Perspectives
History rhymes
April, 2022
Russia’s incursion into Ukraine has raised a multiplicity of complex ethical, political, social, and economic issues which elicit different explanations and responses, depending on the perspective from which you begin. We in the UK are largely influenced by what might be termed a ‘developed world’ perspective, which might crudely be characterised as democratic, broadly liberal, […]
What goes down must go up, right?
April, 2022
Clients of Tacit will recognise the term ‘moat’ in the context of the investments we hold in our strategies. Moat is a term that Warren Buffett uses to illustrate the competitive advantage of a company. Its definition in the dictionary is that it is “a deep, wide ditch surrounding a castle, fort, or town, typically […]
The Impact of Deglobalisation?
April, 2022
When Henry Kissinger asked Zhou Enlai about the significance of the French Revolution, Enlai reputedly replied, “It’s too early to tell.” In 1972, the year of Richard Nixon’s meeting with Zhou the size of the Chinese economy was $113bn (IMF, PPP) and the country was a backwater. Today, similar estimates put the size of the […]
US Economic Leadership: Not changing any time soon
March, 2022
The tragic events unfolding in the Ukraine highlight the geo-political risks that investors must factor into their planning and poses once again the question of where is it safe to invest. In moments of crisis, funds frequently flow to the US, and we see no reason why this time should be any different. The US […]
Money illusion
March, 2022
Standard economics assumes that rational people base their decisions on real value only and take changes in price tags properly into account. For example, rational consumers are assumed to base their shopping decisions on “real” prices (e.g., how many hours do I have to work for a loaf of bread?) and would not change their […]
Ukraine, Energy & Inflation
March, 2022
It is a truism that the Russian economy is dependent upon energy exports, principally oil, for its balance of payments. According to the International Energy Agency (IEA) Russia accounts for 5 million barrels a day on world export markets some 12% of total demand. That export success is not matched by an equal desire for […]
Sanctions in a digital world
March, 2022
For the past two weeks we have read daily reports of new financial sanctions that have been imposed on the Russian state, Russian companies and Russian individuals by countries in the West. It may surprise you to know that more than half of Russia’s central bank reserves are actually not covered by any sanctions as […]
The confusing of risk and uncertainty
February, 2022
When investing, it is important to differentiate between risks and uncertainties. Uncertainties, in the words of the former US Secretary of State Donald Rumsfeld, are unknown unknowns. Risks, on the other hand, are known unknowns. For example, if you were planning to collect a friend or family member from the airport, the probability that their […]
Not all that glistens is gold
February, 2022
Many investors have become obsessed with interest rate rises in the short term and on how this affects the valuation of a company. We have written many times over the past decade that until interest rates provide, or are forecast to provide, a positive real return on a multi-year basis, not a lot has really […]
Drink Deep or Taste Not
February, 2022
“A little learning is a dangerous thing, Drink deep, or taste not the Pierian spring.” Alexander Pope, “Essay on Criticism” (1711) Augustan poetry may not be to your taste, but Pope’s rhyming couplet contains a truth that is often forgotten by investors. It is important to know and understand what you are invested in and […]