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Weekend reading: Good money and investing books to give at Christmas

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What caught my eye this week.

I agree with Merryn Somerset-Web, who writes in the Financial Times this weekend that:

I’m concerned – and hardly alone in being concerned – about the bad rap capitalism is getting at the moment.

Despite pretty definitive proof that free markets are the best way to make the world richer, healthier and happier over the long term, some 40% of voters in the UK are positively keen to elect a socialist prime minister, with a view to getting rid of the horrid thing that is capitalism.

Merryn believes fiction is the best way to win socialists over to the wonders of capitalism, but she struggles to find many good candidates. Starving poets and bestselling authors alike tend to argue money is the root of most evils, along with sex, love, and magical rings fashioned in Mordor.

In the end the best pro-market ideas she can come up with are Great Expectations, Time Will Run Back, Kane and Abel, and Career Girls.

Rather stick to the facts? For those like me whose gift-giving runs to the doggedly didactic, here are my six new non-fiction ideas to give that special someone who won’t take offence:

  • Adaptive Markets, by Andrew Lo – A critique of the efficient market hypothesis, I may post Lo’s ambitious book down to The Accumulator with a wry “bah humbug!”
  • Investing Demystified, by Lars Kroijer – New 2017 edition! Friend of Monevator and ex-hedge fund trader makes the cast iron case for passive investing.
  • This Wisdom of Finance, by Mihir Desai – Really interesting attempt to weave beloved humanities and the much-scorned financial world together. (Give it to Merryn, if you’re seeing her!)
  • A Man for All Markets, by Edward Thorpe – A humble genius tells us how he beat the system in Las Vegas and on Wall Street.
  • Living Off Your Money, by Michael McClung – This new approach to retirement spending has fired the imagination of many Monevator readers. See The Accumulator’s big review.
  • Smarter Investing, by Tim Hale – Okay, so even the latest edition is a couple of years old, but it remains my co-blogger’s recommended read for new investors.

And with that, I’ll wish you all a happy Christmas. 🙂

Thanks for spending some time with Monevator this year. It’s a busy, noisy world, and we do appreciate anyone who finds their way to our humble blog.

See you in 2018!

From Monevator

How to work out which investing platform is cheapest for you – Monevator

From the archive-ator: Memories from the dotcom boom and bust – Monevator [and some crazier stories from Joe Fahmy]

News

Note: Some links are Google search results – in PC/desktop view these enable you to click through to read the piece without being a paid subscriber.1

Scottish income tax rates to rise above the rest of the UK – Telegraph

Household finances worst since Brexit vote, says Bank of England – Guardian

UK rents fall for the first time in five years [Gasp! Landlords couldn’t just hike rents to pass on the tax increases as threatened, after all! 🙂 ]Telegraph

Graph showing how number of homes for sale per branch of estate agents has fallen

Housing market remains sluggish as Budget stamp duty giveaway fails to dent gloom – Telegraph

Products and services

Moneybox app launches Lifetime Isa – Moneybox

Bitcoin for investors: what the experts think [Search result]FT

Barclays latest lender to offer first time buyers buy-to-let mortgages – Telegraph

Sign up via link for award-winning budgeting app Squirrel and we both get £15 – Squirrel

Is a £3,000 a year fee to help invest a £200,000 pension a fair price? – ThisIsMoney

New ONS life expectancy calculator [Scroll down to point four]ONS

Used car pile-up signals a diversion in the auto trade [Search result]FT

Solar projects in Africa offer up to 6% return (and good vibes) but beware risks – Guardian

More than one million UK homes stuck with too-slow broadband – Guardian

Challenger banks top the Best Buy tables for those who can lock away cash – ThisIsMoney

Comment and opinion

IDGAF > FOMO – Pragmatic Capitalism

8 ideas for financial planning in a low return environment [Slideshow]Flirting with Models

Solving hard problems with simple ideas – Morgan Housel

Is it worth increasing pension payments by 1%, or better to enjoy it now? – ThisIsMoney

Investing: The evidence – Part One [Video]YouTube

Why I hate voluntary service charges in restaurants [Search result]FT

The past, present, and future of emerging stock markets – Morningstar

Financial planning priorities – Oblivious Investor

What a complacent investor looks like – A Wealth of Common Sense

Here come the robot advisors [Podcast, Canadian but relevant]Canadian Couch Potato

Diversification always mattered – Abnormal Returns

FTSE 250: Valuation and forecast – UK Value Investor

Betting on bitcoin? You must be prepared to lose it all – CBS News

Richard Thaler: How human behaviour differs from traditional economic models – AAII

Brexit

Guidelines for the next stage of talks – BBC

Conservatives split on life after Brexit – BBC

Brexit deal confirms there’s a window to retire to the E.U. – Retirement Investing Today

Keir Starmer applauds the Tories who put Parliament before party – Twitter

In contrast, how an ideological Brexiteer responds to Parliament being sovereign – Twitter

Off our beat

What ‘black boxes’ in cars reveal about our driving habits – Guardian

And finally…

“Every time you confront something painful, you are at a potentially important juncture in your life – you have the opportunity to choose healthy and painful truth or unhealthy but comfortable delusion.”
– Ray Dalio, Principles

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  1. Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”. []

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{ 30 comments… add one }
  • 1 Tyro December 16, 2017, 12:59 pm

    Merry Christmas to you and TA too! And wishing you both a prosperous and …….. [insert preferred adjective] 2018! Thanks again for this terrific blog.

    Tyro

  • 2 Ben December 16, 2017, 1:07 pm

    your squirel link doesnt seem to be working.

  • 3 The Investor December 16, 2017, 1:52 pm

    @Ben — Oops, thanks. Fixed now!

    @Tyro — Cheers!

  • 4 Neverland December 16, 2017, 4:24 pm

    Seems there is some confused thinking here

    Free market capitalism isn’t proved to result in actually making for a universally wealthy and stable society – a participatory democracy with universal sufferage is

    Democracy =/= free market capitalism

    If you think free market capitalism is generally good for the vast bulk of people I suggest you read up about the exploitation of workers during the industrial revolution in England in the late 17th and 18th century

    Until the government introduced regulations life for most workers was actually pretty horrid – although the small cartel of factory owners, merchants and bankers got very rich

    Businessmen just naturally form oligopolies to cement their position Adam Smith wrote that on wealth of nations

    Only governments can break those up and only democracies will elect governments with the mandate to do so

    It isn’t a coincidence that the two democracies that have gone the furthest towards free market capitalism (USA and the UK) are also the two most dysfunctional and divided

    By contrast democracies with models where capitalism is much more controlled by the state like Scandinavia, Canada and Germany seem to be much more cohesive

  • 5 Sara December 16, 2017, 4:36 pm

    The Financial Times would say that, wouldn’t they? They are the winners. (Is there any irony in the fact that I’d have to pay to read the article!). In a rich country like the UK where the only thing opening on the High Street is a foodbank and only people lucky enough to live in a city have access to a public library then there IS something wrong with capitalism. It may not be capitalism per say that’s the problem but the massive inequality it is creating does need to be controlled.
    Do I want to be locked behind my security gates while the starving hordes riot outside? – No, I do not. An exaggeration I know but devil take the hindmost seems a really poor way to make the world a better place.

    Now I’ve had a moan, Happy Christmas to you both and to my fellow regular readers and a Happy New Year where all the surprises are good ones 🙂

  • 6 FI Warrior December 16, 2017, 4:45 pm

    Ms Web is often interesting and never afraid of making unpopular points if she believes them to be true. However, if many in those positions able to influence the laypeople had attempted (or done more) to educate the wo/man in the street on what real capitalism is, they wouldn’t look at failed economic models as if there was only a binary choice.

    As such, the average person in the street has no idea that we are not living in a healthy capitalist system, just suffering a perversion of it, (as warned by Adam Smith) a winner-takes-all, cartelist, antithesis of free market checks and balances. Given the speed with which our rentier, obviously-rigged, reality appears, it’s no surprise then that the masses reckon (as they did with their brexit reaction) that anything else probably can’t be worse.

    Standing cold, soaked, tired and wretched on a bleak midwintery, windswept, rail platform after a long hard day’s work, it’s perfectly logical someone will think that nationalising the railways (to give just one of many possible good examples) would at the very least take the punchbowl away from the CEOs of those companies who’ve won licences to **** the taxpayers/passengers. There comes a point where people are so fed up that it doesn’t actually matter if it’s true, they just want to share their pain; it might not improve their lot, but they’ll go for it if there’s a chance it’ll bring the winners down.

  • 7 Ben December 16, 2017, 5:25 pm

    re “Used car pile-up signals a diversion in the auto trade”
    im not entirely convinced by his leasing to ‘short’ the used car market. perhaps i should go long by buying that nice expensive BMW.
    More seriously though, i wonder if you could short the used car market by buying some kind of gap insurance.

  • 8 Gaz December 16, 2017, 7:09 pm

    Merry Christmas Monevators! 🙂

  • 9 The Rhino December 16, 2017, 8:28 pm

    “Every time you confront something painful, you are at a potentially important juncture in your life – you have the opportunity to choose healthy and painful truth or unhealthy but comfortable delusion.”

    This sounds great, what a noble furrow to plough – the rational optimist seeking truth no matter the cost to his comfort!

    Complete bollocks though isn’t it. I’ve repeatedly noted over the years that those I’ve come across that are mad as cheese and riddled with nonsensical delusions don’t seem to suffer a jot for their sins. They’ve all got food, drink, jobs, somewhere to live, partners, kids, friends etc. etc.

    It makes sod all difference whether you choose healthy and painful truth or unhealthy but comfortable delusion. The human condition will ensure you’re mildly dissatisfied most of the time regardless. And to cap it off, its entirely subjective – one mans painful truth is another’s comfy delusion and vice versa..

    Merry xmas one and all – hohoho

  • 10 Nick December 16, 2017, 8:58 pm

    Hi TI,

    Thanks for the time and effort you put into the site, it was of great help when I took my first steps into investing a year and a half ago and I have eagerly awaited this reading list each week ever since.

    Something I’m curious about, maybe you or other posters could chime in on.
    Although you don’t actually say it I suspect you agree with Merryn that reading up on capitalism would bring the doubters round. I wonder if you have done the opposite and read any socialist literature or critiques of capitalism? Merryns right that its difficult to make an informed decision if you haven’t heard the full argument but that works both ways.
    Personally, I would say I’m reasonably clued up on the sales pitch for capitalism but I’ve never really been exposed to any of the critisisms or alternatives so I can’t really make an informed decision either way on the capitalism vs. socialism debate.
    All I know is I feel like I’m getting a bum deal as a millenial (I hate that term btw.). My entire working life has been in the aftermath of the GFC and thanks to the brexit I didn’t vote for we’ve probably got another 10 years of stagnation and uncertainty ahead of us. Is it any wonder I doubt the claim that this is as good as it gets? The status quo clearly isn’t working for a lot people and how many of us really understand the alternatives that are being suggested well enough to dismiss them?
    I think I bought Tim Hales following a recommendation on this site but I’ll be ignoring them this xmas and read some socialist propaganda instead to see how the kool-aid tastes.

  • 11 Craig December 16, 2017, 11:03 pm

    The proof – such that it is – seems pretty clear that the social democratic variant of advanced capitalism (viz, Scandinavia) leads to happier and wealthier societies than the British variant.

    Indeed, a semi-rational liberal capitalism (borrow to invest when interest rates and productivity growth are so low), interfere/regulate those aspects of the economy/society which are performing poorly (the housing market) rather than those which are fairly successful (the NHS, universities) would do rather better than the British variant.

    What’s extraordinary is that the British political elite has tilted so far right-wards that it has been left to the most left-wing man in the British Parliament to make the case for moderate social democracy and sensible state intervention. Indeed, for the UK to become a normal West European country.

  • 12 wephway December 16, 2017, 11:10 pm

    It’s an interesting one because it’s not entirely clear that Corbyn is a socialist, even if he claims to be one. I mean, so far he’s talked about nationalising the railways and utilities, and spending more on public services and so on, but he is still very far from advocating a pure socialist society. If you read the papers though you’d think that Corbyn was some sort of die hard Marxist terrorist – this is not very helpful to the debate.

    There is no such thing as pure capitalism either – even such a thing as basic as a patent requires rules and enforcement (which need to be funded through taxation), and without patents I’m not sure capitalism would work. Capitalism works well to drive growth and distribute goods but unfettered capitalism leads to monopolies, risk taking, poverty, and environmental destruction.

    I’m no Corbynista but the situation we have at the moment is that the benefits of economic growth over the last 10 years seem to have gone to the richest 1% only and that is why people are turning to things like Brexit and Corbyn. I agree we need to stand up for capitalism but we need to have a drastic rethink of how it works and consider ideas such as taxing wealth (rather than income), a basic income, cracking down on tax avoidance (which probably requires international rules), and so on.

    Anyway, I’ll get off my soapbox now! Merry Christmas everyone,
    Wephway

  • 13 UK Value Investor December 17, 2017, 11:12 am

    “Free markets are good” is just flat out wrong. I certainly don’t want Heinz to be “free” to thicken my soup with brick dust, unless I’m “free” to shoot the CEO when I find out (because of course we’d also be “free” to buy Uzis).

    A binary debate about capitalism or socialism is pointless anyway. Neither exists in pure form in the real world. Instead we have a mix of both and the debate should be about what sort of mix, not one or the other. And of course you can have good and bad variants of capitalism and socialism, or at least variants that operate under those names (e.g. Corporatocracy or Stalism).

    So let’s have 50 shades of capitalist/socialist grey, rather than mindless black or white.

    Merry Christmas!

  • 14 The Investor December 17, 2017, 2:21 pm

    @Nick and others — Hi! You write:

    Something I’m curious about, maybe you or other posters could chime in on. Although you don’t actually say it I suspect you agree with Merryn that reading up on capitalism would bring the doubters round. I wonder if you have done the opposite and read any socialist literature or critiques of capitalism? Merryns right that its difficult to make an informed decision if you haven’t heard the full argument but that works both ways.

    As I think I’ve alluded to a few times in the murky mists of this website, I have followed the well worn path summed up in the phrase “If you are not a communist at 20 you haven’t got a heart, and if you are not a capitalist at 30 you haven’t got a head”. People pick holes in that pithy aphorism, but I think it sums up a lot of what people go through when they imagine an ideal world — most often as a student with time/space to dream (especially in the old full grant and pre-tuition fee days) — and then their ideals make first contact with the enemy.

    Pretty quickly you discover (a) what people are really like, and how varied and (b) how incentives work.

    To answer your question directly, in my late teens / early 20s I read/skimmed some prime sources (e.g. Das Kapital, which to be honest is more a handbook to capitalism, and Anarchy, State and Utopia, which I devoured in my anarchist days (politically speaking, not mooning out of the top floor of a bus at policeman speaking!). I’ve read lots more accessible / secondary stuff, again mostly but not entirely in my 20s. I am definitely nothing like an expert on political economy etc but I have thought about it a lot.

    As I’ve mentioned before, I’ve voted for all the major parties (plus the Greens in local elections — I’d never vote for them as an MP) and could imagine doing so in various circumstances again. So I think I’m pretty broad/open-minded. 🙂

    My central position these days is that capitalism is great, and delivers abundant good where things are priced correctly. So for example, I don’t believe the value of the environment is priced correctly, and hence it’s trashed by corporations operating within the framework we’ve set up. In all but the textbooks, markets always come with rules. It’s up to us what rules we set — and generally, people talk a good game when watching Question Time or the Blue Planet but act very differently at the ballot box or even in the supermarket. I think blaming capitalism is to some extent the new blaming politicians or further back witches. The fault is not in the stars, but ourselves.

    Capitalism makes people richer and improves standards of living, unquestionably, but over time it is vulnerable to being gamed, which is mostly what people are talking about in these comments. (e.g. Rent seeking by high level execs on 400x the average salary). When I say that sort of thing in articles people call me a communist, so I must be getting some sort of balance in.

    If anyone else is curious/bored on this rainy Sunday, here’s a few more randomly remembered though-pieces I’ve written over the years related to these sorts of issues:

    http://monevator.com/consequences-of-income-inequality/

    http://monevator.com/margaret-thatchers-childish-children/

    http://monevator.com/environmental-degradation-and-wealth/

    http://monevator.com/how-to-be-a-capitalist/

    http://monevator.com/bash-bankers-bonuses-until-they-squeal/ (I was bashing bankers long before it was fashionable!)

    http://monevator.com/capitalism-3-0/

  • 15 John B December 17, 2017, 2:47 pm

    The job of government is set up a regulatory framework so capitalism can work efficiently, and a taxation regime to take the wealth it generates and redistribute it to the poor that capitalism abandons. Currently the Tories’ pursuit of Brexit will cripple capitalism, and the Labour party plan to redistribute wealth that isn’t there.

  • 16 Neverland December 17, 2017, 4:02 pm

    @john B

    Fact is there is plenty of money, probably about GBP 10 trillion at the end of last year

    “The total net worth of the United Kingdom at the end of 2015 was £8.8 trillion* in current prices, according to the annual national balance sheet published today by the Office for National Statistics. This was approximately £135,000 per head of the population, or £327,000 per household.” ONS, August 2016

    *about half of this is property and land, it also excludes Britain’s large stock of overseas investments which is additional I think

    https://www.ons.gov.uk/news/news/ukworth88trillion

    Top 1% of the population own somewhere between an eighth and a quarter of this, top 10% own about half

    https://fullfact.org/europe/uk-wealth-1-percent/

    Don’t believe lies put about by stooges of right wing newspaper proprietors

  • 17 John B December 17, 2017, 7:58 pm

    Labour’s manifesto was claimed to cost £48bn annually, which would require a 1% tax on wealth (assuming collection costs and much avoidance), that’s quite a drag on wealth going forward. Of course the Tories will spend £50bn on a divorce bill, and probably have knocked more than that off the future economy with slow post-brexit growth.

    I’d rather the £135k was growing strongly due to capitalism than being spent in non-economic ways. I know you can argue money can’t be wasted, as it all gives a economic stimulus, but the multipliers can be very different according to strategies

  • 18 Darting December 17, 2017, 9:12 pm

    This whole premise is nonsense. The Labour party under Blair was the Conservative party in milder form, and the Labour party under Corbyn, is simple mixed economy mainstream European social democracy, with capitalism embraced, and only public services owned an run by the people of the country.

    Nationalised or largely nationalised railways for example are the rule in the rest of developed Europe, and a run better and cheaper than privatised ones in Britain.

    Trying to pretend Corbyn is trying to eliminate capitalism doesn’t do you any favours, and just makes you sound a bit foolish.

  • 19 Mathmo December 17, 2017, 10:42 pm

    Happy Christmas TI. Thanks for all your hard work keeping the site going this year. It is much appreciated.

    On the books — I’m struggling through Thorpe at the moment. Lots of stuff in there, but boy does his style grate with me. I’m biased to like the guy, but he really manages to turn an amazingly interesting life into an amazingly boring anecdote. Ho hum. First half was pretty good.

    Paul Lewis’ tipping article is worth reading the comment in the bottom from someone reporting themselves as an investor in London restaurants. Good insights.

  • 20 Hospitaller December 18, 2017, 12:50 am

    And a happy Christmas to you also. We really value your work here. Have an enjoyable rest.

  • 21 Dave December 18, 2017, 1:02 pm

    Came here to have a bit of a whinge about your puddle-deep level of thinking on the Socialism/Capitalism debate but was nice to see some incredibly thoughtful and more nuanced comments from your readership.

    Shows how far this country has fallen/is falling when a guy that wants to rebalance the festering capitalist framework (that this country is currently being eaten by) is made out to be a pariah.

    I’ve done my reading on both sides of the argument and the lazy “oh he’s a Marxist” from people that have barely heard of Kapital nevermind understood a few of its concepts is pretty cringey/rage-inducing. I know in my heart and mind that if we don’t turn away from the current unregulated Capitalism we have in this country now, that all our sensible investing won’t mean a thing – the masses will (rightly) riot against the rigged system, as has happened hundreds of times in history.

  • 22 e17jack December 18, 2017, 1:05 pm

    This website has been of great value to me this year (as i start my pension aged 36 ) and i have spent countless enjoyable hours reading articles from the archive as well as the much anticipated weekend links. Thank you so much for keeping it going and maintaining the regular posting regime.

    Thanks also to the regular commenters who add a lot to the debate! I have weaned myself off social media and also stopped reading comments on The Guardian and other sites because it just became too much ‘noise’ – but the standard of comment here is usually exceptional and informative.

    Merry Christmas one and all, and long live Monevator in 2018 and beyond!

  • 23 The Investor December 18, 2017, 1:40 pm

    @Dave @Darting — Fair point, in that my opening sentence was a bit ambiguous. I was referring to this part — “I’m concerned – and hardly alone in being concerned – about the bad rap capitalism is getting at the moment” — more than the second paragraph about Corbyn and the extent of his intentions. (It seemed a misquote not to include her own full motivation).

    My feeling from my invariably left-wing friends / Facebook etc is that I *never* read anyone posting anything good about capitalism. I mean literally never. In my links above my “Margaret Thatcher’s Childish Children” article goes into a bit of my thinking about that.

    Not new, but still relevant I feel.

  • 24 The Austrian December 18, 2017, 2:19 pm

    A good and very light-hearted film, based on an Arnold Bennett book, that illustrates the virtues of risk-taking, innovation and the dread word ‘profit’ is The Card, with Alec Guinness (https://en.wikipedia.org/wiki/The_Card_(1952_film)). Which is probably why it is very rarely shown.

    ‘Capitalism’ is a term like neo-liberalism, for many people it just means ‘the things I don’t like’. High taxes on income and consumption, plus a decade of QE and ZIRP have eaten the earnings of the under-40s, ‘Generation Rent’, while vastly distorting our economy towards those who already have real assets. The rich have got richer because of government intervention, not in spite of it. If you can’t save up, invest and build a material stake, be it towards FI, starting your own business, personal development or whatever, then the system is not working for you, and that’s all that matters. Yet somehow the culprit, largely thanks to the media I suppose, is somehow ‘capitalism’ or ‘markets’ and not the muddle-headed State and central banks that inflicted the tax and monetary policies on us….. it’s very peculiar.

  • 25 hosimpson December 18, 2017, 2:33 pm

    The Atlantic had a great article a couple of years ago about the market economy vs the market society. I wholeheartedly agree with every word of it.
    IMHO, to say that market capitalism is the source of all evil is lazy, dumb, and, quite frankly, hypocritical. It’s the same as saying that pipes are the source of all pollution. The markets are a very efficient mechanism for allocating resources within the framework in which they operate. It is our responsibility to decide what this framework should be.
    Merry Xmas, Winter Solstice, Hannukah, etc.

  • 26 Mark Meldon December 18, 2017, 3:01 pm

    “The Way We Live Now” by Anthony Trollope is a cracking read about Ponzi Schemes and unfettered greed! See https://en.wikipedia.org/wiki/The_Way_We_Live_Now for a synopsis. What goes around comes around.

    All the best for 2018!

  • 27 Neverland December 18, 2017, 8:47 pm

    If we are doing links this might be good preparation for the day Corbyn becomes PM:

    http://www.channel4.com/programmes/a-very-british-coup/on-demand/1867-001

    Its from channel 4 in 1989 when they did good tv not googlebox

  • 28 Stuart December 19, 2017, 2:54 pm

    I’d highly recommend Rob Carvers new book “Smart Portfolios” https://www.amazon.co.uk/Smart-Portfolios-maintaining-intelligent-investment/dp/085719531X for the more advanced investor

  • 29 John December 23, 2017, 12:50 pm

    My favorite fictional celebration of capitalism is Mark Twain’s “A Connecticut Yankee in King Arthur’s Court”. Full disclosure – I am a Yankee.

  • 30 GGG January 3, 2018, 2:03 pm

    Isn’t it clear though that the most capitalist countries are in fact thriving (e.g. U.S., Singapore and Hong Kong) and vice versa (Venezuela)…..

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