“Abraham Lincoln once posed the question: “If you call a dog’s tail a leg, how many legs does it have?” and then answered his own query: “Four, because calling a tail a leg doesn’t make it one.”
- From Warren Buffett’s 2018 letter to shareholders of Berkshire Hathaway.
The Financial Times led their weekend edition last week with a front page splash: ‘Buffett backs Britain..’ If you dug a little deeper, the truth was somewhat more prosaic. The world’s most famous investor wasn’t actually putting his money where his mouth was, so much as lending moral support to a financial market that many claim is being ‘artificially’ discounted by issues relating to Brexit. With all due respect to Mr. B, and noting that regardless of the article he has yet to commit any meaningful new capital to the UK, he is probably understating UK political risk. We would suggest that the FTSE trades where it does – at no huge discount to other stock markets that we can identify – not so much because of overblown Brexit chatter (the FT is fiercely Remain), but rather because both domestic and global investors have no great enthusiasm for a possible future government led by two unashamed Marxists.
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