What caught my eye this week.
There was something (else) notable about the first TV interview with the three lads from Manchester who restrained a knife-wielder run amok in Sydney earlier this week.
In the initial broadcast, I noticed two were wearing Apple Airpods whilst talking to the camera.
I thought this pretty striking. The wireless headphones are popping up all over London in the same way the iPhone’s once iconic white earbuds did a decade ago.
Nevertheless I was surprised to see them in the TV interview. Mancunians have their own inimitable sense of self-presence, but still – wouldn’t you take your Airpods out before a once-in-a-lifetime appearance on live TV?
That was my first thought. But then Airpod users often say they forget they’re wearing them.
And unlike, say, the ill-fated Google Glass, people love to be seen wearing them. Even when being broadcast around the world!
This trivial observation suggests to me that wireless headphones are going to become ubiquitous. Even your gran in the Highlands will be wearing them within a few years.
And that’s relevant around here because it means a £169 purchase – and that’s with a £30 discount – every couple of years has been conjured up by Apple out of nothing.
Put that in your spreadsheet
Yes, yes, a couple of you will tell me you’re still getting by with a Tesco mobile on a £5 contract and a pager.
There are always outliers or laggards.
But the bigger point is that a lot of today’s silly luxuries become tomorrow’s essentials.
The iPhone of course is the ultimate example of this kind of household expense that nobody really saw coming.
An early retiree at the turn of the century might have budgeted for a mobile phone, sure, but not one that cost £1,000 or more.
And just a few years earlier in the mid-1990s there would have been no annual mobile bill in the forecast at all.
Of course, there might have been a car in the budget – whereas today’s young urban corporate escapee might make-do with Uber – and perhaps a video tape recorder to capture that round-the-world retirement trip at the cost of a couple of grand.
Swings and roundabouts.
Tomorrow’s world
When I first started reading personal finance forums 20 years ago, I was amused by all the inflation conspiracy theorists that abounded, and I still am. Tracking inflation is difficult enough without introducing a nationalised swindle.
However I now see that those who argued we all have our own personal inflation rates made a really good point.
Broadly, stuff (iPhones and Airpods aside) is getting cheaper while services are getting more expensive.
But guessing what stuff and what services you specifically will want to use in 20 years time is harder than it looks.
It’s another reason why personally I wouldn’t want to follow a ‘spending down all my capital’ plan in early retirement (though I accept many feel they have little choice).
Using your current spending is a decent proxy for a decade or two, but what if you’re retiring at 40? Do you really want to miss out on the space travel, the personal teleportation, and the by then-mandatory weekly enemas with your personal gut flora therapist?
Well, okay. But surely not the space travel and the teleportation?
On the other hand, perhaps the robot revolution will lead to super-abundance and a century of deflation.
Tough call.
Inflating expectations
In this context, the news that inflation is currently running a little over target…
Annual consumer price inflation rose to a three-month high of 2.1% in July from 2.0% in June, the Office for National Statistics said, bucking the average expectation in a Reuters poll of economists for a fall to 1.9%.
…seems neither here nor there, especially as anything could happen come 31 October.
With a sensible Brexit deal the pound could rally overnight and imported inflation fade away. Alternatively, with a bonkers no-deal, we might see a run on sterling and all kinds of craziness. Or perhaps just a damp squib either way.
So the Bank of England does face a bit of a dilemma.
But in the longer-term, in a world of accelerating change, we all face a bigger one.
Further reading:
- What is the UK’s inflation rate? – BBC
- How inflation is costing you more than you think [Search result] – FT
From Monevator
A wider universe of investment trusts for retirement income in 2019 – Monevator
How to protect your portfolio in a crisis – Monevator
From the archive-ator: Are you lost in Neverland? – Monevator
News
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
London property prices continue to fall – ThisIsMoney
Solarplicity becomes 13th energy supplier to collapse since 2018 – Guardian
Who are the 1% and are you one of them? – ThisIsMoney
How AI will change the way you manage your money [Search result] – FT
Smart Beta ETFs are doing a good job of capturing the return premiums they target – Factor Research
Products and services
The fate of the world’s largest ETF is tied to 11 random Millennials – Bloomberg
Monzo insists new short-term loans won’t be at Wonga rates – Guardian
Ratesetter will pay you £100 [and me a cash bonus] if you invest £1,000 for a year – Ratesetter
Rail fares to rise by 2.8% in January – Guardian
Customers rank crisis-hit Metro Bank the best current account provider – ThisIsMoney
The Smithson small[er] cap investment trust is off to a good start – IT Investor
Homes painted in vibrant colours [Gallery] – Guardian
Comment and opinion
Stocks for the long-term? [Wish I’d written this] – Demonetized
The impact of interest rates and inflation on stock market valuations – A Wealth of Common Sense
It’s hard to think long-term – The Irrelevant Investor
Four takes on the inverted yield curve… – Abnormal Returns
…there’s no evidence inverted yield curves predicts [US] stocks will underperform cash [PDF] – French and Fama
How to become a millionaire in London on £40,000 per year – Fire V London
On no longer having a house husband – Mrs YFG
How people trick themselves into believing they can beat the market – Of Dollars and Data
Never mind, the Joneses aren’t watching anyway – Humble Dollar
Reinventing retirement: how to live a fulfilling later life [Search result] – FT
Latest ‘return gap’ study shows the value of low-fee, mixed asset, buy and hold – Morningstar
REITs aren’t a true alternative [US but relevant] – Morningstar
Legal and General Group assessed as an ethical investment – DIY Investor
Small [angel] investors on the capitalization table – Points and Figures
Cliff Asness: Bonds are frickin’ expensive [Geeky] – AQR
Brexit
Hammond says PM’s demands ‘wreck’ prospects of new Brexit deal – BBC
Dominic Grieve: I don’t want to put Jeremy Corbyn into No 10 – Guardian
Ken Clarke: I wouldn’t rule out being a caretaker PM – BBC
‘National Unity’: the fantasy flick that will never make it out of development – Marina Hyde
Tiny Luxembourg is already a big beneficiary of Brexit – Fortune
A third of people of UK consumers have changed their spending due to Brexit worries – BBC
Kindle book bargains
Essentialism: The Disciplined Pursuit of Less by Greg Mckeown – £1.99 on Kindle
Misbehaving: The Making of Behavioural Economics by Richard Thaler – £1.99 on Kindle
The Miracle Morning: The 6 Habits that Will Transform your Life before 8AM by Hal Elrod – £0.99 on Kindle
The Asshole Survival Guide: How to Deal with People Who Treat You Like Dirt by Robert Sutton – £1.99 on Kindle
Off our beat
How to see things as they really are – Raptitude
I’m pretty worried about the coming of ‘Deep Fake’ [Example video] – via Twitter
Greenland: Trump warned the island cannot be bought from Denmark – BBC
Deadly banana fungus threatens global banana production – ThisIsMoney
There’s a reason the future is more troubling than the past – Guardian
Why washing machines are learning to play the harp – The Atlantic
And finally…
“As the Danish philosopher Søren Kierkegaard noted, life can only be understood backwards – but it must be lived forwards.”
– Benjamin Graham, The Intelligent Investor
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“Deadly banana fungus threatens global banana production”
This sort of sly dig at Mr Corbyn must cease.
In the ‘Who are the 1% and are you one of them?’ article I was amused by UKIPPER Dave’s (Continuity UKIP) comment “Once WE are out of the EU, EVERYONE will be earning well above average earnings”.
Now either this was a clever planted comment, or UKIPPER Dave needs remedial maths.
Just come across this which makes for ‘interesting’ reading.
Some guy has recreated 130+ research papers that relate to making investment decisions
https://www.reddit.com/r/algotrading/comments/cr7jey/ive_reproduced_130_research_papers_about/
“Results:
Literally every single paper was either p-hacked, overfit, or a subsample of favourable data was selected (I guess ultimately they’re all the same thing but still) OR a few may have had a smidge of Alpha but as soon as you add transaction costs it all disappears”
Deepfake link takes me to Reuters.
@Mr Blue Shoes – Thanks! Fixed now. (I’d say it was all part of an elaborate comment on fakery, but really it was just a late night.)
@Ben — On a related note, if you read the ETF story under the graphic this week about return factors, they also looked at quant strategies and found a huge lag between theoretical and delivered performance, for similar reasons…
Sad to see the human race is being increasingly plugged into the Matrix, isolated from real life. I always think about that when I walk through a park and notice all those headphones and people who can’t even hear the birdsong, unaware of what’s happening around them. It feels, as VR slowly creeps up on us, like every generation is more cut off from nature than the one before, and yet some young people are more passionate about protecting the natural world than ever. It’s a bit of a paradox.
You’re probably right that wanting to stay in the real world makes me a laggard – I don’t even use social media much these days! On the other hand, as a teenager in the 80s I spent most of my time either hooked on my BBC Micro or plugged into my Walkman, ignoring anything else going on around me. But then I changed, so maybe there’s hope for the airpod heads too. Might save them a bit in retirement as well – after all, the best things in life are free.
@David
If birdsong and nature were the aural landscape for most of us, I would agree with you, but alas the reality of living in much of urban Britain these days is a constant assault of noise from selfish and thoughtless people, who think others must be subjected at all hours to their shouting, bass thumping noise, revving engines (insert pet hates here). Not surprising then that the offer of hearing what one wants to hear (maybe even birdsong) in the midst of such a cacophony has become so attractive!
I hope this doesn’t come to pass. I’d like my company pension at 58 please, not 65. Although admittedly, there would be more in it at 65.
https://www.independent.co.uk/news/uk/politics/state-pension-age-rise-conservatives-think-tank-centre-for-social-justice-a9064071.html
Typing this from a London tube carriage. Can see six AirPod users versus three conventional.
I take the point about birdsong and other real life sounds… I became addicted to podcasts and audiobooks a few years ago and now have to force myself to go voiceless now and then. (Just to hear yourself think and muse, also! 🙂 )
@ David. Regarding that birdsong you can hear. How do you know it isn’t just part of somebody else’s ‘Matrix’ that you are in? https://www.simulation-argument.com/simulation.html.
@Kel. Saw that report aswell. Horrified but expected. Those Brexit Ultras are still hammering away at any vestiges of support for the poor. State pension pushed out to infinity for Millennials and GenX (including me). I note no mention of taxing current retirees/boomers or increasing Gilt issuance to pay for the increasing OADR instead. Plus they can replace those immigrants on minimum wages with 65-75 year olds. Win-win.
On the airpods and wider “always listening to something” culture, I am generally against this. In fact, I recently renounced listening to any audio whilst I’m doing something else, as part of my quest to “live more in the moment” and “be more mindful” (both ambiguous phrases, I know).
In general, it has been a positive change. My efficiency and skill in the activity I’m doing (eg.cooking) has increased. What is an increase in efficiency for me could mean the difference between life and death for the city-dweller, as the amount of times I’ve nearly seen busy Londoners flattened by various vehicles is astounding. And as you said T.I, it also gives time for the mind to simply reflect on its own thoughts (always a good thing).
This does not mean renouncing all audio. However now when I want to listen to podcasts or music, I try to focus on doing this as my only act, and not busying myself with other activities whilst doing so. It increases the pleasure of the act, and it can also be achieved with a pair of much higher quality (and also cheaper than airpods) over-the-ear headphones.
And as always, cheers for the links.
> Airpods
OMG I hate to be the miserable old git here but your hearing wears out over time, and it’s loudness related. I used a portable CD (how that dates it) in an aircraft. Once. When I heard how loud it was to drown out the engines I never did that again.
I am nearly 60. I can still (just) hear 10kHz. Sadly I know people of a similar age who are hard of hearing. It’s a lonely world. Don’t to it to your future self. It still disturbs me when my ancient lugholes can hear every word someone across the road is hearing on the phone. If I can hear it 10 yards away, it’s way too loud.
You young ‘uns will live longer with the results than me and these people, and your hearing is a delicate system. Go easy on those airpods and running away from the noise of the real world into your Apple nirvana. Don’t lose the music…
On a wider point, I’m not convinced. Look at the trend price of electronics, and every which way is down. It does more for less. Yeah, Airpods are £169 now, noname clones will be a tenth of that in five years time. I recently discovered I can buy a Steadicam gizmo from China for £300 to lose shake from handheld shots. If you needed to ask the price of a Steadicam in the old days, you couldn’t afford it.
> Do you really want to miss out on the space travel, the personal teleportation, and the by then-mandatory weekly enemas with your personal gut flora therapist?
Are you really suggesting that with whole body teleportation they are going to wrangle your gut flora by shoving a tube up you? Teleport the bugs in and out, FTW.
@Kel
Why a Conservative think tank would want to stir the hearts of their core voters this close to what could be an election with a piece that would effect the wealth of a good proportion of them (the older you get the more conservative you are likely to be) is beyond me, unless it is to subsequently refute the findings as unnecessary after an initial public outcry???
This policy, if enacted would, again, tax the poorest in society leaving the very wealthy with the least effect. A normal conservative policy you might say. But. The sacred cow that is the state pension has proved difficult politically to alter much.
If you were working on a building site, would you want to continue until you were sixty? Let alone 75.
The risk of working is exponentially greater the older you get… (see page seven) http://www.hse.gov.uk/statistics/pdf/fatalinjuries.pdf
So those who have to work are less likely to survive it. If you can afford to retire before 75, think of the poor beggars who can’t.
To dress this up as “Social Justice” is big brother speak.
@Ben
note this comment and it’s replies https://www.reddit.com/r/algotrading/comments/cr7jey/ive_reproduced_130_research_papers_about/ex4zxe4/
also note that the post has already been deleted after being called out for dodgy dealings
@Cowboy
Thanks for that.
Obviously the devil was always in the detail, what 130 papers, what assumption were made. It isn’t the kind of thing I would expect people to just make up, but I wouldn’t (and wouldn’t expect anyone else to) act without any evidence.
It could be one of those “Let’s float the idea and see how it plays, so we have a better idea on the publics’ view of the SP, and see much we can push them on it” or “Let’s tell them it’s 75, but really it’s 70, so in comparison it doesn’t seem to be so bad” jobs. I think it’s a fishing expedition to guage the public mood, that and to start setting the seeds that this may be inevitable. Even if I personally think the SP may get phased out or means tested etc. I never express those opinions in polls, I always express the exact opposite, as I don’t want the government thinking that the public mood is ripe for being persuaded that this is inevitable, that it will be politically palatable, and that we will eventually just accept it. I want them to be scared they will lose their seats if they back such a measure. I want them to think there is no persuading the public on this. I hope the WASPI ladies are victorious too, as we’ve seen what problems that has caused a number of people. A story jumps to mind of a lady who’d been prudent and saved a small amount in a personal pension, but when she’d divorced and lost her house, the small income from that pension meant she didn’t qualify for benefits, and she ended up living in her car.
Watching Sky News this morning there was some babble on this pension at 75 story, my other half said “surely it won’t affect us?” assuming it would be the post-millenial kids, or younger millenials at worst. Surely Gen Xers would be spared this madness?
I googled the story and we were both gobsmacked after clocking it would take affect in 2035.
The knock on impact on personal pensions will be equally devastating if this comes to pass, even if watered down as Kel suggests they say “look, we’ve relented and REDUCED the age to 72 so you’re better off!”
It will certainly tip the balance in favour of ISAs over SIPPs for those planning to FIRE in their fifties. People will abandon pensions through fear they will never be able to get their money out. And it will likely put Corbyn into power. People make poor decisions when they feel they have nothing left to lose.
People will (and should) be asking what the hell their NI contributions are actually for, and I genuinely think this could trigger yellow vest style civil disobediance, like the poll tax riots, assuming Love Island isn’t on. I may be wrong of course, the difference with the poll tax was it was something younger people faced imminently rather than something that wouldn’t affect them for 50 years. And young people are generally better at rioting.
Anyway I can’t believe how the Conservatives would contemplate doing this – on the assumption there is no alternative – while at the same time having enough money to move the 40% tax band up to £80k pa. Time and time again they seem have an open goal against the worst Labour opposition in history, and yet still manage to kick it into their own net.
Maybe Dominic Cummings will sense the nation’s pulse on this one and veto it 😉
Don’t live in Blackpool if you are a man…
https://www.lancs.live/news/lancashire-news/life-expectancy-blackpool-lower-new-16781181