The tech gold rush and why Putin isn’t a chess player
Plus a deadly behavioural bias and other insights from the FT Weekend Festival
My conference summaries have been popular with readers. I pay, I go, I summarise - and readers get a quick recap without having the time and expense. And perhaps are encouraged to visit next year. Let me know if you disagree. This week’s post brings you my notes from the FT Weekend Festival.
And if you like these conferences, I have just booked to attend the upcoming Moneyweek Summit – maybe see you there.
The FT Weekend Festival is held at Kenwood House on Hampstead Heath in London. Last year I was a speaker, but this year, I had the whole day to enjoy the event. Well almost, as the queue to get in was miles long and I missed the first part of Tim Harford’s presentation. This was a shame, as he builds up the suspense brilliantly.
The Weekend Festival is multi-track so you inevitably miss a few sessions – I will catch up online later and let you know – but I still listened to some superb speakers.
Tim Harford
As I mentioned, it was a shame that I got in late (and I would have been even later were it not for Marc Rubinstein of Net Interest – thanks Marc), but the message here was very simple. Harford painted a beautiful picture around a common behavioural bias – we believe what we want to believe.
This is an incredibly powerful bias, which allowed investors in Wirecard to convince themselves they were geniuses and to ignore the flagrant evidence that it was a fraud. At least, that’s the only explanation that Dan McCrum (the FT journalist who exposed the story) was able to come up with.
Harford tells a wonderful story about writer Sir Arthur Conan Doyle, creator of Sherlock Holmes and a brilliant man. He was fascinated by fairies and was fooled by a doctored photo which appeared to show fairies with a little girl. But just the faintest trace of detective work would have revealed that the photographer’s full time job was doctoring photos – the author didn’t ask, because he wanted to believe.
That this fooled Conan Doyle is rather surprising. That investors were fooled by Wirecard in the face of front page articles in the Financial Times is perhaps even more surprising. But such hopes, and confirmation bias, are real enemies of investors.
It’s actually not that hard to combat – just always be interested in the opposite opinion. Interrogate investors who are sellers of the stock you own – they may know something you don’t or have spotted a trend or potential risk you have missed.
The Fairies Picture
Source: Wikipedia
Stuart Kirk
Stuart is (in)famous for ill-judged remarks about climate change which led to his ejection by his then employer, HSBC. Actually, his remarks were more insensitive tonally than outright inflammatory but the bank probably felt it was difficult to retain him in an ESG-related role. He is now writing a weekly column on investing for the FT, but his LinkedIN profile carries the “Open to Work” symbol.
Stuart used to write an excellent weekly at Deutsche Bank and prior to that was on the Lex Column. He is a brilliant thinker – the term thought leader is over-used, but appropriate for Stuart. So I went along to listen and here are a few takeaways.
He believes the US stockmarket is highly overvalued.
He likes the UK and Japan. He thinks “it’s Japan’s turn”.
People are too bearish on China.
Given high nominal pay rises, if we don’t achieve productivity improvements, markets will have a real problem.
ESG is the right way to invest, but with anything new and hot in finance, you get a lot of people jumping on the bandwagon.
The anti-woke feeling is very strong in the US and company CEOs are caught in the middle. If they are too woke, they annoy shareholders but they need to be woke enough to attract young employees and customers – a dilemma.
Stuart believes that buying and selling shares is irrelevant to achieving ESG outcomes and votes are the only way to influence companies. This is a controversial view and quite wrong in my opinion - executives care about the share price.
Panel on Putin and Xi
Peter Frankopan, academic and author
Bronwen Maddox, Chatham House CEO
Yuan Yang, FT China correspondent
Alec Russell, FT Foreign Editor
Alex Younger, former chief of MI6
This was a particularly interesting discussion. Not just because of the high octane participants (Alec Russell was the FT Weekend editor and is now in a much more appropriate role – he is really smart), but because Younger was able to offer a unique and informed perspective.
Asked about Putin, Younger quipped
“I am not a fan”.
But he pointed out that Putin identifies as a spy and has a particular obsession about MI6. He made three points:
1 Putin has an undeserved reputation as a strategic genius. “He is a poker player, not a chess player”. I thought this was interesting – Younger thinks Putin is a gambler.
2 Putin was thoughtful about his business model, creating competing baronies around him who were dependent on him. That model reached the end of the road with the death of Prigozhin.
3 Putin started the war for reasons related to historical unity but it’s really a question of whether Ukraine is an eastern or western country. Because of this blunder, Ukraine has moved to the west.
Bronwen Maddox continued the poker analogy by highlighting that Putin cannot fold but he doesn’t have a Plan B. And importantly, does the west have the will to resist? Ukraine cannot win without continued US support. The top 3 Republican candidates have questioned the role of the US and there is some dissent among Democrats also.
Frankopan highlighted that Putin controls the press in Russia and can sway public opinion. There have been next to no defections since the war began. One of the hard men will come next but they owe everything to Putin and will be reluctant to act. And Putin needs to be in power to safeguard his own personal security. Meanwhile, the will in the west may not last, with an influential observer like Sarkozhy saying that Ukraine should do a deal.
Most of the discussion was around Putin and I came away more concerned than when I went in. I have since been pondering this question of the will of the west. Here’s hoping the Ukrainian forces make some leeway.
Don McCullin
OK, this is an investing newsletter, but I love photography and McCullin is one of my heroes. I couldn’t resist hearing him in discussion with Barnaby Rogerson about their new book. They travelled together across Turkey looking at Roman ruins.
Rogerson said
“Construction is a form of continuous worship”
while McCullin said that he loved the figures but he doesn’t particularly like the buildings because of the tragedy of the people that built them – thousands died in the construction and in the extraction of the stone from the quarries.
McCullin left school and had no education. During his national service, he failed his trade test as a photographer, the reason being he couldn’t read properly, age 18!
I almost laughed out loud when McCullin, who has covered so many wars and has been in such danger so many times, said “Roman sites are incredibly dangerous”. If you misplace your foot, you can end up in hospital, as he did once. He was also bitten by a scorpion but didn’t bother going to hospital. He talked about his experiences as a war photographer and said “those experiences come back at night to haunt me”.
McCullin, who is 88 this October, is still active and was leaving for Turkey the following week to photograph some more ruins. His photographs are astonishingly good. He uses no artificial light at all, and says he cannot wait to get into the dark room to see what he has and print on paper. I would have liked to ask him his views on digital photography – we are taking so many pictures now that I wonder if printing beautiful black and white prints from negatives could become a lost art. I hope not.
A Quick Sidebar
My friend Russell Napier is running his Advanced Financial Markets course in London in October. I wrote about it here. It’s really good! If you want to learn more, visit the website.
What to Expect from a Labour Government
Camilla Cavendish, formerly Director of Policy for David Cameron when PM
John McTernan, former political secretary to Tony Blair
Rachel Reeves, the Shadow Chancellor.
McTernan made some sensible and interesting comments about Starmer being more radical than has been generally realised. Reeves was articulate and sounded sensible – “we have to grow our way to higher prosperity”. But I will believe it when I see it – politicians are so well PR-groomed these days that it takes a more aggressive interviewer to reveal their weaknesses. The FT journalist moderating the discussion wasn’t up for that, so I left early. Sorry, not sorry.
The New Goldrush: How to Make Money out of Tech
This was a great albeit mistitled session – hearing from James Anderson (former Senior Partner of Baillie Gifford) is always an experience. Paying subscribers can read on to learn more.
PS It’s not too late to sign up for my second Forensic Analysis Bootcamp. You can learn more and enrol here.