Top ten shares to buy in a K-shaped recovery for the economy (as well as Bitcoin)

Comment: fund management house Ruffer says we must prepare for an inflationary world

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18 January 2021

The Bank of England predicted a V-shape. That turned into the bathtub shape, then the square root shape. Now, welcome, please, the K-shaped recovery.

Courtesy of the fund managers at Ruffer Investment, the new paradigm consists of dramatic winners (the top half of the letter “K”) thriving at the expense of dramatic losers (the bottom half).

Some classic Ks: everyone is on Zoom and Peleton for their meetings and workouts, but offices and gyms are being forced to close. Deliveroo is to float at

£8 billion but more than 800 restaurants have closed. Boohoo waxes as Arcadia wanes.

People are also getting the Special K treatment. The rich are benefiting from surging asset prices due to low interest rates while millions are newly unemployed, on furlough, or clinging to jobs on reduced pay.

As Ruffer says: “The K is not OK”.

Politicians — witness Joe Biden — know this, and will push through tax rises, regulation on big business and Keynesian state investments in the economy.

Government debts will surge, but how to pay them down?

Austerity is a political no-no.

So, Ruffer reckons governments will let prices rise to inflate away the debt (with the added benefit of hitting asset prices and hurting the rich).

Ruffer’s been buying “protective” assets like gold, index-linked bonds and credit default swaps in case it’s hunch is right.

Should we follow?

Well, also in Ruffer’s anti-inflation armoury is Bitcoin, which has been at both the top and bottom of the K in a year.

That could affect your view of Ruffer’s predictions either way...

Ruffer’s top 10 UK picks

Ruffer made a decent fist of 2020 with overall net asset value jumping 13.5% compared with the FTSE All-Share’s 9.8% fall, gaining particularly in the second and third quarters as Bank and government stimulus boosted stock values. Ocado, Fujitsu and Sony were its top three performers and it rode a high wave with Bitcoin which it bought into later in the year. Bitcoin now makes up about 2.5% of its portfolio.