Over on the Curzon blog, our newest member Emlyn Rees has written an interesting post about his plans for a Wimbledon thriller. That set me to thinking about an interesting question. Why aren't there more sports thrillers?
Dick Francis, of course, made a great career of writing about horse racing. But there are very few thrillers about football, tennis, boxing, formula one, and so on. It is odd. Sport is full of drama and conflict and double-dealing, all the stuff of stories, and has a huge following.
Maybe no one has really tried. One of the projects in my drawer is a football thriller that Random House made a very low offer on at the same time as I started the Death Force series for Headline. So maybe it is just a matter of waiting for the right author to come along. But maybe its because it is impossible to write about sport in a way that doesn't seem flat compared to the real thing? The spectacle itself is so dramatic, it is hard for a writer to match the intensity of the contest. If so, there never will be a really great sports thriller.
Wednesday, 22 June 2011
Thursday, 16 June 2011
The Greek Default
In my MarketWatch column this week, I've been looking at what will happen to the markets if Greece defaults. You can read it here.
Monday, 13 June 2011
What Would Happen To The Markets If Mobiles Did Give You Cancer?
In my Money Week column this week I've been looking at what it would mean for the markets if mobiles did give you cancer. Here's a taster....
There is no shortage of stuff out there to make investors feel nervous. The euro could get blown apart if a long hot summer of protest in Greece and Spain boils over into civil unrest. The Chinese economy might suddenly turn down, removing just about the only source of global growth. Inflation might suddenly rip out of control, provoking central banks to sharply raise interest rates.
But there is one risk that most people probably haven’t thought about at all.
What if mobiles really do give you can cancer?
Speculation of a link between cellular technology and brain diseases has been running for a decade or more. But last week the World Health Organisation said its latest studies suggested there was a possible link between talking on your mobile and cancer.
Leave aside the medical implications for a second – although there are serious enough. This is a huge issue for the markets as well. Just think about the hundreds of billions of investment now tied up in keeping everyone texting and talking on their phones all day. From the operators, to the equipment suppliers to the handset manufacturers, to the computer and software industries, many of the largest companies in the world could be devastated if a meaningful link was ever proved.
Mobile technology has the potential to be another tobacco – a huge and powerful industry that was just about destroyed by the unfortunate fact that it killed people.
Of course, there is still no proven link between mobiles and brain disease. The WHO is not claiming that there is. It’s International Agency for Research on Cancer gathered together 31 experts to meeting in Lyon last week to review the available evidence. It concluded that there was ‘a possible’ link between mobiles and a type of cancer called glioma. The WHO has five rankings of cancer risk, ranging from ‘carcinogenic’ to ‘probably not carcinogenic’. The ‘possible’ ranking is right in the middle of the range. So it is not saying it is definite. And it isn’t ruling it our either.
For anyone tracking the industry, that isn’t particularly helpful. Lots of studies have been done of potential links to cancer, and none of them have been very conclusive so far. Mobiles appear to have some health impact. Against that, there has been no big increase in the rates of brain cancer in the twenty years or so since mobiles became a ubiquitous part of everyday life. And it is difficult for anyone to assess the data accurately because brain caner is a relatively rare condition, so there are not very many people to study.
But just because cancer rates haven’t taken off yet, it doesn’t mean they won’t. People were smoking heavily for a long time before the damage that tobacco does to your health became apparent. Asbestos was widely used in building for decades until the risks with that material were discovered. Right now, all that anyone can say is that there is some form of risk, which the medical experts will need to keep an eye on.
What we do know for certain is that if a link were ever proved, or were simply to move up from possible to probable, then the economic implications would be huge.
This is a massive industry. According to the International Telecommunication Union, there are now 5.3 billion mobile subscriptions. That is 77% of the world’s population. More than a billion handsets are being sold every year. Vast quantities of capital have been poured into building those networks. The rise of smartphones means that even more is being spent each year, and people are doing more, and spending more money on their phones. Tablet computers will only send those figures even higher.
On just about every major bourse, the big mobile players are among the leading companies. Vodafone – with a market value of £83 billion – is a giant of the FTSE. France Telecom, which owns Orange, is one of the largest businesses on the CAC-40. The world’s largest mobile operator, China Mobile, is one of the world’s biggest companies. Nokia may be struggling to re-invent itself, but it is still the world’s major handset manufacturer, and worth $25 billion. Much of the South Korean stock market depends on the mobile divisions of Samsung and LG. New players such as Taiwan’s HTC have soaring share prices (indeed, it recently overtook Nokia in value). And, of course, Apple, which is now critically dependent on its iPhone, is now the third biggest company in the world.
It doesn’t even stop there. Microsoft and Google have invested fortunes in creating mobile software divisions. Chips and other components manufacturers help sustain the commodities boom. Many retailers depend on the sales of phones. So do the new generation of app writers.
In short, mobiles have fuelled much of the growth of the world economy in the past decade. A cancer link would be an economic catastrophe as well as a medical one.
There is not a great deal investors can do about it. But they should be monitoring the medical data, and keeping up with the latest developments. And they should be preparing an exit strategy. If a link is ever decisively proved you don’t want to be holding the shares or bonds of any of the main players in the industry. You might no want to be holding equities full stop – the knock-on effects for the rest of the markets would be severe.
Meanwhile, don’t give up on some fairly old-fashioned technologies. Fixed-line operators such as British Telecom could be set for one of the greatest bounce backs of all time – and with the shares yielding 4%, it might be worth tucking a few of those away. If we all decide to get rid of our mobiles and start calling one another on the landline again, they will soar in value.
There is no shortage of stuff out there to make investors feel nervous. The euro could get blown apart if a long hot summer of protest in Greece and Spain boils over into civil unrest. The Chinese economy might suddenly turn down, removing just about the only source of global growth. Inflation might suddenly rip out of control, provoking central banks to sharply raise interest rates.
But there is one risk that most people probably haven’t thought about at all.
What if mobiles really do give you can cancer?
Speculation of a link between cellular technology and brain diseases has been running for a decade or more. But last week the World Health Organisation said its latest studies suggested there was a possible link between talking on your mobile and cancer.
Leave aside the medical implications for a second – although there are serious enough. This is a huge issue for the markets as well. Just think about the hundreds of billions of investment now tied up in keeping everyone texting and talking on their phones all day. From the operators, to the equipment suppliers to the handset manufacturers, to the computer and software industries, many of the largest companies in the world could be devastated if a meaningful link was ever proved.
Mobile technology has the potential to be another tobacco – a huge and powerful industry that was just about destroyed by the unfortunate fact that it killed people.
Of course, there is still no proven link between mobiles and brain disease. The WHO is not claiming that there is. It’s International Agency for Research on Cancer gathered together 31 experts to meeting in Lyon last week to review the available evidence. It concluded that there was ‘a possible’ link between mobiles and a type of cancer called glioma. The WHO has five rankings of cancer risk, ranging from ‘carcinogenic’ to ‘probably not carcinogenic’. The ‘possible’ ranking is right in the middle of the range. So it is not saying it is definite. And it isn’t ruling it our either.
For anyone tracking the industry, that isn’t particularly helpful. Lots of studies have been done of potential links to cancer, and none of them have been very conclusive so far. Mobiles appear to have some health impact. Against that, there has been no big increase in the rates of brain cancer in the twenty years or so since mobiles became a ubiquitous part of everyday life. And it is difficult for anyone to assess the data accurately because brain caner is a relatively rare condition, so there are not very many people to study.
But just because cancer rates haven’t taken off yet, it doesn’t mean they won’t. People were smoking heavily for a long time before the damage that tobacco does to your health became apparent. Asbestos was widely used in building for decades until the risks with that material were discovered. Right now, all that anyone can say is that there is some form of risk, which the medical experts will need to keep an eye on.
What we do know for certain is that if a link were ever proved, or were simply to move up from possible to probable, then the economic implications would be huge.
This is a massive industry. According to the International Telecommunication Union, there are now 5.3 billion mobile subscriptions. That is 77% of the world’s population. More than a billion handsets are being sold every year. Vast quantities of capital have been poured into building those networks. The rise of smartphones means that even more is being spent each year, and people are doing more, and spending more money on their phones. Tablet computers will only send those figures even higher.
On just about every major bourse, the big mobile players are among the leading companies. Vodafone – with a market value of £83 billion – is a giant of the FTSE. France Telecom, which owns Orange, is one of the largest businesses on the CAC-40. The world’s largest mobile operator, China Mobile, is one of the world’s biggest companies. Nokia may be struggling to re-invent itself, but it is still the world’s major handset manufacturer, and worth $25 billion. Much of the South Korean stock market depends on the mobile divisions of Samsung and LG. New players such as Taiwan’s HTC have soaring share prices (indeed, it recently overtook Nokia in value). And, of course, Apple, which is now critically dependent on its iPhone, is now the third biggest company in the world.
It doesn’t even stop there. Microsoft and Google have invested fortunes in creating mobile software divisions. Chips and other components manufacturers help sustain the commodities boom. Many retailers depend on the sales of phones. So do the new generation of app writers.
In short, mobiles have fuelled much of the growth of the world economy in the past decade. A cancer link would be an economic catastrophe as well as a medical one.
There is not a great deal investors can do about it. But they should be monitoring the medical data, and keeping up with the latest developments. And they should be preparing an exit strategy. If a link is ever decisively proved you don’t want to be holding the shares or bonds of any of the main players in the industry. You might no want to be holding equities full stop – the knock-on effects for the rest of the markets would be severe.
Meanwhile, don’t give up on some fairly old-fashioned technologies. Fixed-line operators such as British Telecom could be set for one of the greatest bounce backs of all time – and with the shares yielding 4%, it might be worth tucking a few of those away. If we all decide to get rid of our mobiles and start calling one another on the landline again, they will soar in value.
Wednesday, 8 June 2011
Writing On Trains...
I seem to have been on a lot of trains recently, which may help explain why I haven't had much time to blog recently. I went to Scotland to promote the Death Force books, and my book on the euro crisis is coming out in Germany soon, so I went there to help promote that. I don't really like flying very much, so in both cases I got the train.
It's a pleasant way to travel, although rather unexpectedly the German train broke down somewhere between Brussels and the border, which meant I had to get a bus the rest of the way to Cologne. Still, it's not as if planes don't get delayed all the time...and when a plane breaks down, it has a tendency to drop out of the sky.
But the best thing about trains is that they give you a chance to write.
I can write pretty well most places. I know some writers like to be in the same place all the time, but I'm quite happy to write in a cafe, or at home, or on a hotel balcony.
Overall, however, I think trains are my favourite.
There is something about the steady motion that aids the creative process. Looking out of the window creates a sense of the world going by, of events unfolding, which makes it very easy to create a similar sense of movement on the page. You can can pause, look out of the window for a while, then crack on with the next sentence. It is just the right amount of distraction. Not too little, but not too much either.
I suspect if I bought a euro-rail ticket and spent six months writing my next book on trains the effect would wear off.
But I got a lot of work done on those two trips.
It's a pleasant way to travel, although rather unexpectedly the German train broke down somewhere between Brussels and the border, which meant I had to get a bus the rest of the way to Cologne. Still, it's not as if planes don't get delayed all the time...and when a plane breaks down, it has a tendency to drop out of the sky.
But the best thing about trains is that they give you a chance to write.
I can write pretty well most places. I know some writers like to be in the same place all the time, but I'm quite happy to write in a cafe, or at home, or on a hotel balcony.
Overall, however, I think trains are my favourite.
There is something about the steady motion that aids the creative process. Looking out of the window creates a sense of the world going by, of events unfolding, which makes it very easy to create a similar sense of movement on the page. You can can pause, look out of the window for a while, then crack on with the next sentence. It is just the right amount of distraction. Not too little, but not too much either.
I suspect if I bought a euro-rail ticket and spent six months writing my next book on trains the effect would wear off.
But I got a lot of work done on those two trips.
Monday, 6 June 2011
Is Now The Time To Sell Gold?
I've kicked off a new column on the Wall Street Journal's Marketwatch site today with a piece about gold. Seems to be getting plenty of hits and feedback from readers. you can read it here.
The Decline of the IPO....
In my Money Week column this week I've been looking at the decline of the IPO. Here's a taster...
The City, just like every other tight-knit profession, observes its own omerta: an unwritten code that whatever arguments may break out within the community, you don’t make them public. So when major institutions start falling out with each other in a very public way, it is time to take notice.
Last week, the fund manager BlackRock launched a biting attack on the way IPO’s were handled. The fees, they complained, were outrageous. The bankers were actively deterring new companies from coming to the market.
The point was a good one – and long overdue.
The number of new companies listing has been declining for years. But raising money for new companies is the fundamental purpose of a stock market - if it doesn't do that, it is really just a casino. What the IPO market needs is new banks that get it right - because the existing players have clearly forgotten what a stockmarket is actually for.
In a letter sent last week, Luke Chappell and James Macpherson, two of BlackRock’s most senior UK executives, laid into the banks arranging new listings with both barrels of a metaphorical shotgun. “It is in all of our interests for London to remain at the centre of a thriving capital market,” they wrote. “We are always keen to invest in companies that need equity to develop their businesses, particularly in opportunities that we are currently unable to access. However, recent developments in the IPO market have, at times, been frustrating.”
Specifically, they accused the banks of being too aggressive on price, demanding fees that were way to high, and not allowing fund managers enough time to get to know a business before they invest in it.
Given that BlackRock, with assets under management of more than £2 billion, is the single largest investor in the UK stock market, its complaints will have carried plenty of weight.
And the record of recent IPOs suggests they are onto something. Glencore, a mega-IPO that because of its size was always going to vault straight into the upper reaches of the FTSE-100 index, managed to get its IPO away, but the shares immediately sank below the issue price. Betfair, the online betting company that staged one of the biggest IPOs of last year, jumped to a premium on its first few days of trading, but is now well below its issue price. Other new issues have had to be pulled because the demand for the shares just wasn’t there.
That matters. When fund managers buy into an IPO they want to see the share price going up steadily for at least a couple of years. Everyone understands that the prospects for a company can change. But if the idea becomes fixed in investors minds that IPO prices are unreasonably hyped-up, and whoever gets suckered into buying into them is going to end up losing money, then it won’t be any great surprise if they increasingly steer clear of new issues.
The figures suggest that is already happening. The numbers of new companies joining the stock market is, as a percentage of the economy, declining all the time. According to the World Federation of Exchanges, the number of quoted companies has been roughly static – at around 45,000 businesses globally – since 2005. In the Americas, it is going down, whilst in Europe it is only going up fractionally (0.1% over five years). Since the world economy has been expanding at around 4% a year, apart from the recession of 2009, you would expect the number of quoted companies to be growing at 4% to 5% annually. But it’s not. Some high-profile names aren’t even bothering with the hassle of a quotation. Facebook, for example, chose to sell shares privately, rather than go to the bother of an IPO.
So, overall, the number of listed companies is going down, or standing still. And yet the number of trades has roughly doubled in this period. So investors are, in effect, trading less and less ever more frantically.
That is hardly a happy situation for the long-term health of a market.
First, new companies are the lifeblood of any bourse. Young companies are where the real growth is going to come from. If they can’t be bothered to join the stock market, or they find the process too expensive, then the main indices are just going to become a collection of older and older businesses. They won’t be able to grow as fast as the economy – and eventually investors will have to find some other way to buy into corporate growth.
Next, raising capital for companies is what a stock market exists for. It is why they were created in the first place – to allow new business to raise money on a scale they could never hope to get hold of whilst remaining private. If they don’t do that, then they really are, as their critics maintain, just casino tables without the bight lights and cocktails. Without any real purpose, nobody should be surprised if they get regulated out of existence.
The core problem is that the investment banks have forgotten how to build and maintain long-term relationships, both with the companies they bring to the market, and the investors that buy shares in them.
Two changes need to be made. First, the sponsoring bank should take a lot more time getting to know the businesses they are bringing to the market, understanding the medium-term prospects of each one, and figuring out how to price it accordingly. Ideally, the shares would deliver a steady 10-15% a year for at least three years after the IPO. Investors would then feel reasonably confident the IPO was worth supporting.
Perhaps the main investment banks don’t want to do that. They may have become so immersed in a short-term, quick profits culture that they no longer find it possible to build relationships over five years. If so, new players should emerge to take their place – because if they don’t, eventually equity markets are going to fade away.
The City, just like every other tight-knit profession, observes its own omerta: an unwritten code that whatever arguments may break out within the community, you don’t make them public. So when major institutions start falling out with each other in a very public way, it is time to take notice.
Last week, the fund manager BlackRock launched a biting attack on the way IPO’s were handled. The fees, they complained, were outrageous. The bankers were actively deterring new companies from coming to the market.
The point was a good one – and long overdue.
The number of new companies listing has been declining for years. But raising money for new companies is the fundamental purpose of a stock market - if it doesn't do that, it is really just a casino. What the IPO market needs is new banks that get it right - because the existing players have clearly forgotten what a stockmarket is actually for.
In a letter sent last week, Luke Chappell and James Macpherson, two of BlackRock’s most senior UK executives, laid into the banks arranging new listings with both barrels of a metaphorical shotgun. “It is in all of our interests for London to remain at the centre of a thriving capital market,” they wrote. “We are always keen to invest in companies that need equity to develop their businesses, particularly in opportunities that we are currently unable to access. However, recent developments in the IPO market have, at times, been frustrating.”
Specifically, they accused the banks of being too aggressive on price, demanding fees that were way to high, and not allowing fund managers enough time to get to know a business before they invest in it.
Given that BlackRock, with assets under management of more than £2 billion, is the single largest investor in the UK stock market, its complaints will have carried plenty of weight.
And the record of recent IPOs suggests they are onto something. Glencore, a mega-IPO that because of its size was always going to vault straight into the upper reaches of the FTSE-100 index, managed to get its IPO away, but the shares immediately sank below the issue price. Betfair, the online betting company that staged one of the biggest IPOs of last year, jumped to a premium on its first few days of trading, but is now well below its issue price. Other new issues have had to be pulled because the demand for the shares just wasn’t there.
That matters. When fund managers buy into an IPO they want to see the share price going up steadily for at least a couple of years. Everyone understands that the prospects for a company can change. But if the idea becomes fixed in investors minds that IPO prices are unreasonably hyped-up, and whoever gets suckered into buying into them is going to end up losing money, then it won’t be any great surprise if they increasingly steer clear of new issues.
The figures suggest that is already happening. The numbers of new companies joining the stock market is, as a percentage of the economy, declining all the time. According to the World Federation of Exchanges, the number of quoted companies has been roughly static – at around 45,000 businesses globally – since 2005. In the Americas, it is going down, whilst in Europe it is only going up fractionally (0.1% over five years). Since the world economy has been expanding at around 4% a year, apart from the recession of 2009, you would expect the number of quoted companies to be growing at 4% to 5% annually. But it’s not. Some high-profile names aren’t even bothering with the hassle of a quotation. Facebook, for example, chose to sell shares privately, rather than go to the bother of an IPO.
So, overall, the number of listed companies is going down, or standing still. And yet the number of trades has roughly doubled in this period. So investors are, in effect, trading less and less ever more frantically.
That is hardly a happy situation for the long-term health of a market.
First, new companies are the lifeblood of any bourse. Young companies are where the real growth is going to come from. If they can’t be bothered to join the stock market, or they find the process too expensive, then the main indices are just going to become a collection of older and older businesses. They won’t be able to grow as fast as the economy – and eventually investors will have to find some other way to buy into corporate growth.
Next, raising capital for companies is what a stock market exists for. It is why they were created in the first place – to allow new business to raise money on a scale they could never hope to get hold of whilst remaining private. If they don’t do that, then they really are, as their critics maintain, just casino tables without the bight lights and cocktails. Without any real purpose, nobody should be surprised if they get regulated out of existence.
The core problem is that the investment banks have forgotten how to build and maintain long-term relationships, both with the companies they bring to the market, and the investors that buy shares in them.
Two changes need to be made. First, the sponsoring bank should take a lot more time getting to know the businesses they are bringing to the market, understanding the medium-term prospects of each one, and figuring out how to price it accordingly. Ideally, the shares would deliver a steady 10-15% a year for at least three years after the IPO. Investors would then feel reasonably confident the IPO was worth supporting.
Perhaps the main investment banks don’t want to do that. They may have become so immersed in a short-term, quick profits culture that they no longer find it possible to build relationships over five years. If so, new players should emerge to take their place – because if they don’t, eventually equity markets are going to fade away.
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