28 the spectator | 29 february 2020 | http://www.spectator.co.ukANY OTHER BUSINESS | MARTIN VANDER WEYER
Bet like Buffett: the virus scare
is a chance to buy cheaper
In the departure lounge
Last week I predicted Barclays’ trouble-
prone chief executive Jes Staley might soon
be ‘stepping back in the manner of Prince
Andrew’, following revelations of a past
business relationship with Jeffrey Epstein.
This week we learn the bank is already
looking for an outsider to replace Staley in
2021, at the AGM in May or at the latest
the end of the year. One source said this
would allow him a ‘graceful departure’ but
somehow I doubt it: the timetable looks
awfully long for any boss to be still at his
desk when the board has taken away his fil-
ing-cabinet keys and shareholders are grum-
bling. Gracefully or otherwise, expect a new
Barclays chief sooner rather than later.Breakfast at the old bank
Speaking of Barclays, as I often do, let me
recommend the eggs benedict at Quod,
the restaurant of the Old Bank Hotel on
Oxford’s High Street. I bet I was the only
person breakfasting there on Sunday who
knew the hotel in its former existence as Bar-
clays’ local head office, presided over by a
director who told me, as his undergraduate
lunch guest, that he regarded unauthorised
student overdrafts as ‘indistinguishable from
theft’. This was 1974, when the British econ-
omy was a wasteland of strikes, inflation,
Labour taxes, failing businesses and dismal
graduate job prospects, but the darker issues
of the day were barely discussed. Instead, as
the port and madeira circulated, my host and
another (more sophisticated) guest debated
whether it was better to have a handbell on
the table to summon the butler, or a more
discreet foot-operated one beneath.
I have kept a little bell in my own din-
ing room ever since, in memory of that occa-
sion and in case a butler turns up. The past
really is another country and, contrary to
impressions I may sometimes give, I don’t
want to go back there. But I’m always glad
to find handsome old banking halls pleas-
antly repurposed.I
f anything, stock markets have been
slow to respond to the spreading coro-
navirus outbreak. Stories of Chinese sup-
ply interruptions, from JCB digger compo-
nents to plastic toys, have been circulating
since mid-February, while hedge funds have
been hard at work short-selling cruise-oper-
ator shares: Royal Caribbean and Carni-
val are both down 30 per cent. Now airlines
have taken a pasting too, with easyJet and
Ryanair among the big fallers in Monday’s
sell-off of European stocks, following news
of a cluster of virus cases in northern Italy.
Meanwhile, a turning point may or
may not have been reached in the rate of
reported cases in Wuhan, where the out-
break began. The World Health Organi-
zation says it has seen positive indications
there, but this probably isn’t the moment
to start believing propaganda from Beijing:
shortly after the announcement that Presi-
dent Xi Jinping was belatedly taking charge
of China’s response to the crisis, I read:
‘Ninety per cent of Chinese cities simultane-
ously recorded a drop in the infection rate.’
Whatever the truth, the natural order of
things suggests the medical emergency will
fade in the spring and shares will recover.
Back in the 1980s, it was commonly said that
‘When America sneezes, the world catches a
cold’ — meaning that recessions over here
inevitably followed downturns over there
because US companies, banks and consum-
ers had such enormous impact abroad. Now
that China is suffering a major disruption
for the first time since it emerged as a glob-
al trading titan, we really don’t know how
severe the economic infection is going to be,
though we do know it will be exacerbated
by unpredictable local patterns of travel
restriction, supply shortage and stockpiling.
Meanwhile also, canny stock-pickers
scan the pharmaceutical sector for claims of
a first coronavirus vaccine: Californian bio-
tech company Gilead Sciences is one share
on the rise, and I see mention of smaller US
Nasdaq-listed names such as the drug devel-
oper Novavax, up 30 per cent in February.
Other pundits suggest buying temporar-ily afflicted consumer stocks such as Nike,
casino operators such as Wynn Resorts, or
more sensibly, the healthcare giant Johnson
& Johnson. But armchair investors should,
of course, do the equivalent of washing
their hands and donning a face mask before
placing bets in such an uncertain field.Buffett’s bulletin
There are many reasons to salute 89-year-
old US investor Warren Buffett besides the
size of his accumulated fortune — $90 bil-
lion at last count — and his declared inten-
tion to give almost all of it to charity. I’ve
always liked his remark that money ‘can’t
change how many people love you’ and
admired the mix of optimism, amiability
and frankness in his annual letters to share-
holders of Berkshire Hathaway, the holding
company that has returned more than 20 per
cent compounded annual growth since 1965,
double that of the S&P 500 index.
This year he was frank about his own
life expectancy — ‘Charlie and I long ago
entered the urgent zone,’ he said, referring
to his 96-year-old business partner Charlie
Munger — and about the difficulty of find-
ing companies they would like to acquire,
which must meet criteria that include being
run by ‘able and honest managers’. Instead
he and Charlie have simply ridden the ‘fick-
le stock market’, buying smaller stakes and
clocking up $54 billion in unrealised gains
for last year but underperforming recent
indices because they shun the hot tech
stocks that Buffett says he doesn’t under-
stand. Making an exception for Apple, which
he calls ‘probably the best business I know
in the world’, he prefers banks, insurers, rail-
roads and established consumer brands.
In interviews this week he also remind-
ed investors not to panic-sell in reaction
to ‘today’s headlines’, but ‘if it gives you
a chance to buy something you like even
cheaper, then it’s your good luck’. I look for-
ward to next year’s Buffett bulletin, putting
this year’s coronavirus market scare into
longer-term perspective.AOB_29 Feb 2020_The Spectator 28 26/02/2020 10:06