Several years ago, I remember meeting one particular investment manager and asking him what his investment approach was. He said: ¨We avoid everything that the market thinks of as exciting¨. The strategy was based on investing in tried and tested companies that generated free cash flow. They did well.
Lately, a new term has come to the fore in investment management – story investments.
These are companies that attract a lot of investment because they excite people with their story. As investment pours in, the price soars, seemingly vindicating the story. But then performance lags, or profitability seems ever further away, and the price slumps.
Early investors have made some money but those that came in later, on the back of the energising story, all lose money.
So here’s the question – given the result of the Peterborough by-election, is the Brexit Party the equivalent of a story investment? And, to a greater or lesser extent, is the Lib Dem surge in the same camp?
The Lib Dems could be argued to have done reasonably well in a 61 per cent leave constituency. They are currently a single issue party so could never play to the local issues as Labour apparently did. And they are in the middle of a leadership contest which means that they face a period where any new leader will have to prove him/herself to the public.
And, as clearly laid out in our recent book, leadership matters – a lot – in today’s politics.
The Brexit party, on the other hand, was expected to walk it. They didn’t, and Labour held on.
So maybe this is the equivalent of a story investment. Lots of early excitement. Great performance in the Euro elections with their lower turnout and which most voters feel don’t matter very much.
But when it comes to sustained performance in elections that matter, tedious and boring issues like on-the-ground organisation, voter targeting capability, credibility, etc all still matter. A bit like the idea that, ultimately, generating a profit actually matters for a business in spite of the excitement that companies like Uber generate while accumulating losses and burning through billions of investors’ cash.
If there’s one lesson from the Peterborough election it might be this: don’t read too much into the Euros or post-Euro Westminster voting intentions. The future is unlikely to be like the past. And boring stuff ultimately matters.
Stephen Gwynne says
At the moment, the Brexit Party is waiting upon the Tory leadership result with a Big Visioning event to be held later in the month.
Clearly, the Brexit Party, despite losing by a mere 700 votes leapt from nowhere into second place. Any shareholder would obviously be pleased by that huge surge in percentage points.
The challenge for the Brexit Party if Brexit is not delivered as promised is identified by Lord Ashcroft and his recent work on back stories with a more comprehensive picture of the UK to be published soon.
The difficulty for the Brexit Party is that the low security high diversity urban suburbs and the low security low diversity peri-urban towns tend to gravitate towards Labour which overlaps with strong Brexit support in the latter but not the former. The difficulty therefore is winning not only the high security rural vote which is the stronghold of Tories but winning the low affluence diversity vote in the urban areas which is one of the strongholds of the Labour vote. The latter section is the reason for the Far Right propoganda war being metted out by Labour Radicals and was conceivably used as a scare tactic during the Peterborough by-election.
When drilling down even further, the self proclaimed indigenous vote (40%) which largely forms the basis of the Brexit Movement and the self-proclaimed metropolitan vote (40%) which largely forms the basis of the Remain Movement, taking into consideration that both these groups are formed of both hard and soft variants, means that the immigrant communities hold the balance of power which specifically explains the propoganda war of far rightism.
Two interesting developments which I haven’t yet looked into is the potential backlash by Conservative Muslim communities regarding the liberal enforcement of lgbt equality measures and the recent tax cuts announcement by Johnson accompanied with a hike in national insurance contributions. Clearly this means low security sections losing out whilst the core Conservative vote wins. This sort of fiscal strategy will not endear ex-Tory low security Brexit Party supporters to switch back if the Brexit Party is to offer something better.
The point of my cursory observations/opinions is that the Brexit Party is purposely hold back on policy formulations in order to take advantage of the dissatisfactions that emerge as a result of leadership battles, most of which could have the potential to be swept into a Believe in Britain narrative, including the Muslim vote.