The Two Johns: Trade of the Decade - half-time report

no indeed indeed um right so episode 22 today we are going to revisit a column that you wrote half a decade ago um and um that column was uh called trade of the decade and it was really a look at why why the uk markets had fallen so much out of favor and whether that presents an opportunity so we'll go into that uh in some detail and then we're going to look at um the recent rise in long bond yields which isn't entirely unrelated um so uh so yeah without further ado so let's turn to the trade of the decade um as i say columbia wrote uh for the investors chronicle five years ago um what do you mean by the trade of the decade Well, five years

ago, I set myself a challenge, John, to help illustrate a wider issue.

And I was just musing on the point five years ago that time and history does assist perspective.

And it encourages patience in the world that seems to be full of, how can I put it, short-term market noise and portfolio turnover.

I set myself a challenge and said, right, let's look at 10 years.

If we could not touch a portfolio for 10 years, how would we construct it? And I suggested that it would encourage a better focus on undervalued themes, undervalued markets.

And to help illustrate the point, I suggested that the UK, which was very unpopular at the time, and still is to a certain extent, but things have improved somewhat sentiment-wise, but then five years ago, Very unpopular.

It underperformed for decades.

The post-Brexit project fear campaign had not helped.

And so I said, right, 10 years' time, I think the UK will be the trade of the decade in the sense that it will perform better than most believe it can and may even be the top performer of all developed markets.

Needless to say, John, there was a fair degree of scepticism with that forecast.

yes how's it played out then were you we're only halfway there

we're halfway there john so that's the big proviso here but i think it's fair to say that it's played out better than the skeptics or the majority of the skeptics thought it would i mean for example the ftse 100 i mean when you when when you suggest that the ftse 100 has actually over the last five years kept pace with the s p 500 People have to double-check that.

But that is a fact.

And I say kept pace.

I mean, it's to-ing and fro-ing.

It is actually leading.

But it's certainly kept in touch with the S&P 500.

And then the wider UK index, the FTSE All Share, hasn't been the laggard.

relative to the FTSE 500 that some of the markets have.

So I think it's fair to say at the halfway stage, the suggestion that the UK could be the trade of the decade is playing out better than the skeptics thought at the time.

And I would suggest the best is yet to come.

So what did people get wrong? Why was there this sort of deep skepticism towards the UK, which which really put people off the scent of the fact that the uk market could could offer these quite quite superb returns over five years i've got a number in front of me the first 100 is as uh has moved 52 and i'm not sure that that figure includes that's not a total return figure no

it's not a total return figure i think the total return figure takes it up to closer to 70.

Which then is very close to the S&P 500.