What will stock markets do?

A lot of the factors around the world that were pushing markets upwards aren’t there any more. Inflation had been depressed by globalisation making goods cheaper. This is changing. And we also had low interest rates and money printing, which is in the first stages of tightening.

We have seen a lot extremely high valuations, particularly for new companies, Bitcoin, meme stocks and so forth. All of these were signs of fairly bubble-like conditions. Famously bubbles are impossible to call but the froth does appear to be coming off at the moment. Investors should be very aware of the game they are playing.

We have less than 20pc in shares right now and quite a lot of what we call “dry powder” – short-dated, high quality bonds that are easy to sell, and cash. The lesson from the beginning of the pandemic, which I think could be repeated, is that when you get market sell-offs they tend to be indiscriminate and there are always good bargains to be had.

What has been your best investment?

One bedrock stock that has done amazingly well is the North Atlantic Smaller Companies investment trust, which we have owned since the 1980s. Its manager, Christopher Mills, has achieved the most extraordinary record. This century, its share price has gone from 479p to £43, so it is up roughly nine times in capital value. If you compare that to the UK market, it is pretty remarkable. The shares also look cheap on a 28pc discount.

And your worst?

The biggest mistake I have made is not investing enough in US stocks. It has gone from being expensive to being very expensive. If valuations are high, prospective returns are low and risk is high, so I have never wanted too much of something such as that.

We often move out of markets very early, but this is how we have built our record of maintaining value. If we stayed in the hottest investment all the time, we’d just produce the same returns and the same volatility.

Fortunately, we have more than made up for it with our investments elsewhere.