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 strange but as ever when something is on the front page of the news it is generally already absorbed by the stock market.         

The rollercoaster performance of gilts continued. Having risen to 1.41% in December 2016, the 10 year gilt yield has sunk again to 1.23%. Many financial commentators talk as if the return of inflation is a certainty but the bond market apparently does not believe it. I was thinking seriously about investing modestly in long-dated gilts if the 10 year yield went above 1.5% but it didn’t happen and for now that ship is sailing away.

In January I wrote about investing with a view to changing demographics and the rapidly growing elderly population. I recommended three shares. McCarthy & Stone – which builds retirement homes – has done quite well. It has risen 17% from 162.5p to 190p. Saga – which offers insurance and other services tailored for the over 50s – is up by 6% (to 203p) and the share price appears to be recovering nicely from the trauma of having 68% of its stock drip fed through various placings over a period of less than two years.

The disappointment has been Pets At Home which delivered a somewhat bleak trading update due to its failure to increase sales of merchandise in its stores. There was a better story from the services (vets and grooming) part of the business (which is where the growth is supposed to be). The shares are down by 24% to 180.5p where they yield 4.4%.

All three shares continue to be suggested by me as long term investments.     

In December 2016 I wrote about Five False Truths, one of which was that “EVERYONE LOVES THE NHS”. Here is an extract:

The brutal truth is that if you give something away for free your customers will happily adopt exactly that valuation. “Free at the point of use” is a very attractive offer but it does not make people love the NHS. Instead it makes them take it for granted. It makes them believe that no demand of their own is too much trouble for the good old, saintly NHS.

I mentioned having seen a sign in the Haematology clinic at Guy’s Hospital that said that there had been 47 missed appointments in the previous week. I went there again in January and the updated previous week missed appointments had risen to 64. I checked this week and the number had risen again to a barely believable 86. These appointments are said by the hospital to cost £275 each.

I have looked at the statistics for overall missed appointments in NHS England. In the final quarter of 2016 9.7% of all appointments were missed without any notice or attempt to reschedule. Shocking as this statistic seems to be the trend has been improving. In 2009 11.8% of all appointments were missed.


So why have missed appointments nearly doubled at Guy’s haematology department? A friend of mine has suggested that the signs pointing out how many people don’t show up are misguided because they give the message that such behaviour must be acceptable if so many people are doing it. Instead of feeling shamed, people feel vindicated by the sense that they are part of a crowd

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