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•142 The 100 Greatest Business Ideas of All Time

Idea 80 – Keeping on track

Unit trusts that track the FTSE 100 index artificially inflate the share price of the
biggest companies in the land, while ensuring that those dropping out of the FTSE
100 will find it very difficult to recover. This is very similar to the creation of the
Premier League, which did the same thing for football clubs.

Idea 81 – Not so efficient savings

The efficient market is held to be true by the professionals. Since the efficient market
hypothesis says that there is nothing a private investor can do to help themselves, they
have to allow the professionals to earn huge commissions by churning their portfolios.

Idea 82 – Which Investment do you Trust?

In the late 1980s my wife did some work on understanding investment trusts as
opposed to the unit trusts she had been used to buying. She raised this with our
IFA. ‘Why do you never recommend investment trusts? I have read of some good
reasons why they can be expected to outperform unit trusts.’ The reply was indirect,
but made it clear that he would not be changing his policy.

Some weeks later he sent my wife a brochure for an investment trust. We
wondered at this, until the same day, I read in the Financial Times of the first investment
trust managers to offer sales commission to IFAs. You’ll find it hard to believe that
it was the very manager our IFA had changed his policy to recommend.

‘Cecil Graham: What is a cynic?
‘Lord Darlington: A man who knows the price of everything and the value of
nothing.’

Oscar Wilde (1854–1900)