ESG is a massive topic; in fact, so big that it is hard to give it justice in the approximately 1,500 words I have at my disposal in these monthly letters. Consequently, I have decided to split it over two months.

I have written this month’s Absolute Return Letter with a heavy heart. I don’t take any pleasure from other people’s misery.

Over the next few pages, I will argue that consumer price inflation (CPI), which is now falling rapidly across the OECD, will soon return to levels that central bankers are comfortable with.

As some of you will be aware, we have recently changed our business model, following an approach from a client who encouraged us to invest directly in listed securities on the back of the same seven megatrends that have formed the backbone of the fund investments we have made for years.

Recently, I was asked by a client what my return expectations are for the next three years.

Today, I am going to bring a new technology, and a new company, to your attention – a company in control of a technology so powerful that lithium-ion batteries could soon become yesterday’s story.

Things are not exactly going China’s way these days. One incident after the other has led to a virtual collapse of international investments in China, but that could potentially be the more benign outcome of the ongoing Chinese debt crisis.

Optimism is the madness of insisting that all is well when we are miserable.

Humanity is sitting on a time bomb.

Economic fundamentals are lining up for a return of QE. Yes, inflation is still on the high side but falling so rapidly that at least some central banks will be willing to take action before inflation is back to 2%.

A tricky situation is unfolding, making it rather difficult for the Federal Reserve Bank to honour earlier promises to gradually ease off in its ongoing fight against inflation.

"We forgot that war is history’s favourite driver of inflation." -Niall Ferguson

I chose the topic for this month’s Absolute Return Letter during the Christmas break.

2022 wasn’t the easiest of years to handle for investors.

Earlier this year, we added “Globalisation 2.0” to our list of megatrends – trends that are virtually set in stone and so all-encompassing that they will have a profound effect on financial markets in the years to come.

In August 1979, President Carter appointed Paul Volcker as Chaiman of the Federal Reserve.

“If the Fed loses its independence, the age of magic money could end in catastrophe”.

We have a long and proud history of investing thematically and believe you can remove a great deal of volatility in your portfolio, if you do so.

"Without Italy, there is no Europe, but outside of Europe, there is even less Italy." -Mario Draghi

Sri Lanka is in turmoil.

It took me a long, long time to write The End of Indexing.

Gold and silver is money. Everything else is credit.

Is gold the answer?

"Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man." Ronald Reagan

Here at Absolute Return Partners, our portfolio construction is driven by the six structural megatrends that we have identified.

Welcome to the new, slimmer format of the Absolute Return Letter.

This month’s Absolute Return Letter deals with a hyper-sensitive topic.

If you have read the Absolute Return Letter for years, you will be aware that the January letter always stands out from the others.

Wealth has risen excessively in recent years and, now, inflation has started to rise as well. Why those two stories are two sides of the same coin, and why much of the growth in wealth must be confiscated again is what this month’s Absolute Return Letter is about.

"Getting older is fine. There is nothing you can do to stop it so you might as well stay on the bus." John Byrne

Let me begin with a confession. Govcoin is a made-up name.

Why commodity markets have done so exceptionally well

How to structure your portfolio when interest rates are rising.

You know society is in trouble when the Prime Minister of your country stands up and says something along the lines of “of course we can afford to take on more debt – you are old-fashioned if you think otherwise”.

"This pandemic has magnified every existing inequality in our society – like systemic racism, gender inequality, and poverty." Melinda Gates

The UK-EU trade agreement entered into just before Christmas is a 1,200-page monster which contains far more cons than pros for the British economy despite Boris Johnson doing his very best to convince the British public of the opposite. In this month’s Absolute Return Letter, you can see why.

From time to time, readers of the Absolute Return Letter ask for my opinion on this or that and, every now and then, I decide to turn my response into a letter. The last few weeks have been no exception.

Zombies are firms that are neither dead or alive. They are in so much debt that virtually all their free cash is used to service their debt, and that is very damaging to GDP growth. This month, we explain why there are more and more zombies all over the world, and why they do immense damage to the global economy.

We are earlier than usual this month because of the upcoming presidential election. See why a US constitutional crisis could unfold in the days and weeks to come if Trump delivers on his earlier ‘promise’ not to accept the outcome, should he lose on the 3rd November.

Modern Monetary Theory (MMT) is a rather unconventional economic concept – at least if you are a classically trained economist as I am. That said, over the years, I have learned that, every now and then, it pays to think out of the box, so I am willing to take a closer look.

Tina is an old friend of mine, but she is also a sad case of hubris, over-confidence and misguided pride. I first met Tina about 38 years ago but, more recently, I have been reminded of her presence every single day. Sometimes valuations get so much out of whack that I get goose bumps all over, and this is one of those situations.

As if the Coronavirus outbreak wasn’t enough of a problem for society to deal with, shortly afterwards, two American police officers ended the lives of two American civilians. Why that will affect financial markets for a long time to come you can read here.

Wounds heal but scars last. That’s an old lesson from history and will also be the case as far as COVID-19 is concerned. We already know from empirical evidence in China that consumers are in no rush to come back on the streets of the big cities, and why would it be any different elsewhere?

Why is it that a fire on the other side of the planet attracts far more attention than a new innovation about to be rolled out, and how can investors take advantage of that? This is a question more relevant than ever, given the impact of the current Covid-19 outbreak.

The economic costs associated with the coronavirus case outbreak are nothing short of staggering. Expect Q2 to collapse which is not good for equities and not good for bonds either.

Lesson #2: Reversion to the mean occurs because people persuasive enough to make something grow don’t have the kind of personalities that allow them to stop before pushing too far.

Financial hardship often drive people to adopt views that were previously unthinkable. It is a very powerful behavioural pattern and has significant implications for financial markets. In this month’s Absolute Return Letter, we take a closer look at what it really means.

Trump's decision to take out the Islamic Republic's most celebrated military leader, Qassem Soleimani, was a timely reminder that we face many problems. An armed conflict between the US and Iran is clearly one of them but far from the only one. Here is a list of the ones we worry mostly about, going into 2020.

We have reached a stage in the cycle where you need to think out of the box in order to deliver respectable returns. Investing like most of us have done in the great bull market will not deliver returns anywhere near the levels we have enjoyed over the past 35-40 years. This month’s Absolute Return Letter offers a solution.

The evidence is overwhelming that automation has positively impacted total factor productivity (TFP) for years, i.e. GDP growth continues to benefit from the digital revolution despite the fact GDP growth is rather pedestrian these years.