James Anderson reckons that energy will essentially be free by 2035, that two-thirds of the world’s biggest companies are doomed, and that Amazon shares are going from $625 to $4000. Perhaps the maker of such outlandish forecasts should stick to fast bowling, except he’s not that James Anderson, but the manager of the £3.5bn Scottish Mortgage Investment Trust.

Its splendidly stodgy name belies a racy portfolio and a performance (doubled asset value per share in five years) to match, while Mr Anderson has put his shareholders’ money where his mouth is, with Amazon its biggest holding. Conspicuous by their absence are the UK companies that are the usual suspects in investment trust portfolios, because Mr Anderson believes the internet, battery technology and gene sequencing will wipe them out.

Of course in any 20 year period, many big companies fail or disappear (think BTR, ICI, Woolworth) but predictions of free energy are reminiscent of the broken promise from nuclear power half a century ago. It may be fashionable to predict the end of the oil age, but it is no more likely than earlier predictions that we would run out. Oil powers the world economy. and big oil has survived much lower prices than today’s. The biggest casualties of cheap crude, if it lasts, will be the battery and solar power industries.

Mr Anderson is surely right about the impact of the internet and the sky-high rated companies that dominate it. Social networks will change our lives as surely as the motor car did, while economic statisticians struggle to try and capture those changes which escape conventional measures of growth and wealth.

He might even be right in another of his contentions, that gene sequencing will bring down the cost of healthcare. For investors, the tougher question is whether today’s giddy ratings mean these exotic stocks are simply too dear. His response: “Our portfolio hasn’t got more expensive, it’s that its hypotheses have become more likely.” So he’s a salesman too, then.

No accounting for complexity

So another useful accounting dodge is blocked. From 2019, the full liability of operating leases must be put on the balance sheet. Financial leases are already there (as you know) since they are more like the hire-purchase agreements that put millions of washing machines into homes in the 1960s. Operating leases are the mainstay of shops, airlines and hotels, which frequently own little more than their logo. Now everyone will have to come clean.

In theory, this will provide investors and creditors with a clearer view of the financial health of the company. It may even do so, but complexity breeds opportunity for mischief. Modern accounts are bloated and (for non-accountants) almost impossible to read. The audit report drones on interminably. After struggling for decades, legislators and the International Accounting Standards Board may have succeeded in making company accounts perfectly accurate and completely incomprehensible.

Compulsory saving = taxation

It is such a comfort to learn that the new boss of the National Employment Savings Trust feels she can cope with the millions of new entrants this month. Small companies which must now become entangled in compulsory employee contributions may not agree. Nest is the default home for “automatic enrolment”, the law that forces every employer to push all his workers into a pension scheme.

If you thought we already had one, called National Insurance, you’d be right. We now have two,  effectively making three income taxes, all levied at different rates and bands. To avoid rioting in the streets, the new one starts at 2 per cent, but it rises rapidly to hit 8 per cent in 2018.

Nest’s new CEO, Helen Dean, frets that you may not have noticed that you’ll have to pay up for your nanny and gardener as the tiniest businesses become enmeshed during 2016. It matters not whether you (or they) have more pressing financial demands, or how long the employment lasts, the money must be deducted. We have “Red” Adair Turner to thank for this cuckoo legislation. Ms Dean is now in the Nest, while Lord Turner has turned his fine mind to climate change. We have been warned.

This is my Financial Times column from Saturday

 

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