Investment Stags and the Cull

As you may have gathered if you follow me on twitter, I can be found walking my dog in Richmond Park most days of the week. The last couple of months have been a little more challenging due to the rutting season. This is where the stags stand about half a mile apart, bellow at each other, resulting in a venison version of “It’s A Knockout” whilst staking a claim to as many doe as possible. The flush of male bravado results in some rather aggressive behaviour and the sensible dog walker is often forced to change course.

Its only natural?

This reminds me of the investment community (there is even a term “stag” for short-term speculators). Like the stags, for about 80% of the year they get on together pretty well, but as if to prove machismo and Pareto’s law, they spend the other 20% of the time making noise about how wonderfully they perform against their peers. Unlike the stags in the park, it isn’t quite as clear cut when the rutting season comes to an end. In the park, the tell-tale sign is when the stags gradually begin to come together again in herds.

Who is the top stag?

It’s now December and many Fund Managers will be keeping a close eye on their year-end figures. This is potentially a period when a lot of noise is made, as the run in begins, attempting to round up new investors with some impressive shows… The equivalent flashing of antlers, posturing and skirmish will follow as each attempts to woo investors with pretty marketing charts that show an upward trajectory. The sensible investor would do well to keep a safe distance, perhaps altering course a little, remembering that this will pass and remember each year there is a cull, which rather changes the perspective on who is or will be “top stag”… there are certainly several stags with very large sets of antlers, however this does not seem to indicate their placing in the hierarchy. It is amusing to observe the “new stags” who have very small antlers, yet have a tendency to be the most aggressive… reminiscent of the boy racer. One wouldn’t wish to draw too many comparisons with investment managers, but let’s agree to observe that new is not necessarily better.

Dominic Thomas: Solomons IFA