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On the Cheap Lager with Lucian Miers

Tom Winnifrith
Tuesday 12 June 2012

Well not exactly. Lucian started with a pint of “Village Idiot” – which Evil might think appropriate but is some sort of real ale. I had a pint of cider and then we enjoyed a bottle or two of Rioja. No lager. No kebabs. Just a pleasant night out in Oxford. The Village Idiot is served in the Turf – a pub my paternal grandfather frequented in days when students were not meant to go into pubs – the Turf has 4 potential exits so allowing for rapid escape. One day I shall write a bit more about his student days in the 1920s.

The Turf is situated behind Hertford College which accepted both me and Evelyn Waugh after both of us were rejected by Christ Church – a far grander institution. Hence, in Brideshead Revisited the aristocratic Sebastian is a “The House” as Ch Ch is known while the middle class Charles is at dingy, poor and unfashionable Hertford. Lucian applied to Hertford but the admirably named Professor Cockshut saw through him and he headed back to the East End.

Lucian says his nightmares when under strain are about that rejection. I do not believe a word of it. My recurring nightmare when I am under pressure is that for some insane reason I have gone back to Oxford to re-take my degree feeling that second time around I can achieve better than a Desmond (2:2 – geddit?). But horror of horrors I am even more useless than I was first time around and find myself sitting my finals and I know absolutely nothing and cannot write a word. Nightmares are a way of not facing up to very real fears by supplanting them with imaginary fears.

Away from our Oxford nightmares the talk was largely of how grim Lucian sees the future. For him AIM is almost a non market now. The days of CEOs completing endless rounds of financings to support their lifestyles rather than to grow shareholder value are over. Folks have seen how AIM transfers wealth from those with capital to risk to parasitic advisors and useless CEOs. And as times get tougher, and more and more folks capitulate and throw in the towel on AIM this just cannot go on. Lucian continues to make money by shorting companies which appear to him to be obviously bust or which have publically stated that their shares are more or less worthless. They may have already fallen by 90% but shorting them in the final weeks guarantees a 100% return if, indeed, they do go bust.

The big short right now is AIM listed Adventis (ATG) but he is also looking at Mouchel (MCHL).

On the long tack Lucian continues to believe that prime central London property is the safe bet. There is an acceptance that quite a large amount of this is empty (held as an asset with 0% yield like gold) and also that the rental yield on such places is truly trivial. It is just that every Russian crook, bent Chinese official/entrepreneur, Iranian crazy etc wants to own a place there. If you are a Russian crook and feel the cold chill of a fixed Putin investigation on its way you have a bolt hole which is far more attractive than seven years in Siberia. Ditto all the other crooks and kleptocrats. Assuming that the Euro goes belly up and the socialists who run Euroland start levying uber-taxes on the super rich the flow of non Brits into Central London will accelerate. I can see the rationale behind this thesis.

Of course Lucian is also so gloomy about the rest of the UK (principally because if you add personal, corporate and Government debt together the UK is more bust than almost anywhere else) that he foresees that outside this enclave of prosperity there will be rioting, a breakdown of civil order, martial law, shootings etc. How quickly will we get to that stage? At this point the Bard of the Boleyn admits he does not know. That is honest enough. The truth is that with momentous events unfolding in Europe and elsewhere (Lucian is very sceptical about the reliability of Chinese economic data and so uber-bearish on China) we just do not know what will happen next or at what pace.

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About Tom Winnifrith
Tom Winnifrith is the editor of When he is not harvesting olives in Greece, he is (planning to) raise goats in Wales.
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