Transcript of video:

Hello everyone,

Well if you haven’t yet seen the film The Big Short, get yourself down to your local cinema and have a watch or wait for the video to come out, which shows my age because videos don’t come out any more, you just go and download it online, and if you don’t know how to do that, get your grandchildren to download it online, they’ll do it for you. Anyway it’s an excellent film and when you watch it what you’ll realise is that hedge fund managers, big banks, asset managers; talk their own book. So when they want something to happen – when they’ve got a bet on the market – they start telling you it’s going to happen, because they know that prophecies can be self-fulfilling in this business, and so they talk it for their own ends. And that’s what’s happening recently, you’ve had the hedge funds who were betting short, wanting to convince you that it’s Armageddon and its 2008 all over again and I can assure you it certainly isn’t 2008 all over again.

Financial crises like those come around every 100 years or so; 1929, 2008 – they don’t come round every few years. And the reason they don’t is because they need massive leverage and they need an asset that will blow up and cause the financial system to collapse and right now that’s not going to happen. The banks are stronger, there’s been a control on debt and the world is generally in a better place than it was eight years ago. But things are going to be a little difficult. We’re going through a rebalancing process in the world. We’ve had too much savings for too long and that money has been slopping around and because there’s been too much savings, people haven’t been spending enough and because they’ve not been spending enough there’s not been enough demand.

As China slows down and reduces the amount of investment in its economy and the oil price falls, hopefully we’ll create some space which consumers can step into and increase real demand. That will be very, very good for the global economy, but it won’t be an easy path – there’s going to be ups and downs and because of that, we will stay broadly diversified but we will be positioned to get the benefit of any increase in equity values.

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