Over the past year, Stuart Kirk, a former head of responsible investment at HSBC Asset Management, has made a name for himself by calling out pretentious shibboleths such as ESG. In this piece he takes as fund managers’ expertise in coming up with excuses to justify their poor performance: “This year, with many down a quarter, half and even more in the case of technology funds, how on earth was the industry going to pass the buck this time?
The usual suspects — an irrational Federal Reserve, murky Chinese politics, idiot retail investors — wasn’t going to cut it. Bingo! A polycrisis. You could hear the spasms of joy across the investment world when this idea started to gain currency in the summer. We’re saved!”
Whilst we leave it to our clients to figure out whether we in Marcellus have used a ‘polycrisis’ to justify our underperformance, it behooves us to help everyone understand this new term. Mr Kirk says “…a polycrisis is not like the usual crises you pay us to navigate on your behalf. Oh no. This one has come out of the blue and is bigger than anything any human has ever seen in history — multiple crises igniting each other in a firestorm of risk. Just ask Larry Summers. If he reckons a polycrisis is here, how can you possibly fire us for losing money?”
For good measure, Mr Kirk then spells out the bitter truth for underperforming fund managers: “The truth is that asset managers always overpay at the top of a bull market and then latch onto a reason no one could have foreseen as the cause of a correction.
To be sure, talking about Ukraine’s eastern Donbas region and food prices is far more interesting than mean-reverting valuations. But markets always correct. The best investors follow the data, not the latest blog on polywhatevers.”
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