History ain’t over yet

The terrorist atrocities in Spain last month were a vivid reminder that what Francis Fukuyama called ‘the end of history’ is not quite here yet.

Fukuyama wrote a highly influential essay, followed by a best-selling book, arguing that since Communism and various forms of fascism had been beaten off, liberal democratic capitalism had become the final, triumphant end to history. By that he didn’t mean that nothing – no events – would ever happen; just that the big ideological arguments throughout human history had come to an end, and that henceforth, all human societies would be organised around those western principles. Tell that to Osama bin Laden. He has a drastically different notion of what would count as a culmination of the battle of ideologies.

There are two things that investors could take from all this. One is that until we really do reach the ‘end of history’, we’re not going to be able to rely on a predictable investment environment. Next, we should leaven our tendency to trust the experts with a fair amount of scepticism.

ukuyama, an expert in his field, failed to factor in just how persistent mad religious fundamentalism would prove to be. His belief that all would be well was of a part with the belief, also abroad at the time he wrote his book, that stock markets really could keep on powering upwards at historically high rates. Two species of experts making similarly optimistic predictions, both wrong.

In this issue, Hugh Fasken looks at a third form of expert – the sort who structures a portfolio for you – and asks whether they are always necessary [p22]. Couldn’t you construct a portfolio yourself if you work to an easily available portfolio model? After all, we should know by now that being an expert is not synonymous with being infallible.

But what about those still-unpredictable markets? Doesn’t that mean that you should, after all, be hiring in expertise? It depends.

npredictability is, well, unpredictable by definition. An expert isn’t necessarily going to be able to get a handle on it any better than you can. One thing you could do, though, is to try to capitalise on it. For our alternative investment feature this month I have a look at online currency trading [p36]. A number of firms offer trading systems that you can access as a private investor. You download professional-looking trading programmes and begin punting. One thing that is attractive about doing so is that you can easily short currencies. However, forex is tricky at the best of times, so caution is advisable.

Finally, we have changed our reader-response system to make it easier and more instant for you to get in touch with advertisers. Instead of laboriously filling in a form, sending it off, and twiddling your thumbs, you can now go on to our website, click on a specially constructed page, and get right through to the advertisers’ own sites where you can ask for literature directly (www. investmentinternational.co.uk). Technology: amazing stuff.

James Featherstone
Editor
jfeatherstone@ccplcemail.co.uk