Ruffer Radio

Fund Manager Alexander Chartres sits down with Investment Specialist Gemma Cairns-Smith to discuss the challenges facing investors in a more fractured global landscape. They cover the journey to this more multipolar and harder‑edged world order, its new power dynamics, and the renewed importance of real assets. They also discuss the skills investors need to survive in this hard new world. READ THE ARTICLE DOWNLOAD TRANSCRIPT]]>

What really drives the economic cycle? It’s not the total amount of debt – it’s the rate of change of new borrowing. Investment Specialist Gemma Cairns-Smith sits down with Ruffer’s Head of Macro Strategy Michael Biggs  to explore his research into the credit impulse — the change in new borrowing that drives economic activity. Mike explains why this signal is widely misunderstood, what it reveals about the UK’s shifting interest‑rate backdrop, and where the biggest opportunities and risks lie as credit conditions turn.   READ THE ARTICLE DOWNLOAD TRANSCRIPT]]>

In this thought‑provoking conversation, Ruffer Chief Executive Chris Bacon discusses the idea of Risk backwards: that comfort, conformity and ‘blanding’ can create the illusion of safety while increasing vulnerability. Chris shares lessons drawn from different decades of life, explaining why disruption can be an advantage, how to cultivate independent thinking, and how Ruffer’s philosophy embeds these ideas in both culture and investment practice. Read the article ]]>

This review explores what we can (and can’t) infer from today’s facts about tomorrow’s markets. Our aim is to get a bit further than Pierpont Morgan: when asked to predict where the markets were heading, he replied, “They will fluctuate.” At Ruffer, we claim to be all-weather investors. In recent years, we let the side down by being overconfident of an approaching handbasket from hell. We dropped our guard; the market went up, and we went down – a mistake we seek not to repeat. The latest quarter’s out-turn should be a double encouragement to those who wonder whether we have learnt our lesson. Predictably, perhaps, we were strong in the poor markets earlier in the year – but, when the markets recovered in Q2, we continued to drive forwards. It might of course be a Swallow, but we trust it’s an Amazon. Common sense suggests the market should be subdued. Wars and rumours of wars are not good for GDP growth. Taxes on trading activity such as tariffs reduce, in absolute terms, the amount of goods traded worldwide, and redirect money from the optimal trade channels into the brackish canals of fiscal spending. Towering over these man-made dangers is the accumulation of debt, which for years and even decades threatens a ghastliness, until, to everyone’s amazement, one day, it actually becomes one. I had a friend who was on a small boat returning from Dunkirk in 1940, pursued by an unfriendly aircraft which sprayed the craft with machine gun fire. I asked him what he was thinking about when all this happened. His answer: a determination to stay alive so he could invest in Marks & Spencer, on the basis that, if the war was lost, the investment was the least of his problems, and if it was won, it was a great entry point. Not having a Bloomberg screen, he didn’t of course know at what level it was trading – but he rightly divined it would be cheap. The point today is that, despite all the uncertainties and bad news, the market’s valuation matrices are banging on pretty much all-time highs – we live in strange times. When prices are at Looney Tune levels, the question is: “Is it me that’s crazy?” I think to establish an answer, a different approach is required. Rather than assessing the world’s health through the discounting mechanism of the market (which ‘knows’ everything), perhaps there is a dynamic at work which is independent of that discounting mechanism. The investment universe has democratised. When I started as a stockbroker in 1972, it was the man from the Prudential and Mrs Tufton-Bufton who drove the markets; one professional, one sentimental. The federated Stock Exchange – not consolidated until 1973 – ensured local companies were supported by local families, and it was a patriotic duty to lose money by investing in War Loan. Today, there are new forces of dominance: the clever clogs who run hedge funds, the purveyors of private equity and now, since constipation has set in with PE, private credit. Wealth managers have replaced private client stockbrokers. None of these have fundamentally changed the way markets operate, except they mostly seek to derive returns from anything other than traditional equity markets and in so doing foreshadow a world where equity returns may turn out to be persistently weak. That phenomenon, when it becomes evident, will be regarded as an event which predates, not postdates, today. When prices are at Looney Tune levels, the question is: “Is it me that’s crazy?” On top of this, a disconnect has grown up between different generations in the West. The shorthand to this is highlighted by the segmentation, by age, into Boomers, Generation X, millennials and kiddos. It is a commonplace that the Boomers may not actually be bandits but they have made out as if they are. They pride themselves on being born before 1964. The generation behind them – the vanguard now well into middle age – are dismayed at being unable to buy the sort of houses their parents own; the cream of everything from Picassos to places in the sun seems to belong not to them, but to an older generation. Here’s my take on it. There is plenty of wealth within the younger generations – but not nearly massive enough to emulate the generation which came before them. Many have money to invest, for sure, but it has to work quickly – successful investment demands the uplands to be sunny, and constantly benign. Those who think like this are the cadre who hold the Magnificent 7, and they trade recherché instruments which can, with a following wind, bring those who own them into Boomerland. Thus five years of making 40% a year starting with £200,000 gets you to over £1 million – and then you can throttle back a bit (even if in practice you don’t). How will it end? Suddenly. When? Next question please. Does this way of investing look foolish? If the cliché about pudding and eating is valid, then it’s not at all foolish. Investors have had more than a decade of this class of investment, winners experiencing enough thrills and spills to remind us that true belief is rewarded, cowardice punished, inactivity guaranteed to be a wasted opportunity. And they have firepower: retail investors put in $4.7 billion the day after President Trump announced Liberation Day this April – a day of market turmoil, which indeed proved to be a great opportunity to make money – and they took it. The US market rose by over 20% in subsequent weeks. ‘Wise’ investors see in them only the ‘the madness of crowds’. But it is wisdom which has been trampled. In a generation’s time, the score card might vindicate the wise – but you can’t eat score cards. How will it end? Suddenly. When? Next question please. But ‘suddenly’ is a helpful roadmap: there will be no warning, so one has to leave early, as we have, and the mind which has ridden the wave is trained to avoid any such equivocation. It has always interested me that the story of America’s Great Depression in the 1930s begins with the Wall Street Crash of October 1929, when it was estimated there was record participation in the stock market. What is typically forgotten is that by April 1930, the US market had recovered quite close to 1929’s all-time high, before it re-started its precipitous fall – some of the participants had to learn their lesson twice over. The point being that there is a lesson to learn, either ahead of time, or not. ‘All-weather’ in our book is about the duality of constructing a portfolio protected against crises but looking to keep that protection embedded in a portfolio that can offer satisfactory returns in the meantime. One of the insights of Nassim Taleb (of Black Swan fame), is that the best insurance against heart-stopping hiccoughs is what he calls ‘antifragile’ assets – investments which do well when everything is going badly. They are non-plussingly difficult to find. Lenny Lauder spotted that even in a terrible economy people still treat themselves to little luxuries like lipstick, and he thereby continued the success of Estée Lauder for another generation. The cinema chains in the 1930s prospered for the same reason, cigarette manufacturers too. But there are not many such assets, and the identification of new candidates needs a dose of contrariness even to imagine that they might exist. It is in the derivative markets that antifragility can be most clearly identified, and priced. Put options on the markets, instruments that are long of volatility, derivatives anticipating a higher yield spread on the brands of top notch businesses – all find their way into our portfolios. In the past, it was rather different – one could select cheap companies to play this role. Dairy Crest, for its cheese mountain, Thames Water for its safety (!), Howard Shuttering for its name. New conditions need new skills, and my job is to imagine a wisdom to sit alongside the other insights which combine to create market knowledge. One last thought, on inflation. All the inflation watchers I see in action would benefit from the information set out in tomorrow’s newspaper. Some think inflation far from dead, others that we might be looking at deflation (prices going down). I’m not very interested in all of that, because it depends on guessing the unknowables: what will happen to workforce numbers, to interest rates, to currency movements, to food prices. I am more interested in what is unseeable, over the hill. Wages as a percentage of corporate costs in the US and Europe are at generational lows and, if immigration proves restrictive, that could change hard and fast. More certain, the balkanisation of traditional industries will create profitless price rises. Put simply, globalisation lowered prices and thereby lowered inflation, and a return to local production reverses that dynamic. We began with the waves of markets: the waves of inflation are longer, slower, and more inexorable. We may yet see a brief dalliance with deflation if markets fall, but it would be misleading: I have great confidence in the eventual inflationary outcome. The deleterious impact on asset prices of being right about that will be significant, so protecting against it commands attention in our minds and in the Ruffer portfolio, distant as it may still be. To reiterate: all-weather means combining shock-resistance with satisfactory returns in the good times. We hope to continue to evidence the good behaviour shown so far in 2025.]]>

Fund Manager, Steve Russell discusses the investment risks we see in 2025 – overvalued US markets, Trumps return to office, rising bond yields.   DOWNLOAD TRANSCRIPT]]>

As the US presidential race enters its final straight, Dr Tim Smith and Alexander Chartres join Rory McIvor to discuss how investors are weighing up the prospects of a new administration.   DOWNLOAD TRANSCRIPT]]>

Investors are herding into a narrow market and propelling stocks to new highs. Fund Manager Jasmine Yeo joins Rory McIvor to explain why this is a market well worth insuring against.   DOWNLOAD TRANSCRIPT ]]>

Duncan MacInnes joins Rory McIvor to reflect on Q1 performance and discuss some of the portfolio’s key positions including gold and silver, derivative protections and the yen.   DOWNLOAD TRANSCRIPT]]>

Can the economy and markets survive interest rates at 5%? Not for long, suggests fund manager Matt Smith – either interest rates must come down or asset prices do. In this quarter’s episode, we reflect on portfolio performance in 2023 and discuss what’s changed in outlook, and investor sentiment, compared to this time last year.   DOWNLOAD TRANSCRIPT]]>

In this quarter’s episode of Ruffer Radio, Chairman Jonathan Ruffer shares his perspectives on the evolution of Ruffer’s all-weather investment approach since founding the firm in 1994. Jonathan reflects on the genesis of the firm, making mistakes, the character traits that shape his investment style, and the challenges and opportunities facing investors today. And crucially, how these are reflected in the Ruffer portfolio. DOWNLOAD TRANSCRIPT]]>

Investment Director Steve Russell reviews the downtrend in performance this year in the context of a global equity market rally. Steve explains why we retain high conviction in a strongly defensive position in portfolios despite investor sentiment having turned more positive. He also discusses the assets we expect to generate returns in worsening financial conditions. DOWNLOAD THE TRANSCRIPT]]>

After a strong start to the year, markets were destabilised by a shift in liquidity dynamics in March. Central banks now face a reckoning. Their choice is simple – inflation stability or financial stability – but it isn’t easy. Investment Director Jos North joins Rory McIvor to discuss how recent developments fit into Ruffer’s investment thinking and what is needed to protect investors’ capital at this critical juncture in markets.   DOWNLOAD THE TRANSCRIPT]]>

Of the many storylines to unfold in 2022, only one really mattered to investors – rising interest rates and falling asset prices. The chief protagonist in this tale – the Federal Reserve - conducted one of the fastest and steepest rate hiking cycles in financial history. But how much further do they need to go? Fiona Ker discusses the unenviable choices facing central bankers and explains why monetary policy will continue to dominate the narrative in the next chapter in markets.   DOWNLOAD THE TRANSCRIPT]]>

Investment Manager Jasmine Yeo joins Rory McIvor to review a quarter of dizzying market activity. They discuss the volatility of UK gilts over recent weeks, consider the potential for a liquidation event in asset markets and provide an update on how the portfolio is positioned. Download the transcript]]>

  Moods are created by events, for sure – but events are created by moods, too. Kipling’s verse balances the permanence and evanescence of greatness – it was written at the time of Queen Victoria’s Diamond Jubilee, when tout le monde gathered to celebrate: The tumult and the shouting dies; The Captains and the Kings depart:  Lord God of Hosts, be with us yet,  Lest we forget – lest we forget! Lo, all our pomp of yesterday Is one with Nineveh and Tyre! Judge of the Nations, spare us yet, Lest we forget - lest we forget! Rudyard Kipling died on 18 January, 1936. His death was the first of three which occurred in the same week, and marked, to my mind, a formal eclipse of that old order. George V, King of England, Emperor of India, died on 20 January. Three days later the voice of Empire, Dame Clara Butt, whose powerful contralto (une voix obscène, opined Reynaldo Hahn) had boomed out Land of Hope and Glory, dominating the massed voices of the crowds gathered for Empire Day each year in Hyde Park. Humanity has a tendency to believe that a settled pattern of order will continue indefinitely. What has this to do with investment? Humanity has a tendency to believe that a settled pattern of order will continue indefinitely. That’s where we are now – the world of investment has been in a unidirectional bull market for forty years – since 10 August 1982. Kipling wrote the words quoted above in 1897, but not until his death, and those of the other representatives of that old order, did the inherent dangers of the reordering of the tectonic plates become relevantly apparent. Economists are not the greatest readers of events, but one of them, Hyman Minsky, was prophetic, and like many pukka prophets, he was hardly known in his lifetime. His great insight was that the dislocations which follow a long period of stability are greater than those which occur in uncertain times. It may have been Minsky or one of his followers who used the image of an hourglass, where the sand forms a triangular mound in its lower half, as it passes from top to bottom; the sand, being unstable, regularly causes small avalanches which flatten its landscape; if, however, the chance configuration of the sand allows the mound to become taller, bigger, then the moment of its destruction is more dislocative. The Minsky moment is a Rudyard Kipling moment – you can point to both a confidence in the stability of things around a society, and know, at the same time, it does not end happily. There are two arguments for this to be relevant today. The first is the extreme levels of debt which have been created over decades, leading to a modus operandi throughout the investment and commercial world which depends on its further creation, and at low rates of interest. The second is to beware the evil eye which accompanies sustained success. In the forty-five years I have been an investor, I cannot recall a more dangerous period than today. In the forty-five years I have been an investor, I cannot recall a more dangerous period than today. It sometimes happens that markets are about to fall sharply, and we are no stranger to navigating them – my first as a stand-alone fund manager was in 1987. But each of these falls, so far, has been partial, in that there were asset-classes which did not participate in the decline, or – as has more recently been the case – there have been insurances which had been overlooked or disdained, and offered a good risk/reward. In 1987, for instance, the real-yield on index-linked stocks approached 5% – it was hard, really, to own anything else; today, those yields are negative, meaning that you are bound to lose money in them (in real terms) if you hold them to maturity. This chronic sense that investments are dangerous is now accompanied by an acute sense of specific danger to the markets – the rumblings of a liquidity crisis, perhaps the first in a series in the years ahead. What is liquidity? When money’s a-plenty, the question to ask is: ‘do I want to buy it?’ When there’s no money, then the question is more fundamental: ‘can I buy it?’ Dr Johnson, not admittedly one of nature’s economic smartboys, captured it well, visiting the Western Isles, and noticing that eggs changed hands for a ha’penny, whereas, on the mainland, they cost a penny. Johnson turned to his scribe and said, “They are not cheap because there is a surfeit of eggs, but because there is a dearth of ha’pence.” We have lived, certainly since Alan Greenspan in the 1980s, in a world where any shortage of ha’pennies has been met with a cascade of half-crowns from the central banks – aided and abetted by the commercial banks who have been able to mint brand new coinage through wind, through weather. What we have come to take for granted cannot necessarily be relied upon in a world where there is a concerted effort to control the amount of money available.  When there’s no money in the system, and the channels of its creation are blocked, many fine investments, which, in normal circumstances would be mouth-watering to own, are unsellable. If, at that point, you need money, and all you have are assets – watch out! We are watching out. Over the last generation, there have been several liquidity crises, but central banks (the Federal Reserve, in practice) have always created the necessary money. This is not magic – banks, both commercial and central, create money routinely – the granting of a loan by either one of them is itself a creative act: it is, in accounting terms, merely the creation of a liability, matching the loan to a customer/counterparty, which is a corresponding asset in its books.  We see pressures building, pressures that encourage a liquidation of risky assets, and a degradation in the liquidity conditions of markets. At Ruffer we see pressures building, pressures that encourage a liquidation of risky assets, and a degradation in the liquidity conditions of markets. The simplicity of the following explanation, centred on the United States, will be unattractive for two opposite reasons. To the technician, it will be a Thomas the Tank Engine survey of deeply complex and technical questions. To most human beings, it will bring about Winston Churchill’s exasperated observation when Chancellor of the Exchequer, “When bankers get together, why do they always speak in Persian?” The Federal Reserve is the ultimate source of money-creation. It has expanded its supply of money to the point where its credibility is coming into question, and so must contract it. But the Fed needs to tread carefully, and indeed it is being careful, notwithstanding its need to rein in that money because of inflationary pressures. (Central to our continuing belief that inflation is the end-game is the central bankers’ extreme reluctance to be harsh with the economy; our views are not changed by Jerome Powell’s recent belligerence – it’s one thing to sound fierce about raising interest rates when they are 3%, but quite another to do it at 20% in the midst of a recession, as his distinguished predecessor Paul Volcker did.) As well as battling to keep the quantity of money in check, the Fed is simultaneously straining to make sure the transmission of its interest rates to the real economy is working. As interest rates go up, savers expect to see that paid to them – but the commercial banks aren’t passing it on. One of the big savings vehicles in the US are Money-Market Funds – roughly 90% of which only invest in government quality instruments. There aren’t enough of these bonds, so the Fed is providing interest at its desired level to these funds, and now has tied up $2.36 trillion of money-market cash, in this service to the community. The key is that, unlike regular bank deposits, this $2.36 trillion cannot be injected into the US financial system if it’s needed. The Fed’s inflation-busting rhetoric means too, that it is shrinking its balance sheet. Commercial banks can, in theory, create money as easily and effectively as the Fed, except they, too, had whoopsies in 2008, and are now so regulated that they can’t create money in necessary size either. Indeed, their commercial imperative is to keep existing businesses supplied with liquidity, at a time when inflation is driving up the latter’s cash requirements – and, anyhow, the commercial banks make good margins on these loans, so why not divert more of their balance sheets to these activities, and away from lower-margin financial market funding activities? We see danger ahead. Markets are still too high, and protection is expensive in an increasingly nervous world; common sense suggests one should invest conservatively, and in safe assets. In a world where people find themselves without the ability to pay commitments as they arise, forced selling drives prices. Among risky assets like equities, one of the counter-intuitive things in a liquidity crisis is that securities perceived as safest and most liquid go down sharply, because investors are forced to sell what they can, not what they want to. We therefore regard plentiful liquidity in the portfolio as overwhelmingly attractive; it allows us to make the most of the opportunities that arise in the aftermath of a crisis. But first we have to get through the storm.]]>

Investment Director Duncan MacInnes joins Rory McIvor for a review of the quarter, discussing the scale of wealth destruction across markets and how they see this rippling out into real world behaviour, and looking forward to what could be on the horizon and what that means for investors. DOWNLOAD THE TRANSCRIPT]]>

Avoiding major drawdowns in markets is key to outperforming over the long-term. It may sound obvious, but in a world of near universal asset vulnerability, it has seldom been more important to stand resolute against falling markets. In this episode, Lauren French and Andrew van Biljon discuss Ruffer's approach to protecting against tail risks in the market and they lift the lid on some of the more creative strategies in the portfolio today.    DOWNLOAD THE TRANSCRIPT  ]]>

Investment Director, Lauren French joins Rory McIvor for a brief overview of the quarter. We reflect on the events that have dominated markets over the past three months – including the major developments we’re all talking about. We also discuss one or two aspects which have received less attention, but may well be crucial for investors in the months ahead.]]>

Tim Kruger is the guest author in this year’s Ruffer Review. In this episode, we discuss his article which draws on his work in the field of carbon extraction and its role in the energy transition.]]>

In this episode of Ruffer Radio, Investment Director, Matt Smith looks ahead at what investors can expect in 2022. We briefly review the investments which worked well in Ruffer portfolios last year (and those that didn’t) and assess the opportunities and challenges arising from the return of economic, market and inflation volatility. ]]>

In this edition of Ruffer Radio, Investment Director Duncan MacInnes explores the key themes in today’s market environment. A brief round up of how recent events impacted markets and Ruffer portfolios, and what investors have learned as we move into the fourth quarter.]]>

Inflation is back, but for how long? Bertie Dannatt joins Ruffer Radio to discuss how markets are digesting the return of inflation, and what rising prices mean for consumers and investors alike.   Impact of different rates of inflation on £100 worth of savings over a 20 year period. Click to view larger image  ]]>

Can behavioural science make us better investors? Andrew van Biljon and Lauren French offer their insights into the world of behavioural economics.  Further reading Gigerenzer (2018), The Bias Bias in Behavioral Economics, Review of Behavioral Economics vol 5/3-4 Kahneman and Tversky (1979), Prospect Theory: An Analysis of Decision under Risk, Econometrica vol 47/2 Miller and Sanjurjo (2018), Momentum Isn’t Magic—Vindicating the Hot Hand with the Mathematics of Streaks Peters (2019), The ergodicity problem in economics Raviv, (2018) The Genius Neuroscientist Who Might Hold the Key to True AI Nanayakkara, Nimal and Weerakoon (2019) Behavioural Asset Pricing: A Review, International Journal of Economics and Financial Issues vol 9/4 Choice (2020) What Lesson Can Investors Take from Sir Isaac Newton’s Mistakes?   DOWNLOAD THE TRANSCRIPT]]>

Bethany specialises in casting light on the shadier corners of the financial world, renowned for her exposé of the Enron scandal in the early 2000s. She joins us to discuss the tension between rational markets and emotional investors, what separates the visionary leader from the fraudster and how a bias to belief affects our decision-making. Bethany is this year’s guest contributor to the Ruffer Review – our annual collection of thoughts and ideas – which we’ll be publishing in early March. You can sign up to receive a copy below.   More information The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron (Blackwells) Saudi America (Financial Times) All the Devils Are Here: The Hidden History of the Financial Crisis (New York Times) How private equity is winning the coronavirus crisis (Vanity Fair)   DOWNLOAD THE TRANSCRIPT]]>

2020 will loom large on financial markets for many years to come. As we cautiously make our way out of the crisis, Duncan MacInnes and Fiona Ker review the more startling developments of the last year, share their insights into the ongoing recovery and look ahead to some of key challenges facing investors in 2021.   More information GMO, Tonight we leave the party like it’s 1999 Office for National Statistics (ONS) US Treasury, Debt to the Penny   DOWNLOAD THE TRANSCRIPT]]>

All elections are equal. But some elections are more equal than others.  In the latest episode of Ruffer Radio, Dr Tim Smith and Alexander Chartres discuss the 2020 race to the White House and explore why this election, in the context of a broader shift in world order, may well be the most important for a generation.   More information $2 trillion spend on green initiatives  Fossil fuel elimination US market returns under Reagan and Carter, source: Shiller, Global Financial Data, Ruffer calculations Biden lead on Trump Electoral college result 2016 Bush versus Gore 2000   DOWNLOAD THE TRANSCRIPT]]>

Alexander Chartres, Investment Director and resident geopolitics specialist, explores the shifting sands of world order. He discusses the deteriorating relationship between the US and China and considers the implications of a new world disorder – on companies, portfolios and our everyday lives. “After Cold War I, the world traded weapons of mass destruction for weapons of mass production.” This shift heralded an extraordinarily benign era for investors, characterised by low inflation, low volatility and low interest rates. The return of geopolitical instability signals a regime change for markets. At the heart of this, is a fierce contest between the US and China – “a long-term, full spectrum struggle for supremacy which will profoundly reshape the world as we know it.” For the first time in a generation, investors must once again try to understand geopolitics and prepare their portfolios for Cold War II. Download the transcript]]>

Duncan MacInnes discusses covid-19: how it has changed the investment landscape, the impact on the Ruffer portfolio and what could happen next. This is the first episode of a new series of podcasts, where Ruffer will be exploring the investment universe and sharing their interpretation of what’s going on. “It’s our view that we are moving through an economic regime change. Coronavirus is not the end of something, in fact it has accelerated a lot of trends that were already in motion—inequality, populism, deglobalisation and perhaps environmentalism and government involvement in our daily lives. The conclusion is we think this will result in a wholly different economic and market landscape going forwards, so it will be essential to focus on keeping client’s capital safe. Before this event we were worried about avalanche risk and valuation risk. Today we are still facing valuation risk—perhaps to a slightly lesser extent but we are now facing inflation risk and the fact that shareholder capitalism is likely to be under threat.  Because we have managed to preserve capital through this crisis so far and deliver a positive return, we are in a position to be able to be opportunistic and pick up bargains as and when they emerge as I think it’s too much to hope that it will be plain sailing from here.” DOWNLOAD THE TRANSCRIPT  ]]>