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Weekend reading: Brexit enters the terrible twos

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My views on Brexit – which are personal and as partisan as yours, so feel free to skip them all – plus the week’s good reads.

Two years after that Referendum result, and according to a survey by the Share Centre, 5% of its customers who voted Remain would now vote Leave.

That is more than double the percentage surveyed who voted Leave but would now switch to Remain. This, despite the whole shebang continuing to be basically the laughing stock of the world (when it’s not showing shades of something much more sinister, such as a anti-democratic power grab disguised as re-enfranchisement).

Still, perhaps that’s not surprising. The Brexit debate has been great for most Briton’s portfolios – I pretty much bought my flat on the back of it – mainly due to the fall in the pound.

International holdings soared in the immediate aftermath of the result, and UK markets soon followed since the big UK listed companies earn the lion’s share of their income overseas.

Most people seemed surprised by this at the time but it was very predictable. Unfortunately (on many levels) I can’t haughtily point you to a Monevator article I wrote before the Referendum pointing that out, as I maintained a no-Brexit discussion policy before the vote.

(It’s truly a shame, because in a convoluted way I lost a friend arguing about the pound in a Brexit scenario in the week before the vote. This isn’t the place to go into why or how it came to that – or what an injustice it is to now be estranged, given that I was urging him not to short the market ahead of the Leave win that he very unusually foresaw – but it’d be nice to at least have a post here as consolation. He may still read the site. Hello S., if so!)

The truth is I believed not bothering to get bogged down in what were already toxic Brexit debates ahead of the vote would be best for this site overall, not least because I thought we’d stay in.

I did think the result would be closer than many of my London friends believed, mainly due to differences in our upbringing I suspect.

However I never really believed a majority of the population would support the asinine case to leave. So I judged it would blow over and we could all stay friends.

Of course that didn’t happen. The country voted Leave, and like most of my ilk I put my head in my hands. I ranted a bit, like everyone, and lost a big chunk of readers who were also Leave voters when we all took sides. In fact, I recently found myself being described on another forum on the Internet as having had a “breakdown” in my first Brexit responses in the weeks that followed, which was an interesting experience.

(Now I know how it feels to be a public figure like Kim Kardashian! Well, perhaps a bit.)

Maybe I did have a bit of a wobbly moment there. However the past two years has only reinforced my feeling that the entire thing is an enormous undertaking – and a colossal waste of time for all but constitutional sticklers – that from an economic perspective could only have negative results1, and that reality was either not understood or willfully ignored by a good cohort of its supporters.

True, the economy has only slowed, not tanked. But otherwise Brexit has dragged on because everyone wants a different Brexit, and any Brexit is a logistical nightmare, let alone one that doesn’t send us into an immediate multi-year recession. (i.e. No deal, hard Brexit, and we’d have been out by now after an immediate triggering of Article 50).

Some of those who don’t read Monevator anymore said in the days after the vote “Get over it, the vote has happened, we need to move on.” I shuddered, because again I saw that they didn’t realize what they’d voted for. Two years on and Brexit is still item one or two on every news broadcast. It will be that way for years more to come.

I’m late to go to one of the restaurants that hasn’t yet been squeezed out of business by the first effects of Brexit, so no time to spell check or sense check this post.

I wanted it to be a bit more diplomatic, but probably there’s still too much snark in it if you did vote Leave. Perhaps that can’t be helped, and I’d feel the same if I read a similar post on your own blog.

At a time when the global temperature is rising, bees are dying, the leader of the Western World has gone rogue, the robots are coming for our (current) jobs, people are 10 years away from fighting land wars for water, and the only people who’ve really got rich from the past 10 years are the richest, I still feel the whole thing is a massive distraction that will solve nothing that really matters.

But fair enough, your mileage may vary.

From Monevator

From the archive-ator: Seven habits of highly successful private investors – Monevator


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.2

Builder Berkeley hits ‘peak profits’ as it warns of London house slump – Guardian

Trader sues broker after making £9m in a live ‘demo’ account – ThisIsMoney

Inside the bank branch that looks nothing like a bank branch [Search result]FT

St Albans commuters kick at gates amid Thameslink chaos – Guardian

‘No deal’ Brexit would cost UK households £1,000 a year [Search result]FT

Products and services

What makes the investment trust model a winner? [Search result]FT

Travel at peak times on luxury coaches with ‘Uber for coaches’ app Sn-ap – ThisIsMoney

How to unlock cash from your property in retirement – ThisIsMoney

Hedge fund fees fall to a record low [Hey, it’s all relative!]Institutional Investor

How to avoid the pitfalls when buying a home abroad – ThisIsMoney

Nottingham Building Society will be second cash lifetime ISA provider – MoneySavingExpert

Property peer-to-peer lending — is it ever a good idea? [Search result] – FT

Comment and opinion

The original ‘flash crash’ [Liquidity fears did not arrive with ETFs…]A.W.O.C.S.

Not every millennial wants to own their own home – Guardian

[De] material girl – Humble Dollar

Heigh ho, heigh ho – SexHealthMoneyDeath

How the YoungFIGuy invests his money – YoungFIGuy

Early financial freedom: An unobtainable chimera? – Simple Living in Suffolk

Reasons not to invest in the FTSE 100 – The FIREStarter

RIT has put his notice in [Congratulations!]Retirement Investing Today

How long can US stocks beat bonds by such a wide margin? – The Capital Spectator

It ain’t what you don’t know that gets you into trouble [Factors/return premiums]AQR

A real-life SIPP in drawdown: Year 6 update – DIY Investor

Inferring the statistics of Buffett’s alpha – Flirting with models

This is a Golden Age for anyone wanting to start a tech company – Fred Wilson

How active management survives: The conjunction fallacy [Research]SSRN

Kindle book bargains

Rivers of London by Ben Aaronovitch – £0.99 on Kindle

Eye of the storm: 25 years in action with the SAS by Peter Ratcliffe – £0.99 on Kindle

How To Be F*cking Awesome by Dan Meredith – £0.99 on Kindle

Off our beat

Smarter, not harder: How to succeed in work… – Farnham Street

…alternatively: Why you should slack off at work to get some work done – Wired

London is the AI capital of Europe [Puffy PDF, but interesting]London Mayor/CognitionX

Apple sees its future in augmented reality glasses, not iPhone – Above Avalon

UK summer BBQs threatened by a shortage of carbon dioxide – Guardian

And finally…

“Far too many people think that they have an edge, and far too few people have an incentive to tell them otherwise.”
– Lars Kroijer, Investing Demystified

Like these links? Subscribe to get them every Friday!

  1. Again, I reiterate they may only amount to say 0.25% off GDP annually in the long run, but that’s also huge in the long run. And for what? []
  2. 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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{ 141 comments… add one }
  • 101 Steve June 25, 2018, 11:44 pm

    Brexit will make very little difference on Britain’s finances, both sides are over playing the benefits and the pitfalls.
    Labour getting in power with Corbyns policies is a far great risk to the UK’s prosperity.

  • 102 Gordon June 26, 2018, 5:03 am


    Do you live in some alternative universe? For the last three years Remainers two main arguments for Freedom of Movement were: “we need migrants to pay for our pensions” and “migrants work in the NHS”.

    “Immigrants make a net fiscal contribution”? No they do not, and just because this fallacy is repeated does not mean it becomes true. Even biased research shows EU migrants make a tiny net contribution and non EU migrants are a huge fiscal drain.

    Here’s an article from the Guardian saying EU migrants make a net fiscal contribution. Look at the comments beneath the article and order them by popularity. Even Guardian readers are sceptical of the fiscal benefits of immigration…..


  • 103 Wephway June 26, 2018, 8:36 am

    Gordon, let’s keep this civil okay?

    The point I’m making is that most Remainers are simply trying to defend immigrants from the types of attacks you are making. There is a positive case to be made for freedom of movement, but it’s not ‘we need immigrants to pay our pensions’ (though we probably do).

    You can call evidence that disproves your argument fallacious or biased if you like, but it’s not going to convince anyone that isn’t already convinced. It’s a bit like Donald Trump calling all news he doesn’t like ‘fake news’, or the way Leavers dismiss expert analysis, it’s just a way of shutting down debate.

    I’m not sure why you mention non-EU migration, seems irrelevant to me in a discussion about the EU (clue is in the name). Also you ignored my point that the UK govt could have prevented a lot of EU migration and chose not to.

  • 104 Mathmo June 26, 2018, 9:55 am

    Interesting assertion that the lower return of — say — VGOV is compensated for by the currency risk of SGLO or even a pure treasuries CBU0.

    Obviously there’s slightly different durations there, but all are medium 8-12 yr. The treasuries yield 289 vs gilts at 131. That’s a lot of currency risk to price in. Sterling has taken a hit and is set for a big recovery when that thing which is not to be named is not as bad as we think, but still a chunky spread.

    Isn’t there more an effect that HMG is being more manipulative of the price than USGov and that the market expects less default risk of the latter? In which case if I’m after wealth storage pending equity collapse (if you believe that bond return is from rebalancing premium, not yield).

    Do I as a domiciled UK person care just about sterling, or is my expenditure in fact linked to the $? Oil. Commodities. It’s easy to argue that I just care about GBP, but I have to worry about inflation if the currency weakens.

    Also — given that 50% of a mixed basket is US stocks, and a lot of emerging markets (such as FTSE100, lol) are strongly $-led, I think global stocks have something like a 70% exposure to $. So if $ collapses when equities go, sure, my VGOV looks like a pretty smug bet, but the CBU0 isn’t too bad off if the equities drop in $ terms too.

    Hmm. One to ponder. Not sure I have the answer. I guess some co-variance stats would be helpful.

  • 105 Matthew June 26, 2018, 10:10 am

    I think that we British are so good natured/vulnerable to guilt that a significant proportion would put the welfare of immigrants above their own, even if they did believe they would benefit personally from less immigration. People who work with kind EU citizens feel particularly guilty and wouldn’t want to explain their decision to those friends. But for me it was made easier because I put my son first. Some other countries would not be as tolerant to us.

    Plus, non eu migrants and the European migrants already here may benefit from reduced future immigration regarding jobs and housing, aside from any economic impact

  • 106 The Investor June 26, 2018, 10:22 am

    @Mathmo — At this point I’d ideally point you to my own deep dive into why to hedge bonds but not equities, but it sits unfinished at 2,000 words in my drafts folder! 🙁 Here’s a paper I have bookmarked from Vanguard though, which may be useful in your research: https://www.vanguard.co.uk/documents/adv/literature/going-global-with-bonds-tlor.pdf

  • 107 Fremantle June 26, 2018, 11:40 am

    It is perfectly rational to be both pro-immigration and mindful of local concerns over immigration. Freedom of movement for workers is tempered by the right of government to control movement from member states on the basis of public policy, public security or public health, but crucially also required employment contracts to be made and accepted. There was obviously a lot of latitude in how this could have been implemented, the UK’s choice was to open the economy completely in line with the open society that is characteristic of the UK. There were to be no police registrations, ID cards or other internal controls for us.

    Personally the open society model of trusting people who are here at face value is admirable and desirable. The combination of free movement, an open society, an open economy, rule of law, strong institutions, low barriers to entry, made the UK a magnet for ambitious risk taking Europeans. Even before freedom of movement, the UK has been a magnet for entrepreneurs from the Continent.

    What surprised the government of the day and subsequent governments was just how popular a destination the UK was. We’d under appreciated just how popular the British model was. This is undoubtedly a good thing. The UK is a prosperous and successful country where people want to live.

    I also believe that attempting to control immigration through the introduction of internal controls, police registration, ID cards etc. as seen on the Continent, would likely undermine the open society model and make the UK overall a much less pleasant land. This is the European model, the Napoleonic Code model, where the state’s inclination is to proscribe what is allowed, rather than the Common Law/Westminster model whereby the state tends to limit itself to defining what is not allowed, and the individual is free to pursue their own ends without needing the state’s permission. Sure, the lines are blurred, we in the UK don’t live in a libertarian free for all, but I much prefer the open society tendencies that the UK has now.

    To preserve the open society model, therefore, we have to make compromises. The compromise that many feel is in control of immigration and the promotion of integration. I’m less inclined to the later, but recognise the benefits of the former, or at the very least the motivation driving the desire to control immigration. By controlling who arrives and is allowed to stay at the border, we can preserve the characteristics of the society that make the UK such a desirable destination in the first place.

    I may be in a small minority of Leave voters to rationalise this way, but I also don’t believe we should dismiss the fears, rational or otherwise, of those whose reactions to mass immigration over a sustained decades long period is more visceral. I’m simply not convinced that the UK could control immigration within the current framework of the EU freedom of movement for workers without losing a valuable and, at least domestically, under appreciated aspect of UK society.

    But immigration was only one part of my case against the EU, and probably not even the most important part.

  • 108 Steve June 26, 2018, 1:14 pm

    Maybe the real scandal was that private investors and the public were told that remain had won, yet the hedge funds knew leave had won.
    Just think how much money was made out of that!
    The mind boggles.


  • 109 YoungFIGuy June 26, 2018, 3:07 pm

    Hi Mathmo, TI – great comments.

    The classic argument against holding international bonds runs like this: say you are a UK investor and hold US treasuries. The US fed then aims to devalue the dollar and create a higher level of inflation. Your treasuries fall in relative value but your UK inflation is the same.

    The argument for international bonds is more general: you are diversifying across a broader asset base and arguably closer to costs of production for a global consumer.

    There’s some research (I think it’s from vanguard but don’t have it to hand) that shows that after hedging most developed market bond returns are similar. The effect of hedging is to equalise global returns – implying that currency effects explain a great deal of the variation.

    I also recently read some research from the CFA (I think, again don’t have it to hand) that shows the dollar return correlation of home and foreign bonds is moving towards 1. There’s been more research on this with corporate bonds which have increasingly covaried with equities. The collective research suggests that in a crisis corporate bonds may not be a suitable diversification for equities.

    I’m also glad to hear somebody else also has concerns on the suitability of the FTSE 100.

    Another thought with bonds: something that is overlooked is that we buy and use a lot of services from the government. This doesn’t tend to factor into what people traditionally think about when it comes to inflation, but it exists. The roads, NHS, rubbish collection, Bobby’s on the beat. The government can either pay it from taxes or from borrowing money (with the ultimate aim, presumably, to eventually pay that debt back through higher tax receipts… That’s the theory anyway…) Holding your domestic bonds is (arguably) a better hedge against that spending than foreign bonds. Mind you, I wonder what Argentines think about that…

    Finally, I use both a investment portfolio analysis/return (like I showed on the blog) and run a full balance sheet with all cash, loans, property. One reason I keep the property out of it is because its a challenge to truly value it. I’ve thought about indexing to the nationwide or Halifax index but that feels wrong. We get periodic valuations from estate agents, which I use as marks in the balance sheet, but it isn’t really the same as a true liquid value. I’ve looked for some kind of answer but I can’t really find anything that feels right.

    Sorry for any typos or loose words on my phone at the airport.

    (p. s. Mathmo, I have absolutely no hard feelings. You are always welcome to share your thoughts on the blog. I’m always looking to get insights from other people to learn something new and think about things. I don’t know all the answers and I’m blundering around like everyone else).

  • 110 The Investor June 26, 2018, 3:08 pm

    @Freemantle — That’s one of the best pro-Leave comments I’ve read for a long while. Your view wouldn’t get me to a Leave vote over Remain, but unlike the economic arguments — which are a non-starter for me — that position is coherent and consistent. I suppose I’d push back and say that the ten years after Romania etc gained the right to move were probably a one-time thing, we are unlikely to see such a spike again, and that over time their economies will catch up, reducing the differential and curbing the flow. But I’d agree it’s rational to say the rate of change was too much of a gamble to find out if one really dislikes the broad cultural impact of high immigration.

  • 111 Fremantle June 26, 2018, 10:18 pm


    Perhaps it helps that I’m Australian British. Australia has long struggled with immigration with a vocal and at tubes electorally popular nativist fringe.

    Stopping the refugee boats wasn’t popular in liberal left wing sectors, but broadly popular amongst most voters of both left and right and has been a reasonably consistent policy for the last 15 – 20 years for both Labor and Liberal (Conservative) governments.

    It has been framed as both humane and fair, stopping the drownings and queue jumping by your with resources to pay the people smugglers. Whilst the EU debate was clearly not about refugees, the refugee influx into a divided and open Europe was bad press for the EU in the UK.

    On the broader front, Australia is s rich and successful open society, albeit with significant benevolent paternalistic tendencies, that welcomes large numbers of immigrants in a reasonable controlled and electorally manageable manner.

    The UK could do worse than poaching some of Oz’s immigration policies post Brexit, which they have been doing for non EU immigration already.

  • 112 Fremantle June 26, 2018, 10:19 pm

    … and a times…

    I’d really appreciate an edit function on comments!

  • 113 zxspectrum48k June 26, 2018, 11:00 pm

    Mathmo. If you take one of the well-designed world government bond indices (the Citi WGBI or JPM GBI) you could look at three indices: the GBI ex UK, FX hedged, GBI-exUK FX unhedged, GBI-UK only index. Taking say a 25-year history (you could go back much further but you would really need to alter for major composition changes) then the annual returns for each index would be: 5.19%, 4.17% and 5.80%. The higher gilt returns are explained simply by a) higher starting yield b) higher modified duration. Normalizing for duration, the returns would be 6.95%, 5.58% and 5.80%. So the GBI-exUK, FX hedged wins. The real value, however, is in the return volatility. The return vols (again normalized) are 4.12%, 11.39% and 5.82%. So the GBI-exUK, FX hedged is also less volatile than the gilt index (diversification etc). The GBI-exUK, FX unhedged is a bit of a disaster with 2.7x the volatility. You haven’t really bought a bond portfolio at all, you’ve bought a currency fund. The duration risk is swamped by FX effects. The only benefit of the FX unhedged fund is the lower correlation with the gilt index (58.9% vs 76.0%) but this is mainly due to higher vol.

    The idea that cross-market correlations have risen isn’t really true. They were always high. But they do vary over time. So the correlation of the GBI-exUK, FX hedged with the Gilt index was 80% in the 90s, dropping down well below 50% in the early 2000s, back to 90% in the late 2000s, again 50% by 2011/12 and now back at 82%.

    As someone who has spent his career in fixed income, I was always taught from day one that that you separate fx risk from duration risk. You look at bond portfolios in currency-hedged terms because this is mathematically equivalent to funding the bonds in their local currency (I’m ignoring the complication of cross-currency basis here). If you want to take FX risk, you do that as a separate overlay. Equity types take a different view but they were never very good with numbers …

  • 114 Mathmo June 27, 2018, 1:39 am

    @spectrum, @YoungFIGuy and @TI
    Thanks for all the extra bond thoughts there — those have all really advanced my thinking now the water is looking a little warmer (yields up, central bank interference down) and my cash pile is looking a little more expensive.

    Having played with corporate bonds as I chased yield and realised that they were correlated with equities, dabbled in gold (that’s the opposite of yield chasing) and even ultra-shorts when I realised I was scared of duration risk (woah — watch those bid-offer spreads open up to a year’s interest when equities dive), I’m still very much on the journey for the perfect counter-weight.

    Looking at what’s available, then in hedged global bonds. ishares have IGLH (G7 govt bonds) at 25bps or AGBP (Barclays Global Aggregate) @ 10bps seems better for only a little extra spice. Vanguard seem to offer a fund @15bps but no ETF yet. Assume the hedging drag of ~10bps is built in to the yields.

    That vanguard article is nicely laid out — and if I’ve understood it correctly seems to come out on the hedged global bonds being a lower volatility store of wealth at a cost of around 10 bps for the hedge, and with a significant diversification improvement over gilts. That seems to agree with spectrum’s excellent and informed comments as well — although I’d like to see correlations with equities as well as just considering pure yields — I believe in dry powder as much as absolute yields.

    I’ll look forward to the completed article, TI — good to know I’m not the only one with an embarrassment in their drafts folder… soon….soon…. 😉

  • 115 Tyro June 27, 2018, 11:19 am

    @zxspectrum48 (and others): re those low-ish volatility returns of 5.5-7% over the last 25 years, how likely do you think it is that we’ll see similar returns over, say, the next 5 years? I ask because I’ll shortly receive a chunk of money to try and keep relatively safe (and not eroded by inflation) in expectation of another property purchase in 2-3 years: the amount is too much to keep in cash but I keep reading that bonds are coming to the end of a 30 year bull run …..

  • 116 Matthew June 27, 2018, 11:38 am

    @tyro – bear in mind interest rate risk – may be keep a fairly significant proportion in cash to hedge that, inflation over 2 years is still a factor obviously but not your biggest risk. Global reduces interest rate risk but increases currency risk, unless hedged

    I personally think 20% equity (vls20) is less volatile than 100% bonds

  • 117 algernond June 27, 2018, 1:59 pm

    Fremantels immigration comment is very well put.
    Additional comment on this:
    (Very approximately) 300 years ago, the Enlightenment in Western Europe started the process of wrestling away power from religion and superstition that helped inflict all kinds of horrors on the population; can recommend first part of Steven Pinkers ‘Better Angels of our Nature’ for good summary on this.
    To control the type and amount of immigration to ensure some of the gains are not ceded seems to be a valid desire, and maybe worth sacrificing some economic growth for.
    It seems that these concerns do not factor into EU immigration policy at all.
    The conversation on it is barely possible in civil manner, because the Left/Liberal/Progressive alliance generally reacts with ad hominem type re-buffs which include words like Nazi, Fascist, Islamophobe, racist….

  • 118 Mathmo June 27, 2018, 11:19 pm

    Tyro – on that horizon I’d be keeping in cash or cash-a-likes — either a savings account or Zopa type lending.

  • 119 Vanguardfan June 28, 2018, 7:30 am

    Is P2P really ‘cash like?’ It’s basically sub-prime lending isn’t it?
    Surely the default risk is higher than, eg, corporate bonds? I agree though that with 2-3 year horizon the only way to avoid the risk of nominal capital loss is cash. You can’t really get a risk free inflation linked return at the moment….

  • 120 zxspectrum48k June 28, 2018, 8:46 am

    @Tyro. Agree with Mathmo. If this is your savings for a house purchase, I’d say cash is the place over a 2/3 year horizon. Almost by definition, the best approximation for returns on bonds over the long term is their yield. At these much lower yields, you’d expect much lower returns (albeit also with lower volatility). As for bonds coming to the end of a 30-year bull run; yes it would seem that way. Of course, people said that 5 years ago, 10 years ago, 15 years ago …

    P2P is hard to categorize. I see it as part of my fixed income credit exposure. Some loans are probably as safe as investment grade corp bonds, others are more equivalent to spec grade junk bonds, ABS or secured loan funds. You also have some very leery speculative property development loans offered to lenders at yields of 12% that no institution would touch with a bargepole (especially given the borrower’s IRR is 30%). The all-in spread being taken between borrower and lender rates is something to be very aware of.

  • 121 Tyro June 28, 2018, 1:36 pm

    Thanks all. A clear consensus for cash over bonds. I do a bit of P2P lending with Ratesetter, but cautiously and experimentally – only about 1% of investable assets. If it doesn’t give me cause for concern over the next 5 years or so I’ll probably put more in, but wouldn’t risk a large-ish lump sum over the next couple of years.

  • 122 Mr Optimistic June 28, 2018, 2:11 pm

    On the basis that you can never be sure, I put money into a Vanguard US Government Index Fund, hedged to GBP. Duration is a not too long, 6 years. Consensus is that I will lose money and would be better off with cash. Well I am greviously overweight in cash so a bit of diversification can’t do much harm. You never know, we could go Japanese and rates will head back down. Hope not but……

  • 123 Matthew June 28, 2018, 5:02 pm

    I personally am willing to risk delaying my retirement goals, and this allows me to take more risk, and for my upcoming wedding I’m prepared to take an affordable loan to avoid selling at a bad time, but it’s not for everyone

    I’m not the greatest fan of bonds because of limited upside to mitigate risk of overall loss, and because rates are low, I can see that p2p probably is junkier but probably escapes interest rate risk, but then so would global bonds (largely)

  • 124 Andrew June 28, 2018, 11:12 pm

    This comment will go down like a lead balloon and won’t be appreciated but I do want to say this. This is my one attempt to help random people on the internet.

    None of this matters. Brexit doesn’t matter. It’s all mental masturbation!!

    Look, the greatest way to shelter yourself from any of this is to figure out how to generate more money and increase your income earning potential. That is it. Buy fucking VWRL and dollar cost average into it. All this stuff, never makes anyone rich, it is a way of protecting the value of the money you have already earned.

    Increase your earnings. Pay off debts. Dollar cost average into a global tracker. Do so tax efficiently at first and then in normal accounts after. If you are must make small bets with a small portion of your portfolio.

    Half of you are having an aneurysm about what to do with your £20k a year ISA. Increase your earnings and dollar cost into a global tracker, it is the only rational play. If you are smart enough to beat the market, to a degree that brings you massive wealth, you wouldn’t be on this blog.

    Have a nice day!

  • 125 Matthew June 29, 2018, 5:54 am

    @Andrew – indeed a lot of it is, as you put it “mental masturbation” because this is the most interesting thing a lot of us do/ have to talk about, and it’s semi social as well.

    Vwrl makes sense for equities, although bonds have a place for different timelines. On the other end of the risk scale people may tilt for other risk premiums.

    Dollar/pound cost averaging is good advice to reduce volatility in the early days, if volatility bothers you, but on older bigger portfolios your contributions will be less than the volatility

  • 126 Vanguardfan June 29, 2018, 8:07 am

    I imagine there are quite a few of us whose Brexit concerns go rather beyond the possible impact on our portfolio…..question is what to do about other than hide under the duvet?

  • 127 algernond June 29, 2018, 9:27 am

    I’m actually pretty worried about what the future holds for the UK and the rest of Europe in terms of cultural change and way of life.

    Can anyone recommend an article(s) on how to handle ones SIPP / ISA wrapped finances if using them to live on from afar?

  • 128 The Rhino June 29, 2018, 10:30 am

    can’t find the relevant article where the discussion on setting ratesetter rates to avoid the volatile lows was – but I note today that ratesetter has removed the option to specify a min interest rate for the rolling monthly (you still can for 1 and 5 years)

  • 129 hosimpson June 29, 2018, 1:23 pm

    To paraphrase Bill Maher, there are two things that Leave voters really hate: (1) being called xenophobic and (2) East Europeans.
    As for the common law vs civil law argument – at this point, given the years of globalization and international convergence, the debate is purely academic and should be relegated to the field of history rather than law. It’s like my 90-page master’s thesis on the merits of the Continental vs Anglo-Saxon corporate governance and finance models. Academically interesting, practically absolutely pointless – now as it was 16 years ago.
    I no longer engage in arguments about the stupidity of this Brexit project. Financially, I’m hedged (as far as possible) against the negative effects of the country going to shit – there’s literally nothing else I can do – and from this vantage point I am going to spectate the proceedings with a supersized tub of full fat salted popcorn.

  • 130 Michael Leuty June 29, 2018, 3:09 pm

    @hosimpson: One possible residual effect of the Napoleonic Code / Common Law difference is that the French seem to see the law as being slightly elastic, while the English believe it should always be followed to the letter. This odd English quirk could account for the view that we shouldn’t hold a second referendum because our course of action has been irrevocably set by the first.
    I very much agree with your third para. You may think I smiled a little at your first, but I couldn’t possibly comment.

  • 131 Matthew June 29, 2018, 5:18 pm

    Common law gives us more certainty than we’d otherwise have, which is good for business, i.e if we were more willing to have a 2nd referendum we would be facing more uncertainty than simply hard, soft or scrambled brexit.

    I also think we over egg the importance of news, we over panic, and we pay for newspapers as if we think it’s important for us individually to know more than free news will tell you, or just a form of entertainment i suppose

  • 132 Boltt June 29, 2018, 8:49 pm

    @ Rhino

    Setting a minimum interest rate for ratesetter – we talked about this in the comments here or RIT a few weeks ago.

    Yes, the floating rate only option for the rolling account seems to be set by the money weighted lending rate from the previous day 6am-10pm. I need to think through how the rate varies if everyone accepts the market rate! Anyhow the rate is 3.5% at the moment.

    I’m also comsidering removing my Investment from ratesetter – I have mild control issues and can’t easily judge changes in their lending integrity over time. Previously I’d taken comfort in using the rolling account thinking I’d get out early but this may be naive.

    Finally it seems wrong that ratesetter rollover 30day lending into longer term loans (presumably taking the margin) – but what happens if New lending funds dry up?


  • 133 Dean Smith June 29, 2018, 9:00 pm

    Investor, don’t you ever read old newspapers from twenty or thirty years ago and wonder at how they were obsessed with issues that don’t seem at all important now? Seriously, read a newspaper from the 1980s, it’s hilarious.
    I suspect Brexit is going to be like that.

  • 134 Mathmo June 29, 2018, 9:36 pm

    @tyro / @vanguardfan — yeah not sure all P2P is really to be lumped in with cash-a-likes. I put P2P with bonds cash and gold in the other side of my tally. They all have some similar features — P2P tends to be low duration (but still some interest rate risk) but high credit risk and yield. Pleasingly not correlated to equities unlike corp bonds, probably. I prefer Zopa as I believe in their integrity and credit checking (and have a friend who works there) – plus individual vs corporate counterparty seems less junky to me. But still not betting the farm on it! Cash is still fabulous — particularly government insured cash.

  • 135 The Investor June 30, 2018, 9:33 am

    @Dean Smith — Hah, yes I know what you mean. I daresay (hope? dream?) that one day Brexit will be a page seven story, though I doubt it will ever entirely go away as a chattering classes talking point. In my opinion the only way Brexit won’t have a small but permanent hit to GDP (say 0.2% a year) is if we eventually somehow have a super-broad range of free trade agreements that outweigh what we’ll likely lose by leaving the EU. (That’s because I believe in the fundamental economic theory and benefits of free trade.) If that’s even achievable it will take decades, and then decades more to make up for what was lost. This all means that pundits will regularly be citing what might have happened if we’d stayed in the EU indefinitely. Joy. 😐

    The economy isn’t the only reason to vote in/out, I accept that, but for as long as we are discussing the economy, I think we’ll be citing Brexit.

  • 136 Samuel Jefferies June 30, 2018, 10:58 am

    Woho! Thanks for featuring my guest post on the firestarter blog.


  • 137 The Rhino July 4, 2018, 1:09 pm

    @boltt just got an email through from ratesetter. They have had a bit of an overhaul of how rolling monthly works. You probably got it too I imagine?

  • 138 Gordon July 7, 2018, 10:30 am


    OK, northerners move down south, southerners also move north. I’d suggest that UK migration is a two way street and all parts of the U.K. benefit. However EU migration isn’t like that, how many Brits move to Romania to work? Maybe a couple of hundred?

    I watch the news and I see the NHS is in semi permanent crisis. I see that there is a housing crisis and not enough houses are being built. If we’re honest we’d admit both these issues are made worse by mass immigration… We really need a points based immigration system where only migrants that *contribute* are allowed in.

    Anyway, if immigration is such a good thing why is there not a single country in the world without immigration control?

    You’re right, the Bremain side of the argument really do need to explain why the EU and immigration are so good… If someone has lost their job/ can’t afford a house/ can’t get a doctors appointment/ can’t get their kid into the local school it’s not much of an argument when someone like you says “I really like working with migrants”….

  • 139 RetiredinLondon July 7, 2018, 11:07 am

    Thought i would post since i find this whole topic on immigration very interesting. First a little about me before i share my views:

    I am 35 and financially independent in London. Worked in financial services for 12 years. I am politically right leaning but not far right by any means and i voted for Brexit (simply because i am completely against the EU and its un-elected bureaucrats who are clearly doing more harm then good).

    I am largely in agreement with what Gordon says. I do think controlled selective immigration is a good thing for the country however what has happened in the last 20 years or so since the last labour government is a mass immigration project into the UK which has clearly been subsidized by the British national (those who have been here prior to the mass immigration) due to various public sector services being more in demand and the benefits being paid to the immigrants with no or low incomes. It also severely affects my generation, the so called millenials, who are finding housing more expensive which is largely due to immigration (property prices were rising long before ultra low interest rates). There are also many high skilled immigrants (mainly from the EU) who people like me would have competed with for jobs in the financial services for example. This clearly means my wages did not rise as much as they would have without the mass immigration project.

    I am not saying immigration is bad nor am i saying immigration is the solution to all our problems. All i am saying is that immigration needs to be selective and dependent on the needs of our economy. It should clearly be a net benefit to our economy (in terms of GDP, national debt and per capita prosperity) not just today but for the long term.

    I have a feeling far too much of the decisions on immigration by previous governments have been politically related – its easy to win an election when you give free stuff, and mass immigration just gives you suddenly a huge number of votes without putting much effort.

    It is easy to see how immigration is a good thing and there is nothing bad about it. Whenever i catch an uber or get a delivery, i like to thank the cheap labour due to immigration that has kept my living costs down. But i am no fool. This mass immigration is being paid by me, today and further down the line. It is being paid by me due to rising council tax, rising house prices (I bought in 2012), possibly reduced inheritance in the future etc. At least i do not work now so i am not paying as much as i used to. But i fail to see, long term, how mass immigration can benefit the individual’s prosperity.

  • 140 Boltt July 7, 2018, 3:31 pm


    Yes, I’ve just got round to understanding the changes – my minor rant is on YFG’s latest article.

    Basically I’m out of Rolling and moving some back into the one-year (4.5% v 3%).


  • 141 Michael Leuty July 7, 2018, 3:47 pm

    Legal immigration implies that nationals of a country are, more or less willingly, granting certain privileges to arriving non-nationals. But being (say) a UK national is very much an accident of birth, largely dependent on when your ancestors arrived in this country

    I was fascinated by Adam Rutherford’s book “A short history of everyone who ever lived” which cites good evidence to show that everyone of broadly European origin is a descendant of Charlemagne. Indeed, those of us of broadly European origin are descendants of every one of the people living in Europe 1,000 years ago with living descendants (which is about 80% of them). So a vast proportion of the UK population are descended from William the Conqueror, and not just the Queen and a few celebs on ‘Who do you think you are’.

    From a moral point of view I think it a desirable aim to offer similar advantages and prospects to all of Charlemagne’s descendents. That for me is one of the key aims of the European project.

    But people have to be comfortable with such changes. Integration takes time, and governments have to ensure that resources are made available to support the integrating immigrants, so that they are not seen as a burden by the existing population.

    Despite all the talk of becoming a ‘global trading nation’, leaving the EU feels like pulling up the drawbridge. Creating a united Europe in which “alle Menschen werden Brüder” would still be a long way off, even if we were to stay. It takes time to wean people off their current ideas and get them to think more widely. But “having got so far, it seems a pity to waste it” as Rabbit said to Pooh.

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