Wednesday The day starts with the usual rush of absorbing what happened in Wall Street overnight, and results or trading updates from UK companies. GUS, Burberry and Mothercare all report positive sales figures, while WH Smith, Marks & Spencer and JJB Sports bear the scars of businesses that continue to underperform. The job of a fund manager is to spot these trends before they are factored into the share prices. But fund management is not simply the art of picking the best stocks in a sector. Recent evidence from M&S also shows that even if trade is deteriorating, the valuation of a stock can become low enough to attract third-party interest.In the evening I visit my children, help with their homework and read one of their favourite stories. Thursday Marconi produces a disappointing trading update. The company is operationally geared and cannot afford bad news on current trading. I exit the stock at 535p, which looks smart on a one-day view at least, as the shares close at 500p. Although fund management is about investing on a long-term view, you have to be alert to changes in markets and the short-term impact these may have. Friday I enjoy a bit of a lie-in before going to see my daughter perform in her morning assembly. The rest of the day is spent trawling for buy ideas: the most interesting yet also the most difficult part of the job. Fund managers traditionally suffer from a lack of stocks to buy, and most portfolios have a number of stocks in them that are really a source of cash. A meeting later in the day with a specialist broker in financials enables me to cover a number of stocks and themes within a large part of the market. Having looked at the banks sector for over 10 years, I feel confident that I have a respectable understanding of these companies, even if that doesn’t always translate into picking the right stocks. Saturday/Sunday An exciting day as I take my son to see his first football match. Arsenal, unbeaten for 48 games, go one down after two minutes. I have a tense few moments wondering if my son has jinxed performance before they secure a 3-1 victory. He seems quiet on the way home – probably tired and slightly overawed. Monday Market very quiet today. A lot of companies are reporting later in the week, and it seems most fund managers are waiting for this before reallocating any funds. Tuesday Far more exciting day. The Prudential surprises the market with a £1bn rights issue, Reuters produces a
better-than-expected trading statement and Sainsbury’s announces a new strategy to win sales. The day crystallises two of the main issues facing fund managers: how much to pay for growth, and whether to believe in recovery stories. Reuters is already up threefold in 18 months, but is showing signs of real earnings growth. It is a story we believe in, principally because a lot of the solutions seem quite straightforward. By contrast, Sainsbury’s is a stock with a poor recent track record yet the new chief exec is asking investors to believe in sales growth of 5% a year. To our mind, this looks unachievable, principally because the competitive environment in the food retailing sector is so intense. The end result of a day when the Prudential is off 8% and Reuters is 8% higher is a portfolio virtually unchanged against the market. In fund management, it sometimes appears that we are running hard to stand still.