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Jockeying for position

I have a new system for betting on the horses. It is not nearly as fun as the “In Bed” Syndicate – where you put the words In Bed after a horse’s name and, if it sounds amusing, you stick a couple of quid on although it is every bit as unsuccessful.

Mind you, after second place in the Grand National, I am clearly getting better and so, altruistic soul that I am, let me share my system with you. Having noticed – keen-eyed hack that I also am – how every big horse race seems to generate a huge human interest headline the next day, I have over the last year or two tried to spot it in advance.

The purest incarnation of this insight would, of course, be Bob Champion and Aldaniti winning the 1981 National after recovering respectively from cancer and career-threatening injury but that was a few years before I was allowed into a bookmaker.

I might claim AP McCoy winning the same race last year on Don’t Push It at the 15th attempt as an actual success if that story had not so obviously failed so many times previously but, as I say, I did manage to snag second place this year with the potential headline, Amateur jockey wins both Gold Cup and National.

What does this system have to do with investment? Well, for one thing, both are infallible with the benefit of hind-sight but recently I have also found myself wondering if the system could work in an investment context. Investors are always looking backwards and saying such-and-such foreshadowed the top of the market so, picking a topical issue totally at random, is there anything happening at the moment that could ultimately be seen to have screamed the end of the commodities boom?

Now, now – don’t be naughty. Just because a commodities trader is to float with a valuation of $60bn-odd and on the day it launched its public share offering, according to the FT, “surprised even seasoned traders by stating that it controlled 60 per cent of the third-party zinc market, 50 per cent of copper, 45 per cent of lead, 38 per cent of alumina and almost a third of thermal coal”, that is no reason to be snitchy.

But people are being snitchy, aren’t they? Not least the City press, who have not been this apparently down on an IPO since, oooh, I don’t know – Gartmore maybe? Glencore’s market dominance, its employees’ shareholdings, the way its chairman was eventually appointed, some pretty close connections among the rest of its board, the scarily impressive – with, since I am writing this piece, the emphasis on “scarily” – roll call of expensive names among its advisers – all this and more has been covered and not universally in a tone of reverence and respect. Don’t ask me for a reason – maybe City hacks just don’t like companies beginning with G and ending in ore .

The arguments in favour of a so-called commodities “supercycle” are well-rehearsed – admittedly as often as not by commodities fund managers.

But there are more balanced assessments too, including as part of a chapter called, New schools of thought – hype or reality?, within a certain emerging markets investment book that currently stands a proud 148,311th in the Amazon best-seller charts. Oh, I wish I was joking about that ranking.

There seems little doubt that the Glencore IPO will get away successfully enough but what will be the major motivation of the investors – those who get a choice, that is, rather than as a result of owning index-tracker funds?

Will it be confidence that commodities prices hold solid in the medium term, even after the world’s central banks stop printing money, or will it be fear of missing out, regardless of any opposing views on why and when the cycle might turn? I merely ask the question.

There is talk of Glencore, at some point down the line, looking to take over diversi- fied miner Xstrata, in which it already has a 34 per cent stake. The resulting entity has already been given the Brangelina-esque contraction of Glenstrata but, should my Spot the headline in advance theory work – and there is, as they say, a first time for everything – then X-Core might just turn out to be a better option.

Julian Marr is editorial director of and


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