The current stock-market correction has been steaming down the track since August and I claim no wisdom for having predicted it: the FTSE100 dipped below 7,000 at the start of the week, having shed all of the 10 per cent it had gained since it began to surge in April. Weaker UK growth forecasts from the EY Item Club, reflecting the impact of the Brexit impasse on business and consumer confidence, are just one factor in the autumnal mood.
But let’s cheer ourselves up with a round of applause for our veteran investor Robin Andrews, whose ‘Faangs to Banngs’ trading idea I offered you on 1 September. His proposition was that soaring US tech stocks led by Facebook, Apple, Amazon, Netflix and Google (via listed parent Alphabet) were bound to run out of road, while a swing to pessimism would bring a revival in leading goldminers such as Barrick, Agnico Eagle, Newmont Mining, Newcrest Mining and Goldcorp, of which Agnico and Barrick were his favourites. He turns out to have been — how can I put it? — Banng-on.
Let’s use big numbers. If you started September with a million dollars spread equally between the five Faang shares, your holding would have sunk to $901,400 by Monday’s close. But if you had sold them and reinvested equally in the five Banngs, you’d be worth $1,081,000; and if you had followed Robin’s tip and bought only Agnico and Barrick (the Canadian-based group whose shares were boosted in late September by news of a merger with an African miner, Randgold), you would be sitting on $1,159,500 — more than a quarter of a million better off. ‘The validity of the switch remains as trade wars and currency fears increase,’ says our man, and I’m sure he’s right.
Luke’s luck turns
Would it be wrong to sympathise with Patisserie Valerie chairman Luke Johnson after what he called ‘the most harrowing week of my life’, just because he happens to be a fellow columnist in his spare time? Or should the fractious fraternity of hacks give him a drubbing for taking his eye off the till in one of his own businesses, having so often lectured us on the financial disciplines of entrepreneurship? The chain of 200 cake-and-coffee shops built by Johnson and his partners since 2006 turns out to have a huge hole in its accounts: far from having ‘a strong balance sheet… with net cash of £28.8
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