The London South East, Investing Matters Podcast Episode 7 John Hughman from Invest-Ability

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.

Peter Higgins 00:17

Hello, and welcome to the London South East Investing Matters Podcast. My name is Peter Higgins and today I have the pleasure of speaking with John Hughman, the former editor of the Investors Chronicle Magazine, and now the co-founder of the Invest-ability educational investing website. Hello, John. How are you?

John Hughman 00:35

Hi Peter I'm doing good. Thank you.

Peter Higgins 00:37

Good, good. Now, today, John, I'd like to start our interview with you by thinking a bit about your early career and what led to where you are now, you know, going all the way back to you as a graduate almost we'd want to start mate.

John Hughman 00:50

Oh, yeah, it's a very long story. So hopefully, we've got time, I actually studied history at university. And I've actually been back to university since then. So I'm a historian by background. And when I left I strangely went into advertising with it with a sort of detour via a sort of very cutting edge culture magazine called Sleazenation, which some people may have heard of, in fact, it's very, very topical now, given what's going on in Parliament and it was inspired.

Peter Higgins 01:17

Indeed, we're not going to go into that in this one.

John Hughman 01:21

No, no, but yes, it's one of the echoes are there today. So it's a very strange beginning, having sort of left university, I ended up with a client who worked in financial services, and I ended up going to work for them. And it turned out to be looking at technology investments. It was a company called Evolution Capital. And so over the years that that company evolved into what became Evolution Securities, and more of a general stockbroker, but I spent the beginning of my career sort of traipsing around the country, looking at little tech companies and seeing if they were sort of right for investment.

And that's really where I began to learn my trade as an analyst. And as I said, that that business then evolved into something that looks more like a sort of stock broker, as we know it, where I covered as an analyst software and computer services, and I picked a wonderful time to do it, because I think I started just before the turn of the millennium and left three years later, and that whole time was essentially the deflating of the.com bubble. It was a funny old time.

Peter Higgins 02:20

Yeah, the great financial crisis we call it.

John Hughman 02:23

Well, no, no, it's the one before the dotcom collapse. Before that.

Peter Higgins 02:26

Oh the one before dotcom collapse. Before that. Okay.

Peter Higgins 02:28

I want to go back just a little bit, because you mentioned the Sleazenation bit and then the bit publicists were your media company but I wanted to get back to the nuance of already.

You're at the stage here, John, where you were headhunted for this investment boutique startup, called then Evolution Capital and later, Evolution Securities, if I remember rightly, that's correct.

Firstly, what were you doing at the media behemoth publicists to garner that sort of attention where Evolution goes, we've got to have that little wide boy there called Johnny Hughman working for us.

John Hughman 02:56

Yeah, absolutely. Well, I mean, it was sort of all you know, everything's been very serendipitous.

So that that agency that I worked for, was a division of the bigger publishers group. And we specialised in the technology industry. So we had clients like Hewlett Packard, Oracle, Adobe companies like that's why I spent a lot of time just reading and putting research packs together for the account teams.

Looking at the tech industry, you know, what really was the very early days of it. So I started to build this knowledge, which I then sort of started to chatting with a client about who worked for one of the big asset management firms in London, before he then left to go set up Evolution.

So yeah, it was it was just I think that's sort of seen my research background knew that I had knowledge of the technology industry knew that I sort of had processes behind that one of the things I did, Publicis Tech, as it was called, was kind of helped build their web team. And then again, very, very early days of web shops, it was a bit Wild West.

And I do remember during that time, you know, the other thing that was absolutely fascinating was how many people were trying to start their dotcom businesses, all it seemed anyone ever wanted to do I'm not sure how we actually ever got any work done because people were either trading the market or trying to set up a dotcom, but either way I you know, I kind of went into it would it be it was an easy decision to make, you know, going into sort of cutting edge tech, which I've been looking at for a while was really exciting. And I'd say I sort of just built up this knowledge and knowledge of the bigger industry which was attracted to the guys I went to work for at Evolution.

Peter Higgins 04:22

Brilliant, brilliant. So you say you're attracted to you're already in the dotcom sort of era in the nuance of it dipped in the start of it. What was your greatest learning whilst that Evolution then because all the tech stuff bubbling off?

John Hughman 04:34

Yeah, I mean, one thing I've really really liked and I think it's stuck with me to this day, possibly for to my detriment is that I am a cautious investor now, you know, I look at markets with a cautious eye and I think you know, when Phil and I when we set up invest-ability, that was something we took through to that as well you know, don't lose money.

You know, when you've seen a whole industry unravel, particularly in the UK as we did cover software and services. There aren't many companies that were on my hatch that exists today. You know, we saw lots of fraud, we saw lots of accounting issues, we even saw some chief executives in court, or one of them ended up in prison. So I took the view away that you know, just because there is this fantastic industry, doesn't mean that every company within it is good. And so you really have to do your homework.

Yeah. And it's also really a cautionary tale in that actually, companies can disappear, companies can go to the wall, companies can get things very, very wrong. And we saw a great deal of that in those very, very difficult years.

Peter Higgins 05:37

As we're seeing now. It's almost like, as an historian see history repeating itself. I've got a question for you later on about that. Now, what I'm intrigued by now, John, is that you and I have worked together, we've spoken together, we've seen each other about for many, many years now. And now I've always assessed it has been quite a tough, pretty self-assured individual, right? Therefore, I'm also a father to a teenager, and you took a career break, and you help your partner throughout that time with your twin daughters. And although you carried on work as a freelancer, I want to ask you this very, very important questions. Do your twins have you wrapped around their fingers? Your daughters? Because mine certainly does!

John Hughman 06:13

Ah, yeah, I guess they have done over the years. I suspect they think I'm a soft touch. So yeah, of course, they're my daughters. They have me wrapped around their little fingers. There's natural.

Peter Higgins 06:23

Yeah I mean, what I liked about that particular time of you taking a break, though, is that even now that's quite progressive, that as a dad, although it shouldn't be progressive, is that you took the important step of taking time out to work freelance moving away from your proper job to do freelance stuff to look after your daughters with your partner at the time.

John Hughman 06:41

Yeah, I mean, it's different time. You know, things like paternity leave just they didn't exist back then. And you know, that we obviously had a challenge ahead of this. And sometimes you've got to make a tough decision, which is, which is what I did. And one thing I've got to mention is actually while I was taking that career break, I was still doing work in and around the market. I actually worked with a former colleague, who then set up an independent research company, which was sold to another broker Espirito Santo is that if you remember them?

Peter Higgins 07:06

Yeah, yeah, I've got that here with that was with Clear Capital, was it?

John Hughman 07:09

That's right. Yeah, that's right. Yeah.

Peter Higgins 07:11

Yeah. So tell us a bit more about that?

John Hughman 07:12

Yeah, it was really, it was really interesting. I mean, I wasn't involved in for a long time, because, you know, the family commitments really took priority. But it was interesting, you know, we worked in the sell side. And, you know, one of the things I took from being a house broker was really how limited you you are sometimes and what you can say, there are relationships that exist within broking firms that really do influence the independence of the analyst and the research that you can actually do. And actually, we felt that, you know, my former colleagues are clear. And I, we felt that actually, there was a place in the market for genuinely independent views of equities. And, you know, I think that's still the case.

Today, we saw you know, a number of these firms emerge at that point, but the route, the model for actually making, you know, a living making money out of being an independent research analyst was very, was very, very difficult because of the way that research is paid for, at that point by trading commissions.

You know, not many people were paying for research in and of itself. So it was it was tough. But I guess the point is, the reason we did it was because we felt there was something that was lacking in sort of investment research from the sell side. And actually, I think that probably is still the case today.

Peter Higgins 08:23

Agreed very, very much. So independence of research, objectivity, which is what you and I and Phil used to talk about quite a lot. Now, after your time at freelancing and Clear, and the results that you guys had there at the time, you took then your first spell at the Financial Times and Investors Chronicle before taking up the huge role of senior technology analyst at Ernst & Young. I mean, you're at the top of the tree there mate.

John Hughman 08:46

Wow. Yeah, unfortunately, not because it's a partnership. Sure, a partner, you're very much not at the top of the tree in a professional services firm. And that was a fantastic time. Again, it was a building on this work I'd done throughout the early stage of my career looking at two big US tech firms. And that's largely what we who we were working with, at EY, Ernst & Young as it was then, you know, we produce big thought leadership pieces looking at the US tech industry, telcos, you know, this was when bundling so that, you know, the idea that a telco was more than just a telco. This is when it was first emerging.

So we're working with a lot of big telcos also, how are we going through their strategic shift into content and triple play quad play, you know, offering multiple, multiple services, which was felt to be the way that the telcos were going to keep their customers as markets liberated.

So yeah, it was it was absolutely fascinating, got to work with lots people over the US got to spend a lot of time you know, talking to companies in Europe, particularly the telecoms equipment space. You know, we I think at the time 3G was being built at that point. What we at now?

Five, so that that was absolutely fascinating, you know, video Yeah, over mobile was not a thing at that point. So you know, lots of discussion around you know, What are the evolution of the mobile device? So yeah, I mean, it's, again, it was just part of this sort of patchwork of learning about how the tech and telco industry has developed over the years, which I think really helps you understand where it might go. But yeah, it was an interesting job. There's lots of travel, which is very nice.

Peter Higgins 10:17

Very nice. Okey dokey. So you're also doing all the work with the telcos and the tech companies during what was the other crash? 2007/8?

John Hughman 10:25

Yeah, just before just before? Yeah, yeah.

Peter Higgins 10:28

So during that financial crash, we I mean, it's estimated, I'm not sure whether they've ever worked out the proper figures now, John, but it's like $1 trillion of toxic assets of bad loans were dealt with, you know, during that particular time. Have you ever looked at banks in the same light ever since that time?

John Hughman 10:45

I struggled to invest in a bank, I, you know, I find them quite challenging. I think they've, you know, they're very cumbersome. And it was different as well, you know, Barclays and Lloyds are not the same beast.

So actually, I got I rejoined The IC, it must have been, as the GFC was brewing. And I got married in September of that year. And then I delayed my honeymoon, because I had the opportunity to edit the news section of The IC for the first time.

I'm not going to let that one up. And you know, the missus was understanding. So yeah, I rocked into the office on Monday morning, and to find that Lehman had collapsed. It was a baptism of fire, to say the least.

But the interesting thing about you know, that from my personal perspective, is that my pretty much my entire family had spent their careers working for banks in London. So you know, I had another perspective of it, which was an internal perspective, I had lots of war stories about, you know, quite how the banking industry came to be what it was. And what it was, by that point, was very badly governed, single minded in the pursuit of profit. And I think, you know, the tales I heard, but that lending standards had really slipped moving into to the GFC. You know, I remember having been asked lots of questions by friends about ISAs.

At the time, a lot of people asked me, well, you know, this is Icelandic guys, who is offering this this much. Yeah, these interest rates? You know, the answer that I often gave them was, it looks too good to be true. It probably is. And, and it was, but against, you know, speaking to people within the industry about the Icelandic banking crisis, which was one of the major triggers. And there were lots of questions being asked, as to where the source of you know, Iceland's newfound wealth was, so yeah, that I mean, it was it was a, I'd say, I haven't come out the dotcom boom and being cautious.

I then went into that, and and kind of, you know, became even more cautious. Because, you know, there were things that happened behind the scenes. And I realised this at the time, which was, you probably wouldn't expect.

Peter Higgins 12:47

Yeah, I mean, difficult time, really, I think a lot of people were getting into investing, because it was all about tech and technology was enabling people to get into the markets a little bit quicker, and all the rest of it.

But as you say, you had the local authorities were doing it, they were putting their money with banks in Iceland, you're going up doesn't make sense. It doesn't make sense. It's going to end up really, really badly. And it did. And it's only recently I've seen some articles still talking about some of the local authorities, which are still struggling, because the money they lost back then 10 years, 12 years on, absolutely agree.

John Highman 13:17

Yeah, I mean, they do. It was huge.

Peter Higgins 13:18

It was huge. It was massive, yeah.

John Hughman 13:20

A lot of people, you know, we're able to call on the government and, you know, the Financial Services Compensation Scheme, to actually get lots of money back, but lots of people exceeded what they were covered for. So there was there was a bit, you know, a big fight, but some people did lose out. And, you know, I think it affected confidence in the system quite badly, you can see that you can feel it, it was again, you know, the second very difficult time, very difficult market conditions that that I'd experienced. And but actually, the strange thing was, by this point, you kind of think, well, it's what happens.

And actually but you know, going back to what I learned from sort of the dotcom boom and bust was that we see what I think that we should perhaps think about now is that, you know, when a sell off happens, it doesn't happen overnight, when I worked in the brokerage, it took three years, pretty much from peak to trough for the FTSE to essentially half a bit quicker during the GFC, because it was much more of a sort of Big Bang event, but it still took a long time for the market to hit its nadir.

So I do look across the markets at the moment and you say little chair, sell off a little bit. And, you know, this is the big one, it's always it's a correction, we were buying the dip, and it's like, well, in my experience don't work that way. In the short-term.

Peter Higgins 14:29

Indeed. I mean, the beauty of what you've been doing, John, is that I just sense the fact that you've always had a passion for educating others, you know, the investors that were buying the Investors Chronicle, for instance, you know, and you set up all kinds of different sort of blogs, you launched the Investors Chronicle blog, the Chronic Investor, and you've got an award for the best online financial journalism. What was it called?

John Hughman 14:52

Wincott Award. Yeah. That was a shocking surprise at the time. But yeah, I mean, you know, it's just Again, that was during the sort of recovery from that massive crisis. So there was lots to write about was great fun, it was nice to win, to win something as prestigious as that.

But you know, and actually, you know, Wincott I mean, it's worth looking back when quite he was a former editor of the Investors Chronicle, you know, many, many years ago, post war, you can still read his writings, and, you know, again, a cautious guy, you know, with a sort of a kind of very sort of measured way of observing the markets and economics. And yeah, I mean, I would encourage people to go and dig out his works, you can do it through the Wincot Foundation website.

They're all there. But it's very, you know, very much inspired me is that sort of how I look at markets and how I further develop as a journalist, and columnist, which is, which is what I've largely did for, for my decade, running The IC.

Peter Higgins 15:47

Yeah, I mean, this is the stuff about history again, history again, isn't it? It's all about looking back, and learning from our past mistakes and things that happened tend to happen again, with regards to all of that, John, what have you learned about your time now, you know, going back to 2008, to now, what do you wish you knew, then? That, you know, now?

John Hughman 16:07

Yeah, I mean, I wish that I'd been less cautious from time to time when a market rips, it rips for a while, you know, when it hits that bottom? And goes, it goes. So I think you know, just because markets don't behave the way you want them to all the time, I don't think that means you should stay away from them.

So actually, you know, look for the opportunities and you know, don't always be so worried about things necessarily going wrong, because they do happen periodically, markets do bounce back. And you know, the thing I've learned definitely over the years is that, you know, markets climb, climb those walls of worry, not necessarily with ease, but they do kind of, there's always plenty to worry about.

Always plenty to worry about. So worry less, I guess, is the lesson.

Peter Higgins 16:51

Absolutely, but the beauty of what you did was it actually all your hard work paid off. You did so much during those first few years at Investors Chronicle. And if I’ve got this date wrong, please. You know, don't nail me to the mast. But September ish, 2012 you became the editor of Investors Chronicle?

John Hughman 17:09

I think that's bang on. Yeah, absolutely. Absolutely. Yeah.

Peter Higgins 17:11

Yep. So tell us about that mate. Because obviously that's a massive task. Now you you're not only doing the other stuff you've done before, you're managing the whole team. And we've often spoke about psychology but psychology of managing teams is an absolute. Task and a half.

John Hughman 17:25

Yeah. And we do it well, herding cats, I think would be the expression you would you would use but no, I mean, The Investors Chronicle, it's always had some really fantastic people. And still does. You know, there are writers there who are at the absolute top of their game.

Yeah. And I can point to people like Bear Bull, whose name I shan't mention, even though I I know who it is. There's I mean, Chris Dillow. The IC’s economist is an absolutely tremendous writer. And over the years, we've had people like Algy, who's now left there and Algy Hall.

That is the app stock screening guru Phil, Phil Oakley, who I set up invest-ability with, Simon Thompson, and lots and lots of other fantastic journalists are Moira O'Neal, fantastic personal finance journalist who went on to do or is doing great things with Interactive, the broker.

So yeah, I mean, you know, it was easy. When you've got such great people writing with such deep knowledge writing about the markets. And I had a, I think it was the guy that set up Private Eye I can't remember his name off the top of my head. But he took over many, many years ago, he walked into the Private Eye office, saw these incredibly talented and knowledgeable journalists around, and said what hell am I here for as editor?

So, I think he concluded that his job would be to kind of just sort of jolly everyone along, make sure they had a good time, and, you know, give them the opportunity to do their best work. So in that sense, you know, it doesn't take a lot of organisation hands off, funnily enough, it's a bit like, you know, perhaps the best way to invest sometimes. But yeah, so it was easy, because there were so many great people there. And, you know, obviously, Rosie Carr is now in charge again, you know, fantastic deputy over the years. So yeah, I was very lucky.

Peter Higgins 19:01

Oh, that's brilliant. Brilliant. Now, one of the things that you did whilst you were there, though, you develop the online in the digital footprint for investors Chronicle. Tell me about that. Because almost goes back to your Sleazenation and publicists days building and building, you know, new sort of income streams and content?

John Hughman 19:16

Yeah, I think in the first instance, it wasn't so much building you new income streams, it was really sort of bringing the whole thing up to the digital age.

So when we launched, you know, we'd barely been online, or barely been on we had a mobile app that offered some sort of share price information, which which I'd built with, with a couple of colleagues.

But that was it, you know, we didn't have a tablet edition. So first things first, let's get this stuff firing because people like to consume media in different ways. So so we did that, you know, over the years we are the podcast was something that I spent, you know, that I introduced and sort of built up from a standing start. I look back, you know, I think we must have launched to about five listeners or on a on a podcast platform, I can't even remember what it was now.

But yeah, that was great as well, you know, giving private investors a different way of consuming, you know, the same sort of content as you and, and, and we do, it's just another great channel and and it's really taken off.

Recently, we sort of expanded that, in the end, you know, Phil and I would chat, we did more sort of show based things. They're doing some fantastic stuff with we sort of interviewing people got City fund managers in particular.

So yeah, that was a big think big push for us. And, yeah, generally, sort of just tweaking things as we went along. The big problem that I always had, that we, as a team always had was the tips section. And it was something we battled with for years and years and years.

Because I think when I started, I think we were doing for large company tips week, six small company tips a week, you look at the numbers, when you produce that many buy or sell recommendations, your performance is always going to just revert to me, you know, you're going, basically be a classic tracker when you're doing that.

And we always wanted to focus it much more on a few sort of conviction ideas. And, you know, that took that took a lot of doing, we also felt that, you know, when you say buy, you might think that, you know, the numbers on paper, or numbers on a spreadsheet might suggest that, but it doesn't take into account who's buying, you know, the circumstances of the individual, you know, are they risk averse?

Are they are they interested in highly speculative growth companies just didn't take that into account. So, you know, we sort of tried to introduce things that would allow us to make those distinctions, but it was very hard. It's very hard, you know, and, of course, when you're tipping something, if someone buys it, and it goes up, they had a great idea. If you tip something goes down, it was you or our terrible idea, as is always the case. But yeah, we see it again. So it's just it was it was a lot of incremental improvements over the years before big redesign, then last year, yeah, which is fun.

Peter Higgins 22:03

You say there was bits and increments and all rest of it. But you know, I've got the stats in front of me here. And the paid print digital circulation increased by 16%. Your registered audience is doubling. You know, the team, you know, you including others, Phil, Algy, and others were winning awards left, right and centre. So that was all under your tenure.

John Hughman 22:23

Yeah, I guess. I mean, I guess the whole thing was, again, it was just trying to refocus everything on you know, making sure that we were producing the content that we felt was most valuable to, to the readership to private investors. And, and, you know, I mean, Phil, Algy very, I think, won it about three times the CFA Institute Awards, Algy and Phil I know both won journalist of the year, and we kind of we've kind of thought, well, let's really dig into let's do analysis, let's do it properly, like, like, we felt that the sell side sometimes misses, if even you as a private investor can get your hands on it. Let's do that. Let's focus on analysis. Let's be more educational, lets you know, give people the tools to fish rather than feeding them the odd fishy tip here.

Peter Higgins 23:08

Absolutely, absolutely. I mean, I love the fact you've got a passion for history, and you've always already experienced the dotcom and the burst of the great financial crash. I'm going just ask you a question here. Now, as Seth Klarman says and sees investing as an intersection of Economics and Psychology? If so, how do you see that? John? Do you agree, disagree?

John Hughman 23:31

I think that's a really good way of, of looking at it. I mean, you and I have spoken about this before, but but I think there's it's taken a long time to realise it. But psychology is probably the most important thing in investing.

Certainly, that's what I believe that, you know, markets don't move because a number changes, they move because people's reaction to something changes because a mood changes. Because there's energy in the market, which comes from how people are feeling about things.

So I think psychology is incredibly powerful. You know, I think you know, your own worst enemy, you're also your worst enemy in investing is probably yourself, you know, you are the one that will suffer from cognitive biases, you will be the one that you know, suffers from things like the endowment effect, you know, valuing something more highly just because you hold it. Loss aversion, you know, fear and greed.

Peter Higgins 24:20

That was my next question actually.

John Hughman 24:24

Yeah, it's like psychology is I agree entirely with that. It's, it's probably the most powerful thing in investing.

Peter Higgins 24:30

And I agree with you wholeheartedly on that. And that's why I keep you know, espousing the importance of psychology and, and knowing thyself. And the problem I have with a lot of the people I speak to on Twitter, is that unless you're talking about this is a really good idea. And you say naturally, here's a really good book about psychology or this is what I learned about this reading this book, or this is what Seth Klarman said, This is what blah, blah, blah, says it's like a come on that's boring Pete just tell me what you bought. That's what that's all they're interested in.

So this other question I had was about fear and greed John as an historian, do you just are you in agreement that we're going to keep seeing these things repeat themselves over and over again? Why don't we, as humans learn from history to see that this is coming again? What's going on?

John Hughman 25:17

Um, because this time is different.

Peter Higgins 25:22

Those four words.

John Hughman 25:23

Absolutely. And I think, you know, human beings have got a tough gig, when it comes to, to be investors. It's actually something that, you know, one of my former colleagues, Algy Hall wrote about in a really fantastic piece, I think, called tame your brain for The IC. And, you know, we are literally evolved from this sort of hunter gatherers of 1000s of years ago, in terms of the way we think the way our mind works, and yet we live in, in an increasingly complex system.

So you know, the reactions you have when you're investing are the same reactions you would have perhaps have when you're out hunting, or gathering or whatever it might be, but they're not necessarily the right reactions in this day and age.

So you've almost got to kind of like, teach yourself, how to not be yourself, which is really, really hard. And, you know, people, people are motivated by, by wealth, people are motivated by the sort of thrill of being in the markets, potentially, you know, making a lot of money when someone else has this positive, you know, those those motivations will always be there. I don't know if it's possible to learn from history. I don't know if it's possible. We can try.

But you know, you've got to take a real step back sometimes and a deep breath, it's, you know, it's not I don't think it's about learning from history, I think it's about really, really, as you say, know thyself, learn how to understand yourself, rather than understanding that, you know, someone bought tulip bulbs in Holland in in the 17th century for far more than they were ever likely to be worth.

Peter Higgins 26:51

Very good point well made, mate. Thank you very much. Now, John, I want to I want to conclude this period of have you been Investors Chronicle with this question, you and your colleagues positively impacted hundreds of 1000s investors lives for the better. If you could tell long-term investors one thing about the art of successful long-term investing, what would that be?

John Hughman 27:13

Oh, one thing? No. So the one thing would be no yourself, but we've done that one already. So I mean, it is really the you don't have to take massive risks, to do well over the long-term in investing, you know, if you drip cash into the market, if you drip it into assets that are reasonably priced, I am going to refer back to history here because because it suggests that you know, markets have a habit of getting through even some of the biggest worries that are thrown at us you know, they survived a couple of World Wars, they've survived all sorts of horrendous things to two crisis that I lived through the Wall Street crash or that obviously I wasn't around for but markets go on. And you know, the magic of compounding, take your dividends, reinvest them. Don't do anything stupid.

With your sort of core pot, have fun money, if you want to want to have a little speculate. But but the core part, just be sensible. Don't panic, don't do anything mad and actually don't and don't look at it every day, you know, that will, you know will only panic you into action. And I think you know, we know the financial service industry makes more money, the more you do so. So don't be bounced into doing things.

Peter Higgins 28:26

Brilliant. I love that reply. John, thank you ever so much.

LSE 28:29

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Peter Higgins 28:46

John, I've long been a great admirer and advocate of continual learning. Please, please share with us what drove you after 19 years of absence to go back to academia to commence your Masters qualification in History of Science, Technology and Medicine? I find this fascinating go one.

John Hughman 29:02

Yeah, it probably was, it was probably something to do with it was obviously with the GFC great financial crisis and what followed, which has been a very extended period of obviously monetarism monetary policy rules all and you know, and we're still seeing that today.

You know, we're still seeing, you know, the prospects of the Fed tightening of interest rate rises, is what mood is moving the markets. And I kind of felt that, you know, looking back at history, what we sometimes forget, is, you know, what happened in the industry is behind them, yes, the rising tide can lift all boats, but not all boats ultimately end up in the same place.

So how do we, how do we understand how industries or science have evolved to get to the point where they are now? How have companies evolved to get where they are now? And I just felt that you know, and actually saw and how and how that's being supported or not by government policy. So all of this stuff coming together.

I looked at things like the history the supermarket industry, which is absolutely fascinating the history of the broiler chicken, it was a particularly interesting story. But it's really interesting because it kind of it tells us why we eat the way we eat today why we have the, but the consumer habits that we do today, you know, look, it's not plant based meat is an evolution of that story.

So I kind of felt there was so much focus on the market, the market, the market, the economy, the economy, the monetary policy behind it, that we weren't actually really thinking very much about industries, and say how they came to be what they are. And I just kind of thought, this is going to change at some point, and I still think it will.

Peter Higgins 30:33

Right, but we were living in it, like you've already taught. So we're living in an era of consumerism, where things are built not to last. So we end up buying the next update and the next movement, which you and Phil spoke about numerous times?

John Hughman 30:45

Yeah, I mean, this is for me is quite a worry. So actually, one of the modules I did on this course was the history of climate change. So actually, you know, we do live in this consumer society, there's a great book, whose name I forget, which is about how we developed into this consumer society where, you know, convenience and disposability seem to be the thing that it's built on, my view would be, something's going to happen again.

Now, we are heading towards a situation where, you know, we we will be resource constrained, you know, we have a real problem with with energy, as we're seeing, and we have a real problem with with waste, you know, looking at history, the nuclear power industry in this country as well, it's something else I've touched on the couse, we, you know, and it's obvious to see why we're in the position we are, I think we are probably at a bit of a tipping point, in terms of the way some industries operate.

You know, I think, you know, you look at you look at the history of industry, they certainly say during post post Second World War, very massive sort of chemical based development, I think we're going to probably need to see some changes, then. Now, again, because we have a serious pollution problem. ESG has become massive, it wasn't really being talked about five years ago when I finished this course. But I think this is the next big step in where we go technologically, and behaviorally as well.

Peter Higgins 32:01

I agree with you. I mean, you've got two twin daughters are now in their teens. John, right. And they're that era. And that generation, are so vocal now, regarding decarbonisation. All these companies are talking about net zero, and all the rest of it, it's a case of really, can they actually manage that tobacco companies or be a being put into ethical funds? It's find it quite worrying really?

John Hughman 32:21

Yeah, I mean, that is another thing that, you know, sort of in the last few years at the IC, and increasingly with invest-ability. ESG, as a label is something that worries me a great deal. You know, I think, as you say, you know, lots of companies get labelled with this, this this sort of ethical sustainable tag, when they're not really and, you know, I, I see it as a bit of a gimmick that some companies within the investment world have used to kind of, to kind of make themselves relevant, still, in an age of ETFs.

Too much box ticking, not really looking at the big problems, you know, talk of net zero when it's, you know, it's politicians talk, rather than the sort of the pragmatic situational on the ground, which is what we're, we're now seeing the results of in sort of Eastern Europe and Ukraine. So yeah, it is a worry. Net Zero is, you know, we need to do something. But you know, what worried me over the past few years was, you know, watching, divestment, what oil companies and you know, we don't we don't need them anymore, we'll chuck them on the pile. We've got electric cars now. And it just seems, you know, we were rushing headlong towards net zero when we hadn't actually worked out how to do it.

Now, I think there is there is definitely a need for it. And I think there's lots of companies out there that that could play a part, but I just feel like it's politically motivated, or financially motivated and lacks the structures it needs to really achieve what needs to be achieved in terms of you know, reducing emissions, reducing pollution, reducing waste.

Peter Higgins 33:47

Now, I agree, I agree with you. Now, you co-founded the educational investing website, Invest-ability, with our mutually very dear friends, Phil Oakley in 2021. And now you're continuing under a different structure. What remains though, is a statement of intense, John, to capture in your website's tagline free thinking, plain speaking insight into the world of investing.

Now, I love that. Please tell me more about the website touched on there about the independence and objectivity analysis and insights that you value for investors, which is much much needed out there right now.

John Hughman 34:20

Yeah. So as you rightly say, Phil, and I launched it in September, last year. And our view was really to keep doing this sort of deep deep dive analytically led research into into public listed companies and, and funds where we thought are interesting. So yeah, we've got we've got a bit of investment coverage up there, Investment Trust coverage, sorry. I'd like to do a lot more of that. We really wanted it to be educational.

So you know, it's actually a lot of time using live company examples to teach an educational aspect and we always wanted to avoid telling people what to what to do. You know, there are there are hundreds ways to skin a cat in the stock market.

You know, there are there are always, you know, divergent opinions on whether something is attractive or not attractive as an investment. And very different reasons, as I said earlier why people would want to buy something or not as the case may be, you know, we said from day one, we're never going to say buy, we're never going to tick, we're going to present a case. And we're going to present the bull case, we're going to present the bear case, and it's up to people to make their own minds up. So that's, that's the, we're not going to pull any punches either. Which is the fun bit.

Peter Higgins 35:29

Yeah, objectivity. I love it. I mean, this is what this is what I love about the plan, and the structure and what you've got in place to do with invest-ability. It's for me, it's about the passion of being objective, you know, to give the analysis, warts and all to say, look, now you've got all this information, do you go away and make your mind up as to what you want to do, and also go and do some more research of your own?

John Hughman 35:49

Yeah, and exactly. And so, you know, hopefully, we're offering a starting point and a framework that, that people can can use to go and go away and do that research. The other thing we, we really wanted to make sure we did was invest in my previous lines of work, I've not always had the freedom to invest as I wanted. You know, when Phil came to join us, some years ago from SharePad, which he was about to help build, before we came to the IC, he had to give up his SIPP, which we ran as a dummy portfolio, but I think, you know, something I've now learned, or learned or experienced,

I would say, is just how different it is to observe than to participate. When you're talking about stock markets, you can be the cleverest pundit in the world, and you can nail everything and know, you know, a company's balance sheet inside out, or you know, what the likely trajectory of interest rates is going to be, sit down in front of you broker and put that order in and press fire.

That's a different experience. And it's one, you know, I want to be closer to the people I'm writing for. And that's essentially what why we set this up.

Peter Higgins 36:51

Brilliant, I love I love what you just said there about the nuance of writing about it. And not saying it's practical and theory, but writing about it and actually doing it when you have to put in your hard earned 1000 pounds or 5000 or 10,000 of your SIPP, which you've analysed is a whole different is writing about what the company said it's going to do and at 10. And then watching the market go up and down five or 10%.

It's a completely different thing. I see so many people talking the talk. But when it comes to the markets have gone down, they've left there's no conversation being had about the stock that they owned, or were championing or cheerleading for three years when it's gone south.

John Hughman 37:27

Yeah, absolutely. And that in itself is a, you know, part of that sort of psychology and investing that we were talking about a minute ago. So yeah, I mean, it just just understanding that, you know, and I say I've heard, I've learned a great deal.

And you know, we always we always wanted our readers at the IC to do well. And we always felt very responsible for the things we wrote, and the accuracy of the things we wrote. But I would say doing this as an investor now, that sense of responsibility is bigger than it ever was before. You kind of realise if I've really got to get this, this right, you know, I've really got to be bang on the money, because I know how much is at stake being an investor myself.

Peter Higgins 38:04

Good. Very good point. Now, I've got a question for you here. And I think this is one that people are basically having conversations about right now growth stocks, especially techs have dominated over value stocks for several years. Can you foresee a period where value investing almost Warren Buffett esque value investing style might come back into vogue? If so, what metrics screening could investors do? In their attempt to locate long-term winners John?

John Hughman 38:33

Yeah, it's an interesting one, I saw something really, I think was Terry Smith, he said it the other day, in his in his last Fundsmith letter, he was talking about what is value. And I thought that was really, really quite interesting, because I can't I've written so similar to myself, you know, I'm not sure what value really means.

It gets used in all sorts of different things, and it's junk that's been sold off, or, you know, stuff that sort of been languishing without really offering much growth? Or is it sort of based on the ability to pay out dividends?

You know, there were so many, so or just, you know, lower valuations? Actually, I, you know, I think you should always be looking for value wherever you're buying. So, growth, investing should also have a component of value investing in it, if you're trying to find something that's going to grow, you shouldn't be prepared to do that.

At any price. What you should be thinking is, is the growth on offer here, good value. And so I think these things always talked about, you know, growth and value is talked about separately. And you know, on some metrics they are, but actually, sense of an investment combines the two. And actually, if you if you turn around and say, I'm a growth investor, we are rolling out a big chunk of the market.

If I'm a value investor, you're actually rolling out another big chunk of the market. Whereas Why do that? Just, you know, there is a world of opportunity out there, and you cut it in half by putting yourself in a camp makes no sense to me.

Peter Higgins 39:57

I love that response. John, thank you for that. Truly, truly fantastic reply. Thank you. Now I want to talk about your obviously, redeveloping the restructuring for 2022 invest-ability. What are your goals and ambitions for investor-ability in 2022?

John Hughman 40:12

Yeah, um, I mean, I really want to grow the amount of content on there. It's what I've been doing, you know, in the last month or so, we kind of trying to work out exactly where we can add the most value. And I think I'm getting closer to that. I think right now, you know, in the market that we're in, which is sort of febrile, should we should we say, you know, I really just want to make sure that all our readership, have the sort of tools at their disposal to really survive in what could be, could be a difficult market. So what I want to do when I get podcasts back up and running, that hopefully will happen next week, or this week, there's been a delay, which is my fault as I wasn't very well. What else are we doing? I'm kind of as I say, I really want to do something that gets us closer to, to our readership to private investors.

So we're sort of exploring some things that around that, that will sort of help bring private investors together, one of which could be an event. So I moved up to Suffolk last year, my family have a smallish farm or a larger small holding. So we have venues I'm possibly thinking about doing event.

But yeah, it's kind of yeah, a little bit up in the air at the moment, just trying to sort of work out what people want. I think people are kind of concentrating on what's happening to their portfolios at the moment, because it's been, it's been very, very unnerving.

But you know, the thing I really want to do is just be fun and entertaining. You know, I think I think there's a lot of investment writing out there. A lot of it's very dry. And and, you know, I just, I think to be readable. You've got it, you've got to be entertaining as well. So yeah, quirky. That's, that's, that's where I want a bit more quality tunes in my daily emails. Music is the answer.

Peter Higgins 41:53

No, that's cool. No, mate. That's brilliant. I mean, if all I would say is just please keep me keep me posted, keep London South East posted as well. And we'll try and do what we can to help garner some attention to what you're doing, because your work. And what you've done over the years has been invaluable to so many people, John, so we just need to keep you and invest-abilities thriving going forward. So where can they find the website? Tell us about the website and where else they can find regarding the podcast?

John Hughman 42:17

Yeah, so it's www.invest-ability.co.uk. There's plenty of free content on there as well. If you want to ever, ever sort of look around before before you decide to take the plunge and subscribe podcast?

Well, as I say it's a bit up in the air at the moment, but you can find it through through the website, or it will reappear in the next week or so on on the various you know, podcast Channels app, I think Apple's our biggest one, Spotify Buzzsprout, all the all the usual. And yeah, we sign up on the website, as well as the daily email. So yeah, lots of lots of forms on there for doing that, which, which I'll get up and running again soon, you know, just been sort of sitting back in the moment trying to keep an eye on the market, sort of sort of take stock.

I think I think it's very easy to put out snap views, which turn out to be wrong a day later, particularly at the moment. So I'm kind of sitting back. I think a lot of people should think about doing the same. Don't be panicked into action. So yeah, that's, that's that's kind of where we are. It's exciting.

Peter Higgins 43:16

Yeah, that's reactive. I agree with you, John. It's been an absolute pleasure speaking with you today on the Investing Matters Podcast. Thank you for all your insight and all your education going forward. And I look forward to watching your journey and your growth going forward.

John Hughman 43:30

Thank you. Thanks Peter and thank you for thank you very much for having me on.

Peter Higgins 43:33

Thank you very much, fellow. Take care, God bless.

LSE 43:45

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