Good reads from around the Web.
Merryn Somerset-Webb might be the nearest thing we have to a punk writer on personal finance.
The FT columnist and editor of MoneyWeek has made a career out of provocative calls – not all of which turned out to be right, but most of which at least made you think.
This week she’s taken another sacred cow out back for a butchering, arguing it’s time to sell out of defined benefit pension schemes.
She writes in this weekend’s FT [Search result]:
Imagine you had invested in something back in 2009 and it had returned 25 per cent every year for the past seven years — a total return of about 480 per cent.
Then imagine that the value of that investment was 100 per cent linked to the bond market.
What would you do?
She’d sell it, she says, and she goes through the maths to show why.
Provocative stuff. I’m a humble blogger, not an FT columnist , and yet I’d be reticent about breaking this great taboo.
But Merryn is fearless – it’s time for her friend to cash in his defined benefit scheme for £300,000 she reckons:
Is his transfer value now so high that it is worth selling?
I think it is.
The first thing to say is that the price is very unlikely ever to be higher than 40 times the income.
Instinct tells you that’s a bubble price and, if the pace of the rise in the transfer value alone isn’t enough to scream “bubble trouble” at you, any proper analysis of the bond market has been telling you the same thing for a few years now.
What do you think? What’s Somerset-Webb missing?
(Do read the article before answering, as she goes through several scenarios. And clearly “you sell out, put it into shares, and then we turn into Japan” will be a counter-argument to almost any investment decision…)
Happy weekending. Don’t shop until you drop.
From the blogs
Making good use of the things that we find…
- 10,000 hours or ten minutes to be a great investor? – Charlie Bilello
- Slow down to go faster – Bason Asset Management
- Mental scar tissue – The Irrelevant Investor
- 80% of fund management biz is redundant – Centre for Policy Studies
- Gina Miller on the recent FCA report [Video] – Evidence-based Investor
- Why investors and management don’t see eye to eye – Oddball Stocks
- The M&A lesson even shrewd managers miss – The Value Perspective
- Rising rates can be good for high-yield credit – A/B Context
- Terminal values and discounted cash flows – Musings on Markets
- When I was a boy – The Aleph Blog
- Animal spirits can’t be modeled – The Reformed Broker
- Five types of retirement – Money Boss
- Great minds disagree about the value premium – Alpha Architect
- Sleeping and napping through bubbles – Investing Caffeine
- An accidental tourist in the world of matched betting – S.L.I.S.
- Monevator reader’s Facebook group for frugal Londoners – Facebook
- Networking sucks because people don’t give a shit – Jon Westenberg
- Every business is a lifestyle business – Bryce Roberts
Product of the week: I’m not really sure about ethical Christmas gift ideas, such as those highlighted by The Guardian. Of course I’m not against helping others. But there are plenty of opportunities to do that all year without trying to chisel a smile out of your 11-year old nephew when he learns you’ve given a Peruvian a goat instead of getting him FIFA 17. Then again, Christmas gifts can be the worst landfill-bound plastic tat. Bah humbug. Goats all round.
Mainstream media money
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 of that site.1
- John Kay: How to be your own investment manager [Search result] – FT
- OPEC’s history shows oil cut deal just the beginning – Bloomberg
- Ultimate stockpickers: Top 10 buys and sells – Morningstar
- Fast-reforming India is an exciting place for investors – Telegraph
- Everything changed in the month of November – Bloomberg
- US dividends aren’t as overvalued as you think – Morningstar
- A deep dive into the legendary Medallion Fund – Bloomberg
A word from a broker
- Oil prices – and inflation – are headed higher – TD Direct
- Greene King: Hangover looming – Hargreaves Lansdown
Other stuff worth reading
- How long will £100K last if you withdraw £4K a year? – Telegraph
- Which online platform is the cheapest? [Search result] – FT
- Zopa puts retail investors on hold as borrowers dry up [Search result] – FT
- Brexit vote halves British demand for Spanish property – The Guardian
- Should you buy a Christmas tree this weekend? – The Guardian
- 89-year old gets job to avoid “dying of boredom” – The Guardian
- Silicon Valley has an empathy vacuum – The New Yorker
- Flying cars are closer than you think – The Verge
Book of the week: The Ways To Wealth has compiled a list of the best investing books of all-time by trawling the reading lists of top finance universities and Wall Street firms. Pretty cool, though there’s a US-bias and the links are American, too. So – spoilers – I’ll point you to the top three on Amazon UK: The Intelligent Investor, You Can Be A Stock Market Genius, and The Essays of Warren Buffett. I’ve read them all and they’re great, but they’re certainly for active investors. For passive investors we’re still flagging up Tim Hale’s Smarter Investing and Lars Kroijer’s Investing Demystified. (And yes, our book continues to be slow-baked down at Chateau Accumulator. It will be worth the wait!)
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- 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”. [↩]