What do you see as the biggest opportunity in your asset class in the year ahead?
Small caps tend to outperform when the global economy is improving so headwinds to growth like the US-China trade war have held small caps back in the last year or so. Any resolution to these issues should see small caps resume their historic trend of outperformance.
What is the biggest challenge in your asset class in the year ahead?
Now that stocks have recovered from the Q4 sell-off, valuations are back to fairly high levels. This can be justified if interest rates stay low and earnings growth continues to come through. But if inflation emerges, interest rates will inevitably have to rise which will put pressure on valuation multiples.
If you weren’t covering this asset class, which one would you like to cover?
I think equities is the best asset class for long-term returns so, if not small cap, I’d cover large cap. But if not equities, I might take a look at certain commodities like lumber, precious metals or even alternative currencies like bitcoin.
What is your biggest career regret?
Not becoming a small cap manager earlier. I made the switch from large caps seven years ago and I’ve been impressed by the tremendous innovation in the small cap space where the risk is not as high as people think, especially when you focus on the higher quality companies.
Which three guests, dead or alive, would you invite to a dinner party at your place and why?
1. Jesse Livermore. One of the greatest stockmarket traders of all time who rode the highs and lows of the market at the turn of the 20th century. He was a brilliant momentum investor so I’d be interested to hear his insights.
2. Lucy Kellaway. A former FT journalist who has become a teacher. My mum was a teacher and it’s always been something that I’ve wondered about doing so I’d love to hear about her experiences.
3. Alex Ferguson. A great football manager and manager of people. It would be interesting learn his secrets about how to get the best out of people.
If you were stranded on a desert island, what three items would you want to have with you and why?
1. A trumpet. I’ve always wanted to play the trumpet so a desert island seems like a good place to learn without annoying anyone.
2. A Kindle. This would be a good time to catch up on all those books I’ve wanted to read but not had the time. I might start with Nan Shepherd’s ‘A Living Mountain’ about her experiences in the Cairngorms.
3. A sand wedge. With all that sand, it would be a good place to practice some bunker shots.