It’s hard to find friends of Facebook’s Initial Public Offering (IPO). Commentators are lining up to poke the social network’s prospects with a stick, and most aren’t hitting the like button.

From Reuters:

Here’s the thing about the big, honking 187-page prospectus Facebook filed late Wednesday. Once you dig past those headline numbers, the company itself ends up looking pretty unremarkable.

From Wall Street analysts:

Retired Neuberger Berman value investor and present CNBC commentator Gary Kaminsky observed that at similar multiples as Facebook, Google would be trading at $850 and Apple trading at $1250.

From CBS News:

At $5 per customer, Facebook is really bad at making money off its customer base.

And so on. Wearing my passive investor’s Helm of Much Smugness, I let the furore rage over my head. Whatever will be, will be – let the index decide.

But wait!

Facebook is going to be worth billions. It’s the pump primer for the tech bubble part II. Am I predestined to scoop up tons of the stuff as my tracker robotically swings into action, like an ASIMO sent to clean up a nuclear accident?

Most index trackers hold securities in proportion to their presence in the index that is followed by the fund. Give or take a few quirks in replication strategies it’s a financial game of Simon Says.

But what happens when an index tracker has to deal with big new IPOs?

Your exposure to Facebook

Any passive investor with a globally diversified portfolio is likely to hold an index tracker that covers the US market. How big a splashdown Facebook makes in your world will depend on:

• What index your tracker tracks.

• How the index admits new entrants.

• The size of the index.

• Your portfolio’s size and exposure to that tracker.

• Facebook’s market cap.1

So how much Facebook action would a regular 60:40 equity/bond portfolio get, in raw moolah terms?

Here’s one possible calculation, assuming:

1. Portfolio size = $100,000
2. US equity allocation of 50% = 30% of a 60:40 portfolio
3. Facebook’s market cap = $100 billion = 0.5% of index being tracked

Then:

(Portfolio size) x (US equity exposure) x (index exposure) = Facebook held

Substituting in:

$100,000 x 0.3 x 0.005 = $1502

That’s equivalent to 0.15% of our notional $100,000 portfolio. I reckon I can stand that kind of punt on one of the planet’s best known brands.

Signing up

Facebook (Ticker: FB) won’t hit the New York Stock Exchange (NYSE) or NASDAQ for another three to four months.

Even then it’s not going to instantly pop into your index tracker in a puff of hype.

The indices will take some time to grind into action and admit Facebook into the ranks. How that affects you depends, as mentioned above, on the index you track and its rules on new members.

UK passive investors may well get their US exposure from one of the following:

Index tracker	Index it replicates
HSBC American Index Fund	S&P 500
Vanguard US Index Fund	S&P Total Market Index
iShares MSCI World ETF	MSCI World
Vanguard FTSE Developed World ex-U.K.	FTSE Developed ex UK Index

Each index has its own brand method of carving up the investable US market.

Facebook’s impact upon a global index like MSCI World will be diluted by the fact that this benchmark monitors an investible universe worth $22.5 billion.

Facebook’s influence will be around twice as large in the well-known S&P 500 index that concentrates on US large cap companies worth over $11 billion.

Platinum membership: The S&P 500

If your index tracker follows the S&P 500, then you may well have to wait a while before you own a piece of Facebook. Google went public on August 25, 2004 but it didn’t gain entry to the S&P 500 until March 31, 2006.

Facebook only needs a market cap of $5 billion to get into the S&P 500, which is much less than its currently guesstimated valuation of $80-100 billion. But size alone is no passport to entry.

S&P 500 companies must also have a public float of 50%. That means half of the company’s shares must be tradable on a public exchange.

It’s thought only 5% of Facebook’s shares will be made publically available through the IPO. The rest will be controlled by management, employees, and early investors. Most are subject to various lock-ups.

Even when enough Facebook paper millionaires/billionaires cash out and start building rocket ships to Alpha Centauri, the final decision on entry is made by the S&P index selection committee. Its members stuff their pipe with a company’s financials, liquidity, and trading volume numbers, smoke it, and then make an announcement if the company gets in.

And even if a company has all the right chops, its industry sector mustn’t be over-subscribed and an existing member must be fit for elimination.

It all reminds me of the time I tried to get into the Gentleman’s Beefsteak Club.

Tufty Club membership: The S&P TMIX

In contrast, Facebook’s entry into the Vanguard US Equity Index fund is likely to be far swifter, because getting into its S&P Total Market Index (S&P TMIX) is about as tough as getting through the doors at McDonald’s.

The S&P TMIX offers exposure to large, mid, small, and micro cap companies that trade on the NYSE and NASDAQ.

In this case there is no:

• Minimum market cap
• Worries about the public float
• Bother with financial viability nonsense

The index is rebalanced quarterly, so it will only be a matter of weeks after Facebook’s IPO before it will be ushered into the S&P TMIX.

Facebook could be a relative lightweight

The weighting of Facebook in the indices may not match the heady $100 billion valuation being put on the company by the media, however.

Most indices – including the S&P 500 and S&P TMIX – calculate a company’s market cap using what is known as a ‘free-float methodology’.

The company’s share price is multiplied by the number of shares freely available in the market to determine its free-float market cap. It excludes shares sat on by company insiders, other public companies, and governments.

If only 5% of Facebook’s outstanding shares are made publicly available, then the impact on index trackers governed by the free-float methodology will be a fraction of the valuations hitting the headlines now.

Market impact costs

The mechanical responses of trackers to index changes make them easy pickings for hedge fund sharps and arbitrage bandits.

They lie in wait knowing exactly when a fat caravan of index trackers is coming down the road to buy and sell.

The arbitrageurs nip in first, driving up the prices of securities that the trackers must buy.

Worse, the tracker funds will have to sell the securities kicked out of the index (which the arbitrageurs have been furiously selling) and so they earn depressed prices on exit and pay inflated prices on entry.

When Berkshire Hathaway entered the S&P 500 in 2010, the price of its shares jumped almost 12% between the S&P’s announcement and the couple of weeks it took for the index trackers to make their move.

This index turnover cost is calculated by New York University Professor Antti Petajisto to equate to a drag on performance of 0.21-0.28% a year, between 1990 and 2005.

This isn’t a cost that would show up on any fee schedule, but would stealthily chip away at returns through tracking error. (Of course, a great many active funds are closet trackers enrobed in high fees, and so they suffer the same malaise).

You can avoid this problem with a synthetic ETF – mostly because it’s unlikely to hold any shares in the companies it notionally tracks – but then it may well be stuffed with Japanese small-caps, so you really need to know what you’re jumping into bed with.

Poke me, I must be dreaming

Of course, we’ll all be smiling if Facebook turns into the next Google.

And even if it doesn’t, the ponderous reflexes of index trackers will at least help passive investors avoid a Day One bloody nose if the internet giant, like so many IPOs, dives like a paper dart.

Take it steady,

The Accumulator

1. Most indices are weighted by market cap so that individual companies impact the index in proportion to their size. So a company that makes up 10% of the index will move the value of the index by 1% if its own share price moves by 10%. [↩]
2. Approximately £95. [↩]

Good reading from around the Web.

I had no sooner published this week’s article questioning expensive university degrees when the emails and comments started to arrive.

That’s gratifying if you’re a writer, and most were very nice. One or two weren’t happy, and thought I was suggesting everyone had to start a business. (I’m not! I’m really not!)

Equally, it also turns out I have more entrepreneurial subscribers than I knew about before I wrote that article. Apparently more millionaires, too.

Several doubters asked where all this free learning I alluded to could be found.

I’m not quite sure how they managed to email me – what with them not having had access to a computer and the Internet since 1993, presumably 🙂 – but anyway, it’s out there, on the Web.

It’s everywhere!

Just this week I discovered (from the Simolean Sense blog) an upcoming free lecture course from the top table of US academia on model thinking.

This kind of model thinking isn’t: You can never be too rich or too thin.

Rather it refers to the mental frameworks extolled by Charlie Munger, the sidekick of Warren Buffett.

From the course outline:

We live in a complex world with diverse people, firms, and governments whose behaviors aggregate to produce novel, unexpected phenomena. We see political uprisings, market crashes, and a never ending array of social trends. How do we make sense of it?

Models. Evidence shows that people who think with models consistently outperform those who don’t. And, moreover people who think with lots of models outperform people who use only one.

Why do models make us better thinkers?

Models help us to better organize information – to make sense of that fire hose or hairball of data (choose your metaphor) available on the Internet. Models improve our abilities to make accurate forecasts. They help us make better decisions and adopt more effective strategies. They even can improve our ability to design institutions and procedures.

The lectures come from Coursera, a new initiative from Stanford University.

Yes, that Stanford. I’ve already signed up.

[continue reading…]

I think going to university is now too expensive, time consuming, restrictive and potentially soul-destroying for people with talent to bother with anymore.

University has become a terrible deal, and most ambitious people shouldn’t go.

There, I said it.

I don’t know why it’s taken me so long to admit to myself that tuition fees, student loans, and the fact that any muppet who can write his or her own name now goes to university means it’s a waste of time to do so.

I suppose it’s because education is one of the central beliefs of being middle class in the Britain today.

Coming from a more working class background – with parents who strongly believed in education – it feels like pissing on the family photo album to make the case against going to university.

So be it.

I was among the first generation of my family to go to university. I benefited from a grant, and I didn’t have to pay fees. I invested my student loans.

My father, in contrast, got a scholarship to grammar school but when the time came to discuss whether he’d go to university – he said it wasn’t even raised. All his life he worked alongside people with degrees and Phds, wishing he had one.

That’s not an appeal to bring out the tiny violins.

It is to stress that I don’t lightly challenge the ubiquitous goal of going to university for youngsters with a bit of ambition.

And it’s to explain that I’m not some elitist snob for thinking it’s a positive sign that the craving for a university education may be fading at last.

Warning: This is a strident piece, aimed at provoking and inspiring those who want to do something different with their lives (whether it’s start a business, get rich, be financially free, or something unrelated to money). If you want to be normal, go to university and get into debt.

How I wasted my time from 18 to 21

It’s not as if I didn’t have a strong hint from my own university experience that it could potentially be a waste of time.

Having never enjoyed school, the first thing I did when I arrived at my top-flight university was to confirm I didn’t need to show up everyday in order to stay there.

No class register, no need to turn up!

I then proceeded to spend most of the next three years discovering women, music, poetry, and London. I read the NME over lecture notes, and created my own magazines and fanzines.

When I did go to lectures, I was spectacularly uninspired by all but about three of my tutors. Most were nice, smart people, but they spent a long time getting through a small part of the vast volumes of textbooks the university obliged me to acquire. There was also lots of diversionary tutorial-style stuff which wasn’t in the textbooks or on the syllabus – theoretically an advantage of a top-tier university education, but not great for passing exams.

“I was spectacularly uninspired by all but about three of my tutors.”

I didn’t waste my time with that. Instead I mainly crammed three or four weeks before the exams, and came out with a good degree.

I did a science / engineering degree, by the way – a terrible mistake for me, personally, which is another reason why you shouldn’t ask a 16-year old to decide where they want to waste three years of their life at great cost. Anyway, it wasn’t a less time-consuming arts degree, let alone something deeply spurious like a photography course or a diploma in fashion, so I had plenty of lectures to go to.

I just didn’t attend them, and it has never mattered since.

This isn’t a story about how I’m so smart that I didn’t need to be educated by lecturers. I was an idiot who sometimes didn’t know what exam I faced that day. I thought I knew more about life through literature than living it, and I made plenty of mistakes. But I was smart enough to realise it was more efficient to learn what I needed to know to pass my degree from books and friends than by sitting in lecture halls.

I’m also not ranting against a bad education. My alma mater is regularly named as among the best couple of dozen or so places in the world to go to university.

I ate caviar from the top table of the education system. I would have been better off skipping it for noodles from a Thai street vendor.

You don’t skip three years of life if you skip University

What about the wider university experience?

You know, quoting Oscar Wilde to bosom buddies under the clock tower at midnight, or meeting pioneering researchers, or simply learning not to be a teenage moron?

I think educated people mistake the progress they make growing up from 18 to 21 or 22 or 23 for the virtues of attending university.

You’d have made most of that progress anyway, as long as you weren’t stuck stacking shelves or masturbating between World of Warcraft sessions.

You can listen to inspiring people at the free lectures that happen in London and elsewhere every single day, or simply watch the TED lectures.

There’s an embarrassment of material out there that’s better than you’ll get in 95% of universities. And the Internet has made it easy to connect with like-minded individuals, too, whatever you want to learn more about. Why study alongside the third-rate when you can learn and even work with the best?

It’s true I met really interesting and stimulating people when I was in university.

However, they were also all idiots, just like any other 18-year olds and just like I was. Better to have met them in a job when they were older and wiser, or better yet in the field pursuing the same passion as me.

True, I did extracurricular activities in university that eventually helped me escape my dumb degree choice.

But were those opportunities a good reason to go in the first place? Why not cut out the middleman?

Too smart or too dumb to make education worth it

I’m not saying you don’t need to go to university because life is easy.

The truth is it hasn’t been so challenging for the young to collect and pay for the baubles of a supposedly respectable life – money, a house, a life partner, kids and a pension – since at least the 1940s.

What I am saying is that for most young people, university is no longer useful in helping you get there.

• Smart and tenacious people will waste three years when they could have been learning useful stuff in the real world (such as making contacts, and learning how to answer a phone in an office and be nice to workmates).

• Average people will be helped in the short term, but at the cost of £50,000 or so of student debts and spending most of their 20s and 30s paying it off, when instead they might have been discovering how not to be an average person.

• Intellectually mediocre people are probably better off chasing money from the start. There’s plenty of money out there in sales, various trades, or starting your own business and employing smart people who don’t know any better, or taking on average people with huge debts to service.

• Lazy people will find £50,000 buys a lot more food and beer in the Far East.

Note that if instead of going to university you simply doss about town or take a minimum wage job and do nothing on the side, then it’s possible – though not guaranteed – that you’d have been better off getting a degree and a lot of debt.

The world is tough, and you need to compete in it.

I’m just saying a degree isn’t anything like a free pass to success anymore.

The people who SHOULD go to university

There are a few people who should go to university – even though everyone who tries a bit now goes, and even though it’ll cost most of them a small fortune they can’t afford and stifle them with debt.

People who should go to university include:

• Rich kids without any better ideas.

• The poorest kids who get much of the costs paid for them.

• Anyone with a scholarship that pays for university, provided they are passionate (talented classical musicians, for example).

• Someone who is ABSOLUTELY CERTAIN a particular career is for them, and that it needs a degree (would-be doctors, for instance).

• University lecturers who get paid to turn up and teach students.

• People who get paid to clean up after students and university lecturers.

• Pretty girls with sugar daddies, to avoid being dull.

• Anyone attending the conferences that universities host to make extra money.

• Foreign students who help bring down our deficit by spending money here.

Almost everyone else should do something else.

Over-burdened bright young things

What if you’re especially academically gifted? Surely you should go to university?

If this were the 1960s, 1970s or even the 1980s, then I’d wholeheartedly agree.

Back then society, recognising your brains and your potential, would pluck you from the conveyor belt that was taking the others from cradle to grave via a mundane job for life, and expose you to new ideas, people, and opportunities.

And you wouldn’t even have to pay for it!

That’s the cherished cultural ideal of universities that makes it so hard for older people to admit that you shouldn’t rack up 5-10 years of your likely disposable income to pay off the debts you’ll get for going there today.

It was great back then. But it’s not like that anymore.

Today’s smart kids are so thoroughly brainwashed by the myth of educational excellence, so terrified of doing anything other than collecting qualifications and certificates, and so secretly fearful that everyone around them is cleverer and working harder than them, that they’d make a slave in a Siberian labour camp blush with guilt.

“That’s the cherished cultural ideal of universities that makes it so hard for older people to admit that you shouldn’t rack up 5-10 years disposable in debt.”

I’ve met these clever kids at the end of their university careers. They’re a weird mix of bewildered and arrogant, insecure and self-entitled. Many are borderline unemployable for a bit, and are more or less humoured in their first workplaces.

Oh most still go on to get decent jobs and so on, eventually. I’m not saying university is deadly, just that it’s dangerous, delusional, pointless, and wasteful – getting a degree is in that sense a bit like recreational drugs.

I can’t help thinking many of them would have been better off – certainly happier – if they’d skipped the whole farce.

I’m not sure what society gets out of it all, either. The innovation keeping us ahead of the Chinese and the Indians is mostly achieved by creative mavericks and dropouts, not by well-educated drones.

Maybe the mavericks need well-educated drones as workers? Or maybe we’d do better to encourage more mavericks.

Anyway, who cares what society needs.

This is your life we’re talking about, or the life of someone you care about. Think hard before you plump for over-education.

The rich dropouts

On the subject of mavericks and outsiders, I used to think university dropouts like Bill Gates, Steve Jobs, Mark Zuckerberg, Richard Branson, and the many others who achieve enormous wealth despite not learning to pass exams were the exceptions that proved the rule.

But as I’ve got older I’ve met a lot of self-made millionaires. I even count a handful among my friends.

Off the top of my head I can think of three millionaire friends or close associates who either went straight into work at 18 or else dropped out of university.

In contrast, I have one millionaire friend who dutifully did the super-educational thing. But he became a millionaire by being a banker, which is about the only way university still pays really big time, in the short run anyway.

Of course I know other people who completed university and became rich. My last boss is one, although the tens of millions he’s worth has nothing to do with his first class education.

He started his business on the side, while still at university, and that’s what made him rich.

Most of the other millionaire graduates I’ve met trace their success to taking a risk and doing something different – going into business, mainly – rather than to a degree.

Nearly all of these entrepreneurs could have started the careers at 18 and got the initial experience and contacts they used that way. A few could have simply read some books, got networking on the Internet, and skipped a first job in an office altogether.

University challenged

There are so many objections to the notion that university is a bad idea that it would take a university lecturer three months to drone through them all.

Let’s consider some.

How can I get a job without qualifications?

The sad truth is getting any job worth having is hard, and mainly comes down to experience and contacts. The sooner you can get those the better.

Kids choose fun but futile degrees in media or photography or fashion to try to get interesting jobs, but employers will still demand you work for free for months – if you’re very lucky – anyway.

Ignore the glossy university brochures. I’ve met many people who did these degrees, at great cost, who now work in the accounts department or similar.

Start doing what you want to do at 18, and be brilliant, if you must have a 9-5 job. Personally, I’d try finding some other way to make money.

What about jobs that demand qualifications?

It’s true that many businesses now recruit ‘graduates only’.

Given nearly everyone who can write and pay for a pint of milk is a graduate these days, that’s not exactly an intimidating hurdle – unless you’ve followed the advice of this article and skipped getting a degree altogether, in which case you’ll be momentarily stumped.

Ideally, I say avoid these sorts of jobs.

I saw on the news yesterday that Nestle is building an ‘academy’ at its new factory. If a chocolate maker feels it needs to train its own staff rather than leave it to universities, you should seriously wonder about the usefulness of what you’ll actually learn at them, as well as the competency of any company demanding evidence of a degree from you.

But if you must get a degree to do what you really want to do (are you sure?), then do it cheap by living with your parents, and having a part-time job instead of going to lectures. Read textbooks instead.

Or perhaps buy a degree on the Internet.

I want to do something that REALLY needs qualifications!

Okay, certain professions require teaching: I don’t want to have my heart operated on by someone who bluffed through exams using Wikipedia.

If you really want to be a vet, a doctor, or an architect – and I mean REALLY want to be one – then university is worth the cost.

You don’t need to necessarily start at 18, though.

One of my best friends did something really inspiring the other day. He left his cushy job in engineering – and a salary – to pursue his dream of a career in medicine.

At the age of 40! I was blown away.

How much better though that he does this at 40, when he knows what he wants, rather than sleepwalking at 18 into becoming an embittered box-ticking NHS robot who wishes he’d chosen to do something other than sticking his finger up bottoms all day.

I’ve met these lordly consultants and registrars, and I suspect many would be better for having lived a bit before becoming doctors, or at least for taking a career break.

My friend was an idiot at 18. No matter, I was there, and I was an idiot, too.

If you’re not taking advantage of what being 18 means and being a bit of a moron, then you’re doing something wrong.

Much more wrong than choosing not to waste £50,000 going to university.

I want to meet interesting people!

I have nothing against this aspiration, and I should pursue it more myself.

But it’s not a good reason to go to university.

You’ll notice heavyweight magazines like Prospect or The Economist or The London Review of Books don’t stuff their pages full of interviews with 18-year olds. Charlie Rose does not interview undergraduates. The opinions of first-year students are not called upon at economic summits, or celebrated by the Nobel Prize committee.

That’s because 18-year olds who’ve done nothing but study all their lives are pretty boring. Rich in many ways, but dull.

Reality TV programmes like Big Brother feature young men and women sitting about dissecting their mundane sexual woes while drinking endless cups of tea all day.

If that’s your idea of interesting people, you’ll love university.

You earn more if you’ve got a degree

This one is hard to argue, in that it’s statistically true. However, it’s also statistically meaningless. Only someone with a university education could think it was important.

Given that most of the brightest, ambitious people – not to mention the most privileged – go to university, it’s hardly surprising that the same cohort goes on to earn more money.

But this tells us nothing about the bright and ambitious people who do something else. We can only look to anecdotal evidence, like all the self-made entrepreneurs who seem to do just fine without spending three years being lectured by people who can’t do but do teach.

Besides, the education pay gap is shrinking every year. At this rate people who avoid university will end up financially ahead, once you take into account the cost of a degree.

That’ll be pretty funny – I can’t wait to hear the excuses.

Much-quoted data from the pre-fee charging era suggests an income premium over a working life for degree holders of £100,000. But that data didn’t factor in debts or fees, even before the recent massive hike.

So the jury is out on whether degrees will pay in the future, especially if you’re a man:

If tuition fees rise to £7000, degrees in the arts, humanities and non-economics social sciences will be bad investments for men. The cost of getting them will exceed the uplift in future earnings.

What’s more, at a higher discount rate on future earnings, or in the bottom 25% of graduate earnings, even degrees in science, technology and engineering will have negative pay-offs for men.

Most degrees still result in higher salaries for women according to the same research, but there are clearly a host of other factors at play here.

If you are set on getting a degree for money, do law or economics or similar, and try very hard to get a First!

I am passionately into something weird

There’s been this big invention in recent years. It’s called the Internet.

You no longer need to go to university if you’re a bit different or want to learn more about something weird. So don’t bother.

Being weird is brilliant and marketable these days, but it can’t be taught.

I want to transcend my poor / limiting background

I feel for you. There is still a class divide in this country, and I believe social mobility is declining.

Young people who grow up in wealthy households in the South East or in the privileged enclaves dotted around the country really have no idea how lucky they are, or how the other 90% live. If they are privately educated it’s even worse.

If you’re in a ‘bog standard’ comprehensive school on the outskirts of Middling Town, UK, your family probably doesn’t know lawyers or company CEOs – let alone the investment bankers, media geniuses, and entrepreneurs who are really doing well these days.

It’s very different for the lucky kids with high-flying aunts, uncles, and neighbours.

The rich are pulling away from the rest of society. The denigration of university education has taken away one of the few ways a clever, poorer young person could vault up the rungs.

From internships for the children of mates to crippling rents in London where the action is, opportunity is being closed down, not opened up, by these social trends.

I agree with all that. I just question whether a degree and a shedload of debt is going to help you. Especially if you do an arty degree and plan to work in media, fashion, music, design, or anything like that.

Your best bet escape route degree-wise is to do the most solid degree you can – preferably law, economics, science, or engineering-based – at one of the top universities in the country.

A degree in social science from somewhere nobody has heard of is going to land you back home on the shopfloor at Debenhams quicker than you can say: “Three years, £50,000 in debt, and all I’ve got is a chip on my shoulder”.

I want to be a grown up

The final recourse of the university defenders is it teaches kids how to be adults, and to live in the real world.

Such a laughable idea, I don’t know where to start.

Besides being grossly unfair to those poor dolts who skip university yet still somehow manage to drive cars and be polite to checkout assistants, it’s a pathetic justification for spending £50,000 moving from one town to another only to hang around with similar people learning lots of things you’ll never need to know again.

There are many more interesting ways to bridge the gap between self-obsessed 18-year old and a slightly less self-obsessed 21-year old than attending university.

There’s the now-ubiquitous gap year, for a start. I have come full circle on this – I thought it was a waste of time and money when I was a student, but 20 years on it seems like brilliant value.

People work all their lives so they can retire and take the trip of a lifetime. Why not take the trip when you’re 18, and learn to wash your own socks and make other people cups of tea along the way – just like in a hall of residence, but with better scenery?

Enjoy yourselves, then get a job, and count yourself £40,000 up on the deal.

University: A poor investment

I should have twigged the notion that everyone should go to university was a bad idea when it was championed by the last government.

Almost the definition of a good idea blown out of proportion is a modern socialist party’s manifesto – whether it’s state pensions, the NHS, worker’s rights, anti-discrimination, or the idea that everyone should be an A* student with a degree.

All brilliant ideas in theory – but absurd in extremis.

Cynics may say the Left’s championing of university is all part of some political game, but I’m prepared to give politicians the benefit of the doubt.

Most well-meaning people still think we need to send everyone possible to university. Practically everyone thought so 20 years ago, including me.

But times move on. The very popularity of the idea that everyone should get a degree has become its own downfall, by making degrees too expensive to teach and too trivial to count for much.

About the only thing that gives me pause in writing this piece is, as I said at the start, the thought of my parents, who glowed when I graduated and who spent some money on supporting me there, only for me to abstain from the whole debacle.

“The very popularity of the idea that everyone should leave school for university has become its own downfall.”

But we all make mistakes when we’re young.

It would be a bigger mistake to encourage more young people to waste their time and money getting a degree, out of some sense of guilt.

Remember: I didn’t even have to pay for my university education. Tuition was free, and a grant (and frugal habits) met most of my living expenses. Yet I still think it was a bad deal.

Imagine if I’d spent £50,000 on it!

Compound the £50,000 you’ll spend on university in a tracker fund for 50 years earning a little less than the average real return from UK shares of 5%, and you’ll have nearly £600,000!

Good luck beating that with your superior qualifications.

Unqualified opinion

Most young people won’t listen to me, which is fine – it leaves more room for those prepared to think different to seek the many other genuine opportunities out there.

Most of us are too old now to benefit from making a different choice anyway, whether you agree with me or not.

So it’s up to us to help the young at least think about their options.

Got children yourself, or plan to? According to research from the financial firm rplan, a child born this year will likely cost £123,000 to put through university.

My advice is to move somewhere vaguely affordable that has a decent university nearby, build your kids an annexe with its own entrance for when they’re 18, and encourage them to stay and study at home. You might just turn a liability into an asset.

Oh, and have one fewer child than you planned to. (You’ll be happier, anyway.)

If you agree with my argument that more young people shouldn’t go to university – not with all of it, but enough to give someone pause before starting adult life in hock to The Man – then please press the ‘Like’ button below, or Tweet it, or send it to some young person you know. You might just save a life!