The Marmite investment strategy

Author: Steven Crouse

After an abnormally volatile 2016, my interactions with investors so far this year have been dominated by careful consideration and (thankfully!) cautious optimism.

I am often asked the timeless question, ‘Where are the opportunities to grow my capital so that I have enough to retire, or to leave a legacy for my children?’ So, what of investment opportunity in times like these?

Investing has often been described as something one does when you hold a simple belief that tomorrow will be better than today – otherwise why would you commit your hard-earned capital to something that will give you less than what you put in?

In tying these thoughts to this quarter’s theme of opportunity, I was reminded of a module I studied at business school as part of our marketing curriculum, which focused on quirky and out-the-box advertising. An advert for Marmite, one I will never forget, came to mind. Now I’m no fan of Marmite – I’m a Black Cat Peanut Butter boy, through and through. But the ‘love it or hate it’ spread is intriguing, as a simple Google search illustrates:

“Marmite is made from yeast extract, a by-product of beer brewing. It is a sticky, dark-brown food paste with a distinctive, powerful soy flavour, which is extremely salty.” 

With a write-up like that, one has to give credit to the creative team behind the marketing; logic dictates that your average person would not be rushing to their nearest convenience store to try this!

But alas, despite its less-than-enamoured stigma among detractors, Marmite boasts a large following of ardent fans. Furthermore, it is vitamin rich, gluten free, provides a range of nutrients and folic acid, and is even rather effective in keeping mosquitoes away. So it may not be a bad idea to include it in your daily diet (if you can stomach the taste, of course!)

True, there are times when an asset is cheap for a reason, and should obviously be avoided. But if your strategy is suitably diversified, if your investment horizon is sufficiently long, and if your needs have not fundamentally changed, these pockets of ‘Marmite’ in your portfolio may just be poised to surprise.

When considering your portfolio, you will see periods when a particular asset class or share underperformed or returned a negative. Those are the moments when investors question the benefits of holding on. The active decisions taken by our team strive to minimise volatility and capture opportunities. Yet successful investing involves less focus on the ‘out of favour’ holdings, and more reinforcing and reminding yourself of the fundamental goals for which you are investing.

To quote from Lewis Carrol’s Alice in Wonderland when Alice meets The Cheshire Cat:

Alice:                                           Would you tell me, please, which way I ought to go from here?
The Cheshire Cat:                      That depends a good deal on where you want to get to.
Alice:                                           I don’t much care where.
The Cheshire Cat:                     Then it doesn’t much matter which way you go.

Opportunity knocks in a variety of forms. Our role is to ensure we’re prepared and ready to answer the door when it does.