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Weekend reading: Pre-apocalyptic budgeting blues

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What caught my eye this week.

Unlike every other personal finance blogger around, I’ve started 2020 wondering whether it’s time I spent more money.

Definitely not going bananas – financial independence is too precious a salve for that!

But making little effort to further grow my wealth.

This is a novel thing for me to consider. Saving comes naturally (genetically?) to me. I’ve mostly left The Accumulator to write posts about mental fortitude and so on, because I’ve no great insights in this area – I just do it. Being in the black has been normal for me since I was eight or nine. I often have to strain my powers of empathy to understand why anyone with a reasonable job and no dependents is different.

And so for decades I’ve occasionally amused myself with compound interest. Even sleeping overnight in a hospital when my dad was in intensive care – and the financial crisis raged abroad – I’d plug in my numbers like some comforting ritual, to see what ludicrous rate of return I needed to catch up with Warren Buffett. (I was also reading The Snowball. And no, I’ve not caught-up!)

So what’s changed?

Well, it’s not that I think we’re doomed to low returns from equities for valuation, or other market timing reasons to act. I don’t see any great evidence for that, provided you’re globally diversified.

And I couldn’t give two hoots about a run-of-the-mill bear market.

Perhaps it’s just getting older? Childless friends my age are forever traveling, urging that you can’t take it with you.

Maybe it is just middle-age? There was a story going around on Bloomberg this week that mid-life misery peaks at just over 47. I’m within shooting distance, but that sort of estimate is usually tied to responsibilities I don’t have, like sleepless children.

Still, I do suspect it’s the ‘years’ field on my old friend, the compound interest calculator, that has set me off.

Because, frankly, when I look around at the world today, I’m more hesitant about entering another 40 years into that box.

Woe is me

Stand down that “actually…”, my friends…

As someone who has often sent people Hans Rosling’s infamously positive TED talk about how the world is getting better – and who regularly includes similar graphs in this round-up – I’m well aware many indicators are going the right way.

I also notice exciting progress in my active investing forays. Genetics-based biotech and the coming-of-age for renewables are two exciting areas to watch.

But I wonder if it’s too little, too late?

Recent politics doesn’t help my mood, obviously. One reason for sharing those hopeful graphs is all the debating with people – left and right – who have become openly scornful of the systems that brought us peace and prosperity – capitalism, markets, a social safety net, international cooperation. See Brexit and Donald Trump for more.

Politics also matters because we’ve had a gun to our head for six decades, and yet nobody talks about nuclear war anymore.

My feelings on nuclear weapons are summed up by this quote attributed to Bertrand Russell:

 “You may reasonably expect a man to walk a tightrope safely for ten minutes; it would be unreasonable to do so without accident for two hundred years.”

When you look at the glib nationalism now prevalent in the UK and the US – and the renewed posturing of Russia and, arguably, China – you can’t help remembering we’ve already been balancing on that tightrope for quite some time.

And then there’s the environment.

Again, not a novel concern – see my post from 2010 on why environmental degradation is the biggest thread to your long-term wealth.

But honestly? I thought I’d probably easily make it out before a true collapse.

If anything I’d become less militant on that front. I’ve got no kids, so why was I curbing my short-haul flights and offsetting carbon via a share of fresh woodland I bought? My friends were constantly in the air with their two or three children who would inherit the results.

Maybe the Australian bush fires are a wake-up call? Evidence has been abundant for years – as a once would-have-been marine biologist I’ve long read about coral reefs dissolving from ocean acidification with dismay – but the Aussie footage is ominous.

Finally, I’ve also just read Dan Carlin’s The End Is Always Near.

As a fan of Carlin’s podcasts I’m familiar with his dour take on the murderous and careless nature of human beings. But you’re whacked over the head with it in his book. It’s hard not to conclude we’re living on borrowed time.

If I told you Carlin wonders whether intervention by an alien caretaker might be one of humanity’s best and only shots, you’ll get the picture!

Enough is enough

The other day I mused whether a Plan B was required in case the politics in Britain continues to deteriorate towards irrationality. A bug-out escape option, maybe, to some more hospitable political climate.

Many readers engaged with the idea. A few said I was being ridiculous or irresponsible for ‘predicting’ such a thing.

Let’s try the maths again, eh?

I’m guessing there is a 5-10% chance of this bug-out option being needed – up from ‘negligible’ 20 years ago. So I’m estimating at most a one-in-ten chance. In other words, I ‘predict’ that nine times out of ten the UK won’t reach this sorry state. That is not a forecast of certain or even likely disaster.

The point is even a small chance of a truly dire outcome is worth insuring against, however. It’s the same reason you insure your house against it burning down, though that’s never happened to anybody you know.

Unfortunately there’s no good Plan B against a global catastrophic dislocation – nuclear war, environmental collapse, the singularity, or perhaps a global pandemic – except to get your business done beforehand.

That is, to spend more money.

You can’t save the world

Before anyone asks (thanks in advance!) I’m feeling fine. I’m looking forward to the wedding of an old friend tomorrow, and I have an interesting date lined up for Sunday.  I do suffer from SAD a tad, but that’s nothing new.

These Weekend Reading posts are a chance to range more widely beyond asset allocation, ISAs, and SIPPs. And I have found myself pondering whether an uptick in living for today might be a rational response to how I see things have been progressing.

Wealthy people are living for longer, and we’ve written before that a retiree at even 65-years old should ideally have a plan that can see them out for 30-40 years.

However not all those years will be healthy, and that raises difficult questions when planning. For instance, should you spend more money on travel when you’re early into retirement? Or should you save more for later, when you may need care?

Very few of us consider the healthy life of the societies – or even the planet – when making such calculations.

That’s a luxury we take for granted. Few societies (including our own) have gone as long as the UK has without some major disruption, be it war, famine, plague, or revolution.

Globally of course the planet has always come through, but from Easter Island to the Mayans to most recently the likes of Egypt, the demise of local natural life-support systems has caused unrest if not extinction.

It’s a bleak subject.

Optimists make the best investors, and that’s the hat I’ll continue to wear when investing.

But as a saver?

Maybe it’s time for some pessimism.

From Monevator

How to maximise your ISAs and SIPPs to reach financial independence – Monevator

From the archive-ator: How to enjoy life like a billionaire – Monevator


Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!1

UK becoming a country of ‘ghost towns’, says Adam Smith Institute – ThisIsMoney

Could new regulation spell the death of trusts? [Search result]FT

Savers trapped in one of Neil Woodford’s frozen funds will be allowed to access their cash again next month – ThisIsMoney

UK tech investment grew faster than the US and China in 2019 – CNBC

Nobody feels overpaid – The Irrelevant Investor

Products and services

New Virgin Atlantic credit card reward bonus gives you enough miles to fly to Barbados or New York – ThisIsMoney

Santander slashes interest rate on its popular 123 current account to 1% and will cap cashback – Money Observer

How do I solve my transatlantic inheritance tax problem? [Search result]FT

RateSetter will pay you £100 [and me a cash bonus] if you invest £1,000 for a year – RateSetter

UK collector pays record £1m for rare Edward VIII sovereign – BBC

HyperJar bills itself as a buy now, pay later app – ThisIsMoney

Testing via Thriva helped me lower my cholesterol. Will write-up someday! Get 50%-off with this affiliate link – Thriva

Homes for fitness fanatics [Gallery]Guardian

Comment and opinion

If only… – Humble Dollar

The Investor’s Fallacy: Don’t bet against the US market over the next 10 years – Of Dollars and Data

Nobody can predict a coming market crash. So stop worrying about it. [Video] – Robin Powell via YouTube

Lifestyle design – Indeedably

No one gets rich by shunning new cars and lattes – Barry Ritholz

Should your employer pay your bills if you work from home? – Guardian

Why I won’t be taking up a savings challenge [Search result]FT

Insanity and 2019 in review – Retirement Investing Today

Why Manhattan’s skyscrapers are empty [Clear parallels with London]The Atlantic

The big pull: Going back to work after retiring… – Next Avenue [hat tip Abnormal Returns]

…and is the side hustle a new dance seniors are learning? –Kiplinger

The dual Y-axis chart: Just say no [Geeky]Tim Duy’s Fed Watch

How expensive are ESG stocks? [Research]Factor Research

Naughty corner: Active antics

The fallacy behind the rise of passive fund management [Search result]FT

You bet! [Howard Marks’ latest memo to clients]Oaktree Capital

Tesla and Apple valuation questions – Jean-Louis Gassée

Mid Wynd International: global thematic investing – IT Investor

Why Admiral is my favourite dividend growth stock – UK Value Investor

The periodic table of commodity returns – Visual Capitalist

Looking back, looking forward – EQ Investors

‘Woodford effect’ weighs on stock market minnows [Search result]FT


Forget staying close to EU after Brexit, chancellor tells business [Search result]FT

Brexit will have soon cost the UK more than all its payments to the EU over the past 47 years put together – Business Insider

Politics is completely broken. It’s time to re-imagine the state – Wired

Can you identify Iran on a map? Few US voters can [Understatement]Morning Consult

Kindle book bargains

The Looting Machine: Warlords, Tycoons, Smugglers and the Systematic Theft of Africa’s Wealth by Tom Burgis – £0.99 on Kindle

The Making of a Manager: What to Do When Everyone Looks to You by Julie Zhuo – £0.99 on Kindle

Economics: The User’s Guide by Ha-Joon Chang – £1.99 on Kindle

Off our beat

A survey of 20,000 creatives suggests brainstorming is a giant waste of time – Quartz

How negativity ruins relationships – The Atlantic

How Slack ruined work – Wired

The Mandalorian is the only smart soldier in the Star Wars galaxy – Wired

And finally…

“Index funds make up for their lack of short-term excitement by their truly exciting long-term productivity. The traditional index funds is designed to be held for a lifetime.”
– Jack Bogle, The Little Book of Common Sense Investing

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{ 68 comments… add one }
  • 51 Snowman January 19, 2020, 3:43 pm

    @The Investor

    Interesting and entertaining discussion on cholesterol here which covers some of the points you make.


    For example at 9 mins they describe hypercholesterolemia as a made up disease with no symptoms other than a number or a statistical risk that is not understood. And Nick amusingly points out that the cancer fairy doesn’t come along and magically reduce cholesterol in people affected by cancer to explain why people with disease associate with low cholesterol.

    But please do read that Ivor Cummins book, I guarantee you will be blown away by it. I’d lend you mine but it is out on loan at the moment.

  • 52 Passive Pete January 19, 2020, 4:45 pm

    @Snowman Thanks for the recommendations, I haven’t read or heard Ivor Cummins or Dave Feldman and Nick Mailer. I’ll get onto those shortly as I’m currently on the final chapter of The Man Who Solved The Market – another great recent recommendation by @TI.
    I’ve read Michael Moseley’s books and seen him on tour last year. I recall he identified a problem of being fat on the inside and thin on the outside – something that appears to affect Indian men disproportionately, so probably due to genes (basically having fat surrounding the vital organs). I think Moseley showed success in treating this via intermittent fasting – something I’ve been doing for some time since using the 5:2 diet successfully.

  • 53 The Borderer January 19, 2020, 5:03 pm

    @ Matthew (33)
    I like your idea of replacing bees with robots. Millions of years of evolution circumvented by Elton Musk or his ilk. If anyone thinks that man can do better than nature, then they should have a look at https://asknature.org/strategy/seeds-with-efficiently-shaped-wings-glide-slowly-to-earth/#.XiR6fiPgq70 – these seeds was studied by NASA in their design of the space shuttle.
    Regarding the chances of Armageddon, have a look at this: – https://thebulletin.org/doomsday-clock/current-time/#.
    And a bedtime thought, you may, unknowingly, live close enough to a target that the CEP of a Russian SS-18 could put a warhead down you chimney – but, of course, you would never know about either of these things!
    As you say, may as well live while we live.

  • 54 DaveDatum January 19, 2020, 5:31 pm

    Hi @TI. I suspect may be deleted… but 97%? I imagine that figure is an estimation of from what the MSM allows to be published & aired.
    Here’s a few well-known names who are what alarmists would label ‘deniers’, but that would call themselves realists or skeptics:
    Freeman Dyson, Patrick Moore (one of the founders of Greenpeace), Clive James (OK, was not a scientist, but still rather intelligent), David Bellamy (stolen from our screens because of his wrongthink on the subject), Matt Ridley, Bjorn Lomborg (an Economist, but well considered).

  • 55 Mr Optimistic January 19, 2020, 6:13 pm

    Problem I have with the climate change debate isn’t that I dispute that mankind may well be causing an acceleration in warming ( and even if you did doubt that, why would you take the risk that you may be wrong?), it’s that we must not put ourselves at a significant economic disadvantage whilst acting ineffectually. I read that there is roughly one new coal fired power station put into commission somewhere in the world each week. If our efforts don’t significantly make a difference then we need to realistically weigh the benefits against the cost to ourselves. Words to the effect that we should show leadership, or set an example, are just that, words, the inner glow of satisfaction and feeling good about ourselves are conceits which mustn’t be bought at too great an expense if we don’t make a real impact on the monotonic graph.
    Looking at how politics works, offering short term pain for long term gain puts the opposition in. Democracies aren’t good at strategic planning. When the real consequences of global warming show up, then we will act and adapt out of necessity. Until then….well good luck.
    PS, not sure I have much faith in the quantitative models ( the behaviour of the oceans, atmospheric/ ocean interaction, ecosystem response) so it could be worse or better than currently predicted. When the North American ice sheet melted it switched off the gulf stream and what later became Portugal saw a temperate climate degenerate to having icebergs offshore in a century or so. We have been warned :).

  • 56 Andrew B January 19, 2020, 6:44 pm

    There is a balance I think. Remember you never know what’s around the corner.

    I went from healthy to seriously and permanently ill and disabled almost overnight. It has changed my perspective.I am 50. Whereas before I would agonise for weeks over spending decisions, I now make a decision in a few minutes. It is needed and worthwhile..go for it..

  • 57 The Investor January 19, 2020, 8:00 pm

    “MSM allows to be published & aired” …. “wrong speak”

    If I believed the sort of stuff that people who use such language believe, I’d have a word with myself. 🙂

    Some of largest and most powerful companies in the world (including the largest, and until the recent tech boom generally the largest) are fossil fuel companies.

    Most people drive around in cars run on fossil fuels. We fly around with abandon. We do whatever we like.

    Opposing forces to these facts on the ground are puny to the extent that a schoolgirl has been able to rise to the top of their ranks, and even she’s been villified by the usual Barry Blimp-ish suspects for her trouble.

    There’s no MSM conspiracy that is gatekeeping what is allowed to be aired. The reason we now routinely talk about man made climate change as real is the same as why the “MSM” doesn’t talk about alternative theories about how 9/11 didn’t happen or the moon landings might have been fake.

    Agreed, the outcomes/models from here are highly uncertain but that’s another issue.

    (Also, Dyson believes in man made climate change, from memory. I seem to recall he’s against curbing growth/innovation on account of it, which is a coherent argument. But anyway I’m not engaging in discussions about half a dozen people with a vaguely contrary view versus an overwhelming scientific consensus, be it 97% versus 92% versus 87%. When the consensus changes or looks close to changing, I’ll change my mind.)

  • 58 ZXSpectrum48k January 19, 2020, 11:51 pm

    @Economiser. Sorry should have said finite system not closed system. Nonetheless, that big fusion reactor isn’t an inexhaustible supply either, especially when its up against exponential demand. At the 2017/18 energy growth rate of 2.3%, the total demand for energy would outstrip the total solar flux hitting Earth in just over 400 years. And we could only collect a fraction of that.

    The issue is that the Earth is in thermodynamic equilibrium: incident radiation from the Sun against radiative cooling. Many economists seem to believe that exponential economic growth is feasible on a finite system such as the Earth. Growth always requires energy, thus exponential energy is required. The problem is every time we use low-entropy, concentrated energy to do ‘useful work’ (in the physics sense), we are left with high-entropy waste energy (waste heat). That waste heat is too diffuse to be radiated away. So it accumulates. Now my prior life was as a theoretical physicist, not a climate scientist, so I don’t know the details of how that plays out, but anything that disturbs that equilibrium should be viewed as a source of risk and volatility.

    Putting my fund manager hat on, I see taking a risk on climate change as a terrible risk-return proposition. It’s the classic bad carry trade: picking up pennies in front of a steamroller. If your right, you make a few bob, if you’re wrong, you lose a few fingers, a foot or perhaps you just get completely flattened. Dead. If we had a plethora of other planets to go to but, err, we don’t. This is a one shot trade. So why take the risk?

  • 59 JimJim January 20, 2020, 7:36 am

    I have to totally agree with ZX on this one. His closing sentence “This is a one shot trade. So why take the risk?” says it all.
    If you have signs of damp in your house and a builder tells you your roof is leaking you can ignore the advice and see if it sorts itself out or you can get the roof fixed.
    The economy will carry on either way in the event of changing our ways to make the planet more sustainable for those that live here. It will just be different economic activity. Renewable energy is getting on par or cheaper than coal and gas now, we are making moves to figure out how to store excess energy and a lot of the technology is in place. In the last climate meeting in Spain just before Christmas the countries that stopped things moving forward were all big producers of fossil fuels. Go figure! They don’t seem to mind living in a leaky house because they are comfortable off the back of that leak. (Australia has had some instant (if you don’t give climate change credence, it must be fate) karma on that vote).
    Being socially minded in a country seems a hard enough thing to achieve in today’s politics. Being socially minded on a world scale might be next to impossible. If we change our ways we can still make money, whether the same people are making the money is the issue.

  • 60 Richard January 20, 2020, 9:18 am

    @ZX agreed, why take the risk. Plus reducing our reliance on the producers / suppliers of oil and gas, which usually come from highly suspect regimes can only be a good thing both morally and economically.

    Of course our FI dreams are somewhat driven by the need of never ending growth which creates a paradox of sorts. Monevator has written on environmental investing a few times in the past, but I am not sure it is yet easy to be 100% environmental and stick to the tenants of passive investing (global equity tracker etc)

    A healthy debate is important and the cynics have their place. It helps to push the science forward. Providing the cynics are using data or driving productive scientific discourse we should not demonise them. If they just put their fingers in their ears and so no no no, fill your boots….

  • 61 Matthew January 20, 2020, 12:38 pm

    I would say that although it looks like it, we dont actually need exponential growth, we just need businesses to continue to make a profit, and pass that profit on – as long as they do, funds will accumulate, and as long as we still have inflation and business structures that use debt to magnify inflation (like buy to let does) – we will be ok

    Yes, the amount of incoming energy from the sun is finite, so market forces will make that more expensive, and make us rethink our growth as an when we need to, and it is part of what I’ve said that theres a limit to the population this planet can support, and ultimately (short of colonising elsewhere) most humanity will wind up in a borderline starvation mode like most animals at peak population

    Also it is difficult to best natures designs on things, although i wouldn’t say impossible. It certainly makes sense to piggyback off natures designs as much as possible – but consider this – humans, as animals, are part of nature, so all our actions, even talking now, is part of nature – a nature not yet disovered – next time youre watching david Attenborough contrast it to “great railway journeys”, or period dramas, or the anique roadshow or question time, as examples of how we even study ourselves, and our own nature

  • 62 arty January 20, 2020, 12:55 pm

    @Matthew “most humanity will wind up in a borderline starvation mode like most animals at peak population”

    Only in the absence of economic growth. In country after country, across a wide range of cultures, the effect of a becoming moderately prosperous has been for population growth to decrease, usually to a level below replacement level.

    BTW, those interested in the decarbonisation debate, and the investment aspects thereof, might find this video interesting:
    Despite the title, and the channel’s usual somewhat permabearish outlook, I found it very informative.

  • 63 Mr Optimistic January 20, 2020, 2:02 pm

    Incidentally, hope everyone is keeping an eye on the earth’s magnetic field. The magnetic north pole has wanderlust but the south pole is pretty steady ( no idea how that works).
    ZX: don’t think we’d like it much if we were in thermodynamic equilibrium with the sun 🙂

  • 64 Matthew January 20, 2020, 2:32 pm

    Good points @arty and @mroptimistic, I don’t know if the decrease in birth rates in developed world will hold or if its a short term developmental stage, but I think its due to our rising standards of an acceptable minimum to raise kids

    Magnetic field will one day stop although a long way off and luckily I think we will be able to save ourselves by then (ie artificial magnetic field) – and life will find a way even without that protection, after mass extinctions perhaps

    The most resourceful way I believe for intelligence to survive as long as possible is to develop true AI that needs minimal body (just self maintenance) and no planet to survive, and only needs energy from orbiting a star or a nuclear reactor

  • 65 John Bray January 20, 2020, 9:05 pm

    The S-curve for population growth goes flat as wealth increases. We just can’t afford all the people alive to be that wealthy. Its not so much a problem with energy, but water, metals, land etc. And who am I to deny my lifestyle to others…

    In a global economy with global pollution, only united action can change behaviour, and that won’t happen as the economic advantage of rogue behaviour is too great. We also have a big gap between what people want and what they are prepared to give up.

    BTW most of the deniers quoted are dead, and Ridley owns a coal mine.

  • 66 arty January 21, 2020, 9:55 am

    I find these apocalyptic discussions both bizzare and fascinating to watch.

    Buddhist ideas about the world ending in the year 4600, the book of revelation, Islamic ideas about the battle at the end of times in Dabiq, millenarian cults, Malthusian theories, peak oil, extinction rebellion – these end of the world ideas have been with us for thousands of years, and it doesn’t look like they’re going away any time soon…

  • 67 Matthew January 21, 2020, 10:48 am

    Really once you go beyond the life of your great grandkids, theres nobody you should overly care about any more than the man in the street or an alien species or a past one like the dinosaurs – even if this world one day ends life will probably go on elsewhere, although it would be a shame for that to happen

    Although the apocalypse does give idle minds something to think about, and in religion it can even be a relief

  • 68 xxd09 January 21, 2020, 7:12 pm

    Actually having children is a vote of confidence in the future

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