Coffee House

The author of the RBS ‘sell everything’ note has been predicting disaster for the last five years

13 January 2016

5:52 PM

13 January 2016

5:52 PM

Should we sell everything because Andrew Roberts (not the historian but an analyst at RBS) tells us to in the expectation of crash? Before you press the ‘sell’ button, it might just be worth reflecting on the fact that there has always been a time when some analyst somewhere has been handing out the same advice.

Quite often that somebody has been Andrew Roberts himself. In June 2010, for example, he said: ‘We cannot stress enough how strongly we believe that a cliff-edge may be around the corner, for the global banking system (particularly in Europe) and for the global economy. Think the unthinkable,’ he said. The unthinkable in that case turned out to be that, contrary to the Cassandras’ warning of a double dip recession, it didn’t happen. The global banking system survived and stock markets grew strongly.

Mr Roberts was at it again in July 2012 when he said: ‘People talk about recovery, but to me we are in a much worse shape than the Great Depression… Even the Congressional Budget Office, probably the most bullish forecaster in the world, is forecasting a US recession in the first half of next year. It’s amazing stuff.’ As we now know, there was no US recession in 2013. Instead, the US economy grew by 3.2 per cent and the stock market grew strongly.

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Like the proverbial stopped clock which is right twice a day, if you are constantly predicting a stock market crash you will eventually be right, but it doesn’t make your advice very useful. When you are eventually right, you may go around saying ‘I told you so’, yet in the meantime great fortunes will have been made by people who ignored your advice and piled in and joined the boom.

What makes me sceptical of the suggestion that we are on the cusp of a bust is that we haven’t really had a boom. True, some indices have trebled in seven years, but only from a deep, deep trough following the 2008/09 banking crisis. Bull markets never last more much more than five years, it is often argued. But are we really in a bull market? Markets have been sliding for nine months. The correction in the FTSE 100, for example, is very close to the 20 per cent which would mark an official bear market.

So maybe we are at the bottom of a dip and it is upwards from here. I don’t know, and nor does anyone else. It is all very well trying to analyse economic fundamentals, but markets are so unpredictable because they are the mercy of investors’ emotions.

If everyone followed Andrew Roberts’ advice a stock market crash would become a self-fulfilling prophecy. But there is little sign of it so far – markets are up strongly this morning across the world. The value that investors put on Mr Roberts’ advice is evidently not that great.   Maybe they remember that his bank not only failed to foresee the last crisis but bought ABM Amro just as doom descended, forcing the government into a bailout. That is one investment I wish that I, and all other taxpayers, had not been forced to make.

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Show comments
  • tigerblood53

    New York—-

    2010—Andre Roberts RBS Anaylyst predicts “cliff-edge” scenario for markets!!
    2012—Mr. Roberts again predicts markets “To be worse than Great Depression!”
    2016— Recent setback by markets, primarily due to commodity weakness and incompetence of Chinese to properly handle market fluctuations, Mr. Roberts again proclaims “doomsday scenario for life as we know it on earth.”
    To give perspective to Mr. Robert’s continued harangues, we contacted a devotee of the “so-called” banking analyst. Mr Charle Falling of Charleston West Virginia, an apostle of naysayer Roberts, went “cash” in 2010 and purchased untold amount of water and MRE’s. ” Yep, got it buried in the side of a mountain, the cash is secure, but had to rotate some of the food, rats got to it.” “Me and the missus know that ‘ol Andy will get it right one of these times, we’s ready and willin.” When asked if he was remiss by losing the ROI on his buried funds, Mr Falling gave a quizzical look and responded “HUH?”

  • UnionPacificRX

    Yes sell everything
    the Stock markets are crashing
    the futures market (oil) is crashing
    the commodities market is crashing
    and
    it has just begun. 3 trillion lost in Asian markets, 2 trillion lost in the New York Stock exchange.

  • Andrew

    Roberts & Blanchflower LLP, opening soon on a high street near you

  • The Laughing Cavalier

    The Sage of Somerset, aka ‘Mystic Mogg’, spent decades predicting doom and gloom. Occasionally right like a stopped clock, doomsayers hit upon a downturn eventually and then claim omniscience.

    • LG

      Ah, yes, The Great Reckoning?

  • Gilbert White

    Know an ex Liberty director made a million from doing good? Why build a factory to create jobs with this option?

  • Magnolia

    We’ve had the stealth bull and now we are having the stealth bear.
    I’m poised for the big one going down.
    It’s hard to imagine now but people were genuinely saying that oil would never fall below $100 a barrel not that long ago. I think the housing bubble will go and then I dread to think what state the banks will be in. No doubt shares will get hammered in the thick of it. Still we can rest assured that our government loves us and will always do what is best for us.

    • Andrew Cole

      Does that mean we should start saving so we can get the cheap houses then? Dates please.

  • Thanks Tank

    The world economy is a bit of a basket case, Britain’s economic fundamentals aren’t that great, if there is a turn down things could be rough for a good bit.

  • Peter Simple

    “Experts” will always tend to try to draw attention to themselves by predicting disaster. “AGW” is a prime example of this sort of thing. .

  • Simon

    Finally a sensible article. This Andrew Roberts should be sacked. It’s exactly because of dumb people like him that investors panic and don’t know what to do. Also a 20% decline is no reason to sell, it’s just normal. Our local currency has declined 20% last year and I didn’t burn my cash.

    • telemachus

      Why has RBS not been broken up?

      • A Free Man

        It has. It’s name still exists, but 2016 RBS is very different to 2008 RBS

      • davidofkent

        In theory, part of the bank became Williams & Glyns. I don’t know what they’ve done with the Irish bit.

    • Frank

      Trouble is Mr Ross Clark is not an economist, a banker, or a stockbroker.
      Anybody who thinks the current economic/financial/equity/global security situation is safe / sound is profoundly delusional.
      Andrew Roberts is just suggesting that it would be sane/sensible to move any investments into a safe haven – is that so revolutionary?

      • oblomov

        As it turns out, Andrew Roberts is not an economist or stockbroker, either, and is a “banker” insofar as he works for a bank.

        • Frank

          And your point is what precisely?
          Andrew Roberts is RBS’s head of economic research and analysis, so he may not be a banker, but arguably knows considerably more than Ross Clark about finance and economics.

          • ACMEsalesrep

            And yet he has been consistently wrong for the last several years. You may wish to accept his title as proof of ability, but I think his results ought to be taken into consideration.

            • Frank

              I was merely trying to indicate that he had a greater skill set than a journalist when it comes to analysing share and bond prices. He may be bad at it, but then perhaps this journalist is also fairly rubbish?

      • Simon

        @disqus_T5DGdbimZ5:disqus . It never has and it never will be safe. That’s why stocks are called ‘high risk assets’. Now one could argue what ‘safe havens’ are… bonds, gold? I doubt that they are unconditionally safe.
        What is a retail investor supposed to do with this ‘sell everything’ advice? Does that mean he is bearish on every single industry or country? Is he bearish on health food stocks, Vietnamese equities or health care? Should i also close my ‘short oil’ position? Yes the current system may be far from perfect but predicting the end of the world does not help anyone. There are some assets you should buy, some you should hold and many you should sell.

        @disqus_EMwdkIyFoy:disqus agreed. that was a dumb comment.

        • Frank

          Agree, although a very large number of people seem to have forgotten the intrinsic risk in all equities! The old rule was get as much sensible diversification as you can, and avoid anything looking like it is being pumped by some outfit. Given that I am small fry investor, I have opted for a wide range of corporate bonds – bound to be the wrong choice and perhaps equities will explode through various ceilings – just don’t see it myself.

    • Alex Jackson

      It looked sensible up until the point of:

      “But there is little sign of it so far – markets are up strongly this morning across the world.”

      As if a few hours of data are ever relevant to anything ever.

    • disruptivethoughts

      Alarmist advice like this should be prosecuted under the same category as other market abuse, including ramping and insider trading. How are we to know that his advice note was not distributed to friends and colleagues so they could profit from its effects?

      If the markets ignored rumours and only responded to factual information, such as the real, audited profits of companies, then they might better reflect the value of things. Of course, I do also understand that such a dose of honesty might well hurt as many small investors as it benefits.

      • ET

        I agree ! But then with the FTSE now at 6,400 he looks completely stupid… hopefully people will remember the quality of his advice (or lack of !!!) and of RBS’s work.

    • ET

      FTSE ended today above 6,400, anyone having followed Andrew Roberts and “sold everything” on 12th Jan would have missed a 10% uplift ! Enough said !!!!

  • Atlas

    As anyone in finance knows every bank employs a perma-bear, they are there as a counterweight to the perma-bulls and release notes just like any other analyst. Unfortunately mainstream economic discourse is so dire, because leftists have trashed the education system, their pronouncements periodically become mainstream headlines without the provision of context.

    The greatest single threat to our economic wellbeing is the iron grip leftists have on the education system.

    • The Masked Marvel

      Never mind. Somebody from No. 10 was probably on the phone to the editor demanding somebody do something to counter the suggestion that Osborne has not in fact created an economic miracle with the wind at its back and smooth sailing ahead. Ross has simply obliged.

    • Sue Smith

      That last sentence of yours. Apposite.

    • Thomas Katz

      “The greatest single threat to our economic well being is the iron grip leftists have on the education system.”
      and they seem to be tightening their grip on the Doctors now.

  • Greenslime

    He must be a mate of Mad Albert who used to work at SocGen. He was a ‘permabear’, always predicting doom and gloom. Like a broken clock, he had to be right on the odd occasion but the only reason that people listened was because he was funny.

    • Sue Smith

      Who was the American billionaire who said “when people panic you should buy; when they become greedy you need to sell”? I’m buying at the moment, but in much smaller licks in case of further falls.

      But I’ve had no real growth since the GFC, except for a brief stint in our market which took us up to nearly 6,000. Today it is 4900, which is far less than pre-GFC levels.

      I always believed we were looking at a 10 year period to ‘recover’ from the GFC. And I don’t work for a bank!!!

      • Observer1951

        I am interested in what you are buying into? I have a wide range of stocks and am holding GSK, AZ, HSBC and National Grid for the dividends. I’m taking a bit of a punt on GSK splitting or a takeover

        • Sue Smith

          I’m trading on the ASX (Australia) and buying resources (BHP Billiton) which have completely crashed, and I did buy energy which did much the same thing. Hoping that in the longer term these make a recovery. Also, some of our Big 4 banks in Australia. Sold some others which had remained static but produced very little dividends. Two of them were subject to take-overs which I hate like poison! Consequently, I ditched them.

          Still hold quite a bit of cash and thinking of investing in real estate this year – at least you can drive by it and see it’s still standing!!!

          Good luck!

    • The Bellman
  • alabenn

    Well he will be right one day, then you will be proclaiming him as the new Messiah, remember Cable.

    • Colin

      Cable? He who correctly predicted six out of the last 2 crashes.

    • The Masked Marvel

      Cable is best known for giving predictions after the fact. The BBC used to call him “The Sage of the Credit Crisis”, but in reality he’s “The Sage of 20/20 Hindsight”.

      • disruptivethoughts

        A sage who almost certainly never put his money where his mouth is, not least because he didn’t have a time machine.

    • Sue Smith

      Agreed. If you call it often enough you are bound to be right one time. Just as it is with time itself – twice a day it is 12 o’clock.

      • alabenn

        The trouble was, lots of idiots believed the half witted fool, some still think he is still a sage.

        • Sue Smith

          One has to remain very sober indeed, especially when in retirement and the chance of recovering financial losses – short of a Lottery win – is next to impossible. This has been our most frugal year on record. That’s OK; we can take it – for now!!!

        • Andrew Cole

          Apart from his former constituents is that :) They seem quite clued up.

    • davidofkent

      I noticed the other day on the TV that cable still thinks there are people listening to him. Poor man!

  • Jez

    I’ve been predicting a disaster gor 15 years.

    In incredibly slow motion it looks as though this crazy notion could actually become an unfortunate reality

    • Roger

      I have heard about impending disasters and revolutions for nigh on 70 years now and not a bloody one of them turned up to brighten my day.

      • Jez

        Surely it must have brightened your day with Britain collapsing as a World power, losing our status as an independent national state and being utterly transformed into a multicultural, ever increasingly divided society?

        We were told to celebrate these facts from school onwards.

        • Roger

          No it peed me off. But there we go the ups and downs of this tipsy turey existence.

          • Jez

            Yes true.

            Respect matey. Take care

  • Thomas Katz

    I’ve just seen the trailer for The 5th Wave, and I too like Andrew Roberts have seen the future

    “First, the aliens took our power. They destroyed our cities. They
    infected our people. Then, they invaded our planet. There have been four
    waves. Can we survive ‘The 5th Wave’?”

    The “Aliens” are the Liberal Political Elite, they’ve nearly destroyed Europe by controlling the EU, and now helped by Dopey Dave all the others they infiltrated whilst in the Bullinggon they are coming for us

    • flipkipper

      I don’t get you chaps, mate init. The Germans demanding back what are their gold reserves from our German Monarch and the Chinese looking to cash in UK IOUs on Mul- and Burberry, that hasn’t got anything to do with aliens init you dope.

      It’s you chappies spending it on the white stuff from Afghanistan. Stop smokin and start doing some meaningful WORK!

      • Thomas Katz

        Mr Flipper Kipper, When the Aliens programmed you I fear they didn’t get your “Queens English” quite right, parts of it are a little incomprehensible.

        • flipkipper

          Tommi, quit smokin that dope init bruv and stop doing the white stuff they import from Afghanistan from where else matey.
          How does your post differ from the Area 51 tripe the likes of you dad and grandad ‘figured out’ sixty odd years ago? Ask yourself that bruv.

          • Thomas Katz

            Mr Flipper Kipper, You’ll be telling me next that the bearded white man, that lives in the clouds and answers my prayers, isn’t real.

      • The Laughing Cavalier

        You make a good point about the Germans and their gold. So far they have succeeded in getting only a tiny fraction of it back.

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