G’day! Back in the mists of time, 1991, (gulp….that’s 27 years ago!) I was well into lifelong learning but if I’d known I’d live this long I would have waited much longer before being addicted to bookshops. Yes, you youngsters out there, believe it or not, but to find and buy a book in those days you had to travel to a shop. Now you just sit on your bum, click on t’internet, and next day a busy bee arrives all the way from a Brazilian river with said literary purchase. Or go Kindling. Don’t ask.
My other book selection procedure involved airports, given that I often used to have the “pleasure” of waking at the sparrow’s fart and catching the “red eye” to London in search of friendly financial journalists…. (yes folks, “paper” newspapers used to be bought by people, and what was reported believed by them) …. who shared out my “wisdom” thus attracting new clients to us. And hanging about airports afforded me extra browsing time to “find” interesting books.
And that is exactly how I stumbled across “The Age of Unreason” by Professor Charles Handy. Originally published in 1989, but available in ‘91 in paperback at the highly attractive price of only £6.99. What a bargain. In it Handy foresaw dramatic changes transforming business, and predicted “the virtual disappearance of lifelong, full-time jobs.” It was a thought-provoking read.
As an example, he explained that when he left Uni he had obtained a job in a Plc within a specialist division and posted to a foreign subsidiary. Then to illustrate the pace of change, by 1989 not only had the division gone, so had the Plc, and even the country had vanished. Gulp!
He suggested that “discontinuous change” would require “upside-down thinking” especially in work and business. He compared future success or failure to a frog sitting in a pan of water that’s slowly brought to the boil. Because the frog couldn’t detect gradual temperature changes it would happily stay put until it was boiled to death. And he predicted that as the fate of any business, no matter how large, unless they woke up to this unprecedented rate of change.
Think of that regarding the Savings industry. How many Life Assurance Mutuals founded in the early to mid-19th Century remain? What happened to our traditional Final Salary Pension Schemes? Think of all the other businesses that once thrived but have now vanished. Scary, eh.
So I decided to apply “upside-down thinking” to the growing consensus belief that the world’s in danger of yet another stockmarket crash or recession at any moment, plus visit an old pal, and simultaneously indulge myself in another passion – red wine. And where better to do all this than Down-Under, in Upsidedownland, Australia. Thus anybody who sent me emails from the 18th of March until last week would have received the following reply…
“I am on a recession-hunting tour Down Under and won’t be back in the office until 11th April. I may be checking my emails when I am not drinking red wine.”
So what did I discover? Well apart from some new glorious reds, and yet another interesting read in Perth Airport, Tim Marshall’s fascinating “Prisoners of Geography,” you will be relieved, but not surprised to learn, that after travelling many, many 1,000’s of miles, via Emirates and Dubai, from Perth to the beautiful Margaret River, to Adelaide, the Barossa and McLaren Vale, and finally on to Melbourne, there’s nothing to report that would give economic pessimists any fresh hope.
In short, the world down-under is buzzing. En route, Dubai’s airport, they say, is now the busiest in the world, even at midnight and the wee small hours. 5-star hotels are springing up in Perth, Aussie wine sales are breaking records (and that was before I got there) and Melbourne… what a busy place that is. Take my advice. Don’t go near the centre on a Friday after 5pm, unless you fancy being trapped by thousands of thirsty Aussies looking for a drink. Think Australian Rules footie but without the rules.
Did you know Melbourne has around 5 million (thirsty) inhabitants, and that Sydney has over 5.5 million? That flights between the two cities add up to the second busiest air route in the world? And I’d no idea there were so many would-be customers living in countries nearby. We all know about China, but how many folk live in Indonesia or Vietnam do you think? I wasn’t even close. If you, like me, think of paddy fields when you think of Vietnam, think again. It boasts the best IT expertise in Asia apparently. (By the way, Indonesia’s pop is 261 million. Vietnam, 93 million).
But the one thing that grabbed me about our trip around Australia was the legacy left to the current generation by those incredibly brave and hard-working early settlers in the 19th Century who travelled from the UK for months in sailing ships in what have must been truly awful conditions. And who cleared the land, built farms, wineries, townships and cities. Many it seems were skilled in construction or farming, but others embraced change and new skills. You wouldn’t believe how many Scots established wineries. How about a “Bobbie Burns” Shiraz from Campbell’s of Rutherglen? Or a Scotchman’s Hill Pinot Noir? Jings.
And then there are the trees. Summer sun in Oz is fearsome. So what did previous generations do? They planted trees by the thousand to provide shade. Not for themselves, not even for their children, but for their grandchildren and great grandchildren. It’s really quite humbling today walking in the welcome shade in the leafy streets in Melbourne.
And thus two lessons were learned afresh. While pessimists wallow in daily ever-changing fear -inducing headlines, why not look for what’s encouraging in the world. And down under there’s a lot to be excited about. So instead of focussing on stockmarket falls, focus on bargains created. As Ned Davis Research and others remind us, over the last 100 years there’s been 89 stockmarket falls of over 10%. So what’s happening this year is quite normal, but that doesn’t make headline news.
The other lesson was the value of patience/long term planning (a la the wineries and the shade). The Chinese said the best time to plant a tree is 25 years ago. Charlie Munger, Warren Buffett’s right hand man for well over 25 years recently released a checklist for successful investing. 3 stand outs…. Be Independent in thought, Be Prepared to work, work and read and read. Have Patience…resist the human bias to act. Better to just treat yourself to the odd Shiraz. (That’s mine)
And finally a last word on legacy. I learnt that last year HMRC collected over £5 billion thanks to Inheritance Tax (IHT). More than a few readers of this letter may recognise my “40% discount scheme.” I used it to pay for my Oz trip, and to buy decent wines. It goes like this….once you’ve spent the money the taxman can’t get it when you die, thus the 40% discount. But for many it still leaves capital to tax, and as Ken Dodd discovered, living near the sea doesn’t exempt you from the Inland Revenue. So if you’d like thoughts on IHT legacy planning, give us a shout, G’day.