Sunday, 23 November 2014
5 November 2014, 10.30 am
I am at a meeting of the Internal Governance Committee. CIPA is very proud to have an Internal Governance Committee, because it shows that we are doing things Properly and Prudently. Not that we weren’t Proper and Prudent before, but now there are documents to prove it.
We are discussing CIPA’s investment portfolio. An investment portfolio is kind of like a big handbag that you can stash your wealth in, only it is kept under someone else’s mattress instead of your own and you are not allowed to see it for twenty years or so, possibly because it spends much of those twenty years being passed around between bankers and traders and other undesirable types for them all to have a laugh at it. Each time it changes hands, someone takes a little bit out for his troubles, until it is quite depleted, and then you get sent a report full of pretty-coloured graphs which shows you the extent of the depletion and reminds you that financial investment is a long term activity. The expert who delivers the report then tells you that the best thing to do now is to leave the depletions where they are because they are just about to GROW again. When they do grow again, however, do not be tempted to ask for them back, because the expert is probably not entirely sure where the big handbag is any more. Investment is a long term activity because you are supposed to do it, forget about it and not bother people again until you die.
Forgive my cynicism, but if you ever have enough money for someone to offer you an investment portfolio, that is a sure sign you should be putting it somewhere else. And not telling anyone.
Anyway, today we have been joined by the man who looks after the CIPA handbag. He talks about phasing and benchmarking and asset spread. The other people on the Committee talk back to him about reserves and contingencies and drawing down. And I sit there wondering if I have enough pound coins to give my children their pocket money this week, because they get very cross if I give them notes and ask for change. Children are very like taxi drivers, I’ve found.
About the only word that I recognise from the discussion is “risk”. But it’s OK: we are not taking any. The man with the CIPA handbag has been instructed not to place it anywhere even remotely risky, because CIPA’s reserves are there for a rainy day of biblical proportions – a Noah-type day – and we do not want to do anything improper with them. Mostly they are in nice safe government bonds, and who better to look after your handbag than the government?
Well it had better be a diamond-encrusted handbag, that’s all I can say.