, we fear a traditional ‘diversified’ portfolio is not going to be much protection in the next market convulsion.

The future looks even more uncertain than usual. Normally uncertainty translates into lower asset prices. But not this time. And with the prices of all assets buoyed by abundant liquidity, we fear a traditional ‘diversified’ portfolio is not going to be much protection in the next market convulsion.

In particular, we believe that conventional bonds will provide neither acceptable returns in good times, nor much protection in a downturn.

October 21, 2020

The coronavirus pandemic has hit public finances like a war. Across the world governments have scrambled to offset the economic and social impact of the virus. Huge, and necessary, rises in public spending have pushed government deficits to levels not seen since the two world wars of the 20th century.

The coronavirus pandemic has hit public finances like a war. Across the world governments have scrambled to offset the economic and social impact of the virus. Huge, and necessary, rises in public spending have pushed government deficits to levels not seen since the two world wars of the 20th century.

The numbers are enormous: UK government debt now tops £2 trillion (1). whilst the US owes an eye watering $26 trillion (2). The picture is similar across Europe with many other countries also seeing debt/GDP ratios rising to over 100% (3).

October 8, 2020

Whatever one’s outlook, there have been times in 2020 when the markets seemed to echo one’s innermost thoughts, and times when we shout out like Falstaff, that the whole world has gone mad. The bulls and the bears have had their time in the sun, and their time on the dark face of the moon—what follows is a digested diary of our journey through the year 2020 so far.

September 10, 2020

Could a vaccine change market leadership? When will enough doses of FDA-approved Covid-19 vaccine(s) to inoculate 25 million people be distributed in the US? The superforecasters of the Good Judgement Project believe there is a 93% probability we will have an FDA-approved vaccine in a year, and enough of it to inoculate 25 million people in the US. This is up from just 20% in the dark days of April.

Could a vaccine change market leadership? When will enough doses of FDA-approved Covid-19 vaccine(s) to inoculate 25 million people be distributed in the US? The superforecasters of the Good Judgement Project believe there is a 93% probability we will have an FDA-approved vaccine in a year, and enough of it to inoculate 25 million people in the US. This is up from just 20% in the dark days of April.

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