Title: Till Time's Last Sand
Author: David Kynaston
Pages: 879 (including notes and index)
Publisher: Bloomsbury
Price: £35.00/$75.00
ISBN HB: 978-1-4088-6856-0
ISBN TPB: 978-1-4088-6857-7
ISBN ePub: 978-1-4088-6858-4
This is quite simply a perfect addition to the collection of anyone who has an interest in the financial past. Sub-titled A HISTORY OF THE BANK OF ENGLAND 1694-2013 it does exactly what it says on the tin.
The blurb on the inside front cover sleeve describes the book as the first authoritative and accessible single volume history of the Bank of England and I look forward hugely to reading it fully at leisure and to consulting it in years to come.
Till Time's Last Sand opens with the Bank's founding in 1694 (by a Scotsman named William Paterson, which I knew, and with a £300 capital subscription from philosopher John Locke, which I didn't know). It closes in 2013 with Mark Carney succeeding Mervyn King as governor.
Another thing I didn't know was that William Paterson was gone from the bank before the end of February 1695 for conduct unbecoming and breach of trust.
I passed my banking exams in the spring of 1983 and became an Associate of the Institute of Bankers in July that year, and was elected to fellowship of the ifs School of Finance in March 2007 so have almost a full lifetime's exposure to banking history, which enthused me from day one of my history of banking studies.
What fun to wander down memory lane with tally sticks (sticks of notched wood that were in effect IOUs, the blockchain of their day) and Navy paper (bills based on the security of the English Navy, and it WAS the English navy as the Act of Union that created the UK did not pass through parliament till 1707).
Page 13 has a rivetting account of how the then deputy governor Michael Godfrey died suddenly when watching the siege of Namur in 1695 along with William Paterson. 'A cannon ball from the ramparts laid Godfrey's head at William's feet. Bank stock immediately fell 2 percent, once the news reached London; and Scawen, who apparently had been standing only two yards away, was elected as the new deputy governor'. They just do not make them like that any more.
Page 477 features - nay, stars - a list of opinions attributed to central bankers, drawn up in 1962. A central needs a sense of smell (analysis is only theorising but may be encouraged when it confuses critics). No civil servant understands markets. Politicians do not sufficiently explain the facts of life to the electorate. Central bankers should always do what they say and never say what they do. Taxes are too high. Sounds pretty much bang on as a summary of the world 55 years later.
The final sentences of Till Time's Last Sand are straight from the mouth, or pen, of Mervyn King, musing on the heroes and villains highlighted on the website of his favourite football team, Aston Villa. 'For all our sakes it is important that central banks are seen neither as heroes nor villains. They should be modest technicians, striving to improve the way they use the tools of their trade, and always eager to learn. Openness of mind and fleetness of foot will be the best way to avoid extinction.'
A fitting end to a marvellous book. I take my hat off to David Kynaston, author of an earlier history of another institution, the Financial Times, published in its centenary year in 1988. It still sits proudly on my bookshelf nearly 30 years after it was presented to me as an FT staffer at that time.
Hedge Funds Top Over 17 Years
Hedge funds significantly outperformed traditional asset classes such as equities, bonds and commodities over the last 17 years according to a new study by The Centre for Hedge Fund Research at Imperial College in London. The research, commissioned by KPMG, the international audit, tax and advisory firm, and the Alternative Investment Management Association (AIMA), the global hedge fund association, is described as the most comprehensive of its kind to date.
The report, entitled “The Value of the Hedge Fund Industry to Investors, Markets and the Broader Economy”, found that, per annum, hedge funds returned 9.07% on average after fees between 1994 and 2011, compared to 7.18% for global stocks, 6.25% for global bonds and 7.27% for global commodities. Moreover, hedge funds achieved these returns with considerably lower risk volatility as measured by Value-at-Risk (VaR) than either stocks or commodities. Their volatility and Value-at-Risk were similar to bonds, an asset class considered the least risky and volatile. The research also demonstrated that hedge funds were significant generators of alpha, creating an average of 4.19% per year from 1994-2011.
“This research is powerful proof of hedge funds’ ability to generate stronger returns than equities, bonds and commodities and with lower volatility and risk than equities,” said Andrew Baker, AIMA’s CEO. Portfolios including hedge funds also outperformed those comprising only equities and bonds, The Centre for Hedge Fund Research concluded. The study showed that such a portfolio outperformed a conventional portfolio that invested 60% in stocks and 40% in bonds. The returns of the portfolio with an allocation to hedge funds also yielded a significantly higher Sharpe ratio (which characterises how well the return of an asset compensates the investor for the risk taken) with lower tail risk (the risk of extreme fluctuation: see http://www.brianbollen.com/bbb_brian_bollens_blog/2012/04/killie-break-celtic-but-will-euro-break-too.html).
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