In this series, members of the Cerno team reflect on the crisis and provide detail on their work and domestic lives.
For our next interview, we caught up with Ed Bonsor, Private Client Director, to hear his thoughts on life during this time, and how he sees this crisis compare to previous cycles.
What is the highlight of your day working from home?
Strangely, I was thinking about this very question last week.
I concluded that my favourite time of day is breakfast with my kids. Somehow it was always an ordeal prior to the lock-down. The clock is ticking on the commute and the battle to the school gates, children are procrastinating, and parents are fighting over the kettle and who will organise the last minute spelling revision. Even getting the school uniform together seemed to ratchet up the pressure.
However, since working from home breakfast is the time of day just after my morning run, so my mood is perhaps better than usual.
Also, the conversation that creeps out of the mouths of a six year old and a four year old can be hysterical. There is nonsense interspersed with very occasional clarity. My son was suggesting we could sneak out and escape London under the cover of darkness to catch Corona off-guard. My daughter has been complaining that we do not have much of a garden, and that I need to acquire a bigger one with a swimming pool. No pressure then.
As a newer member of the team, how has the experience with Cerno Capital through this crisis compared to previous cycles?
I have spent much of the last twenty years of my career inside the walls of investment banks. I remember the dotcom mania of 2000s vividly, and of course, the relatively recent drama of the Global Financial Crisis in 2008 where banks sat at the heart of the turbulence. Sitting on a dealing floor things move quickly, and the goal of all desks is ultimately to create movement in markets and to drive volume across the asset classes in which they trade. This necessarily means a lot more noise is generated by in-house experts and analysts.
As a firm, our focus on quality from the outset has meant that we have a little more breathing space than many in the market at a time like this. We are not trend-followers (in terms of price action) and the emphasis on best-in-class companies means that we have precedent for these managements capitalising on moments of distress in the global economy. Of course, a focus on good balance sheets helps, and James was swift to act on four of the weaker names in the Global Leaders portfolio at the onset of the crisis.
My career spent in Asian markets means that I have a soft spot for the Pacific strategy we manage. We have a deep level of experience in the region across the team, and we have a niche focused on innovation emerging from the region. There is no doubt the next generation of technology leaders are just as likely to emerge from the Greater Bay Area in Guangdong as they are from Silicon Valley. As an investor, it makes sense to have exposure to the best talent in both regions.
It seems clear to me that the tech world will polarise around US or China products. It will be fascinating to watch the battleground for the internet giants in markets like India. It has been noted how digital trends have accelerated in this crisis, and this has compounded pressure on traditional incumbent business models. Swathes of the market look uninvestable on the basis of these technological disruptions.
How are you keeping on top of market movements?
Before joining Cerno, I had easy access to my own Bloomberg. It was a wrench parting ways, although I am frequently pestering colleagues over their shoulder on our in-house terminals. I use digital subscriptions to the FT, the Wall Street Journal and the Times which seems to give me a sprinkling of good journalism. For pricing, the Yahoo Finance app does a great job if you have a watchlist of share prices, exchange rates and currencies. It has a great charting function if you are partial to technical analysis too.
For me, the revelation of this cycle has been Twitter, which has huge real-time value on financial news flow. The politics on twitter can be a screaming match, so it is sensible to detach a little from that part of the feed. However, there are so many high quality journalists, economists, financial commentators, technical analysts and macro traders available to connect to. The democratisation of financial expertise and news flow is a really positive trend for interested investors sitting outside of financial institutions.
What is your best habit and your worst habit picked up during lockdown?
On the plus side, I have managed to stick to a morning run most mornings. I manage to fumble my way around the park at the end of our road. Embarrassingly, I am only managing 5km at a time, but I am hoping it is enough to make up for my lack of mobility around town. I have used an app called Strava which introduces a little bit of personal competition. I can almost hear Tom Milnes yelling at me as I flounder around my circuit. It is not a bad time to tune into a few podcasts too. It makes for a healthy distraction and I have been enjoying MACROVoices, MoneyWeek, Against the Rules and the Tim Ferriss Show amongst others.
On the less positive side, I do find myself pouring out a tipple most days. I am sticking to a gin and Fevertree tonic, and have held back from drinking wine. It seems to compliment the evening sunshine extremely well. I should put a little shout out for Chika’s nuts too, a brand set up by a good friend of ours. The perfect combo.
What is your favourite bingeworthy TV series?
In the past, it was unusual for me to absorb myself in long television series. Of course, during lockdown it has been a real pleasure to connect with a bit of contemporary culture. I fell into the trap of The Tiger King. The less said about that the better. Who knew there were more tigers held in private hands across the USA than exist today in the wild?
More recently, I have really enjoyed the biopic on Michael Jordan’s career, ‘The Last Dance’. It is a fantastic show, and even as someone who knows less than nothing about basketball, it is impossible not to marvel at Jordan’s talent, drive and personality.
A little bit more off piste, I thoroughly enjoyed ‘The Loudest Voice’ on Now TV, with Russell Crowe and Sienna Miller leading a star-studded cast. Through working in finance I feel like I have witnessed the rise of Fox News from afar, but it is a brilliantly acted series about a talented and troubled network executive.
Do you think any of the changes over the last few weeks will impact your life going forward? Why?
It may be middle age, but I was increasingly aware of the importance of balance in life going into this period. If anything COVID and managing quarantine has underlined the importance of ensuring well-being in all aspects of life.
I am extremely grateful for the extended time with my family. I do still like them (you will have to ask them if the feeling is reciprocated !), and it is good to take the extra responsibility of parenting.
It is hard to see how there won’t be less face-to-face interactions for business at the end of this. I think time was ticking on business travel for environmental reasons anyway, but I envisage we can expect the amount of business travel to reduce markedly, particularly if we have travel restrictions that run into 2021. This is no bad thing.
As far as Cerno goes, I am reassured by the quality of the culture and the people involved in the business. It has been a great transition for me personally, and the investment process has been vindicated thus far across all three core strategies in 2020. Long may it continue.