It's soundbite heaven as Justin Urquhart Stewart returns to MoneyTalk.
You can listen to or download this podcast here.
David:
This is MoneyTalk, the weekly investment podcast from the Motley Fool. I'm David Kuo, and today I am joined by one of the UK's best-known investment commentators, if not the UK's best-known investment commentator, Mr Justin Urquhart Stewart. Welcome to the Motley Fool, Justin.
Justin:
Thank you David, it's a great pleasure to be here.
David:
Well, I'm delighted that you could actually make it, for people who don't know, the day we're recording this podcast is the day after the big snow, the big freeze. So much for global warming, hey? So anyway, Justin, I've been asked on numerous occasions why your company is called Seven Investment Management, so can you please explain why?
Justin:
Oh, that's very easy, actually there were seven of us, it's very cheap branding. We looked round the room, and said, one, two, three, four, five … that'll do, seven, that's fine, rather than coming up with some other quirky name. In fact, my business partner came up with some terrible name, which sounded like something out of Lord of the Rings, and I said, "We can't have that – that's awful, why don't we call it Number 62?" And he said, "What's that?", I said, "That's the number of my house". And so eventually we said seven sounds better.
David:
OK, so what exactly does Seven Investment Management do?
Justin:
Seven was set up by the seven of us very simply as almost a reaction to what we found going on in the stockbroking and investment community. I'd reached a certain age, and my business partner, Tom, where we'd been running Barclays Stockbrokers, which I had originally started back in, heavens, '86 in its original form, and we got fed up of large corporations, and the large corporations which we felt weren't actually doing the right thing for private investors.
It was a perfectly good investment house, nothing wrong with it, but there was something wrong. So what we wanted to do was go back to the basic rules of investing – how about having no commission? How about looking after people's money based on the value? – if it goes up, we earn more, if it goes down, we earn less. How about managing the risk? How about having no in-house fund manager, but focusing on the asset allocation? Making sure it's transparent, making sure that people can see it – it is after all their money and not ours, and using that old-fashioned City line, which seems to have gone out of date rather these days, which is, it's a privilege to look after people's money, not a right, and then give them the ability to do, if they want to do some punting themselves, they can do, and to be able to help them with financial planning.
We don't do financial planning but we work with a lot of financial planners – not financial advisors, not stockbrokers, but these people who plan, so they're much more like private doctors, that's to say they're fee-based (I have to pay a private doctor, no-one else will look after me!), but I've reached a certain age where my body parts are collapsing, so I go and see Martin, I pay him a certain amount of money every year …
David:
Do you call him by his first name?
Justin:
Absolutely, or sir occasionally, and I go and see him, and I pay him a lot of money not to see him, but when I do have to go and see him, I'm properly ill, and then he sends me to someone else, because he doesn't do eyes, bones or legs, but he co-ordinates the body of Urquhart Stewarts, all of us, to make sure we're all fit and healthy, and you need to do that on a financial basis, I'm a big believer that we need to go back to what we used to have in Scotland and what's very common amongst the oriental and Chinese community, which is family money – still applying the techniques that you have as individuals, but now across your family, because most of us, if we're struggling to bring up a family, don't have much money, but our parents do, grandparents and great-grandparents, and they're all living longer.
Now you can, of course, send one or two of them on a single flight to Zurich, but not too many, otherwise the police get interested, but much better that you co-ordinate their assets and liabilities, and I want us all not just to have a good portfolio – I expect to see a personal and family balance sheet, apply the same disciplines to running a company to our families. It's amazing how much cost you can get rid of, and how much more efficient you can be in your investing.
David:
But if you know families like I know families, then isn't there a lot of in family bickering that goes on?
Justin:
Oh absolutely, I mean good heavens, here we are, after Christmas, most of us can't even spend three days together without falling out, and the divorce rate's just gone through the roof, and with the snow as well – God streuth, there's probably mass murder in Kent at the moment. So actually what you have to do, you have to have a neutral party. Now in years gone by, actually in Scotland, we used to have the family notary, which was a sort of family lawyer-type person, boring old fart but actually quite useful, so what you need is to bring that person back. Now they're very common in the States, they call them financial consultants there; here they're quite rare, financial planners, there are only about a thousand in the country, and of course it's quite difficult actually to find people who (a) you get on with, and (b) who you trust to actually co-ordinate the family.
You're quite right, David – you can't have any one member of the family doing it, because no-one else will ever trust them, because he's trying to get one over you, but let's learn from the Chinese families, some of the Indian families, and from the old British families – that's how they used to run their money. It's the banks that have told us over the past few years that we're a client of one, and we're on our own – well most of us aren't sad gits on our own, well occasionally I am, but financially, put yourself together with the rest of the family, and you're much much stronger.
David:
So let's go back to what's happening today, and how was the Noughties for you? They call them the Noughties now, don't they?
Justin:
Yes, well the Noughties, so now we go into the lean, mean Teens. Like most teens, they're very lean and very mean, and very unpleasant. So the Noughties were exciting for us, because our business is now eight years old, so I left Barclays again, I've left them three times so far, I left them in 2001, and it took us a couple of years to really get the embryonic ideas of Seven together, went live in 2002. So the Noughties for us were fantastic – very exciting, hard work, you were building the business, and it still is hard work, and quite right, so it should be, and we've now reached the stage where we're doing I think the right thing; I can sleep at night.
Not that we were fantastically successful, we're doing what's right for the clients, and that allows me to sleep at night. What I don't like doing is actually earning money out of people by way of trading commissions when they haven't made any money, that makes me feel sick frankly, but the City gets too greedy, and what I wanted to do with this, because I am of a certain age where I thought we had probably one more chance of trying to do the right thing, it sounds a bit holier-than-thou, but trying to do the right thing by people, you're not going to be exceptionally brilliant, but let's start off with not losing the sodding stuff, and let's grow it, slowly and steadily over time.
Then you can afford to take little punts and risks, and add some excitement to it, add the sex and violence to it, but if you start off with sex and violence, you just get too tired – ask Max Mosley.
David:
So throughout the Noughties, lots of people would be saying, from the year 2000 until the end of 2009, nothing happened to the stock market, it virtually went nowhere. So what did we actually learn from that period?
Justin:
What we learnt is we have to go back to the original disciplines where you do make money, and there are two errors, one, between 2000 and where we are now, we saw a huge amount of volatility, where we were, up at the top of the market at 2000, then we went crashing all the way down to 2003, and we've been yo-yoing about ever since. So for people who are willing to do their trading, and individual stock trading, and individual stock trading, which is always a proportion of your portfolio, I encourage people to do that, and you do so by those lovely old Motley Fool rules of being able to concentrate and focus and understand on a small clear area of where you become the expert – that's great, and so the Noughties have been very good.
At the other end of your pot of money, the don't lose the sodding stuff pot, which is generally bigger, which should have a sign stuck in it saying, don't lose the sodding stuff, therefore you apply the disciplines of asset allocation, and all that is, instead of having, which I get to see with most people's portfolio with stockbrokers and private banks, four asset classes, which is equities, bonds, fixed interest and things like that, property and cash, well that's great, that's a reasonable sort of chair to have, except equities have been rather unreliable, property's been dreadful, and cash has been awful as well.
Well on that basis, that leaves me with bonds, which are somewhat unreliable as well, so I've now got a pogo stick, not a chair! So why don't I have asset classes which consist of shares around the globe? – so there's lots of different types, fixed interest around the globe, commodities, yes – property of different types, infrastructure, currencies, hedge funds even, private equity – all sorts of different things which behave in different ways, because as a manager I'm not so interested in what the individual funds are, I'm interested in how those asset classes are behaving.
I know historically for many decades how they'll behave; that doesn't mean they'll behave like that in the future, but I know their volatility. If I could measure their volatility, I can improve the predictability; if I can improve the predictability, then the clients have got more chance of getting what they expected to have in terms of the returns at the given level of risk, and that, I think, is a really very old-fashioned way of trying to actually build money slowly for people, but it works, so the Noughties for us have done exactly what I thought they'd do – provide, despite the really horrific things that we've seen, a reasonable level of returns on a five, seven, ten year basis.
David:
So did you predict the rise in the stock market in March 2009? – you know this tremendous rise from March to the end of the year, almost 50%?
Justin:
I'd say that – well I wouldn't say I wouldn't, although there was one lovely thing, but I remember the day in March when the S & P hit 666, and I came into the office, and I said, "Fantastic – Satan's in the stock market, buy now!" – and I did actually buy a bit, and I have to say, not because it was the bottom of the market, it was just a fantastic number, and I just wanted to mark it, and as luck would have it, actually that was the bottom of the market, but I'm being flippant.
Actually our asset allocation committee, which is known as the "No Hairs, Mohairs and Grey Hairs", because they're all of a certain age, because I've gone round the City and collected old chums of mine who are of a certain age, but they're often ex-chief investment officers, so Michael Hughes from Barings, John Hatherly from M&G, Charles Diamond from Econostat, and these guys go back 30 years. The most common word in the meeting is "What?" "Hello?" "What?" – because they're all deaf, but they were the ones not trying to predict either the banking crisis, which actually they did by saying the risk levels have got too high, and paying attention to people like the Bank of International Settlements, but also turning round and saying, equities have now reached a level where they're too cheap, but more to the point, look at the stimulus packages being put together – we've got to increase our exposure, and the lowest level on our balanced portfolio we got to in equities was 28%.
Since then we've raised that up to 50% during that time, because our balance portfolios don't have a high level of equities, because we have all those other asset classes in there as well, which is quite different from a typical stockbroker who would, for a balanced portfolio, often have 70% of the balanced portfolio, and the reason we veer it down like that is to measure the volatility. I don't mind having 70% of equities, but I would regard that as a higher-risk portfolio, and the same proportion of movements would have occurred in there. So it wasn't the gift of being able to say that's fantastic, my silver ball says, buy equities, it was the asset allocation team of the No Hairs … actually they're called old farts, sat there and said, look – all this stimulation going on here, the economies are on steroids, the market's going to react from that – and it has.
David:
So that was the trigger then? – the cheapness and also the amount of money there was going in the market?
Justin:
The stimulation, and this is the big question we've got for 2010 – what happens when you come off the drugs?
David:
Yes, correct – that was going to be my next question – what can we look forward to in the Tweenies, I think they call them, up until the end of say 2019? What can we look forward to in the next decade?
Justin:
Well, the good news is, the global economy is growing – there is no global recession, we're out of recession, unfortunately there are various countries still in recession, but the globe is growing, but we have to be very careful now, we're in a very different situation – 2009 was a fulcrum year; the year which you and I have discussed, you can see where the weight of money and emphasis on growth has been, it's moving from the west to the east. In 2009 it did, and the big marker in 2009 was the forming of the G20, the G20 where you've got countries like India, China, Indonesia, Saudi Arabia – these countries are now vitally important, but the most important relationship in the world is the G2: you've got China and America.
These two, one is a right-wing regime, one's a left-wing regime – I just don't know which is which! But they can't do without each other, they are in a symbiotic relationship with one another, they have every opportunity of cocking it up, if they allow protectionism in, you heard the Americans a couple of months back, putting 35% duty on Chinese tyres, the Chinese reacting saying, we'll put the duty on American chickens – I didn't even know America exported chickens to China, but anyway, that's relatively minor, but if that built up into anything worse, and we started seeing something like we saw in the 1930s, where you even had the Smoot-Hawley Act in America, which actually put up huge levels of protection, even though the Americans knew it was going to do damage, you had Pork Barrel Politics and a local representative from Minnesota saying, I want to protect my local tyre manufacturer, and of course they all did this, and the rest of the world reacted, and we ended up with the Depression.
We have the opportunity of entering that similar sort of scenario, I doubt whether we will, because hopefully our politicians aren't that stupid, they are pragmatic. The Chinese are pragmatic, I just hope the Americans are.
David:
Well, that's an interesting point, because we had Roger Bootle here in October, and he was talking about his book, "The Great Implosion", and what he was saying at the time was that the mess that we're in now was in some ways caused by China, because China had a huge amount of money in savings, that money had to go somewhere, and it therefore ended in the West, and it gave us the opportunity to borrow money at a very low rate of interest. Now he says, in order for the things to reverse, China has to start buying stuff, buying stuff from the West – can you see that happening?
Justin:
It's started already, it's not going out and buying all the usual stuff the Americans would expect, I can't think, when you hear the Americans saying, we want the Chinese to buy more American products – what's an average Chinese person, sitting in a garret in Shanghai, going to buy off the Americans – a Cadillac? It ain't going to happen, guys! Or television – they're made in China. So actually what you're seeing is China has got the world's largest investment in itself, what you've seen is 15% of its GDP now being spend in terms of its support package – this is huge, and the West is feeling the reaction to it, and so is America, well America's obviously part of the West; look at the corporate results in America, everyone said, "They were good" – actually they were good in parts; domestically pretty weak; Coca-Cola, pretty weak domestically, in India and China, doing well; Caterpillar, that company that makes big Tonka toys, doing very well, not because of America, but because of China; ABB, Zeelands in Europe, those big German, lovely old boring German infrastructure companies, I love 'em, and of course they've been doing fantastically out of China.
So China is spending that money, and so for the West, and it's easy for politicians to sit there and say that China is just behaving like a dragon, and sitting greedy on its gold; it's not, and equally though, if you're going to start hectoring and lecturing the Chinese, they won't react very well to it either, and you can hear some of that reaction when you start talking about currencies, the Chinese must revalue their currency – look at it from a Chinese point of view. I've got 2.2 trillion with nearly 65% of it in dollars, in your currency, and you're currently devaluing it, and you want me to carry on buying your treasures? And the answer is, they're both wrong, and they're both right, and they need to be pragmatic. The problem of course with dear old Obama, it's not a matter of whether he's pragmatic or not, it's what the Congress actually do, as to whether they can be pragmatic, we don't end up with salt barrel politics, whatever the phrase is.
David:
Now the thing is, you touched on protectionism – are we not seeing a little bit of protectionism now in the case of Iceland and the UK – Iceland is saying that, I know I owe you £3 billion, but I'm not going to pay it back to you – is that the kind of protectionism that we're going to be seeing in the next decade?
Justin:
Yes, sort of can't pay, won't pay. Well this is where we're now seeing this issue, and we have to remember, remind people, that countries do go bust, some do it on a regular basis, like Argentina and Ecuador, they just have a cuckoo clock to remind them, but the likes of Iceland, and we know that Iceland was building up for time, for those that were watching it, I was writing about it, and got some very rude letters from the Landis Bank and others …
David:
Same here.
Justin:
They were very aggressive about it all, and so we could see that was a disaster waiting to happen, but there are going to be other countries like Ireland and Greece, some are brave enough to face up to it, like Ireland, I've a lot of respect for what the Irish government are doing; the Greeks, I'm not too sure they've necessarily got the backbone to do it, I suspect there'll be a whiff of tear gas in the air before the month is out.
Of course the Icelanders, well of course they're in a difficult situation, because it's not a matter of not being able to pay, if they don't want to be an international pariah, they have to. So again Britain, the Netherlands and Iceland have to be pragmatic, they have to pay the debt back over time, otherwise they're going to have trouble with the IMF, they're going to have trouble not getting into the EU, but of course there Britain mustn't look smug, because guess who's also in the firing line – what about our debt?
We're going to spend £40 billion in interest – that's about £125 million a day, I think, and so our level of debt means that we have a very reasonable chance of losing our rating, and if we lose our rating, the cost of debt goes up even more – that's why our politicians are being so silly, I'm afraid the Labour government doesn't seem to understand that they need a credible policy, not just telling us they're going to cut it in a period of time – how? The Tories aren't much better, because George Osborne has to go back after half term, so he doesn't get much credibility; Ken Clarke, people spent a lot of time listening to, but well, not many people take any notice of him, and Vince Cable, but he's in the wrong party.
So anyway, I'm afraid we are in a similar sort of situation here, so I fear for the United Kingdom over the next year or so, because we're going to have to go through a very difficult period of austerity, and we need a statesmen. Unfortunately we're a couple of statesmen short of a parliament.
David:
Now the thing is, you've highlighted sovereign debt as a possible pitfall for 2010 and beyond – where are the other pitfalls that investors should be looking for?
Justin:
The most important issue, we did touch on it a little earlier, is coming off the drugs, coming off the steroids, because if the government levers, and on the particular day we're discussing this, we've got the Bank of England decision, which is going to be deeply unexciting, because it's going to be nothing, and I suspect for several months to come it's going to be a big build up to nothing, and they're not going to move interest rates until they've got any sign of movement in the economy.
They'll move quantitative easing first though I suspect. So the big question is – when do I pull the lever back to come off the drugs? If I do it too early, then the souffle just settles straight back down again and goes flat like an old piece of leather. If I leave it too late, then the souffle blows up and I end up with inflation coming through, and I suspect most central bankers and most finance ministers will be quite happy to have inflation coming through on the basis that actually we don't want to tell anybody, but it devalues the debt. It also devalues the economy, but given the choice there, I think they'd far rather have a little bit of inflation.
The problem with a little bit of inflation, it's followed by a lot more inflation, as they Zimbabweans will tell you, but look at Zimbabwe – a million percent of inflation last month? – it was in deflation, in a year, so you can't make this up, can you? It's like a fairy story.
David:
Right, can I read you a quote now? – this quote, I'm hoping that you will actually recognise it – somebody said, "Every decade will see momentous changes in the FTSE, and this one is no different. The mining companies are much more prominent, but that could change over the next ten years". That quote came from Justin Urquhart Stewart. Now what exactly do you mean by that? What are these momentous changes that we are likely to see?
Justin:
Just cast back over the past couple of decades, and you'll see what the FTSE actually looked like, you go back to the 1960s, it was an imperial index, or in fact the FTSE 100 didn't exist then, but the equivalent of it, the FTSE 30, ICI, shipping companies, all those sort of things, flying the flag round the world.
Then you can see how that changed and developed into the conglomerates, the Hansons and all those sort of companies that we remember. Then of course we went through the privatisation, and all those we had, and then the utilities all coming through. Then of course we had the banks, in terms of the mortgage banks coming through, most of which have disappeared, they've imploded; then we had telephones and technology, T&T, or as turned out to be, TNT, and so then that changed, so you could see the complexion of the FTSE 100, and then we started coming through to the mining companies.
Mining companies are going to be strong, and it's one of those truisms from the FTSE 100, as soon as you think, oh well I can see this solidly heading for a future, it promptly changes. What the difficult thing is to say, what replaces it? – and I think what is going to be interesting, and this is where I think you're going to be seeing more changes, to more related companies coming through, related to out of the Far East, companies looking for access to capital, coming through, so more geographically-orientated, rather than just necessarily focused on just mining.
Mining's going to be very important, of course it is, but the commodity issues they're going to be having is, I think, an awful lot of value's being pushed into commodities on the basis that the economy's growing at the level we saw for the past decade. The economy's going to be growing at a slower level for the next decade, I believe. Even China, we'll still grow, China claims 10%, well knock two or three percent off that for enthusiasm; at 7% it's sort of round about where it should be, that's not the heady growth for a developing nation.
So if you see growth at that sort of level for the next few years, and the rest of the Western nations, whilst the imbalances are straightened out, the banking system, which we haven't really talked about yet, is straightened out and rebuilt, therefore the growth levels are going to be weaker, so the mining companies will pull back, but the great thing about mining companies is, you don't have to take the stuff out of the ground, you shut the mine, and come back. So it's not a wasted asset, I'd say something like property, where you shut the property up, and you come back and you find it's got things in it.
So I see the FTSE going through another change, into a more international – it's already international, but internationally broader-based investment structure.
David:
So are you saying that we're likely to see the likes of Bank of China and China Airlines floating on the UK stock market in order to access the kind of capital that we have in the West?
Justin:
Yes, I think already you're going to be seeing more of that coming through, we've seen it with the miners coming in from countries that people can't even spell, and you'll see companies like, well Bank of China and various other Chinese banks as well, coming in even to the retail market her as well. Why? – because it's a developed market, they can learn from it, but particularly in terms of listing in London, it's a much more sophisticated and in depth listing; London, despite what's happened in the past two years, is still the most international market in the world, and you need access to that.
They don't necessarily want to go to the States, because there's only one market in the States, and there's only one country – the States, and the European markets still aren't international enough yet. So if London plays its cards right, it's in a good position, and the FTSE 100 will reflect that.
David:
So how do you see the outlook for the pound then? Are you worried about the possibility of the pound being devalued?
Justin:
It is being devalued, and it is, I think as the Duke of Wellington said, "We're in for a hard pounding, gentlemen", and it will be a hard pounding, and quite rightly too. It's the wrong term: strong pound/weak pound, because strong doesn't mean good, weak doesn't necessarily mean bad; overvalued/undervalued.
Over the next few months, I can see it being further pushed down against developing nations' currencies, which, some obviously are paid to the dollar; shorter term we've been actually behind dollars, because it's still a reserve currency, but the longer term picture of a weaker dollar is still going to be there. However, sterling's going to be weaker than it, and the ugly sisters' campaign between the dollar, the euro and the pound, we are looking really deeply unpleasant – a warty old pound.
But having said that, after the election, and let's suppose that Mr Osborne is still in his job, and is back from half term, and not wearing shorts, then supposing the Tories do come up with a really tough policy, which is what is needed, and it's credible, then in many ways actually that might be seen as a positive side for the pound. The good news is, and it doesn't really come out much in the press, is that if you actually look at our industry at the moment, which is hobbled by a banking system that doesn't work, those that are exporting, and we still have a lot of exports, are benefiting, yet again, from the pound being at these levels.
Remember that our real element of recovery started when we got throw out of the embryonic euro back in '92, so we're now back at much more realistic levels. So if our goods coming in, in terms of consumer goods coming in, cost more – hard luck. If our holidays cost too much more going overseas – hard luck. If we can export more cost-effectively, and it's not manufacturing, it's the R & D, the expertise, and some of the businesses I'm involved in are really benefiting. We still manufacture a lot in China, but the expertise is here. So we're really benefiting from that, I think there's going to be more of that to come, but I means unfortunately Britain just goes through this very difficult period that we're going to have that's going to last five years, so the first two years are going to be very difficult, depending on how we manage the economy, and what we do with the banks.
The Royal Bank of Scotland and Lloyds are technically insolvent, and in my view, and I know they're much much bigger, I would have gone down the same route, let's assume we couldn't actually have the old Bank of England mechanism of the lifeboat any more, but the same route as Northern Rock, where you saw a very effective individual called Gary Hoffman go in there, beat up the Rock, pay back 70% of its debt nearly to the government, recapitalise it, good bank/bad bank, and you've now got a well-run smaller operating bank, and the reason you need Lloyds and RBS operating like that is those clearing banks, when they're operating, because remember, there are good clearing banks inside them, if you clear away the rhubarb, you'll find good banks in there, and that's what the economy needs, so they can start lending again properly – they're not functioning at the moment.
So until we get that sorted out, we need surgery, as you've seen with Northern Rock; not placebos and paracetamol being given to the RBS – they're hobbling along, and they're hobbling along because the politicians can't make up their mind.
David:
So my final question for you, Justin, is, it is quite likely that this year we will see a change in the government – how will that affect investors?
Justin:
What you're going to be seeing is investors now should think very carefully about their tax situation – tax is going up, very likely VAT will be going up, maybe to 20%. The effect of that is a lot of us are going to be wearing children's clothes, they'll be tight but you'll get away with it.
David:
(he laughs)
Justin:
But what you're going to be finding is that we're going to be in a position where we're having to start saving more, and so we should. Our savings and investment should take a much broader geographical view, because other areas of the world will still be growing more effectively than we are. But let's be clear, I'm afraid we have lived on the back of the hog for ten years, and now we're going to have to pay for it. There's an awful lot of debt to be paid down, and not just government debt, but personal debt, and we're going to start saving, and that's good. So my first direction to everybody is, pay down your debts.
My second direction is, get your planning done for your family, because after all you've now got three or four generations to manage – your great-grandparents are very nice, one or two of them might like a single visit to Zurich, you can't do more than one, because the police might be interested. But manage those assets across in a cost-effective, tax-efficient way, and make sure whether it's in your SIPPs, your ISAs, use all of these to your benefit, and you've got much more choice now, so you don't have to be ripped off with charges for those, you've now got many more cost-effective exchange-traded funds, which I know you talk about a lot, it's fantastic that we can use, and a lot of the expensive advice that you've had, you don't need, a lot of it you can do yourself, but really the good advice you need is much more down to some of the tax planning and those areas, where you need some technical support and advice.
But we've never been in this and had … I think it's a generational opportunity where people have actually got the opportunity to grab hold of their financial affairs, and be able to pick and choose the advice and support they need, have much more cost-effective funds they can use, as oppose to the old active management funds, which one or two are good. The total expense ratios: only in Britain, in Perfidious Albion, would you have a total expense ratio, the TER, which doesn't include the total expenses, and isn't a ratio, and not only that, there's no single definition – there are two, brilliant! Is it hardly surprising that people don't trust where they go to?
Stockbrokers are nice people, some of them are my relations, and I was one for many years, but they deal in stocks, and they're bit like a man who owns a hammer – most things look like a nail, to a stockbroker most things look like a stock, more Vodafone say.
The private banks, they're nice people, very nice, they're very polite, you get the same thing expect you're looked after by someone called Tarquin at twice the price.
The financial advisors, there are very good financial advisors, but the RDR, the Retail Distribution Review, is going to separate out the good financial advisors from those people who call themselves IFAs who aren't very I and provide FA! And then you've got the financial advisors and planners, and it's the planners I think are the ones that we need, there are very few, but those are the people who are actually looking forward, and telling us all the one number we all need to have as individuals, which is – how much is enough? That's to say, how much do I need, so that when I do decide to retire, which is hopefully never, the money can start running out, and I know it'll run out after I've died, or more to the point I can ensure that I die the day it does run out, and just make sure that clicks into place.
David:
So are you actually more confident now in January 2010 that we are going to actually sort of see some kind of recovery here in the UK, and people are going to feel better over the next decade?
Justin:
Over the next decade, yes. Over the next one or two years, it's going to be difficult. The question we have to ask ourselves, and this should be for all of us, in five years' time, is it better than it is now? And the answer is – yeah, probably, but it's not as good as it was five years ago, I grant you, but it's better than it is now, so long as you obey the disciplines – do I trust the government? – no, no matter which colour, we have to be looking after ourselves, but use those tax breaks and apply the rules of the Motley Fool, and we'll all be in a better shape.
David:
That's wonderful. Well thank you for coming in today Justin. Now, as you know, I end each podcast with a quote, and today's quote comes from Anon, and he says: "Too bad you can't invest in taxes, because they are the only things certainly to go up".
Justin:
I'd agree with that.
David:
I would agree with that also. This has been Money Talk, I have been David Kuo, and my guest has been Justin Urquhart Stewart of Seven Investment Management. If you have a comment about today's show, you can post it on the Money Talk web page at www.fool.co.uk/podcast, and if you want to suggest a topic for future shows, you can email me at moneytalk@fool.co.uk. Thank you very much, and everybody, have a great week.
