Don't gamble on market volatility, invest in this Oxford legacy for the long term
Questor is The Telegraph's stock-picking column, helping you decode the markets and offering insights on where to invest.
Extreme stock market volatility may tempt some investors to hunt for a quick return on their holdings. Indeed, with the price levels of indices such as the FTSE 100 swinging by several percentage points on an intra-day basis, the idea of making large profits in a matter of days, or even hours, may seem plausible.
The reality, though, is that short-term stock market movements are little more than random events. An infinite number of wholly unforecastable variables – including extremely fluid trade policies and comments made by world leaders – can affect equity prices over a period of hours, days and even weeks. Trying to estimate them ahead of time is a fool's errand that can quickly lead to extreme losses rather than exceptional gains.
In Questor's view, a far more astute response to extreme market volatility is to buy fundamentally sound companies that offer good value for money over the long run, such as Oxford Instruments. Shares in the FTSE 250-listed firm, which designs and manufactures equipment used to analyse matter at an atomic and molecular level, have fallen by 23pc since the start of the year.
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Telegraph
23 minutes ago
- Telegraph
The British advertising giant that lost its way
Britain's top advertising executive, Mark Read, was in prescient form as he addressed a room of leading industry figures at the SXSW conference at Shoreditch Town Hall in east London last week. Talking about the impact of artificial intelligence, Read, the head of FTSE 100 advertising group WPP, said 'there will be fewer people involved' doing the work required of his business in future. Just a few days later, WPP announced that the 58-year-old would step down from the advertising behemoth at the end of this year. No one could accuse him of not leading by example. Read's departure comes after WPP lost its title as the world's largest advertising company to French rival Publicis – cementing the decline of a British media stalwart that many feel has lost its way. Now the London advertising giant, which owns well-known agencies including Ogilvy and Grey, will be tasked with appointing a successor who can breathe new life into the company – and with it the UK's advertising scene more widely. Britain's advertising industry has long enjoyed a glamorous reputation, cemented through television shows and its adland heyday in 1960s Soho. 'It's in quicksand' The £40bn industry helps the UK punch above its weight on the global stage – and the wobbles at WPP should concern anyone interested in Britain's standing around the world. 'In a way this symbolises the sludge-like decline of the UK in recent years,' says media analyst Alex DeGroote. 'This should be an exciting, thought-provoking, game-changing advertising company. It should be a bit of an icon for London, but it's in quicksand.' Read, who has worked at WPP for more than three decades, was appointed chief executive in 2018 by former chairman Roberto Quarta at a turbulent time for the company. At the time, Read was chief operating officer, having led several WPP divisions over the years. Sir Martin Sorrell, the mercurial entrepreneur who built WPP from a wire basket manufacturer in 1985 to a multinational company, had stepped down in a storm of allegations of personal misconduct, which he has always denied. The advertising group was, by anyone's reckoning, a bloated organisation that had ballooned following a hotchpotch of acquisitions under Sir Martin's tenure. Read's most pressing priority, therefore, was to slim down and simplify this 'unwieldy' corporate structure. He did so through a string of disposals, including the £2.5bn sale of a 60pc stake in market research group Kantar and, more recently, the $775m (£572m) sale of a majority stake in PR firm FGS Global. The ad boss also merged a number of agencies and restructured the business. In what will now be one of his last moves as chief executive, Read last month rebranded the group's media buying division GroupM to WPP Media in an overhaul that will lead to heavy job cuts. 'He came on board as chief executive at quite a difficult time when Sorrell was effectively ousted,' says DeGroote. 'The company is a lot simpler today than it was. The main feature of the last seven years has been simplification.' Yet beyond this simplification has been a story of decline, as WPP's growth has all but ground to a halt. In a trading update in April, WPP said it expects revenues to fall by as much as 2pc this year. For shareholders who backed WPP under Sir Martin, Read's tenure has been painful. Shares have more than halved since he took over seven years ago – falling 52pc – giving it a market value of £6bn and leaving investors nursing steep losses. WPP can point to several major client wins in recent months, including Unilever and Amazon. But it this week lost its $1.7bn (£1.3bn) Mars account to arch rival Publicis. Critics accuse Read of overseeing the demise of scores of advertising brands, among them J Walter Thompson and Wunderman. Industry figures also point to an exodus of talent as a series of mergers and lay-offs triggered a brutal game of musical chairs for staff. Ajaz Ahmed, the founder of agency AKQA who left WPP following a row with Read last year, says: 'There has been very little accountability over the past few years when you consider how much leakage of talent and clients and wasted expenditure in areas that have not driven any growth for the company.' While WPP has stalled, its competitors have taken over. Publicis last year stole WPP's crown as the largest advertising company by revenues. The upcoming merger between Omnicom and Interpublic – two other rivals – means WPP will slide further down the rankings and face a major new challenger. 'The numbers don't lie: the valuation has halved,' adds Ahmed. 'They are not growing at the same rate as their main peers and have been relegated into the second division.' DeGroote adds: 'It's a company, which to be honest, I think a lot of investors have given up on.' Not quick enough to adapt But what is behind the decline? WPP has undoubtedly faced macroeconomic challenges, including a sharp slowdown in China – where it was hit by a corruption scandal – and a slump in advertising spend by major tech clients. But analysts say that Read – perhaps preoccupied by restructuring – was not quick enough to adapt to an advertising market that has been upended by technology. Meta and Google hold an increasingly powerful position and are developing their own tools to allow brands to create advertisements themselves, sidestepping traditional agencies. AI poses an even more existential threat to the industry as new software emerges with the capability to automate creative processes. Read has undoubtedly sought to embrace the new technology in recent years. He bought AI tech firm Satalia in 2021 and has been developing WPP Open, which is used by more than 50,000 people, amid a broader pledge to invest £300m in AI each year. But critics say these moves pale in comparison to the savvy acquisitions made by Publicis – which include data giants Sapient and Epsilon – while WPP's business model has remained fundamentally unchanged despite radical changes in the industry. Richard Pinder, the former chief operating officer of Publicis who also worked at WPP, describes the WPP approach as 'squeezing the lemon'. 'The operating model hasn't changed,' he says. 'It's 'perform or we'll close it down, perform or we'll fire people, perform or we'll merge you'.' 'Pragmatism beats dogmatism' Pinder argues that Publicis, by contrast, embraced technology and overhauled its business model to focus on offering broader business solutions more similar to those of a consultancy. 'My summary is that it was pragmatism beats dogmatism,' he adds. 'This feels to me like WPP could have owned the future of advertising, but has walked away from it.' Some detractors lay the blame at Read's door. 'Sorrell, for all his faults, was a terrific frontman and was a very identifiable face,' says De Groote. 'Mark is not that sort of character ... I doubt anybody outside of WPP would know who he is.' Pinder describes Read as a more likeable person than Sir Martin, but argues this might have worked against him. 'The one who follows the tyrant often does badly unless they go with a new mantra,' he says. Others rally in support of Read, arguing that he ascended to the top job in difficult circumstances and inherited issues from his predecessor. Moray MacLennan, the former chief executive of M&C Saatchi, says: 'It was so chaotic at WPP when he took over it was existential. I think he has saved WPP. 'Sorting out a mess is not particularly glamorous, it's really draining ... It was asking a hell of a lot and I think he did a really decent job.' 'A stalwart job' Claire Enders, a media analyst, agrees that Read 'stepped into a blaze'. She adds: 'I don't blame Mark Read for any of the problems he inherited, nor for the problems that he tried to solve. 'He did a stalwart job and he was parachuted into an extremely difficult situation that he's delighted to be out of.' In a LinkedIn post this week, Lorraine Twohill, Google's chief marketing officer, described Read as a ' visionary who ushered WPP first into a digital-first world, now into the AI era'. Read's departure comes amid an escalating row with Publicis after WPP accused the French company of using low-quality advertising inventory, such as websites built primarily for displaying advertisements. Publicis, which has rebutted the allegations, last week sent a letter to Read and other top WPP executives threatening legal action. Nevertheless, many believe the writing was on the wall for Read when WPP appointed Philip Jansen, the former BT chief executive, as its new chairman to replace Quarta. Jansen, a heavy hitter in the City, will play a crucial role in determining Read's successor, and industry watchers argue that change is needed. 'It probably is time for someone else to come in with new ideas and do the next stage of WPP,' says MacLennan. Ahmed says: 'The new chief executive needs to be a change agent, someone who is willing to spend most of their time in the US and the fast-growing markets, a champion of genuine innovation both in terms of the way the company works and the services it provides, and a winner.' WPP's decline – not least its languishing share price – has fuelled speculation that the British advertising giant is ripe for either a takeover or break-up. While shareholders may support such a move, others fear an ignoble end for what was once the jewel in Britain's advertising crown. 'It's lost its raison d'être,' says DeGroote. 'If you get this thing humming, the price will perform. The UK needs a strong WPP.'
Telegraph
5 hours ago
- Telegraph
All-male shortlists return to the City after diversity backlash
City businesses are restoring all-male recruitment shortlists amid a growing corporate backlash against diversity policies. Senior executives and board-level headhunters have said they are no longer seeking to exclude men when hiring for top roles, as they seek to capitalise on the shifting political climate on diversity, equity and inclusion (DEI). It marks a considerable turnaround for businesses that have spent years urging headhunters to only approach female candidates, as they have been under pressure to have at least one woman occupying a top-four board position. A number of companies had also banned all-male shortlists. However, an executive at a FTSE 100 company said that excluding male candidates for jobs was 'insulting to women and men' and 'silliness all round'. He said: 'Companies shouldn't be afraid of having all-female or all-male shortlists. It depends on the job, the location and the company. Occupational segregation is a fact of life. 'I'd suggest in 2025, if you're artificially having to introduce gender balance, then the problem is bigger than your shortlisting approach'. A City recruiter who specialises in board-level moves said that there was now a 'far greater hesitancy to have all-female shortlists in the UK for both executive and non-executive roles'. They said: 'All-male shortlists are back, I am afraid. In the current, jumpy environment, all-female shortlists will be seen as too risky.' It comes after companies around the world have rolled back their DEI programmes in response to a crackdown by Donald Trump. The FTSE chief said he expected UK businesses to 'quietly' return to accepting male-only shortlists, particularly if they have operations in America. Accounting giant PwC is among City companies to have banned all-male shortlists for executive positions in recent years, while Aviva has said that all senior white male recruits must be approved by Amanda Blanc, the chief executive. Employment experts have said in the past that all-women shortlists are unlawful unless companies can demonstrate that there are no men of equal merit for the job. Political parties can, however, reserve all places for one sex on a shortlist if it will help to reduce unequal representation. A biography of Angela Rayner by Lord Ashcroft, the Tory peer and author, recalled her criticising the all-women shortlist system in 2019 during a talk at Oldham Sixth Form College. Ms Rayner is said to have told students: 'When I was going to be a Member of Parliament, I didn't want to stand in an all-women shortlist. I wanted to stand on an open list. 'I'm as good as any bloke and I've proved that since ... I should have been selected years before I was selected. I had to get selected on an all-women shortlist.'
Daily Mail
16 hours ago
- Daily Mail
HAMISH MCRAE: Do markets accept ongoing conflict now as a fact of life?
What is happening in the Middle East is so terrible in human terms that it seems wrong to be discussing the implications for investment. But that is what markets have to do. However horrible things are, and however huge the uncertainties, the plain fact is that the markets have to try to work out what might happen to the economies of different countries, to the price of the various types of assets, to interest rates, inflation, and so on – and all amid the fog of war. While we cannot know what will happen in the coming months, there will clearly be a period of extended conflict. This isn't just about the immediate consequences of last week's Israeli strike. The practical question facing us all is how best to invest in an increasingly dangerous world. Some short-term reactions have already become evident, but they have been strangely muted. The gold price has jumped, though it's still a little below its all-time peak in April. Oil prices climbed too, but at $75 a barrel on the Brent measure, they are down on where they were at the start of this year. As for shares, naturally they too took a hit, but the FTSE 100 index is still close to the all-time high it reached on Thursday. It is almost as if the markets are accepting continuing conflict as a fact of life, just another of the string of things they have learnt to cope with. Can that be right? There are two responses to that. One is to say the world economy is huge and regional tensions will always burst out, as we have seen in the past three years. What happened last week was part of that pattern. But because the global economy is so big, the ability of these conflicts to inflict damage beyond the countries and people affected is limited. To put the point harshly, the argument is that while this is horrible for the people caught up in the conflict, it is manageable as far as the wider economy goes. The other response is to say this is far too complacent. Quite aside from its human toll, war destroys wealth. Resources have to go into reconstruction and additional defence spending afterwards. Money that goes into military hardware and armed service salaries is money not available for education, health and all the other things that government supports. Though these conflicts are regional, and we hope against hope they will remain so, it would be naive to suppose we will not feel the effects across the developed world. That leads to practical implications for us all. Disruption is never good. It puts up the cost of everything. It leads to higher government borrowing – yes, even higher – for we are already in a mess across the developed world on that score. That inevitably puts up interest rates to higher levels than they would otherwise have been. And since the central banks will probably not put up rates by enough, I'm afraid the outcome must be higher-than-expected inflation. So what should we do? I take comfort in looking at what happened after the Second World War, which saw the destruction of life and wealth far beyond anything on the distant horizon now. Industry and commerce recovered quite swiftly and, after a lag, share prices reflected that. House prices took a while to steady, before starting their long, if uneven, march upwards. Inflation was suppressed at first but eventually burst out even more viciously than we have seen in the past five years. And anyone who held cash or bought government securities lost their shirts. So we should go on saving and investing. We should hold as little cash as practicable, and I personally hate the idea of holding gilts – UK Government bonds – even at their apparently decent yields. Property may not be a great buy at the moment, with stamp duty changes, non-doms pulling out, landlords selling up and punitive council tax rises. But we all have to live somewhere, and a mortgage is a form of forced saving. On a long view, owning one's home must make sense. And then there are equities, and note this. If, after everything that has been thrown at big British companies, the FTSE 100 index is hovering around its all-time high, what on earth would it do if the clouds lift a little?
