personal investment blog

WE NEED TO TAX ASSETS

WE NEED TO TAX ASSETS

20 Jun 2017

Nearly every commentator admits that he or she was wrong about the recent election, in particular their belief that no one with a modicum of responsible judgement would vote for Jeremy Corbyn. I also was wrong when I wrote this: Just as the Labour party cannot afford to be a blunt advocate of public spending because it knows that government debt is critically...

Are you rich and is everything your fault?

Are you rich and is everything your fault?

28 Apr 2017

THE PARADOX OF SPENDTHRIFT AUSTERITY It may be stretching a point to say that any of the political parties in the forthcoming “snap” election will make interesting financial arguments but it does seem that the days of competitive spending pledges might be behind us. That would be a relief and at least we could say that the continuing nine year fallout from the...

Report on Q1 2017

Report on Q1 2017

1 Apr 2017

The UK stock market had a sound quarter with the post Brexit vote devaluation effect fading. The FTSE 250 resumed its customary outperformance. It rose by 5.1% in Q1 compared to 2.9% for the FTSE. This is typically a sign that people are feeling less defensive or fearful. Given the somewhat alarmist nature of news headlines in the last months this might seem...

The crumbling social contract

The crumbling social contract

15 Mar 2017

THE LAND OF THE FREE-FROM-RESPONSIBILTY The Occupy protesters (what was it they were protesting about again?) used to chant “We are the 99%”. The 1% were portrayed as the selfish and/or crooked people who had appropriated most of the wealth. It is demonstrably easy to be part of the 99% – in fact, it’s darned hard not to be. Rarely had so many ever been...

Investing for our old age

Investing for our old age

16 Jan 2017

Here are two pieces of great news for the citizens of relatively rich, relatively developed, relatively Western economies. Women can increasingly combine career and motherhood rather than having to choose between them: and improved healthcare (if not exercise and diet) mean that people on average are living to greater ages. Fifty years ago, the UK average...

Report on Q4 2016

Report on Q4 2016

13 Jan 2017

The UK stock market continued to climb the wall of fear or crawl forward in the sea of uncertainty or whatever you will in Q4. The FTSE 100 outperformed the FTSE 250 for the third time (out of four quarters) in 2016. Rising interest rates helped the UK banks index rise by 16% in the quarter. Some people think that lending margins will improve as interest rates...

FIVE FALSE TRUTHS

FIVE FALSE TRUTHS

13 Dec 2016

Imagine that your morning post contains an envelope that has your name and address written by hand in block capitals. Inside is a note, written by the same unknown hand that says, “YOU ARE SMELLY”. What do you make of that? For a moment you will regret having two helpings of chilli con carne last night and you will think back to last Thursday when you had a...

Why investors love uncertainty

Why investors love uncertainty

18 Oct 2016

Every five minutes, someone, somewhere, says that “markets hate uncertainty”. This is an example of anthropomorphism or the attribution of human characteristics to animals, objects or ideas. Benjamin Graham, the father of value investing according to Warren Buffet, wrote about Mr Market, an obliging business partner who offers to buy you out or sell you a...

Report on Q3 2016

Report on Q3 2016

5 Oct 2016

The second quarter ended just after the Brexit vote and the stock markets were in a state of shock. The FTSE 100, which is where frightened investors go to hide, had one of its rare periods of outperformance over the FTSE 250 in Q2. (The FTSE 100 includes large multinational businesses, the FTSE 250 is a better reflection of the UK economy). In Q3, the FTSE 100...

How QE plays out – and other guesses

How QE plays out – and other guesses

15 Sep 2016

This is a follow up to my last post about how QE is a wrecking ball that distorts financial markets and economic decision making. I have no opinion – despite a sceptical mindset – about whether QE is being applied correctly or about whether it will work. I doubt if even hindsight will allow people to agree about whether it succeeded. As an investor I need...

QE : a wrecking ball to crack a nut

QE : a wrecking ball to crack a nut

3 Sep 2016

On 4 August 2016, the Bank of England expanded the QE (quantitative easing) programme that it had begun in 2009. This expansion, which now includes corporate bonds as well as gilts, is ostensibly in response to the Brexit referendum result on 24 June. The Treasury and the Bank had warned that Brexit could lead to a bad recession. You might need reminding that...

Report on Q2 2016

Report on Q2 2016

6 Jul 2016

On the face of it, the quarter was dominated by the UK Brexit referendum decision on 24 June though, in the main, trends were consistent throughout the quarter. The FTSE 100, which delivers its rare moments of outperformance in times of nervousness, had continued to do better than the FTSE 250 up to 23 June. After the referendum result this trend was...

Hidden charms of Mrs M&S

Hidden charms of Mrs M&S

5 Jun 2016

Back in November one of my first ever blogs was about M&S. The shares were trading at 389p and I wrote that only takeover interest could justify a higher price but I thought that the pension liabilities made that a very unlikely prospect. For reasons which were and remain unclear to me the shares touched 600p last year but M&S has not yet been taken...

Four kinds of bias

Four kinds of bias

30 May 2016

1)      SELECTIVE USE OF FACTS It is not news to say that people will select facts and opinions that appear to favour their side of an argument. There was a good example last week from the pro-Remain CBI which wants to demonstrate that the possibility of Brexit is already hurting investment. “Overall, surveys of investment intentions have shown a...

Trade Agreements – the New Protectionism

Trade Agreements – the New Protectionism

2 May 2016

THE “UNREPEATABLE” MISTAKES OF THE 1930s According to the IMF (and pretty much everyone else, I believe) the Great Depression of the 1930s was made worse by protectionism. After the financial crisis that blew up in 2008, leaders of the Group of 20 (G-20) economies pledged to “refrain from raising new barriers to investment or to trade in goods and services,...

Report on Q1 2016

Report on Q1 2016

8 Apr 2016

Following a nervous rally in Q4, in Q1 the UK stock market was merely nervous. For the first time in seven quarters, the FTSE 100 (-1.2%) outperformed the FTSE 250 (-3.0%). This is a small indication that investors were becoming more worried about the outlook for earnings, I suppose. Since the Fed made the first tiny upward move in rates (0.25% in December),...

BREXIT special. Does politics affect asset prices?

BREXIT special. Does politics affect asset prices?

15 Mar 2016

A STUPID ARGUMENT THAT YOU WILL CERTAINLY HEAR ENDLESSLY One of the most commonly and confidently asserted falsehoods is that markets hate uncertainty. Without uncertainty there would be nothing for markets to price. The pricing of assets is about probability. All questions of probability involve uncertainty. If you ever meet someone who believes in certainty...

OSTRICH POST II – DADT

OSTRICH POST II – DADT

25 Jan 2016

Don’t Ask, Don’t Tell (DADT) was a (now repealed) US official policy that insisted that gays serving in the military must take part in a cover-up. On the grounds that they kept their sexual preferences a secret they were excused from being openly bullied, discriminated against and dismissed. Something that everyone knew to be untrue (the idea that the US...

Report on Q4 2015

Report on Q4 2015

5 Jan 2016

Following a very wobbly third quarter, we saw a nervous rally in Q4. As usual, the FTSE 250 (+4.5%) did better than the All Share (+3.5%) and the FTSE 100 (+3.1%). As a reminder, over ten years the 250 has performed more than ten times as well as the 100, yet index trackers continue to offer the 100 or the All Share (than which the 250 returned 5x over 10...

Melting capex

Melting capex

24 Dec 2015

This seems to be a time in which people have a touching faith in the idea that progress can be achieved through international negotiations. Certainly, the mutual back-slapping following the Conference Of Parties (COP21) in Paris implied that a new era of cooperation has arrived. COP21 had 25,000 official delegates and an estimated further 25,000 fellow...