LSE 00:01
You are listening to investing matters brought to you in association with London South East. This is the show that provides informative educational and entertaining content from the world of investing. We do not give advice so please do your own research low and welcome to this investing matters podcast.
Peter Higgins 00:18
My name is Peter Higgins. And you can find me at Conkers3 on Twitter.
I'm here as the host of the Investing Matters podcast and I'm thrilled today to have the hugely talented and popular commentator broadcaster on business finance, economics Victoria Scholar, the Head of Investment at interactive investor, The UK’s largest direct to consumer investment platform. Is that correct, Victoria?
Victoria Scholar 00:54
Number one flat fee investment platform. So number two in the UK.
Peter Higgins 00:59
Brilliant. So thank you ever so much for joining us, Victoria, I'm going to have to read this introduction that I've got written out for you if I may, because I'm absolutely staggered at what you've filled already in your very, very short timeframe within the industry various different sizes.
So you've got a wide ranging broadcast remit discussing daily business news agenda, investment strategy, and asset allocation, collected investments and direct shares, as well as macro-economics and markets.
Previously, as a financial journalist at IG group and presented the business news at the IG TV broadcast channel.
You also have a background as a producer for Bloomberg and a broadcast journalist with CNBC, BBC and other platforms, and you're in demand to be spoken to regularly and I see you regularly on BBC and other channels as well. And across the world.
You started your career on the trading floor in the Square Mile at an investment bank Nomura, which we'll speak about later, you hold a degree in economics from the University of Bristol, fantastic, and a broadcast journalism Masters in the City of University of London. And you've also double award winner as well. We'll talk about those later on. So what more do I say? I’m bowing to your prestige. Thank you ever so much for joining us, Victoria.
Victoria Scholar 02:21
Thank you for having me. I don't know who wrote that. But that was a very flattering introduction. But thank you.
Peter Higgins 02:26
No, thank you. So I'm going to start with my first question.
So we'll start with your degree in economics from the University of Bristol. You later attained a broadcast journalism Masters degree from the City University of London.
After graduating from Bristol University, a first job of all places trading floor in London, Nomura, the leading Securities and Investment Banking Group from Japan. Please can you share with us that role, how it came about, and what it entailed and what you learned from that, that time goes straight into the lion's den?
Victoria Scholar 3:09
Well, like you say, it was straight into the lion's den, because I was meant to intern at Lehman Brothers, but it filed for Chapter 11 bankruptcy.
So they offered me an internship at Nomura instead, because the Japanese bank acquired the European arm of Lehman around the 2008 financial crisis.
So it was definitely a tough time for the industry, I'd say, you know, people weren't necessarily making as much money as they were before, there were lots of job cuts and the bank was going through a major transition.
So I wouldn't say it was the easiest first job but it certainly gave me an amazing grounding in how financial markets operate, to work on a physical trading floor and understand all the interconnecting roles between sales and research and trading and structuring.
And I think what the experience taught me was that what I was really passionate about was the news flow that drove the price action.
So you know, you'd hear a Fed speaker say something and straightaway, you could see the move in the dollar, or a company would release their results.
And you can see that reflected in terms of trading action at 8 AM and so I think my passion really lied in the storytelling, which is why I then went on to do a Master's in broadcast journalism, and then worked at CNBC as a producer on Squawk Box, you know, writing scripts, and just doing general production behind the scenes for the presenters and the whole team.
Peter Higgins 05:01
Fantastic, you’ve covered my second question here, because I was about asking you about for our global listeners that wanted to consider following your footsteps in financial journalism.
Could you share your journey as to CNBC and Bloomberg but you've answered that so thank you so much. Absolutely phenomenal. What were the highlights and positives that you'd like to share about your time and career up to that point from Nomura? You shared a little bit there, but also interviewing and putting those scripts together?
Because what everyone's synonymous with Squawk Box and CNBC and Bloomberg, fantastic programmes everyone's like, every time it comes on the headlines, read and backwards and forwards is awesome.
Victoria Scholar 05:38
Well, I think I'd say that I've heard someone describe this before as a squiggly career where you move from kind of job to job. I've done quite a few different things over the course of my sort of 15 years of working life that I think the main, most important thing is that I wouldn't really be able to do my job now, if I hadn't had all those pieces of the puzzle.
So I've learned something in all of the roles along the way, CNBC and Bloomberg in a brief time as a freelancer for BBC and CNN that really taught me how to be a financial journalist, because I learned how to script write and condense stories and find the headlines.
And I was also involved in guest booking and also we went on outside broadcasts. So I went to Zurich a few times to cover Swiss earnings.
And I remember going to London Fashion Week to speak to the Burberry CEO.
So there were lots of exciting opportunities that that really gave me a grounding in kind of how to communicate financial stories as a journalist, I'd say.
Peter Higgins 06:56
Fantastic. Thank you for sharing that. Now, Victoria you started at IG in January 2018, where you worked as the as their financial journalist and presented busy news at the firm's IG TV broadcast channel, having interviewed many CEOs, CFOs and business leaders, what are your recurring winning characteristics that you noticed within those individuals that investors should also take note of before they deploy their monies with those companies that they lead?
Victoria Scholar 07:27
Oh, that's quite a tough question. I guess it will probably be just being super on top of whatever it is that they're, you know, covering whatever sector it is, or whatever, industry that they're in just knowing absolutely everything about what's going on, and then probably just being quite calm, and personable, you know, CEOs have to be kind of like the face of the company.
So often, they're quite charming. So kind of like good social skills, I'd say it's pretty important as well.
And something that because time and time again, and yeah, just being like really in the detail of what they're doing.
Peter Higgins 08:22
Brilliant, thank you for that reply. And that's the similar sort reply we've had for most people, which I appreciate.
I think the hardest thing to do is to lead a company with masses of employees, it must be a massive, massive task. I think as investors, we sometimes take that for granted.
So it's very important. Now from IG, you joined interactive investor in September 2021 and you've joined as the Head of Investment at interactive investor, please, can you give us first a bit of an overview of interactive investor, its scale, offering services, solutions, etc. for our investors that could potentially use your platform, please?
Victoria Scholar 09:03
Sure.
So we are the UK is number one flat fee investment platform. We're the second largest investment platform for retail customers in the UK, we have about 450,000 customers.
And you can get access to a huge range of single stocks, funds, ETFs investment trusts, and a huge range of different products.
We're not an advisory firm, but what we tried to do is to provide as much information and education to help with your trading and investment journey.
So we have a huge content team at interactive investor, who's consistently updating our websites. And we publish lots of information about what are the most popular stocks on the platform.
We also have a fund performance regular release, where we look at how customers have been performing over different timeframes.
We also have recommended lists, which are compiled by Morningstar and outsourced one is our Super 60 list of recommended funds.
And then we have an ACE 40 list, which has more of an eco-friendly focus for people who are interested in looking at more sustainable investments. And so my role is to be part of that communication of information to our customers.
So I write articles for our website, I published some videos on our YouTube channel. And then I do quite a lot of TV and radio talking about what's going on, and trying to basically strip out all of the financial jargon, because one of our kind of priorities has been to try to help democratise finance and give more and more people access.
Because you know, there are so many products that you can get access to these days that make it super straightforward. You don't have to be a stock picker, to be invested in the market. And the research shows that if you are invested over the long-term, you tend to do a lot better than if you're not.
So we're very much about long-term investing. We're not really about intraday trading. We're not about you know, event driven trading, we're focused on making sure that people have more money by the time they get to retirement.
Peter Higgins 11:41
Brilliant, love that response, thank you ever so much.
You touched on a very, very important part there about your role. It's a very multifaceted role. Victoria, what do you enjoy most about it?
Victoria Scholar 11:53
I mean, I think that I really enjoy doing the TV and radio. It's really fun getting to meet lots of different teams at different places like BBC and Sky and go into different TV studios and different radio studios.
So it's fun to be in a role that's kind of closely linked with the media. But then also, you know, working at an investment platform, and then you know, we have a lovely team. I love working with our team, with the PR people and content people. And I do really enjoy writing as well.
So I get to do articles for our websites, and also tried to do some opinion pieces for newspapers as well.
Peter Higgins 12:41
I’ve read some of your quality articles, and they’re out quite regularly as well. They've got a whole team got a big team of content writers.
Victoria Scholar 12:48
Yeah we do.
Peter Higgins 12:49
Fantastic content. Thank you.
I want to ask you about the economy and the UK in this bout of questions because a lot of people are asking lots of questions as to what's going on what's next, and so on and so forth. And you being the Head of Investment, you've got your finger on the pulse of most things. So I'm going to try these questions out. We'll see how we get on. Okay?
Victoria Scholar 13:11
Yeah.
Peter Higgins 13:12
Victoria, while the UK has so far managed to avoid a technical recession defined as two consecutive quarters of negative growth, persistence sluggish, economic growth continues at sky high inflation, negative real wage growth and general cost of living pressures weigh on the consumers in turn, the service industry is typically the driver of economy, what do you see as a catalyst going forward for the UK economy, Victoria?
Victoria Scholar 13:37
I’m so happy we’ve moved on from me and talking about the economy, so now I feel a lot more comfortable.
I think looking ahead, when we think about the UK economy, the hope is that inflation will finally start to come down.
And of course, these price pressures have been responsible for the cost of living crisis. It's been why wage growth has been in negative terms.
And it's why consumers and businesses have been feeling the squeeze. So the hope is that as the year goes on, food price inflation is going to cool and broader price pressures will ease the forecast is that inflation will halve by the end of the year.
And that will mean that the Bank of England won't need to raise interest rates that much further, in order to curtail these inflationary pressures.
But like you say, the economic backdrop is still pretty sluggish. And we had that unexpected shrinking in the economy in March, GDP is still half percent below its pre-pandemic levels, you know, we've had widespread industrial action. And that's driven by inflation because hay is lagging behind inflation.
And like you mentioned, the service sector has been struggling. We've had difficult weather conditions as well, particularly in March with very wet conditions, which have meant that the retail sector has struggled and other industries as well.
So growth is still sluggish, but the hope is that inflation will come down. And once inflation is at a more manageable level, then the hope is that we can think about growing the economy again.
Peter Higgins 15:09
Brilliant, thank you for that reply.
The inflation and UK inflation is currently at around 10% food and non-alcoholic drinks inflation in March was reported 19.1, the cost of limiting prices continued in the UK to buy UK consumers, what strategic tools do the BOE have at their disposal really to lower inflation without triggering a recession?
That's the seems to be the hardest sort of bridge to cross at the moment.
Victoria Scholar 15:41
Yeah, well, I think the Bank of England is in a difficult position, because it's trying to tame inflation that's largely been driven by factors overseas, whether that's the war in Ukraine, whether that's problems with the global supply chain post pandemic, or whether that's problems with harvests in Spain and Northern Africa that have sent food prices higher.
But the tool that the Bank of England uses, of course, is interest rates. And that's why we've seen 12 consecutive rate increases to the highest level since 2008, of 4.5%.
And Goldman Sachs is predicting that we could see rates move to around 5%, before the central bank decides to keep rates on hold beyond that. But really, it depends on the data.
You know, if inflation doesn't drop below double digits, as we were hoping it would in the latest figures, then the central bank may be forced to push interest rates even higher.
But as you suggest, it's a delicate balancing act, because on the one hand, it wants to cool the economy to the extent that it eases those price pressures, but it doesn't want to overdo it, as that could obviously cause too much economic pain and potentially trigger more negative growth trajectory and even the risk of recession. So it's certainly treading a fine balancing act at the moment.
Peter Higgins 17:04
Indeed it is. Now we'll talk about risk which you've touched on there a little bit. The whole purpose of assessing risk is to ensure that organisations, central banks, economists, heads of research and heads of investment are ready to face whatever potential crisis are to come.
Victoria, which of the less frequently discussed risks have you analysed that you feel more investors should show an increased awareness of and why?
Victoria Scholar 17:34
I think there are risks around China's growth outlook.
You know, there was hopes that as its anti-COVID lockdown measures were alleviated.
We've seen this huge surge in pent up demand, but actually it's been a lot more bumpy for China as it's emerged from the pandemic. You know, we have seen pockets of strength, but there have been pockets of weakness as well. And China for a long time has been the key growth engine to the global economy.
But there are major risks. You know, it had that property crisis not long ago with the collapse of Evergrande.
And you know, we could see further risks around China in the months or years ahead. So that's something that certainly to keep an eye on. I also think that there is a risk that inflation, particularly in the UK becomes entrenched.
And that's something to watch, the hope is that inflation will ease this year, but there is an outside risk that it could linger on, because of what's known as secondary effects.
So that's where, because of the worker shortage, workers can demand higher wages, those higher wages could potentially translate into higher prices, as businesses face higher costs. Businesses, on the other hand, have been already facing higher costs.
And they've been passing those on to consumers, in terms of high price tags on the supermarket shelves, or wherever else. So these second round effects do have the potential to exacerbate inflation, and mean that it lingers on for much, much longer than we would like. Hopefully that won't be the case. But that is another risk that I see.
Peter Higgins 19:19
Indeed, if you spoke at the secondary effects of inflation, and there's been conversations being had an articles written about price gouging in the retail sector, and the big behemoth retail outlets taking advantage of consumers.
What are your thoughts about that? Do you think it's more linked to energy costs that these large employers have to deal with? Or do you think some of them are taken advantage?
Victoria Scholar 19:43
There has been this debate about whether companies have been profiteering from inflation, because we have seen some wholesale costs ease and that hasn't necessarily translated into lower consumer prices.
Also last year, Sainsbury's and Tesco made hundreds of millions of profits and food inflation is at a record high.
But some of these businesses have been quick to rebuff these claims Unilever and Sainsbury's have said that they aren't profiteering.
I think in terms of the supermarket's specifically, it's a hugely price competitive sector, particularly with the German discounters like Aldi and Lidl.
So they can't put their prices up too much because they risk losing market share.
You know, Morrison's already recently got ousted from the big four as one of the German discounters over took it.
But we have heard many, many times that businesses have been responding to these cost pressures by putting up prices. We've heard that so many times and like I say, you know, the risk there is that inflation does become entrenched.
But the hope is that once these wholesale prices is that which are expected to do soon, then supermarkets and others will be able to start passing those on to consumers in terms of more affordable prices.
Peter Higgins 21:05
Love that reply, really appreciate it.
Now, one last question on the risk side of things. We've spoken about the risks and the banking sector is that all manner of different things going on of like Silicon Valley Bank, First Republic Bank, Credit Suisse of all names, is there any opportunities that were missing within the banking sector, we spoke about all the risk, I was going I'm not going to ever invest in a bank again. But should we be looking at possible opportunities, also in the sector do you think?
Victoria Scholar 21:34
Yeah, I think that there certainly are potential opportunities. You know, we saw Crispin Odey, the hedge fund manager buy UBS in anticipation that is going to actually benefit from this Credit Suisse deal.
So far, a lot of the turmoil in the banking sector has been contained to the US midsize lenders and larger Wall Street lenders have much stricter regulation in place versus pre 2008.
So the expectation would be that they are relatively well shielded from the turmoil, but we have seen quite significant sell offs across the sector, not just within the mid-sized banking sector, but the larger lenders have come under pressure as well.
So for value investors, if you believe that this is a temporary risk, and that it's going to ease out in the next few months, say then arguably that could be a buying opportunity, while they're relatively undervalued.
Peter Higgins 22:42
We'll take a break here. Now let's ask you some personal questions, things that I think need to be put out there, because you know, you've spoken about all the risks and all the rest of it, but there's something that most people are not aware of which you have that most people I've interviewed and never spoken about.
You were awarded and you also got the award as in the best of I think maybe jointly, the Bronwen Wood prize, for the Society of Technical Analysis for your diploma, or getting over 90% I'm like technical analysis?
Please share where did that come from, you know, because I'm speaking to the guys doing charting and women doing charting all the time, and I think got a diploma no, have they won an award for it. No. So come on Victoria share.
Victoria Scholar 23:33
Okay, so in my previous job at IG, the thought process was that, you know, customers or clients have a major wide range of access to fundamental analysis, through websites, news organisations, etc.
But their view was that there isn't that much information out there about technical analysis, and trade ideas, and understanding the technical tools.
So as part of my job there, I did a diploma in technical analysis with the Society of Technical Analysts, and I had the advantage of it being COVID locked down. So I had nothing else to do apart from revise.
So I think I just got way too into the detail of candlesticks and chart patterns. And yeah, I just really, really enjoyed it. And yeah, that was it.
Peter Higgins 24:36
You’re being very humble. It's a very tough course. And people pass it and you smashed it. So well done.
Victoria Scholar 24:41
Thanks.
Peter Higgins 24:44
Continuing on with the awards, March of this year, you won the coveted City AM Analyst of the Year award.
Please do tell us a bit more about that award, please?
Victoria Scholar 24:56
Yes. So City AM hosts an annual award ceremony and there are lots of different award categories for individuals or businesses who have done well at what they're doing.
So yeah, I was very lucky and won the Analyst of the Year award and they said it was because I am good at translating financial information to a wider audience, which they said, you know, more people need to do.
So. Yeah, that was great. It was really fun, lovely evening at the Guildhall in London. So yeah, it's great.
Peter Higgins 25:37
Okay, and congratulations again for winning there Victoria, given the current and ongoing external influences and macroeconomic pressures. What are your thoughts currently about the market action that all investors are having to navigate?
Victoria Scholar 25:52
Yeah, sure. Well, if we're talking about the UK, specifically, the FTSE 100 was pretty resilient Last year.
It's long been criticised as the Jurassic Park index because it doesn't have many sort of forward looking tech stocks.
But actually, that was a positive last year because it meant that it avoided the so-called tech wreck, and the FTSE 100 has been doing okay this year, but taking a sort of slightly longer-term view over the last five years. It's significantly underperformed the DAX in Germany, or the CAC in France partly because of reputational damage since Brexit.
And it's interesting, because this sort of valuation gap is having quite a few consequences. You know, we've seen a lot of deep pocketed overseas private equity companies set their sights on UK targets recently, Apollo Group, for example, looking at THG was looking at Wood Group, but that's now been abandoned.
And Network International is another one. But there have been lots of PE bits towards the UK market because of that valuation gap.
We've also been seeing this big discussion about London listed companies eyeing a listing in New York instead, ARM Holdings was deciding where it was going to IPO and it opted for New York and a blow to London. And then also, you know, more recently, we saw Paris overtake London as Europe's most valuable stock market.
So there is this sort of structural underperformance in a slightly longer-term horizon despite the fact that the FTSE was pretty resilient last year.
Peter Higgins 27:38
Yeah, I find it quite frustrating and I've spoken with many people on this particular Investing Matters podcast about the ARM Holdings situation.
And it's what was one of our, you know, gems UK terms, and we let it go softly.
And now all of this noise around the fact that going to listen in New York, we should never sold in the first place. Victoria as far as I see.
Victoria Scholar 28:03
Yeah, you're probably right. I don't disagree.
Peter Higgins 28:07
Okey dokey. So given the current uncertainties regarding the UK economy, do you have any views regarding sterling as a currency, it seems to have been performing quite well against its peers in recent months, despite sort of, you know, lots of headwinds.
Victoria Scholar 28:23
You're right. Last year, it was all about the dollar. The US dollar appreciated quite significantly on the Fed stream of rate hikes.
Its aggressive inflation, combative, monetary policy tightening, but really since sort of September, October of last year, investors have been looking at when the peak of the Fed’s rate hiking cycle might be and we know that markets tend to move more quickly than the economy or actual events because it's sort of an anticipation mechanism.
So the dollar has been under pressure largely since then and other currencies have been rebounding against it, and one of which is the pound which is around a one year high or just shy of that, you know, this is because we still have a major inflation problem. US inflation has fallen back below 5%, ours is still stuck above 10% and yes expectation will be that more tightening is required.
And we know that currencies appreciate as interest rates rise, and we look at interest rate differentials.
So while US interest rates were more attractive last year, now we're seeing that shift back towards the UK and that's benefiting the currency.
Peter Higgins 29:37
Yeah, I mean, obviously, we've got yourself on the interactive investor platform and lots of UK investors are UK centric, and then they're sitting there going, actually, I'm not doing too badly this year, I was expecting it to be worse. So is that is there a risk that they're always been complacent? Do you think and they should be, you know, get themselves ready? For more flux for more, you know, volatility?
Victoria Scholar 30:05
I mean, I think more volatility is probably pretty likely to be honest, you know, there's a lot of uncertainty at the moment, we've got the geopolitical instability with the war in Ukraine, we've still got the inflationary backdrop, we've got sluggish global growth, or we've got a banking sector crisis in the US, there's a lot to contend with.
So I don't think there's going to be a smooth road higher from here, it's going to be a bumpy road to come.
Peter Higgins 30:38
Thank you very much for that. Now, given what you've just said, regarding it's a bumpy road, and you know, the uncertainty in the market with regards to successful investing, you touched on it, the best way to be a successful investor is to be a long-term investor. And we agreed upon that, is there a tried and tested strategy of investing that you think that most investors should try to apply to their investment strategies going forward?
Victoria Scholar 31:05
Well, I think there's a few things that we think are really important, when you're deciding how to invest, I think the first thing for us is regular investing, which is actually free with interactive investor, because it helps you to smooth out the natural ups and downs of the markets, it takes out the difficult job of having to type in the market, if you put all your money in at one level, and then all of a sudden, it goes down by five or 10%, you're going to be massively in the red.
Whereas if you can just smooth that out over time, that tends to be the best way to go about it.
And then the other point that you say, is just being invested for the long-term, you know, it's been a very volatile period, for the last sort of couple of years.
And the research suggests that it's always better to remain in the market, if you can, rather than kind of hopping in and out, you also might end up with heavier fees. And then kind of linked to this is the kind of thought process of trying to not let your emotions get too involved in trading.
So it's very easy to want to sell after a big sell off and get caught up in this panic selling.
And, you know, equally, it can be very easy to hop on the bandwagon and get into a stock that's already rallied 100% because you think it might go up further.
So trying to kind of separate yourself from the emotions when you're investing is really important, too.
And I think probably not checking your investments too often as well.
Our thesis is all about long-term investing and if you see that your down might stress you out and then you might be tempted to sell.
Whereas actually, if you've just got a well diversified portfolio, that's another important thing.
Diversification is key, if you've got a well-diversified portfolio across different geographies and asset classes, and you're in it for the long-term, then hopefully, that will work out well.
Peter Higgins 33:11
Thank you, I loved for the fact you've touched on such an important point, which most people do not think about. And that's the psychology of our own personal well-being and how we maintain our cognitive balances regarding investing, because it's so uncertain, it can be difficult.
But if we can maintain our mindset, we can actually transition through all of the difficulties and do very well. But do we need more education regarding the psychology of investing rather than, you know, buying and selling sometimes do you think?
Victoria Scholar 33:41
Yeah, possibly, I think it'd be it's so fundamental to your trading and investment strategy, isn't it?
Because we're humans, and we're humans with emotions.
So it's so important to be mindful of that. And that's why having a plan in place is so critical so that you stick to that strategy or plan rather than getting distracted by how you're feeling really.
Peter Higgins 34:11
Absolutely chasing FOMO. As often happens with so many investors, chasing whatever is doing well, at the moment.
Now Victoria, I've got one final question for you, which I will leave for a moment. But I'm going to ask you, is there anything that you think we should have covered that I haven't asked you that you'd love to share with our investors that would enable them to be better going forward as investors?
Victoria Scholar 34:32
I don't think so.
Peter Higgins 34:34
No? Okey dokey. Well, I'm going to ask you this question then. Victoria, because you are a double award winning guest the first that I've had on this particular podcast, so thank you ever so much for coming on.
I would like to conclude this interview with you with a fun question I would like to bestow upon you complete autonomy and power to change one thing that would ensure the betterment of everyone on this planet that we called Earth what would it be and why? You’re in complete control now.
Victoria Scholar 35:03
Gosh it's quite difficult having lots of power isn't it?
I think I would go for alleviating global poverty.
Peter Higgins 35:13
Victoria Scholar double award-winning Analyst and Investment Head at interactive investor, thank you ever so much for sharing your insights learning and knowledge with our global Investing Matters audience it's been an absolute delight speaking with you, take care God bless you.
Victoria Scholar 35:31
Thank you so much for having me on.
Peter Higgins 35:35
I look forward to seeing you soon take care.
LSE 35:38
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