The Plender Prognosis: Safeguarding Wealth in a Shaky Economy

Andrew Brill 0:00
Hello, and welcome to Wealthion. And I’m your host, Andrew Brill. My guest today has been covering the economy both here and overseas for over five decades, he’s seen a lot of ups and a good deal of downs. And the warning signs for both are very similar. We’ll discuss that more coming up next.

John Plender 1:04
Thank you, Andrew,

Andrew Brill 1:05
it’s a it’s a pleasure to have you on and talk to you. And you know it, your article was tremendous in the Financial Times about your longevity in this business. And I want to ask you, in today’s world, when so many people get bored with their job and change jobs, you’ve been doing this for over five decades. What keeps you interested in the financial end of journalism?

John Plender 1:29
Well, when I started, I was very wary of finance and was much more interested in foreign affairs. But over time, I began to realize a fundamental truths about the way the financial world works, and that is all human life, is their finances a very good way of looking at the way human beings interact, what motivates them, and how they affect the world. And I think that finance is a wonderful prism through which to look at human life.

Andrew Brill 1:58
Yeah, it’s because everybody has to be involved in finance, in one way, shape, or form, either it’s their personal finance, or try to figure out how to make a living and make their money grow. Right.

John Plender 2:09
That’s true. Absolutely. Right.

Andrew Brill 2:10
In your article you talk about your lessons from when you started journaling today, is there a time that you could equate today’s economy or today’s financial markets with those of the past?

John Plender 2:25
I think that the period, which is most obviously instructive in terms of how we look at today is the the decade of the 1970s, because that was a decade when you have extraordinary high levels of inflation, particularly driven by explosive commodity and energy prices. And a lot of economists today have been telling us about why our decade is different from the 1970s. I would put it to that the it’s it’s what is similar about the 1970s that is most striking, and most important in terms of how we think about the way we invest today.

Andrew Brill 3:01
Do you think that we’ve learned something from the past? I mean, the inflation right here in the States is obviously lower than it was in the 70s. But still a lot higher than the Federal Reserve would like, or the Feds would like it to be. But do you think that we’ve learned anything? Or does history keep repeating itself? And we’re gonna end up here again, 2030 years down the road once we fix today’s problem?

John Plender 3:26
Well, I think that what I would say is looking back over my time, following markets since the late 1960s, what is clear as that both central bankers, and people who invest in markets tend to have very short term memories. But if you look at history, and particularly its financial history, what is striking is that there are always cycles, there are always booms and busts. And that financial stability is endemic. You can keep the lid on it for long periods through heavy regulation. But particularly in periods of deregulation, you tend to get financial instability and financial crises. And that’s something that you need always to have at the back of your mind when you’re investing. That the Good times never last. There are always bad times that follow.

Andrew Brill 4:16
Is there something about the 70s. And I know that you go back to in your article you go back to when bonds were a big, big thing in in the UK, and, you know, that all changed with you know, certain people. And, you know, we they sort of created the early ETFs, if you if you will, is there something from the 70s that you look at and say oh my goodness, we’re making the same exact mistake now than we did that?

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John Plender 4:44
Yes, I think we are in a sense, because over the long period that economists have dubbed the Great Moderation that took place before the financial crisis of 2007 to 2009. Everybody started talking about bonds as safe assets, the sovereign bonds of governments in the developed world were regarded by economists as being safe. Well, I put it to you that nothing in financial markets is ever safe. And that bonds particularly, are not safe because they are vulnerable to inflation. And so theoretical economists and also actuarial investment advisors, I think, have done investors poor service by pretending that there is a category of risk free assets, they talk about the risk free rate on sovereign bonds, it’s not risk free at all. And I think that I would say to you that at the moment, I think that because we’ve gone through this period of very high inflation, huge increase in interest rates over the past two years, then bonds have taken a terrific knock. So it may well be that we are now looking at performance where bonds will outperform for a time. But the notion that they are risk free, the notion that this is a safe asset, is something that is for the birds.

Andrew Brill 6:06
Now, you, you write about risk, and your recent article, the end of February talked about risk in the bond market, and that’s tied to the debt because our debt continues to go up here in the United States. And a lot of that debt is being serviced by buying bonds and stuff like that, but so that you’re saying there is a big risk to buying these bonds, because the country could have serious problems?

John Plender 6:33
Well, yes. And the fact is that sovereign bonds do even in the case of the United States, which provides the world with its reserve currency, sovereign bonds, are, they are prone to all sorts of risks, including default risk, governments can default history tells us that they do. The only question is whether they default formally by not paying the interest on the debt, or whether they default informally through inflation, which devalues the IOU that you as an investor hold, and to whom the government’s own money. So you think that the Fed could actually start lowering interest rates? So it’s less expensive for the for God for the government to buy money and devaluing those bonds? Yes, I think that well, lowering interest rates actually means that, you know, bonds tend to rise in periods of falling interest rates. But I think the, again, to look at history, what is very similar in our condition today, is the period after the First World War, when you have public sector debt, at incredibly high levels, even in the United States, over 100% of gross domestic product. And, and we managed over a long period of time to get that down to quite low levels of 50 to 60% of GDP in the mid 1970s. Now, we’re all the way back up. And across the developed world, we’re looking at rates of debt of 8090 100% of GDP. And we haven’t seen that since 1945. And that is very dangerous. What it means is that governments are trying to service an enormous mountain of debt, that is very costly. And at the same time, at the moment, they’re running very substantial deficits, which means that the debt will continue to rise from these very high levels. And that means that default risk is is increasing all the time. And at the moment, I can’t see whether you’re looking at America, and both the Democratic and Republican fiscal sort of eat a fix, or you’re looking at any other countries in the developed world, it seems to me that very few countries look like they’re going to be able to engage in fiscal consolidation to bring down those overall levels of debt. So that means, again, that taking a long term or medium to long term view, sovereign debt is potentially a very risky asset.

Andrew Brill 9:04
In your opinion, what do you think is the solution to bringing down the debt or getting things under control? I mean, we’re, we’re in a period, much like the 70s, where there was there’s unrest around the role that maybe in the 70s, we were at the end of the Vietnam conflict, and we were dealing with stuff in the Middle East, much like we are today, you know, things in the Middle East, where oil could begin to rise, energy prices are going to be and begin to rise. What is the solution, John? I mean, we’re at a crossroads here where things could get ugly, but it needs to be fixed.

John Plender 9:38
Well, the solution to high levels of debt in the end boils down to economic growth, if you can generate economic growth, then countries abilities to service the debt and to pay it down, is there you know, it’s possible to do if you’ve got economic growth, and if you look at the situation in 1945, at the end of the war, we were looking potentially at a huge post war reconstruction boom. And part of the reason the debt, the public sector debt came down after the war was that you had that growth, which was very helpful in terms of, of servicing the debt. But in addition to that, you had what economists call financial repression. That is to say, governments held interest rates below the level of economic growth. And they allowed inflation to bring down the real value of the debt to now we haven’t, at the moment got a very good prospect on economic growth in the developed world. And if you look at the possibilities for financial repression, for using inflation, to reduce the real value of debt, that’s quite difficult to do if your central banks are all committed to inflation targets, as low as 2%, which is the case in the US or the UK and many other developed countries. And it’s also very hard to do the kinds of things they did in the 1940s and 50s. Like putting ceilings on interest rates, having regulatory ceilings, very hard to do that now in a world of global capital flows, because if you put ceilings on your debt, you know, in one country, then capital will flow to others where there is not a ceiling. So it seems to me it’s much harder to get levels of government debt down today than it was after the Second World War. And it’s very worrying that we don’t have levels of growth that would make all these things much easier to handle. It seems like here, at least the United States, they’re telling us that the economy is growing, the economy is doing really well. I know that there are some signals that say not so much, but a lot of the things that we’re looking at are, you know, high, but consumer prices, I guess, are high. So maybe the economy is not as good as we were being told, and is that why the debt isn’t coming down the way it should? Well, the US economy is actually doing much better than all the other large economies in the g7. And there has been a phenomenal fiscal expansion under the Biden administration, no escaping that fact. And there will continue to be under whichever color of government we have, after the next presidential election, both will deliver expansionary fiscal policy. So you’re getting quite a high level of growth in the United States, relative to recent history, but not relative to what you saw in the 40s 50s and 60s, which helped get their very large levels of debt down. And at the same time, you know, if you’re going to continue to run very large fiscal deficits, which the US and the other countries in most other countries in the developed world are doing, then we’re still back in potentially what economists call a debt trap.

Andrew Brill 12:54
Right, you talked about the 70s. And I’m trying to find the exact wording you call it financial, it was a it was a big problem, the financial and economic out landscape in the 70s. And it seems like we’re in a very, very similar situation now.

John Plender 13:15
I think that’s right. We had in the 1970s, a unique combination of financial instability, which was partly the result of the breakdown of the Bretton Woods fixed exchange rate system, which was introduced after the Second World War and stabilized exchange rates. And once that, that restraint on exchange rates was removed, we had extraordinary currency volatility. And then also we had deregulation of interest rates. So we had a combination of both currency instability and interest rate instability. Well, that is the case today, we have no globally agreed regime for the management of currencies, nor do we have coordination of interest rates. So in a sense, we’ve got the same rather chaotic economic backdrop that we had in the 1970s and all the same kinds of problems in trying to see our way through that and manage our way through that.

Andrew Brill 14:10
You mentioned in your article back in the early 70s. When President Reagan said okay, gold, the currency, the dollar is no longer tied to the gold, you can’t just exchange your currency for gold. So now our currency is no longer backed by gold, gold prices here are going through the roof. But what are the ramifications of that today?

John Plender 14:33
Gold has always been the favorite bolthole in periods of extreme financial instability for investors. And on the one hand, there are those like Warren Buffett, a great investor from Omaha who say that gold is a load of rubbish and you know, it’s got no not much real value underlying it and he has no time for it. He said many years ago. On the other hand, I would argue that Gold is actually in effect, a 6000 year bubble. It’s never really burst. But even if there isn’t tremendous fundamental value there, because global investors, psychology is completely convinced that it is the ultimate bolthole in times of extreme stress, whether geopolitical, financial, whatever. And I think I’ve come to the view having originally been with Warren Buffett, that actually, gold has wonderful characteristics as a diversifier in a portfolio to have a sort of minimum baseload percentage of gold is probably a form of insurance that all investors ought to have, and I would say should particularly have in periods when government debt is clearly moving out of control, and pointing to very severe financial instability and future, including governmental defaults.

Andrew Brill 15:55
So when we talk about volatility of markets, back in the 60s and 70s, you had the nifty 50, that people looked at, and we’re like, oh, I, you know, they had the fear of missing out on those things. Now we have aI stocks, the magnificant, Magnificent Seven, which, since Tesla has dropped off has been the now the super six, how do you compare the two, the nifty 50? To The Magnificent Seven or the super six?

John Plender 16:24
Well, there is a certain amount in common, particularly investor psychology towards them. But the interesting question, when you get this concentration of very, very successful stocks that are doing extraordinarily well, and are asking yourself, can they keep it up? Is that it’s a question about barriers to entry. And if you think back to those nifty 50s, with Xerox and Polaroid and others that are now corporate dead, you have to ask yourself, if you look at today’s Magnificent Seven, how many of those could be in the same position as Xerox, or Polaroid in five to 10 years time? Now, I think the barriers to entry, you know, at the moment, there are some pretty solid barriers to entry around a lot of these very large companies like Microsoft and, and Nvidia and so forth. But I think that in a periods of very rapid technological innovation, it’s amazing how quickly barriers to entry can fall. So my suspicion and I think there’s some evidence from academics who’ve put together investment return series going back to 1900, that there tends to be a bias in markets to over valuing technology over very long periods. So I think you need to be a little wary. I mean, it’s very dangerous to tell investors to get out of the Magnificent Seven. But, but it’s also wise to point out that magnificent sevens don’t always stay seven, and normally always stay magnificent forever. And the nature of capitalism is that at the heart of what drives growth is creative destruction. And destruction obviously, effects both companies, and some of them get destroyed over time.

Andrew Brill 18:18
We’re seeing a little bit of that of in Apple, it’s not being destroyed, they’re re configuring to go after AI, obviously, scrapping their Evie car and, you know, they’re, they’re gonna try they’re refocusing their efforts into AI. Is there something you look back on like aI back in the 60s or 70s? And I know that that was a, we felt the 60s and 70s was a huge growth period. Is there something like that, that you saw either technology, or something else that you saw back then that was like aI today?

John Plender 18:51
Well, I think that a little later, obviously, the internet had was one of those kinds of enabling technologies. I think that the interesting sort of comparisons, if you’re looking for technologies that really were fantastic drivers of growth, you have to go back earlier and think about things like electricity. But I think it’s too early, it’s too early for us to be entirely sure about how marvelous AI will turn out to be. It’s obviously a very, very powerful technology indeed. But the other thing to bear in mind as an investor, when you look at these new technologies, is the big question is, sort of, across how many companies is is are the fruits going to be spread? And how much of those fruits will actually go to consumers, not to shareholders, because the cake gets divided in different ways according to the dynamics of the market within which these companies are operating.

Andrew Brill 19:49
Is there anything about AI that scares you? I know that you made a reference to you know, individuals being able to invest on their own and they creation of these platforms to be to, you know, for people just okay, I want to buy the stock, I’m gonna press this button, I’m gonna buy a little bit of stock. And I know that there was some apprehension there. But do you have any apprehension about how AI would affect the economic landscape or the the markets themselves?

John Plender 20:17
Well, I think AI will almost certainly be a force for even greater market efficiency than we have at the moment. And it’s very hard for private investors to operate in markets, which are dominated by sort of institutional investors with fantastic access to information, huge access to detailed research, it’s, it’s, it’s a very difficult environment for private investors to operate in. And it seems to me that the nature of AI is very much that it’s brilliant at managing information in ways that are immensely helpful to the people who manage it and call the shots. But for private individuals, like I think that it will tend to accelerate the move towards passive investing, because you just have to accept that you can’t compete with these guys who have access to such phenomenal technology. That said, you know, there’s a limit to how far passive investment can go without introducing a sort of counterbalancing lack of efficiency, because if everybody is using passive passive investment, then the process of price discovery in markets, you know, the ability to value shares has been eroded by everybody pursuing the same momentum, as directed by indices,

Andrew Brill 21:42
you had concern about passive investing, and the rise of passing in investing in algorithmic trading. Can you expand on that? What was What’s your concern about that?

John Plender 21:55
Well, I think the two concerns, the first one is simply that I do think that passive investing is a form of momentum trading in effect. And that means that you’re departing from fundamentals and from fun, fundamental value. And there’s a limit to how far that can go. And there is a point at which too much passive investing means that markets will end up encouraging an inefficient allocation of economic resources, so that there has to be some constraint on passive investment. And if we are not to end up with an inefficient allocation of resources, I think my other concern about the way trading, trading habits and behaviors are going at the moment is that I think that we’re at risk of having excessive trading. No economist can tell you what constitutes an excessive volume of trade to achieve an efficient market. And when you look at the extent to which you have these high frequency traders, people using algorithms and all those kinds of things, a fantastic amount of human resource is being poured into this rarefied activity, which might otherwise have gone into health care, or, you know, some what I would regard as maybe more productive and socially useful outlets. So there is a question about whether the financial system can’t become too sophisticated, and become an an excessive drain on resources that could be better deployed elsewhere in the economy.

Andrew Brill 23:31
So are you are you a little bit concerned about what happened with GameStop, where its individual investors, or passive investors got some information and kept feeding it and feeding it and feeding it until it drove GameStop? To a point where it should never have been?

Well,

John Plender 23:46
Well, that’s right. But But of course, that is, has been a characteristic of markets throughout the the centuries, you know, you do get these irrational behaviors, you do get bubbles, and there is a degree to which technology can multiply and magnify. The effect of the madness of crowds is sometimes being called. So yes, you Your point is, right. So there’s a FOMO in effect, there’s a fear of missing out, especially with something like GameStop or even these AI stocks, where they’re going through the roof, and the invidious of the world. There’s a fear of like, if I don’t get on board, I’m not gonna be able to make this money. That’s absolutely true. And Fear Of Missing Out is one of the great characteristics of the big bubbles of history going back to the South Sea bubble, the Mississippi bubble, but also including in our lifetimes, you know, the, the tech bubble that burst in 2000. Fear Of Missing Out is a brilliant way of losing money, but it’s inherent in human nature, that we are afflicted by that sort of desire, and that fear in your work.

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Andrew Brill 24:59
In your experience, John, where do you think this market is going? You know, you’ve studied markets, you’ve, you’ve lived through peaks, you’ve lived through valleys, and you’ve seen recoveries and then slide back and all that stuff. Where do you think this market is going?

Well,

John Plender 25:15
Well, it’s incredibly difficult to recall the top of the market. And it’s incredibly dangerous to say that it’s the top of the market, I can see all sorts of worrying factors in the wider economic environment, which point to difficult times ahead. But I don’t think this is the moment for investors who say we need to bail out, because financial conditions at the moment, are not too bad. We’re looking at a period in which interest rates are going to be coming down in the course of this year in all the developed countries around the world. And so it seems to me that, given the enormous importance of monetary policy and dictating the levels of market, you markets, you’re, you’re really taking quite a quixotic risk and making a very dangerous judgment. If you say that in a period of falling interest rates, markets are going to fall out of bed. Having said that, there are always the unknown unknowns, anything can happen. And you have to have at the back of your mind that whatever the monetary and financial conditions are telling you about where markets ought to be going, geopolitical risk, is now becoming a more and more pressing concern for all of us. When you look at superpower competition between the US and China worries about what China might do in Taiwan. In the meantime, you have Putin posing a potential strategic threat to Europe in a very worrying way. And, and no clear outcome as yet to where things might be going in Ukraine, that that is something that could spring surprises on us, which really would upset markets very badly. But at the moment, I think the odds are not on markets falling out of bed yet, but they ought to fall out of bed soon, because I feel that the the debt background, and also the fact that we are in a relatively low productivity world, and with the exception of this narrow area to do with AI, and other other tech, we’re looking at, not exactly, perhaps not stagnant, developed world economy, but certainly a very underpowered world economy compared with where we been, say in the 1980s 1990s.

Andrew Brill 27:38
So how would somebody protect themselves? Obviously, you can’t time the top of the market, it’s very difficult to time the bottom of the market, but it How does someone protect themselves from falling off a cliff, if you will? If this is the top or say, Well, I’m gonna hold on a little bit longer, but I’m gonna figure out how to take some money off the table, would that be a smart thing to do? Or how would someone protect themselves from geopolitical things that could take place and, and really disrupt the markets,

John Plender 28:09
the absolute key is diversification, you’ve got to hold a diversified portfolio, you then you have to make up your mind about some things which are not to do with diversification, like, for example, whether you think that China is investable or not. And, you know, China is a real conundrum for any investor. And I would be extremely wary of investing in China if I were a private investor. But having said that, diversification, is key to preparing for things that could go wrong. As I said earlier, I think having a percentage of your portfolio and gold, which gives genuine diversification, if things, you know, if both equities and bonds are falling out of bed, gold will operate in the opposite direction and very likely give you a store of value that holds at that point. Having said that, I should just perhaps remind people that if you look at gold over the long term, I mean, for example, between the peak of gold in 1980 It it took something like, you know, two and a half to three decades for investors to get that money back in gold, because it can be a lousy investment for a very long time. However, if you’re looking, if you look at it as as insurance, as opposed to, you know, a bet that you take to make money then as a diversifier in a portfolio, it has real value.

Andrew Brill 29:41
So buy some buy a little bit of gold and you know, you’ll be okay. Over the long term.

John Plender 29:48
You bet.

Andrew Brill 29:49
Yeah. So at how has you’ve been an economic financial journalist for a long time? How has financial journalism in your opinion changed? And how has that affected markets? And how have markets changed? Because of financial journalist?

John Plender 30:06
Well, I’m probably the last person to ask because I’m a financial journalist. But I think that, first of all, it’s financial journalism has become much more sophisticated. I think also, particularly the quality of economic comment from the media is far, far better than today than it was 50 years ago. And I know central bankers who have said that, to me, they feel that the media is can be a much more positive force than it was decades ago. And also, it’s, I think, probably, it’s quite heavily regulated. If you look back at the origins of financial journalism in in the 18th century. The famous French philosopher Voltaire was also a speculator, and he ran a financial newsletter in which he, he promoted the stocks that he bought. So he was in modern parlance, front running. So there was a lot of skullduggery going on in financial journalism days gone by, I think now, it’s a much cleaner thing. And it’s very well regulated. And I think it’s an important part of contributing to the efficient workings of markets. But having having said that, I think it’s, you know, the quality of financial journalism is partly being eroded by the growth of comments in social media, which is much less regulated and, and where a lot of people seem to acquire a following on the basis of very little in the way of knowledge track record experience, or what have you. So we’re now looking at a rather more mixed picture than we were a couple of decades ago. It’s there’s a lot of lazy comments out there as well as good comment from good sources like my own The Financial Times, if you’re excuse a plug,

Andrew Brill 32:02
I appreciate it. Are you concerned about that? About some misinformation out about their look, the digital age has changed a lot of things. I read your article online, I didn’t open up the Financial Times, so that you know that the digital age and social media are prevalent in today’s society, is that a concern of yours coming from, you know, people who used to read the newspaper are now getting their information online, they’ll go on social media, and perhaps find something that isn’t exactly the perfect truth?

Well,

John Plender 32:35
Well, I think that, that I’m entirely in favor of people having access to media outlets, like the Financial Times Online, because obviously you can get it more rapidly. And there are all sorts of advantages in in accessing financial information online. But having said that,it I think that what worries me is simply that I always thought in terms of if you think about fake news, and the misinformation that is available through social media. Instinctively, as a liberal, you might think that good facts and good information will drive out bad. And I think our experience of social media is that that’s not necessarily the case at all, that in this huge, wide, very diverse marketplace. People are not necessarily gravitating to the good outlets like the Financial Times and the Wall Street Journal to inform their investing behavior. They’re often going to all sorts of strange places, and becoming swept up into bubble type behavior on the basis of all sorts of misinformation and bad analysis.

I

Andrew Brill 33:54
I want to turn to currency for a moment now you lived through the euro, where many countries adopted the Euro from their own currency. It took I think it was the better part of eight years for the euro to go from 1991 until it was adopted in 1999. Original originally it was a digital currency was something that was just electronic we’re now in the age of cryptocurrency. Your thoughts there is this cryptocurrency? I know Bitcoin has hit a new high is cryptocurrency going to eventually become a currency in your in your opinion?

So you don’t think in the electronic age that we live in, there’s a value on, you know, this is supposed to be a currency that cannot be corrupted or cannot be stolen or anything like that, you know, understanding that there is no value, you don’t see a way on which in which this cryptocurrency can become adopted as an actual currency.

John Plender 34:33
Well, I’m one of those who wonder whether crypto currencies aren’t really a solution that’s looking for a problem. It seems to me that the crypto currencies that well, if you leave aside stable coins, which are pegged to hard currencies or values, cryptocurrencies, just have no underlying value and I think with gold As, as I mentioned, you know, there’s a 6000 year track record that has infiltrated human psychology about the underlying value of gold, even though there isn’t much underlying value. I don’t think it’s the same with with cryptocurrencies. But the cryptocurrencies are having quite a run at the moment on most obviously Bitcoin, partly because, you know, they’ve been given regulatory approval to be put into ETFs, and so forth. And that’s rather similar in a way to what happens with currencies, when a government decides that a currency should become an authorized and legally enforceable medium of exchange, the only thing is, you can’t really use crypto for exchange. So the SEC and other regulators who made it easier for people to use crypto, but use it for what people are using it for a store of value, but there isn’t any value there. So it seems to me, you know, in a curious way, that the regulator’s have encouraged a bubble. And that in the end, the value isn’t there. And I don’t really see how in 10 years time, it that the store of value case for crypto will look robust.

Well, in the end, it’s a matter of human psychology, if there’s no value there, it depends on whether enough people can be convinced that there is value even if it’s sort of not visible and not tangible. And my guess would be that, that crypto will not reach that point at which human psychology will give it an imprimatur capable of lasting another 6000 years. So, but it’s, it’s a difficult judgment. But in the end, all I would say to you is having looked at a lot of investments where there’s been a lack of real underlying value, and a lot of psychological hype. Be wary, there are trading profits to be had of crypto, but also trading losses. And in the long run, I just don’t see it as rivaling gold at all.

Andrew Brill 37:37
So in your journeys, as a financial journalist, you’ve interviewed people, you know, high profile people in finance, economics and politics. Is there any that stand out to you as most memorable? And why would that be?

Well,

John Plender 37:55
Well, the one who I learned most from partly because I, I knew him and and worked sort of as an auditor of the pension fund that this man rang ran, he was called George Ross Goobie. He ran the pension fund of Imperial Tobacco. And he made the seminal decision when he was running it in 1947, to get out of government bonds, and go entirely into equities, which in those days was very, very controversial. Pension funds. You know, they they invested almost exclusively in government bonds. And he his thinking was that government bonds were a hopeless hedge against inflation, they would lose value over time and equities, had real value and were dirt cheap at the time. And he was proved to be right. So he was my sort of mentor, so to speak, in looking at investment, and I’ve not really, I mean, obviously, there’s some enormously clever, admirable investors. Around Warren Buffett being the most obvious one. I have a particular soft spot for the the naysayers, the ones who cry wolf, Jeremy Grantham, being one in particular, but then the trouble is, I’m not sure that I would encourage everybody to follow Jeremy Grantham on a month to month, year to year basis, but in he’s one of those people who rather I mean, I dare I say, in the end have proved right, that in terms of judging, you know, the market on a day to day basis, I wouldn’t necessarily say that you should follow him. Just use him as an intellectual mental sounding board to test your views on. So, you know, those would be my ways of thinking about great investors. In the end, I think you’re by all means, use use them as sounding boards, but I think that for most people there I said, it’s far better to go the passive route because it’s so much cheaper in in terms of the cost of investing the fees you pay and To all evidence suggests that the number of human beings who are capable of outperforming, or indeed underperforming markets consistently over time, it is a tiny fraction of the human population. And the likelihood that your eye is one of that fraction is a very, very low.

Andrew Brill 40:19
I’ve had a fascinating and reading your article about Ross Goobie, and how he was one of the first people to create an ETF, if you will, a portfolio of stocks that he held on to and he was really into holding on to stocks and letting them them grow. And he was an innovator in that respect. And I found that fascinating to fight to figure out and learn from you that he was one of the first people to actually do that.

John Plender 40:48
Yes, well, he, you know, to put it in simple terms, he believed passionately in buy and hold. And he believed that if you trade you’re incurring large costs, and that will reduce that will really erode your performance over time. And that is, that is one very important lesson that private investors can learn from somebody like him that trading on a on a regular basis is it damages your portfolio performance, unless you are a genius, and most of us are not.

Andrew Brill 41:18
So John, last question. And you’ve covered economics and financial situations for a very long time. What would be your best advice for somebody who’s investing over a lifetime,

John Plender 41:33
I think the probably the best advice would be to say, invest early and invest consistently in your lifetime. Because the compound interest is a fantastic phenomenon. If you invest something that you hang on to for 60 years, the compounding effect is miraculous in what it does to your wealth. So a combination of investing consistently, you know, all the time regularly out of your income. And at the same time, obviously, you have to take into account the pressing demands of your family and, and your your circumstances may be difficult. So it isn’t always easy to keep up. Investing on a on a month to month, year to year basis. But if you can invest early and keep investing consistently, that is the way to ensure a really good, happy, financially secure retirement.

Andrew Brill 42:39
Oh John, I can’t thank you enough for joining me, I, you’re a wealth of information, and a wonderful person, and I appreciate your insights. I appreciate everything that that you’ve told us here today. And I hope that people will, will take your advice and invest early and do as best they can and seek out good advice. Right is that that’s what we’re saying is seek Don’t Don’t Don’t believe everything you read, especially if it’s online, but seek out the really good advice. Indeed. And last question is other than the Financial Times? Is there someplace we can find you on social media? Or do you stay away from that stuff?

John Plender 43:19
No, I’m afraid I’m very much the Financial Times. So that’s, that’s where you find me. And that’s where you, you see me and, and I, I hope I will continue to be seeable and read there for quite a long time yet.

Andrew Brill 43:34
Well, we appreciate you. And we appreciate everything you write for the Financial Times. I know reading some of these articles, really as has brought some some light to some of the financial situations that we’re in. So we appreciate it very, very much. And I thank you for joining me. That’s a wrap on another discussion here on Wealthion thank you for joining us. If you need help being financially resilient, please head over to Wealthion.com and sign up for a free no obligation consultation from one of our vetted registered investment advisors. And remember to follow us on social media for the latest news and information to help you invest wisely. Thanks again for watching and until next time, stay informed, stay empowered, and may your investments flourish.