Two additions for portfolio

An unusual feature of the global economy in the new millennium is the way governments and central banks are able and seemingly need to inject almost unlimited amounts of stimulus to keep the show on the road. For much of my life it was the other way around as central bankers tried to restrain deficit-spending governments by famously ‘taking away the punchbowl just as the party was getting started.” Not any more; now we have near-zero interest rates (negative at the long end in some countries) and massive deficit spending programmes to try to take the global economy out of freefall and keep growth going. Inflation is barely mentioned any more and wage inflation is a distant dream except for footballers and workers in IT.

These extraordinarily low interest rates mean that the competition from cash and bonds as an alternative to equities as a home for your money is virtually non-existent, which helps to explain why shares in fast-growing businesses are so sought after and highly valued. Investors brought up on traditional metrics like PE ratios and dividend yields find it all disquieting but examples like Amazon, Alphabet, Salesfore.com and others have shown that it makes sense to invest in highly valued loss-making companies if they are delivering fast growth. There seems almost no limit to how big successful companies can become in a globally connected world as we enter the ere of the trillion dollar business.