View all newsletters
Sign up to our newsletters

Support 110 years of independent journalism.

  1. Business
17 September 2012

Don’t take business lessons from Downton Abbey

Lord Grantham: no businessman.

By Freddy Barker

Caution! Don’t read on if you haven’t watched the first episode of the third series of Downton Abbey

Downton Abbey is normally leisurely viewing, but high-net worth (HNW) ears will have pricked last night at the news that Lord Grantham has invested his fortune in a doomed railway company and faces ruin.

Going from hero to zero – with the inevitable family fallout – is something that keeps even the wealthiest awake. So a quick analysis of Grantham’s mistake may put a few minds at rest today.
   
Diversification is the buzzword of many portfolio managers. Complicated as it sounds, the idea condenses into the simple thought that investing across a series of asset classes, sectors, geographies and maturities achieves the same returns as investing in one stock, but – crucially – with less risk.

The concept is sufficiently appealing that some HNWs go overboard on it though. Breaking their fortunes into a thousand pieces after liquidity events, they unknowingly diversify themselves into mediocrity and ensure that, while safe, their money won’t grow at the rate required to counter inflation, family spending or the taxman.

A balance therefore needs to be struck, and Lord Grantham would have done well to listen to the advice of Murray, his money manager, in this department.

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via saturdayread.substack.com The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via morningcall.substack.com Our Thursday ideas newsletter, delving into philosophy, criticism, and intellectual history. The best way to sign up for The Salvo is via thesalvo.substack.com Stay up to date with NS events, subscription offers & updates. Weekly analysis of the shift to a new economy from the New Statesman's Spotlight on Policy team.
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU

Academics currently posit that the vast majority of diversification benefits can be achieved with 12 to 18 holdings. This represents a happy balance between, at one end, concentrated investment in the few first class opportunities that come our way in a lifetime, and, at the other, the don’t-put-your-eggs-in-one-basket mentality.

What it comes down to is that when you are worth hundreds of millions – as Lord Grantham was – the battle is not so much investment management as risk management.

Wealth preservation is the Holy Grail, and the fallout of failing to achieve it will be graphically laid out in Julian Fellowes’ third season.

This article first appeared in Spear’s.

Content from our partners
Labour's health reforms can put patients first
Data science can help developers design future-proof infrastructure
How to tackle the UK's plastic pollution problem – with Coca-Cola

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via saturdayread.substack.com The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via morningcall.substack.com Our Thursday ideas newsletter, delving into philosophy, criticism, and intellectual history. The best way to sign up for The Salvo is via thesalvo.substack.com Stay up to date with NS events, subscription offers & updates. Weekly analysis of the shift to a new economy from the New Statesman's Spotlight on Policy team.
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU