David Kuo talks to David Buik of BGC Partners.
You can listen to or download this podcast here.
David:
This is MoneyTalk, the weekly investing podcast from the Motley Fool. I'm David Kuo, and today we will be looking at whether it matters who wins the next general election. My guest today is the "King of the Airwaves", the "Voice of Reason", the "Face" of BGC Partners, Mr David Buik. Welcome back to the Motley Fool, David.
David B:
How delightful to be here David, and thanks very much for inviting me.
David:
I'm very excited to have you in here today, because I want to hear your views about how the election is going to be affecting people's finances, people's investing. Now, at the time of this podcast, the Conservatives have a slender lead over Labour, round about six points. Now, according to my calculations, that could end up with a hung parliament, but the big hang up really is, does it really matter who wins the next election, David?
David B:
I think it does matter – in the immediate short term, I don't think it does matter, and contrary, I'm a huge fan of Ken Clarke's, the fact that he thinks that a Labour government might be better than a hung parliament, I disagree with him, because a hung parliament will generally mean that nobody can do anything too dramatic, and there is a necessity for everybody to pull together, to deal with the problems, and what are the problems? – the problems, there's obviously the public sector borrowing requirement, and also quantitative easing, and interest rates, and how do we get two and a half million unemployed people back to work? I think that's a common goal, the problem is, everybody's got a different way of handling it. Now, going forward, I think we couldn't possibly, after 13 years, have another five years of Labour, but I would say that, wouldn't I? – for the simple reason is, I think what the Labour administration did at the turn of the century has really discredited them, Gordon Brown has used sub-prime lending as a convenient springboard to blame the problems and the desperate recession that we have in this country on what happened in the United States – that's a cheap shot, as far as I'm concerned.
He was one of Alan Greenspan's disciples, he stood at his shrine for years and backed him. As he (Alan Greenspan) allowed the US banks, and all the international banks, to lend money indiscriminately, without any kind of regulatory controls, allow balance sheets to get to ridiculous sizes, the Royal Bank of Scotland – two trillion pounds, above the entire budget of the government. Now, on that kind of track record, for Gordon Brown last week to look at us, saying, please take another look at New Labour – no thanks, because I think I might die of fright if I did.
We need a change, a change is desperately needed, we need to get people back to work, we need some fresh ideas, and above all else you can deal with getting people back to work as well as dealing with the public sector borrowing requirement. Unfortunately, at the moment, both parties are being duplicitous and economical with the truth, because there's an election due in the next two months, and therefore they're not prepared to say how they're going to halve the public sector requirement in four years, very laudable, Alistair Darling, thank you for that, but how are you going to do it? And the problem is that we all know that it's going to have to include massive unemployment, which is 200,000 people losing their jobs, in my opinion, in the next three years in the public sector, and I was hoping in having some plans where we can redirect them into the private sector, which I think is so incredibly important, you can't just chuck people out in the street, but it strikes me nobody's got any plans.
One of the areas where I am hugely critical of the Labour administration is their attitude towards education, encouraging hundreds of thousands of kids to go to university with deeply average academic backgrounds – how many thousands of people, running up debt, £15 to £30,000, leave university, full of hope for employment, and get nothing. What they should have done is concentrated their efforts on allowing the really bright and smart people, from all backgrounds, to have their university education and crack on. The rest of them, the government should have provided money to teach them trades – you can earn £100,000 a year as a plumber, and you think I'm joking, I'm not.
The same applies to a carpenter, the same applies to any kind of technical job, and all these people's aspirations. So there was dear old Gordon and his mob, took £80 billion off the banks and the financial sector for a period of ten years, didn't he look a clever little one? And what did he do? – he ignored and neglected manufacturing output and industrial production for ten years, so we've now got a completely unbalanced economy, and that has to be dealt with, because we have actually got some good industries over here, but it's going to take the north east and the north west ten years to recover from this neglect, and you're asking me to give Gordon Brown another chance – do me a favour.
David:
But isn't the problem, David, that at the moment we are at the mercy of lenders – we need to borrow money here in the UK to finance this budget deficit that we have, and also to finance the huge amount of national debt that we have. Now the thing is, regardless of whichever party gets into power, it doesn't matter who it is, whether it's George Osborne, whether it's Vince Cable, or whether it's Alistair Darling occupying number 11 Downing Street, they have the same problem, in other words, they have to convince people outside to carry on lending the UK money. So isn't their remit exactly the same, they are going to have to cut the budget deficit?
David B:
Of course, whoever wins this election's a hospital pass, it's a shocker, because nobody's going to be happy about it, because we are going to go down again before we go up, but it really is going to take some really brave decisions. Now, one of the things I think you alluded to was the fact that we've got to do something about the banks, now this is absolutely right, but we're now into our eleventh month of waffle, and no regulation. G20 – we paid ring-a-ring-a-roses down at the old Excel Centre, ra-ra-ra, we love each other, and everybody walked out of there swelled up with tears, thinking, the brave new world – what's happened? – nothing.
David:
But what did you expect to come out from that?
David B:
I expected some intelligence, from the fact that Messrs Brown and Darling, forget the rest of the world, get on with your regulation, the United States do the same, they're different games, Europe do the same, and then you keep an idea on each other with what you're doing, so that you don't get involved in what I call "regulatory arbitrage", which could be very dangerous, and then the show might be back on the road, but there's all the banks getting stick from everywhere of not lending, and they don't know what their new requirements are for capital, they don't know what restrictions are going to be had – are they going to split investment banks? Are they going to do this ... because it's all waffle, and apparently, on the Basel II agreements, there's enough paper in Basel to sort out the entire unemployment from the Forestry Commission – it's all bumph, all talk, no action. This has to stop, and you can turn round to the banks, if you say, right, there you are – those are the rules, you adhere to them, we agree them, then there's no excuse, David, but at the moment there's every excuse to say, am I going to lend Fred Bloggs, who makes widgets in Wisbech, five grand, because he might be able to sell a few more widgets – ah ah, I'm not going to do it, because I'm not convinced he can repay me, but once you've got the rules sorted out, and once you've got your system sorted out of how you're actually going to deal with it, then I think there is no excuse to go to the banks, and say, come on guys, you're not playing the game. At the moment, you're giving them every excuse in the book, because it's Vogue now to call bash the bankers, and the reason is, they haven't been given the rules of attrition, of how they're actually going to get on with their job.
David:
So when do you see some solution coming out of this?
David B:
I don't know, I mean ...
David:
Because at the moment you were saying that the UK is completely different to what is going on in America?
David B:
Of course it is.
David:
But having said that, some form of legislation has to come out of this?
David B:
Of course it does, but one of the things is that, if you recall, let's very quickly for your listeners, compare the difference between the United States and the United Kingdom. The United States basically came out of sub-prime lending, and also, what I thought was pretty disgraceful behaviour from Fannie May and Freddie Mac, and to a lesser degree AIG, the big insurance operation – that's where the initial problem was, and then, of course, colossal losses made by some of the investment banks, starting with Bear Stearns and Lehman Brothers, and spreading everywhere. If you actually look what went wrong here in the United Kingdom, what went wrong here, from the people who really got buried alive, was credit: Northern Rock – rubbish; Bradford & Bingley – not very good; HBOS – a disgrace; and in point of fact Barclays Bank had exposure in capital markets and other areas, didn't require the government; the Royal Bank of Scotland – OK, hands up – that investment in ABN Amro, they obviously engaged some other part of their anatomy apart from their brain to go through with that one, that was crazy.
But our issues have been different, they have actually been credit, rather than investment banking, so everybody getting all pumped up and saying, big is awful, chop the investment banks up, we don't need them – yes we do, because our economy is so weak at the moment, that if you actually split the banks into Boring Bank plc and investment bank, who is actually going to subscribe for capital in Boring Bank plc, apart from the government? – very few people, people are very sore that they've had such a clattering during the course of the last ten years. I mean David, you're one of the top people in recommending people investments, and you've got a great track record, but if you'd been in investments in this country for the last 13 years, you'd be in a pretty bad state of disrepairs, and you wouldn't be relying on old fogeys like me to come and talk to your lovely company, because I shall be well retired, but I can't afford it.
David:
But the thing is, we had boring banks in the old days, we did have what I call the 363 rule of banking – pay your savers 3%, lend money to your borrowers at 6%, and you're on the golf course by three o'clock in the afternoon, hence we had 363 banking, but the point behind that was that at least people knew that, when they went to a bank, and they put their money in there, nobody was going to run out the back door and go and gamble it away on some exchange somewhere out in Timbuktu. But isn't that the whole idea behind why we want to split up investment and retail banking?
David B:
If the timing was right, in terms of the economy now, you might have a case, but at the moment I'd be particularly worried – the case of HSBC, Barclays, our two strongest banks, who've got some very considerable presence in the world of investment banking, and also for different reasons, the Royal Bank of Scotland, who report their results on Thursday, who are likely to see losses down from £26 billion to hopefully around £6 billion. Now people may say, it's still disgraceful, and they're absolutely right, but my word, that's pretty good. I'll give you a clue, and you don't need me to tell you, that but for Royal Bank of Scotland's treasury, and its investment arm, those losses would be a hell of a lot bigger. We need to get money back to the taxpayer, that £70 billion that we've skinned them for, they need it back, and I want to get it back without taking undue risk to them, PDQ.
David:
So that's a good point to introduce the Osborne idea, where he's going to give this people's bonus, in other words he is going to be selling shares in Royal Bank of Scotland and Lloyds Banking Group back to taxpayers again. Do you think that's a good idea?
David B:
Yes, I think it's an excellent idea – but, and there is a big proviso, because I've obviously spoken, as you have, to the Conservative party over this as well, this happens when the taxpayer's got his money back, we don't take any risk with that until such time as that happens, and I'm all for those people who own Lloyds Bank shares at £3.50, and they're now what? – 58p as you and I talk; Royal Bank of Scotland, they were £7, got down to 11p, they deserve some recompense, and you can say, well hang on a minute – what about the institutional shareholders? Yeah, but on the other side of the coin, they've got analysts, and they're old enough and ugly enough in some respects to look after themselves. But I think it would be a marvellous way of instilling capital on a tax-efficient basis through ISAs, and I think Lord Mandelson's cheap comment about the fact is that it's an election gambit – I beg your pardon, pot calling? This is a proper, sensible, real Tory policy – small government, initiative, zest, verve – bring it on.
David:
But the argument there is that we already own the banks anyway, as taxpayers we have been financing these two institutions, the Royal Bank of Scotland and Lloyds Banking Group, to the tune of £70 billion, so we already own the banks – isn't is a bit rich for the Conservative party to say, what you're doing now is to buy back what you already own?
David B:
No no, because I think I made the point, and I think if you ask George Osborne to put a bit more meat on the bone, I don't think he would expect the country to swallow this until the taxpayer's got his money back. So I think that's a complete pre-requisite, as far as I'm concerned. Then, and I think in the case of Lloyds, the share price has to get to about 123 pence, and I think the Royal Bank of Scotland, you may get, my maths is wrong, it's about 75 pence.
David:
It's got to be back up again at 75p, yeah.
David B:
75p, or something of that nature, and then you could say to them, come on, come and subscribe to some shares through ISAs, whatever it is, and perhaps put the threshold up from £7,000 a year to £10,000 a year or whatever it is, to give people the encouragement, and then by then you will have had new regulatory controls, and people won't be so cynical as they are now. Who can blame them for being cynical, with what's happened? But now I thoroughly approve of that sort of thing, because I'm a small government person, and I'm also somebody who likes the idea of taxing people on their spending power, not on their earning power.
I think people forget, because all they remember about Lady Thatcher was how cruel she was in the latter day of judgement, between 1988 and 1990. She turned this country round on its head, absolutely fantastic, gave people like me from a very ordinary background a chance to make a bob or two, because she lowered the taxation levels from 83 to 60 and then to 40%, and changed the whole emphasis, put the VAT in there, and said, you can earn as much as you like and I'm going to encourage you to do that, but when you spend it, I'm going to give you some stick, and I think that's exactly the way to do it. So this is my kind of politics, and this is my kind of idea of getting people back to work, and also encouraging them to save for something just more than 2 or 3%, because interest rates, David, as you will probably agree with me on, are unlikely to make much progress in a northerly direction in the course of the next year.
David:
Even though inflation is running at about 3.5%?
David B:
That'll come down.
David:
Right, inflation will come down? – you see, I can't see it, because I mean this is probably a good point to introduce our idea of quantitative easing. Now a year ago, when you were here, we talked about quantitative easing, and I think at the time, if I'm not mistaken, you were in favour of it, and I was totally against it, I said those companies that should go to the wall really have to go to the wall, whereas you, on the other hand, said this is far too dangerous a policy, you cannot really afford to drive that many businesses to the wall through a lack of liquidity, lack of capital. Now, have you changed your mind about quantitative ....?
David B:
No.
David:
£200 billion later, and nothing has happened, David.
David B:
I know, but on the other side of the coin, let me just express to you what would happen if Mervyn King and Paul Tucker and the others said, right, time out, guys. I went round the room, because I knew, you crafty little monkey, were going to have a little chat with me today, I went round the trading floor of the office, and I said, since three years ago, at what capacity are the wholesale money markets? They're at 20% of what they were three years ago, and that's after nearly a year's quantitative easing, you pull that plug, goodnight Vienna – you couldn't do it.
David:
But the problem is, you've pumped £200 billion into the UK economy, still GDP is 0.1%, it could be revised up to a whopping 0.2%, we've got inflation at 3.5%, we've got unemployment, we've still got sluggish retail sales – so what has the quantitative easing done for the UK economy?
David B:
It's stopped the economy completely falling over, and it's stopped us probably having five million unemployed, I think it's worth it, because basically the banks would have been, see you later. You know, people cope very well with bad news, obviously they cope better with good news, they can't cope with uncertainty. Apart from the fact that, as I say, I've castigated Labour for driving us into this reprehensible situation, same breath, I give them marks for attempting to get us out of it. But they put us there.
David:
Yeah, but having said that, we still have a budget deficit around 12% of GDP, whereas we're over here pointing our finger at the Greeks, and sort of saying, look at the kind of mess you're in – we were in the same mess though, David?
David B:
On a like-for-like basis? – of course you're right, but, on the other side of the coin, we've been triple A rated indefinitely, for an indefinite period of time; we have got a significantly higher percentage of people at work; if you look at Greece's economy, and I'm sure you'll agree with me, there's a bit of agriculture and a bit of ouzo and a bit of wine, there's not a lot got going for it, and also 30% of the population doesn't pay tax, they're all on the lump, so to start chucking us in with Greece, I think it's a bit un ... but, my God, you've got a good point. Perhaps we need to deal with it, because as you so rightly say, we're in a domino effect, we'll start with Greece, Spain, Portugal?
David:
Ireland?
David B:
Ireland, the Baltic states, eastern Europe, apart from perhaps Poland.
David:
Dubai?
David B:
France, and there's dear old Blighty, and we're not exactly at the Top of the Pops tree either, so this whole debt situation throughout the world is a major problem, and the United States has got a problem as well, because it's got to repay it as well.
David:
So who's lending the money then, David? I mean, it sounds as though half the world's in debt at the moment, so who is lending this money?
David B:
I don't think half the world is in debt, I think the entire world is in debt!
David:
So are we all just lending each other money?
David B:
Yes.
David:
And we're just printing money?
David B:
We're printing money to dig ourselves out of a grave, but ...
David:
And yet you still agree to this, and you think ...?
David B:
Because the kissing has to stop, and the kissing has to stop by cutting public expenditure, not being cruel, but this is where Gordon Brown is pathetic, saying that David Cameron and others want to cut public expenditure and chuck 200,000 people on the street – of course he doesn't want to do that, nobody does, but he's got to do it, but reconvene people, even if it costs us money, to go in to the private sector – we have to get away from this ridiculous level of wasting money, and having nothing to show for it. I mean, you go to any major hospital, the number of people who are, what I call, non-essential services, ie not doctors and nurses, earning £100,000 or half a million a year, you'd be blown away, my friend, it's ridiculous.
David:
What – you don't think they deserve it?
David B:
No, the number of people doing it don't deserve it. Of course, I'm a great believer in the pyramid thing, is that the top man gets very well paid and gets well bonused and everything else, all for that, but it's when you've got these layers of a hundred, and a hundred and fifty thousand, and two hundred thousand, and all this sort of thing, and I'm not singling out St Thomas's – all the big hospitals are exactly as guilty as any of them. You go into the education sector, you go probably into the Ministry of Defence, I'm against cutting defence as well, but all these public sectors – local government, unbelievable, the wastage in there, and everybody talks about, well we'll save a billion here, and we'll save one and a half billion there – that's peanuts. When somebody says, excuse me, we're going to save £35 billion, then I'm going to sit up and listen.
David:
So which are the companies that are going to be most vulnerable, as we come out of this, and perhaps come out the other side of the election? Which are the companies that you think people should be avoiding?
David B:
I've got a funny feeling, I'm keeping my powder dry about the drug industry, for the simple reason that, if President Obama gets his healthcare bill through, I personally think it'll be significantly watered down, if it is watered down, then I'm a great believer in the drug sector, because everybody wants to get well, but when you narrow the profit margins, and when, a number of times when you switch the television on, and you hear awful stories about somebody dying of cancer, but the National Health won't pay x, y, z thousands of pounds for this sort of pill, well this has to stop, and also, in the United States, it doesn't matter what your politics are, to have 40 million people in the United States with no healthcare, it's just ridiculous, and it is a human thing, and we need to deal with it, but there may be a cost for that. So I've been keeping a watching brief on healthcare and drugs.
The sectors I like – let's talk positively: energy I love, for the simple reason, I think that companies who pay good dividends, whatever we are, we've got two big problems in the next hundred years, one's oil, the other's water – everybody laughs about water, but water is going to be a major problem to our great-great-great grandchildren, and so now that we've got some of these better energy companies restored to their former glories, I mean I think Tony Hayward at BP is doing a cracking job, I think that company's well undervalued; but Shell's got a long way to go to convince me, but that maybe just me; look what Tullow's done in the last year; love a little company called Salamander Energy.
David:
What does that do?
David B:
Ooh, it's a little oil exploration company out in the south east of Asia, keep a little watching brief on that.
David:
Is that your tip for the day?
David B:
No, I'm not allowed to give tips, you'll have the FSA all over me like a bad rap, I'm just telling you what our clients do, and some of them are very shrewd, and I love that sector. Technology is rock'n'roll, you know, companies like CSR, I think, are terrific, I mean their shares have gone up 70% in the last year.
David:
They make the chips for the radio?
David B:
For radio and Bluetooth and the mobiles and all that sort of thing. Apple, you can't ignore that, and I think all those other ...
David:
Do you think there will be room for technology as we come out of the recession?
David B:
Absolutely, I think it's one of the sectors that's almost, I'm not going to say, almost immune.
David:
But where's the money going to come from then? – because I mean, as you well know, the money's going to be really tight as we come out of the recession.
David B:
Well, you're 20 years younger than I am, and I can't believe I'm holding a mobile phone.
David:
I've got one exactly the same as that, a Nokia.
David B:
Now that's known as a brick, it's bog standard, but when you walk up and down the road, and you see people t-t-t-t-t, and I'm thinking, gosh, we didn't have that 20 years ago, and the world is no worse of a place from what it was. I just think that today ...
David:
I didn't have friends 20 years ago, so I couldn't text anybody.
David B:
I actually think technology's massively important, because for me, it spells leisure, and I think leisure's going to be a big thing, because I think our grandchildren, David, are not going to be working five days a week, I really don't, I think they're going to be working so that everybody's got a contribution four days a week, so then, leisure becomes incredibly important. What we've got to do now, in my opinion, is get debt down and get income up, because every time, I mean, I don't know what you think, but it just amazes me, I'm a coffee junkie, and every time I go into Starbucks, some pimply youth ahead of me orders a large cappuccino with lots of froth, sticks his credit card in for £2.05, or whatever it is – please. And this actually gets us all into very bad habits, I mean our problem, as you know, over the last two and a half years is, governments have borrowed too much, banks have lent too much and we've all borrowed too much, and we're in a mess. Now, over a period of time, we have to cut that out, somehow, but you have to give people the incentive of earning more money, and also ...
David:
You're talking about utopia, aren't you?
David B:
Of course, it's not going to happen, you were going to tell me that, and that's fine.
David:
Well exactly, it isn't going to happen.
David B:
I still think we can strive for it.
David:
Consumer debt is £1.4 trillion, national debt is heading towards one trillion pounds, now you're talking about paying down that debt and getting people to earn more – it's not going to happen, is it?
David B:
Immediately, I think you might say, what are you sniffing, and you might well be right, but I'm still going to say, that's got to be the goal.
David:
OK. So let's turn to bank bonuses, now at the moment John Varley, Bob Diamond, Eric Daniels, and also Stephen Hester, have all turned down their bank bonuses – was that the right thing for them to do?
David B:
Political expediency, I could wax lyrical for an hour and a half on this. John Varley and Bob Diamond and the others at Barclays were always going to do that, because they've been through a different route, and a lot of people thought they'd taken a bit of a gamble, because there were people who didn't believe what they were saying, about their write downs, and they'd been to Qatar to get some very expensive capital, and terrific, well done to them, and they've always delivered what they'd said they'd deliver, and these figures are audited, and we are, of course, with Barclays becoming more and more reliant on investment banking, a year ago, David, I think it was 40% of the profits, this year it's 50, and I think it'll be 60 next year. Corporate banking's going well, but retail banking, not good, and I think you'll find, when Royal Bank of Scotland reports on Thursday, they'll say, rock'n'roll – treasury, investment banking and corporate banking, but retail banking – sorry, that's where the losses will come from. And so I could understand what they were doing, because I think Barclays is so committed to investment banking, that the bonus system was going to be such that their traders were always going to be taken care of, and they're all, the rest of them, are very rich men, and they can wait for what's required in the future.
In the case of Stephen Hester, he gets some sympathy from me, and I'll tell you why: he wasn't part of this mess, he's had the job with Sir Philip Hampton, the Chairman, of getting rid of the entire board of Royal Bank of Scotland, the entire non-executive directors, who were, in some respects, by encouraging the delivery of shareholder value were almost as culpable as Fred Goodwin, he, was said, will you do this impossible job? And he's got a management team round him, and he said, yeah, I'll do that, and these are my terms, and I think he made a serious personal error of judgement in telling the Treasury Select Committee that his parents thought he was overpaid – I'm not certain I would have done that!
David:
He was very honest!
David B:
He was very honest, no, but I think he may have rued the day, but I have no doubt that he'll be sorted out at the far end of his contract, which is fair enough, if he delivers.
David:
Because if he can double the share price from 35 to 70p, effectively increasing the value of Royal Bank of Scotland from, I think, £20 to £40 billion, he will get £10 million, he will walk away with £10 million – nobody can begrudge him that.
David B:
He deserves it – no, absolutely not, and I think people giving him stick did so because they were angst and angry and very annoyed, because many of them were people who've had to cough up, and I've had friends who've had huge stakes pro-rata to their size and their wealth in Royal Bank of Scotland, and they're trashed. So I can understand it, but Stephen Hester, dix points, he's done very well. Eric Daniels, I'm told he's cross, the other side of the coin is that he was part of the Lloyds situation. There is no doubt in my mind they will never prove it so long as night follows day, that Gordon Brown's dabs are all over this one, is that he obviously was very enthusiastic about a merger between Lloyds and HBOS, and when Eric Daniels went to the Treasury Select Committee, he did say that he was somewhat frightened, I think his terminology was, by the indecent haste with which the due diligence was done on HBOS, and of course when the figures were posted last year, £10 million loss, which didn't come from mortgage business from HBOS, as you probably know, it came from injudicious lending in all kinds of property areas that HBOS shouldn't have been anywhere near. Now, the other side of the coin is, as you put it, and you are so right, is that he and Win Bischoff, the Chairman, pulled off, well a miracle, raising that kind of money, £15 billion from shareholders, so I think unbelievable, and he deserves some recognition for that. Again, at the end of the day, he will get it.
David:
OK, so, just before we end this podcast, David, can our listeners take away some sage advice from you – what are the things they should be looking at, in terms of how to handle their portfolio from now, and maybe for the next two or three years?
David B:
I think I could see, to be honest with you, the FTSE 100 getting to perhaps even as high as 6,000 by the end of July of this year. Why? – because I think the quality of the earnings is improving all the time, I think there's no correlation between the economy and the equity market, and beyond that the alternative asset classes are deeply unattractive, ie, money on deposit in the banks – awful, so if you're getting a 5% yield from BP, or whatever it is, it's pretty good to me, and therefore I could see that happening, but I think I would like to caution people about the second half of 2010, because this election is going to change us, and it doesn't matter well it's ... well it matters to me, whether it's Tory or Labour, but in terms of what's got to be done, it doesn't matter that much, it's just a question of how it's done, because the public expenditure has to be dealt with. There is no question in my mind that unemployment is going to go up, and also, because tax will go up, because it has to go up, we are skint, if we're not already skint, and therefore folk will not be paying the amount of cash across the tills at Marks & Spencers that they were, and that, as you know, creates unemployment, I mean there were already signs yesterday that Next and M&S didn't get very good press from some of the analysts, because people are worried, and if unemployment does go up, then you can see a knock on effect for the share market.
So I say to people, is there's value going forward, but be in the right sectors, and I think the right sectors, as I've said to you, are energy, technology, and mining, and make sure that the shares you're in for the next year pay you a good dividend, because I think there might be a bit of hornet's sting in the tail in the latter half of 2010.
David:
Right, wonderful – so you think there might be more bankruptcies then, at the latter half of 2010?
David B:
Oh, undoubtedly, and I think unemployment will hit three million.
David:
Oh my goodness – that's not a very cheerful note to end on, is it?
David B:
No, but for investors, as I say, there is no correlation between the real world and the world of stocks and shares, and I read a horror story this morning just before we go, in the Daily Mail, and don't have a go, because it's still something, saying that, I forget the exact figure, was that 28% of businesses intended to lay some people off.
David:
Oh my goodness.
David B:
It's not me creating rifts and stuff, so confidence is there, and has returned to the fold, but it's nothing like as strong as people would like it to be.
David:
OK, that's wonderful, right, I will try and cheer people up with my quote of the day, as you well know, I end each podcast with a quote.
David B:
Absolutely.
David:
And today's quote comes from Anon. Now some people have unkindly said Anon is me, and I make these things up in my bathtub – it couldn't be further from the truth, this is actually from Anon, and he says, "Politicians are like nappies – they both need changing regularly, and for the same reason" – there we go.
David B:
I like that.
David:
I do too, and it's not mine. So thank you very much for coming in, David.
David B:
It's a great pleasure David, thanks for inviting me.
David:
This has been Money Talk, I have been David Kuo, and my guest has been David Buik from BGC Partners. If you have a comment about today's show, you can post it on the Money Talk web page, which you can find at www.fool.co.uk/podcast. If you have a suggestion for future shows, you can email me at moneytalk@fool.co.uk. Until next time, have a great week.
