How can investors protect portfolios against inflation?

Gold has a useful role to play as it can’t be debased by governments. Index-linked bonds, whose returns rise in line with inflation, are another excellent option. The price of an index-linked bond is tied to the difference between interest rates and inflation, so if we are saying inflation is going up but interest rates will not go up by as much, that is a good scenario for index-linked bonds.

Do you think shares and bonds will move in tandem from now on?

Over the past 35 years bonds have provided a really nice offset to shares. But in the Covid crash in 2020, bonds did nothing for you. At the start of this year shares and bonds fell together and I would expect that to continue. If you hold a “60:40” portfolio (60pc in shares and 40pc in bonds) I think you are going to be disappointed. They are going to move together and that means there is a lot more risk in savers’ portfolios than may be apparent.

Why did you sell your Bitcoin?

The trust had a 2pc allocation to it. We bought at around $15,000 (£11,500) in November 2020 and sold north of $55,000 in April 2021. It was a great trade, but we decided to exit. We held it because we viewed it as a defensive investment that sits outside the monetary system and therefore can’t be debased by central banks, just like gold. However, it was getting increasingly caught up in speculative fervour and behaving like a riskier investment.

What has been your best investment?

Over the past two to three years it has been the “volatility call options” we held going into March 2020. These investments rise in value when volatility in stock markets increases.  They were up eight-fold in aggregate in February and March 2020 when British stocks fell by 25pc. 

They provided a fantastic offset and allowed us to make money through that period. We capitalised on that by selling them in late March and early April to buy bombed-out investments.

And your worst investment?

Sometimes it can be the things you miss out on. I think we underestimated the benefit that “growth” stocks, particularly technology stocks, would get from the deflationary environment after the financial crisis and even during the pandemic. We held only a few of those stocks.