Weekly Market Commentary | 23/04/2024 | DOCS, AML | A Clairvoyant’s View of the Economy

This week Jamie returns to a topic mentioned late last year; the use of Google Trends to get a sense of how sections of the economy are performing. He then discusses what, if any, investment ideas can be narrowed down. He then reviews the travails of two ex-private equity businesses with similar names. One he thinks might be worthless, the other he finds intriguing…

Last week, markets had a bit of a pullback. It was nothing major and simply took indices back to where they were a few weeks prior. The narrative cause was a fear of spreading instability in the area of the world so often blighted by conflict. Sometimes markets need to come back a little and whatever is in the news can be the trigger. Longer-term, UK equities still look cheap so any further sell-off should probably be used as an opportunity to buy more of your favourite businesses.

On the State of Economy Now

There is a famous and possibly apocryphal story about how the Rothschild family made it big during the Napoleonic War. Between 1814 and 1815, Nathan Mayer Rothschild provided Wellington’s troops with gold coins under a contract from the British Government. This contract meant that he had a keen interest in the news from the war and had built up a large information network to ensure his knowledge of the state of play was timely. In the weeks leading up to the battle of Waterloo, the value of government stock had become very depressed as markets reflected the fears of a French victory on the continent. The defeat of the French was of great relief in markets and the depressed prices rallied hard. There exist different stories about how Rothschild had obtained the information ahead of the markets. One story is that he himself was present at the battle and had personally brought back the first news of victory, riding a succession of horses through Europe and crossing the English Channel in the dead of night. Whatever happened, he is said to have bought ahead of the crowd.

Regardless of whether or not he made a fortune on the news is irrelevant because the reality is that if somebody is able to obtain important news ahead of the market (usually referred to as price-sensitive information) then that person can profit from that information. In the bad old days prior to the Big Bang, it was considered part of the job of a stockbroker to be up to date with non-public information about client companies. These days, acting on inside information (or material non-public information as it is also referred to) is illegal and can face a penalty of unlimited fines and up to ten years in prison.

There is, however, a clear distinction between trading based on finding out something you shouldn’t have and thinking laterally about disparate information to form an insightful view on a company. In financial analysis, there is a style known as the mosaic theory of financial analysis. This involves gathering disparate information that is knowable (whether it is widely known is another matter) and combining it to generate an investment thesis that gives you an edge over the market. There are those who will say that it is impossible to gain an edge in investing and they will lean toward some form of the efficient market hypothesis. I believe these people to be mistaken and using information that is public yet not widely considered as part of one’s analysis is a key to successful investing.

A few months ago I talked about using Google Trends to help inform investment decisions and last week I mentioned it in relation to Americans looking at the sun. Google Trends is a resource where I think there is a genuine opportunity to obtain public information of real value that has, for whatever reason, been ignored by market participants. The original article summarises how Google Trends allows a user to identify changing trends for particular search terms. Many of these are seasonal and obvious but illustrative such as the clear spike in the search term for ‘sunscreen’ in the peak holiday season. Others however, are steadier through the year e.g., ‘nearest petrol station’. Regardless of whether a term is seasonal or static, the prevalence of it as a search term is an indicator of its popularity. For example, those of us with taste are aghast that Crocs have become popular and even fashionable again. You can clearly see the initial popularity in 2007 before falling off and subsequently, the rise in popularity over the last three years. Note also that the popularity is still cyclical and thus the cyclicality is no hindrance to observing a trend (chart below).

1. Crocs – UK – since 2004

This week, I shall review a few search terms to see if we can glean any investment insight that has been missed. In other words, we shall use Google Trends to gain a clairvoyant’s view of the economy. But first, a few points worth bearing in mind about Google Trends:

  • It’s best for things related to the consumer since the consumer is a larger mass than business users and frequently ‘new’ things in business require considerably more fact-finding than might be achieved through Googling something like ‘how to open a new brick factory?’ for example.
  • Data only exists as far back as Google started tracking it – 2004.
  • It can be narrowed down to country or worldwide but not continental nor regional.
  • As already mentioned, some data is seasonal but you can still compare over long periods of time to gain a sense of a trend.
  • These are relative indices whereby the period of time when the search term is searched most often is 100 and everything else is relative to that.
  • For whatever reason, some search terms become gradually more popular with no obvious reason and vice-versa. For example, ‘toothpaste’ has gradually become more popular on a worldwide basis for twenty years is anyone’s guess. Therefore, whilst the data we can observe might be powerful, it should only ever used as a supplementary piece of information to help build the mosaic. Google Trends is the tail; don’t let it wag the dog of due diligence.

2. Toothpaste – Worldwide – since 2004

Last week we talked about the economics of house building, where I stated that an increase in the volume of houses built will probably benefit the suppliers more than the house builders. Rather than searching for ‘house building’ good proxies are ‘new mortgage’ and ‘new build’. Both terms indicate the same thing, which is that housing transactions appeared to have partially recovered from a low base at the end of 2023, which might imply an improving opportunity in building materials, estate agents and mortgage banks.

3. New Mortgage – UK – since 2019

4. New Build – UK – since 2019

One obviously cyclical term is ‘holiday’; we have to be careful with this one because the COVID-19 era would throw up some unusual search volumes. I.e., during the lockdowns, the volume would have been depressed; during the subsequent opening up, there was pent-up demand. Consequently, we’ll view the term over a ten-year period and ignore the two years from 2020. The search term follows a familiar path each year and we are approaching its peak period for 2024. To my eyes, it looks like the term is rising at a slower rate than in previous years, which may indicate a disappointing season. Trading updates from EasyJet, Ryanair and Jet2 will be interesting.

5. Holiday – UK – since 2014

There has been a rise in personal savings in the UK as interest rates have made keeping money on deposit nominally more attractive. There was a clear spike in volume for the term ‘savings account’ in 2022 mirroring the rise in interest rates. Since peaking in November of 2022, the term has been declining consistently in popularity and is now only slightly higher than before the spike in interest rates. One interpretation could be that people are less interested in saving and the interest is declining. This would imply a potential uptick in consumer spending if these elevated levels of savings are reversed, which would benefit consumer parts of the economy such as retailers, pub companies & restaurants and, in contradiction of the previous point, holidays.

6. Savings Account – UK – since 2019

Some good news: despite the lacklustre pace of per capita GDP growth, very few people appear to be concerned about the job situation at present. The phrase ‘unemployment benefit’ is close to historic lows going back twenty years. Note: the sharp spike at the worst of the COVID-19 panic.

7. Unemployment Benefit – UK – since 2004

The story is the same in the US. Here we change the term to ‘unemployment insurance’, which is what it is referred to in the US. The implication here is actually not as clear as one might assume as there is a well-publicised wave of retirements coming from the largest generation of them all – the baby boomers. As these people retire, there often aren’t enough native-born people to fill the vacant positions. The effect is low-growth full-employment. Still, it should at least mean consumers feel more confident in their employment and confidence yields consumer expenditure. Taken with the point about personal savings, we could be heading into a strong period for consumer-facing businesses.

8. Unemployment Insurance – USA – since 2004

As not to bombard with too much information in one go, we will return to this topic at a later date with different search terms. This week, I talk about Dr Martens, which continues to disappoint, and I try to provide a degree of consumer understanding using Google Trends. I then muse upon Aston Martin.

Dr. Martens, full-year trading update and outlook


Dr. Martens has an interesting history. I had originally assumed it had British origins given that it is considered an icon of British design but no. Dr. Klaus Märten was a German doctor who injured himself skiing in 1945 because of poor-quality army boots. He set up the business making better boots with a friend two years later. Apparently, the biggest demographic buying the boots in the early days were women over the age of 40 (80% of all sales).

It was in 1959, that a British shoemaker, R. Griggs Group bought the rights to make the boots in Britain. The name was retained – sort of. In order to anglicise the name, the umlaut was dropped from above the ‘a’. Looks like half a job to me; if they really wanted to anglicise the name, they should have also changed the ‘e’ to an ‘i’.

From thereon, it eventually became a fashion piece sported by certain groups like punks. Over the years, there have been waves of growth and contraction as the fashion of the boots ebbed and flowed. Most recently, the fashion of the boot peaked in 2020 as can be seen by the worldwide search term ‘Dr Martens’.

9. Dr Martens – worldwide – since 2004

In 2013, R. Griggs, and the Dr Martens brand were bought by the private equity firm Permira. It was relisted just after the last peak in popularity in 2021.

Trading Update and Outlook

This was the latest in a long line of disappointing updates. Previous updates have been poor because of distribution issues in the US. This update was different, however. The figures for the most recent quarter were in line with previous guidance with growth in EMEA, APAC and direct-to-consumer and flat figures in the US. The problem this time was twofold; firstly the outlook statement and secondly the departure of the CEO.

Next year, the management expects that the US wholesale will decline by a double-digit percentage, which is expected to reduce profit before tax by c. £20m. This is about one-eighth of the total for the prior year. There is continued cost inflation and the company will not be increasing prices further to offset this (suggesting waning popularity). This will lower profit before tax by a further £35m. A further knock-on effect of a poor outlook for US wholesale is that there will be another year of ‘one-off’ costs related to additional warehousing, which will lower profit before tax by a further £15m

I do not believe that the CEO’s departure was planned although I could be wrong on that. The timing with a really poor release would imply my hunch is correct. The CEO was in charge during the private equity era and through the IPO. He will be replaced by the Chief Brand Officer. The CEO is said to be staying in post until the end of the current financial, which at the time of writing is seven weeks away.

Opinion & Valuation

One of the great things about the internet is the democratisation of information. Once upon a time, you had to rely on reputation and hope that the product you were buying was of high quality, but today there are numerous outlets that allow one to really know whether what you are buying is any good. One of many examples of this, if you are interested, is a YouTube channel in the US called the Rose Anvil. It is run by a leather worker called Weston Kay, who cuts footwear in half and explains whether it is worth the price. One thing you will learn if you watch channels like this is that Dr. Martens are simply not very good for the price.

What you might also learn is that for years, Dr. Martens were made by another company called Solovair – in fact old pairs of Dr. Martens were dual-branded with Solovair. These days, the vast majority of Dr Martens are made cheaply in the Far East but retain a premium pricing. The interesting thing is that Solovair exists as a stand-alone brand making the boots in original Dr. Martens fashion; with the same design, in England and for similar money. They are generally considered a superior product. Incidentally, here is the worldwide popularity of the term Solovair.

10. Solovair – worldwide – since 2004

The problems with Dr. Martens the company is that they used to be made in England, they used to be high quality, they used to be fashionable and they used to have a good balance sheet before Permira held it for a number of years. There remains a brand value in there somewhere but the longer they make lower-quality products, the more that brand value will diminish. Is that brand value worth more than the debt? That is a difficult question to answer. In 2013, the whole company was bought by Permira for £300m; the current debt load is £600m.

You can make all sorts of inferences about valuation based on the figures that the company is currently generating but without labouring the point, those figures were generated by a company that either had peaked or nearly peaked in popularity. For me, there is a very real risk that the value of this company could be lower than the debt load. I used to sit next to a guy in the City who described poor investments with the phrase ‘I wouldn’t touch that with the rough end of a ragman’s trumpet’. Never really fully understood that phrase, but I know it applies to Dr. Martens. Avoid.

Aston Martin Lagonda, Intercooler Podcast


Aston Martin Lagonda is a British car manufacturer that was founded in 1913. It became the Aston Martin that most people think of from 1947 when British industrialist, Sir David Brown acquired the company and placed it within his existing tractor business. It is from him that many Aston Martins obtained the ‘DB’ moniker for ‘David Brown’ such as the Aston Martin DB5, which featured in Goldfinger. It is a slight exaggeration (but only a slight one) to say that rarely in its 111-year history has it turned a profit.

In modern times it has been owned by Ford Motor Company (until 2007) and private enterprises (until 2018). In 2014, whilst still in private hands, Mercedes-Benz and Aston Martin entered a partnership where the former would provide engines and electrical systems to the latter with Mercedes-Benz taking a 5% stake in Aston Martin.

The business was listed in London in late 2018. The business wasn’t in a good state but came to market with a lofty valuation and the poor share price performance since is a reflection of this fact. From 2020 onwards, Lawrence Stroll began building up a sizeable stake in the business and installed himself as Executive Chairman.


Ordinarily, I provide reviews from announcements made by the company but this week a podcast I listen to, unrelated to investment, piqued my interest. In this week’s Intercooler Podcast, Andrew Frankel, a well-regarded car journalist with a passing resemblance to Jean Reno, reported back on a lunch he had had with Mr Stroll. The main takeaway was that the company had, more or less, just completed a difficult four-year turn-around period where a lot of problems had been solved. Moving forwards, he believes that the company is very well positioned and could be selling >10,000 cars per year in as little as three years’ time. From 6,620 last year, that would be a 50% increase. There seemed to be an ebullience about how good the prospects are for the company now that the balance sheet was fixed via equity injections and the quality of the current product set had improved. The forthcoming re-vamp of the DBX SUV, in particular, could be enormously profitable should the company execute it well.


Lawrence Stroll is a very successful businessman that is known to be a tough operator. In the four years since becoming Executive Chairman, the group has had four CEOs. Further, the very fact of the word ‘Executive’ ahead of ‘Chairman’ will put many off, but on the whole, my view is that he bought 25% in the business partly because he could, but mainly because he thinks he can make buckets of money from it. Until listening to this podcast, I’d sort of dismissed Aston Martin as ex Private Equity fluff that was best avoided. At the minute I’m not sure what to think but I’m interested enough to at least start following the story a lot closer.

In the 1990s Porsche was in serious trouble. It was saved by the rationalisation of the product range with the then-new Boxster sharing significant parts with the contemporaneous 911. Once the company was stable, it became very profitable following the move into SUVs with the introduction of the Cayenne. Aston Martin of today is not a repeat of Porsche c. 2004 but it certainly seems to rhyme.

One to watch.


Jamie Ward

Jamie owns none of the stocks mentioned.

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