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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”. []
{ 141 comments… add one }
  • 1 Tony Edgecombe June 22, 2018, 8:10 pm

    I’m pretty sure politicians and zealots are going to be bickering over Brexit for a generation. I’m already completely sick of it and am cutting out most media.

  • 2 edel June 22, 2018, 8:13 pm

    Ha try living in Northern Ireland with all the uncertainty and risk of violence breaking out again if a hard border is re-introduced – really England will have it easy 😉

  • 3 Tim June 22, 2018, 10:30 pm

    That “Rapid Experimentation” piece on it being a golden age to be a tech startup has a lot of truth in it. However, something that worries me is the creeping influence of some of the attitudes of that trendy startup scene on more mainstream IT. I’m talking about mantras like “move fast and break things”, “release early and release often” and “if you aren’t embarrassed by v1.0 you didn’t release it early enough” (google any of those and you’ll find pieces extolling the benefits of such attitudes). A lot of these things actually translate as “get your users to do your testing for you for free”. That sort of thinking might be appropriate for a tiny startup desperate to get something out before they run out of cash… but when things like banks become infected too… that’s when you get things like the TSB meltdown. The article ends hoping “the result of this era of rapid experimentation is likely to be progress on important, and also mundane, human needs”… I just hope they realize some of us have a human need for anything IT related to stop changing so damn often!

  • 4 Chiny June 22, 2018, 10:50 pm

    So, why did you not short the £££ pre-referendum ? I’m equally Remain but shorted the £££ because there was little downside. Remain win; £££ would probably stay where it was and I spend months/year in Euroland, and Leave win, well we all know what happened. I’ve shifted £100s of k out of the UK slowly, have a Plan A nearly completed to shift myself, and a Plan B in case… A number of high profile brexiteers have already stated their plans to financially and/or physically exit the UK, so it seems a reasonable that savvy if humble Monevators review the options.

  • 5 mike June 22, 2018, 11:31 pm

    Interesting polling below – an economic downturn would not change most Leave voters minds (true, the reality of a recession could change that). This is why arguments to try and convince that Brexit is a bad idea, shouldn’t focus on the economics.


  • 6 britinkiwi June 22, 2018, 11:44 pm

    As a recently confirmed citizen of New Zealand (thereby having dual nationality) I have still followed the whole Brexit thingie quite closely having all my older relatives voting leave. Remember they are/were part of the generation that voted to join the EEC. As I said to a colleague soon after the vote – Brexit might work well for the UK in the long term but you can expect the politicians to cock it up….

    I get no pleasure from seeing this prediction acted out.

    Different economists find different things – even with Brexit (yes, there are economists predicting positives) and most projections of doom have failed to take place, which suggests that predicting the outcome of complex real world variables in nigh on impossible.

    I’m also very struck by alternate world views – bees are not doomed, neonicotinoids are better than alternates, afforestation has reversed, climate change isn’t all human driven etc etc and I find the real story is far more nuanced – and the world is generally getting better. As an example of the latter look up Hans Rosling on Youtube or the website ourworldindata.com.

    Thanks for the blog – always interesting! Always read!

  • 7 Bill G June 22, 2018, 11:44 pm

    Your comment on water wars in ten years time might be optimistic, the new Renaissance Nile dam in Ethiopia (with political support from Sudan) has potential to cripple Egyptian agriculture. It will produce three times more power than the Hoover dam, which suggests its size.
    This in a region with a massive youth bulge whose economic needs are already not being met.

  • 8 Neverland June 23, 2018, 12:09 am

    I always like to picture Boris Johnson as a frog with a natty little union jack waistcoat.

    As the story goes, researchers found that when they put a frog in a pan of boiling water, the frog just quickly jumped out. On the other hand, when they put a frog in cold water and put the water to boil over time, the frog just boiled to death. The hypothesis is that the change in temperature is so gradual, the frog does not realize it’s boiling to death.

    While the results of the experiment are in question it is a good metaphor for brexit.

    Of course that is just fantasy. Boris Johnson is a toad, not a frog. In reality the UK economy is the frog.

    The budget in November will be when the heat gets turned up to gas mark 4.

  • 9 Gordon June 23, 2018, 6:17 am

    Maybe people thought portfolios would collapse on a Brexit vote because the media and politicians had spent 6 months telling us Brexit would result in immediate collapse of the U.K.?

    I think leaving the EU will reduce the growth of the economy….. However I think leaving the EU will increase GNP…. IMHO, an economic model based on low skilled immigration is foolhardy. If fruit farmers and coffee shops can’t compete without EU migrants it’s doubtful they are really that beneficial to the UK economy. A fruit farm with a couple of hundred EU workers is probably costing the taxpayer a net couple of million in tax. Does the UK need that type of business?

    Trump is right on one thing. The media really is pushing out fake news.

  • 10 Passive Investor June 23, 2018, 8:02 am

    ‘…the assinine case to leave…’ It isn’t assinine to worry about uncontrolled immigration (if you don’t live in the SE and aren’t a beneficiary of low labour rates), lack of democratically elected accountability of the European Commission, the push for ever closer political union and the high price of food thanks to the CAP and so forth.
    Disagreement is fine but denigrating the arguments of your opponents is a matter of regret. I mention it because it is an almost universal failing amongst the Southern metropolitan elites.

  • 11 Gregory June 23, 2018, 8:07 am

    BINO. B(rexit) I(n) N(ame) O(nly):
    “Nothing in [sections of] this Act authorises regulations which … create or facilitate border arrangements between Northern Ireland and the Republic of Ireland after exit day which feature physical infrastructure, including border posts, or checks and controls, that did not exist before exit day and are not in accordance with an agreement between the United Kingdom and the EU.” http://www.businessinsider.com/this-brexit-bill-amendment-could-force-britain-to-stay-in-the-single-market-customs-union-2018-6

  • 12 Chris June 23, 2018, 8:09 am

    I would not worry about what others think about your views about Brexit. Your blog is your blog. Whether you’re a cheering leaver or a groaning remainer, it’s your space – and I personally value seeing a range of perspectives and am happy reading those which don’t necessarily align with my own. That’s how I learn things, change my mind etc. No intelligent person should allow themselves to get caught up the tribalism around this as I suspect of it is bread and circuses anyway.

    Having spent some time in poorer areas in the North around five years ago and realising that attitudes had not materially changed since growing up on a council estate in the 80s, I too was not surprised by the result.

  • 13 Matt June 23, 2018, 8:44 am

    I seem to recall reading a fairly serious economics article last year that argued that England leaving Rome in the 1530s had reduced economic growth. So you’re probably right.

  • 14 Tony Edgecombe June 23, 2018, 8:56 am

    @Chiny The pound would have probably bounced in the other direction, it had been on a trend since the referendum was called.

  • 15 Guido Maluccio June 23, 2018, 9:08 am

    @britinkiwi Of course there are better alternatives to neonicotinoids, unfortunately they aren’t so profitable. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4284368/

  • 16 Wephway June 23, 2018, 9:31 am

    Tbh we’re going to be rule takers in the future when we make a trade deal with the US or China. At least as part of the EU we had a large influence in the rules of a large economic bloc. As Theresa May said, we never really lost our sovereignty, though it may have felt like it. EU immigration could have been reduced by previous govts and wasn’t so you can’t really blame the EU for that. Food prices are going to be higher once we leave as well, regardless of the CAP. The warnings yesterday from Airbus and BMW were quite stark, the future looks fairly bleak outside the EU unfortunately.

  • 17 algernond June 23, 2018, 9:49 am

    Agree with Passive Investor; denigrating half the population is not helping matters.
    Have you seen the latest Jonathon Pie video: ‘BREAKING NEWS: All leave voters are thick!’ ?
    (Sorry, I dont’t remeber if links are allowed in the comments or not)

  • 18 Malcolm Beaton June 23, 2018, 9:49 am

    Brexit is a reminder to us all that in a money argument versus a people argument the people will win
    We see how “ human” the stock market is every day
    People seem to feel ignored,are hurting and generally feeling very blue
    In spite of all having shoes,a widescreen tv,plenty of food and a roof over their heads
    It’s obviously not enough
    The discussion is should be why this is so?
    Our leaders are very poor,corrupt and self serving with all the credibility of a used car salesman
    No wonder people are all over the place-very frightened and very angry
    The fourth estate is having a wonderfully profitable time exploiting the situation-who believes them any more?
    A very British Revolution is underway
    Can we all bring it to a successful conclusion?

  • 19 The Investor June 23, 2018, 10:15 am

    @PI — I was describing the case to leave as asinine, which we clearly disagree on, not its supporters. I’ve certainly thrown a few loose words around on this over the years, especially early on, but equally I feel there’s a rhetorical trick among the Leave press etc that actually relishes the idea they (“the people” etc) are being personally assaulted. Again I don’t deny most of us on all sides have said intemperate things but I think I can say the decision to leave is stupid and the likely outcome deleterious without that saying all or even most who voted for it are stupid.

    We all make stupid decisions all the time, as behavioral economics has demonstrated in the investing. 🙂

  • 20 Neverland June 23, 2018, 10:38 am


    Having worked periods in other EU countries the choice about having a low cost/low productivity economic model is the British governments nothing to do with the EU. Plenty of EU countries run trade surpluses and have high per hour productivity

    @passive investor

    If Brexit is going to be so great for food prices why has everything in my shopping basket gone up?

  • 21 Neverland June 23, 2018, 10:45 am


    Hitler, Trump. Duerte, Erdogan (repeatedly) were all democratically elected. People are thick and easily manipulated. I remember Thatcher sitting on a tank a in blue suit in 1982

    But that’s okay, as the Daily Mail would put it:

    WE MUST ACCEPT THE WILL OF THE PEOPLE AND MOVE ON (can’t do bold unfortunately)

  • 22 Tim June 23, 2018, 10:56 am

    @Gordon: I find your assertion that “A fruit farm with a couple of hundred EU workers is probably costing the taxpayer a net couple of million in tax.” incredible. Some evidence please? My own google-fu quickly leads to the (no doubt partisan) British Summer Fruit (BSF) association’s “Anderson report” from last year which includes “A slump in Government revenue from income tax, corporation tax and National Insurance” in its assessment of the predicted impact, but I assume they must have some solid basis for that. Of course the real dream of the tabloid right has always been to put the unemployed to work in the fields, and interestingly I also learned that the BSF is apparently distributing a video to jobcentres around the country this week in a desperate attempt to recruit more brits.

  • 23 Haphazard June 23, 2018, 11:15 am

    Given the vitriol that sometimes surrounds Brexit, it is quite hard to raise your head above the parapet. Especially if you’re a remain voter in a leave area or vice versa. Some of us feel we have to preface our comments with “Don’t shoot me, but…” disclaimers.

    But without commenting on the merits of Brexit itself, I think we should all be concerned about the poor quality the debate. Coverage focuses on the Westminster bun-fight, on party politics and divisions. We hear very little about the EU perspective (aren’t there two sides in a negotiation)? We are fed clichés about supposedly xenophobic leavers, on the one hand, and gloomy, doom-mongering remainers who just need jollying up.

    The debate before the referendum was similarly poor. There was little effort to explain what the EU did or how it worked. How many voters could describe how the EU makes laws, or what subjects it can pass laws on? How many people know that EU law is passed by a double majority of the Council (democratically elected governments) and the European Parliament (directly elected)? Does it matter?

    Or did people, many perhaps quite indifferent, vote because they fancied a change, like the vague idea of “taking back control”, distrusted the government (leavers) or were happy with the status quo, didn’t want to rock the boat (remainers)?

    I’m not sure that gut feeling is the right way to make this kind of decision – whatever side you’re on. It’s different in a general election where you are looking at the performance of a particular government, can assess the outcome of your vote and change your mind every 5 years or so.

  • 24 algernond June 23, 2018, 11:32 am

    Hi Neverland,

    I’m not saying that people shouldn’t continue argue, campaign or demonstrate for which ever side they wish (it’s meant to be a free country right?), just that that some of the remain camp denigration of leave voters does nothing for their arguement. Sure, it adds to the remain echo chamber, but won’t convince leave voters to change their mind; for that, proper arguements are needed, for which great numbers of people on boths sides haven’t gone into the detail very deeply.
    (Jonathon Pie puts it much better than me!)

  • 25 Gordon June 23, 2018, 11:49 am

    @Tim. I think you need to look at the state provided “in work benefits” to see if industries like fruit farming are beneficial to the UK….. A worker needs to earn circa £30k a year to be a net tax contributor. Do you think that fruit pickers earn that much?

    My immediate family own a fair chunk of agricultural land and I can confidently say that my experience of the farming industry is that it takes more from the taxpayer than it contributes.

    I think we should all be suspicious of vested interests defending their positions in this Brexit debate.

  • 26 britinkiwi June 23, 2018, 12:09 pm

    @Guido Maluccio Not sure your reference helped any and failed to support your assertions being a review of multiple strategies. Given this is a finance blog its probably less fruitful to discuss it here but illustrates my point entirely – it’s more nuanced than simplistic.

    @algernond Jonathan Pie – is a star!

    @Neverland Hitler was not elected to president but was appointed as successor when Hindenburg died in 1934 two years after the elections.

  • 27 Mr Optimistic June 23, 2018, 1:01 pm

    @Gordon. Re farmers, oddly round here every farmer I met seemed pro-brexit which surprised me. They were all fairly old, but nevertheless I thought they would vote for what I thought was a gravey train. Not so and still not sure why. However, not much point in claiming they were all wrong and foolishly voted against their own best interests whilst I, alone amongst them, was clear headed and rational. I’ll let you draw the broader parallels.

    I voted remain (through somewhat gritted teeth).

  • 28 Gadgetmind June 23, 2018, 1:12 pm

    There was a nasty (even for them) front page article in the Daily Mail a few days ago banging on about how nearly four million EU citizens in the UK (who’ve in most cases come to here to start a new life, learn the language, settle down, earn money and pay tax, buy houses, have children, all of these things) will not only be allowed to remain here post Brexit but can also have their families here. Column after column of hatred and bile.

    Err, yes, they live here and will be able to remain here, just like British ex-pats in Spain (except the earn money and learn the language bit!) will be able to remain there. What did these people expect, mass deportations the day after the vote?

    Faced with this level of ignorance and xenophobia we really don’t stand a chance.

  • 29 Neverland June 23, 2018, 1:20 pm


    It’s been 30 years in the uk since people saw that government policy can have an adverse effect of their standard of living so people have just forgotten that voting has consequences

    Because “leave the EU” was such an open ended outcome leave voters could kid themselves that the economic cost would be borne by someone else

    As time goes on it will be more apparent as taxes rise and public services degrade

    but of course … none of this will be anything to do with Brexit…

  • 30 Neverland June 23, 2018, 1:42 pm


    Fact: in the 1932 German elections Hitler’s national socialists won 37% of the vote, more than any other party and became the largest party in the German parliament

    If you would like to peddle alternative facts please try harder

  • 31 Passsive Investor June 23, 2018, 1:49 pm

    @ The investor – I completely understood that you meant that the arguments (not the people making them) assinine. That’s my point. It is perfectly possible to disagree about the economic benefits or otherwise of leaving vs staying and about whether constitutional and democracy arguments are important or not. But why do you say that these perfectly reasonable arguments made by Leavers are assinine (rather than that you feel strongly that they are wrong)? As I said you are not alone amongst Remainers in the hostility expressed towards Leave arguments.

    @ Gordon – we haven’t left yet! I have seen economic analyses suggesting that food prices are 10-20% higher than they would be without the CAP. In the short-term the pound fell after the referendum result and that has raised the prices of imported goods. But it is impossible to say where the pound will be relative to the euro in a few years time once the dust has settled. I would argue that the value of the pound in the long-term will have everything to do with the market’s view of the economic and monetary policies of the UK government and very little to do with the short-term uncertainty during the exit negotiation.

  • 32 Neverland June 23, 2018, 2:32 pm

    @passive investor

    But the economic investors made by the various leave the eu campaigns and now the government ARE asinine. Latest one being spending the “Brexit dividend” on the nhs…

    There is something rather Trumpian about pouring out lies about “£350m a week for the nhs from leaving”, “80m Turks about to join the eu”, calling judges and MPs “enemies of the people” and “traitors” but then playing thin-skinned martyrs when the multiples inconsistencies of their belief system get called out

  • 33 Wephway June 23, 2018, 2:52 pm

    The UK economy has gone from being the fastest growing economy in the G7 and EU to the slowest. Analysis today suggests the UK economy is 2.1% smaller than it would have been had we voted to remain. That’s £440m a week, somewhat more than the £350m a week we we’re supposed to save (though of course we got half of that back as a rebate anyway). Taxes will have to rise to pay for the new NHS spending committments, because we sure aren’t making anything from leaving the EU. Meanwhile Leavers continue to put their fingers in their ears and say it’s all going to be alright.

    All of the Leave arguments fall apart under greater scrutiny, and yet Leavers continue to parrot the same things. That is why their arguments are assinine. Immigration, sovereignty, £350m a week, control, it’s all hot air out of BoJo’s ass, but he doesn’t care as there is always someone else to blame.

  • 34 Grislybear June 23, 2018, 3:25 pm

    Whether you voted leave or remain there are some observations we can all agree on. The government doesnt seem to be making a very good job of handling Brexit. There is no clear plan about a way forward through Brexit. In the short term as a result of this there are going to be job losses. When it comes to negotiating future trade terms with the EU , they have a team with 50 odd years experience and are by all accounts excellent at their job, the UK team just will not be as good. I am sure we can all agree on the above.

  • 35 Passive Investor June 23, 2018, 3:30 pm

    @ neverland @ wephway. There are perfectly respectable economic models that predict better economic outcomes after Leaving. You are welcome to disagree of course. But rather than repeat (?parrot) the assinine assertion, perhaps have an open enough mind to reflect that the Treasury model predicted a serious economic downturn after the vote. Not a great advert for its forecasting accuracy or the assumptions it used in its modelling. Hence I have a degree of scepticism about the short term claim of a 2% loss of GDP.
    I agree that the claim about judges being enemies of the people was ugly and disreputable but it was made by a newspaper after the vote in the context of the Supreme Court ruling. It was not part of the argument for leaving. There doesn’t seem to me to be much point in continuing the debate in this somewhat uncivil forum so I won’t.

  • 36 Mr Optimistic June 23, 2018, 4:00 pm

    @Neverland. Perhaps the straightforward answer is that people didn’t necessarily vote according to economic prospects. People I know tended to vote on matters of control and dislike of how the EU is portrayed here. One noticeable aspect of the campaign as I recall it was there was not a strong pro-EU lobby and the remain arguments were negative, you’ll be sorry, worse off and the other lot are liars and/or fools. I wonder if this isn’t a pernicious failure of the EU: it may be economically and politically advantageous but nobody loves it. Not the Germans, nor the Italians, nor the Greeks, not the Hungarians….

    Isn’t this blog rather following the same pattern: your wrong, asinine
    , selfish and so on. If one wanted to advance the argument, and maybe get others to change, is that the best way of going about it?

  • 37 Neverland June 23, 2018, 4:13 pm


    The “treasury analysis” you are presumably referring to is dated 16 April 2016 and looks at the LONG TERM analysis of possible outcomes if the UK left the EU after 15 YEARS

    So to say “the treasury predicted a serious economic downturn after the vote” is just another piece of misinformation

    (Needless to say all the long term outcomes in leaving the EU were negative)

    Really, you just make things up, wave your hands around a bit and then say “there doesn’t seem to be much point in continuing this debate” don’t you?


  • 38 Wephway June 23, 2018, 4:17 pm

    I only saw one economic model suggesting a better outcome after Brexit and that was from Prof Patrick Minford who based his claims on false assumptions. https://blogs.sussex.ac.uk/uktpo/2018/02/22/will-unilateral-free-trade-be-the-making-of-brexit/ But I’d be happy to look at other models if you have them.

    The treasury model’s predictions were based on the UK leaving the EU straight away which didn’t happen. Saying that, so far the UK is 2.1% worse off, presumably down to the weak pound and a slow down in business investment. Mark Carney said the other day each British citizen is £900 a year worse off than they would have been, and we haven’t even left the EU yet. The future for the UK is bleak to put it mildly.

  • 39 Neverland June 23, 2018, 4:31 pm


    Apart from in the UK desire to leave the EU in other member countries is actually pretty low – FACT

    But you go ahead and make things up 🙂


  • 40 Green_as_grass June 23, 2018, 4:31 pm

    I would have thought a bunch of investment enthusiasts would agree that economists and their forecasts are about as much use as astrologers. But we all fall into the trap of suddenly believing everything they say and waving their predications around as if they are scientific evidence when they happen to align with our political views, views which most of us are reluctant to admit are more emotional than rational.

  • 41 Gordon June 23, 2018, 4:35 pm

    I think the economic case for freedom of movement is poor.. Yeah, a couple of million EU migrants will increase the size of the economy. However do they improve living standards for the average Brit? The BBC make much of the case that EU migrants pay £2 billion a year more in tax than they receive in benefits. What’s £2 billion a year for the average Brit? Circa 60 pence a week… However by the time you include the cost of the NHS and schools etc EU migrants are a cost to the taxpayer….

    @wephay. OK, say the economy would have been 2.1% bigger without Brexit. So what? What’s the point of continually chasing economic growth if you can’t get a doctors appointment or your kids in the local school? What’s the point of economic growth if you have to build houses on greenbelt to house all the EU migrants?

    The British people made the right choice voting Brexit.

  • 42 Passsive Investor June 23, 2018, 5:01 pm

    @Neverland – this is from page 5, the executive summary of the Treasury document you refer to.

    A vote to leave would cause an immediate and profound
    economic shock creating instability and uncertainty which would be compounded
    by the complex and interdependent negotiations that would follow.
    The central conclusion of the analysis is that the effect of this profound shock would
    be to push the UK into recession and lead to a sharp rise in unemployment.

    As I said to put it mildly it shouldn’t inspire confidence in the rest of the document.

    @ wephway – this is a discussion of the issues around economic models. You are right that most economists support your view but wrong that their opponents are assinine. Of course it wouldn’t be the first time that a majority of economists got it wrong.


  • 43 Gordon June 23, 2018, 5:19 pm

    George Osborne said in 2015 he would need an emergency budget if we voted for Brexit. We voted Brexit and we never had an emergency budget….

    The media constantly complain about the Brexit side of the argument lying. However it seems that it was Bremain that told the biggest porkies.

  • 44 Gadgetmind June 23, 2018, 5:20 pm

    The economic case for freedom of movement is very strong.


    And at the end if the day, it’s a valuable freedom, one that we’ve voted to take away from ourselves. Freedoms are hard won but oh so easily lost.

  • 45 Neverland June 23, 2018, 5:32 pm


    As I remember the pound dropped 10% on the day of brexit against the dollar before falling further, the bank of England halved interest rates to 0.25% and pumped another GBP 170bn of quantative easing new money into the economy

    As it is UK GDP in Q1 2018 grew… 0.1%…. pretty much the lowest in the OECD except maybe Italy

    … to put it mildly that doesn’t inspire confidence in the UK economy’s future prospects

  • 46 Neverland June 23, 2018, 5:40 pm


    George Osborne was sacked in July and we had an emergency interest rate cut plus quantative easing from the Bank of England in August 2016

    You just make things up don’t you?

  • 47 Gordon June 23, 2018, 6:00 pm


    I think you’ll find that Brits have been working/ staying around the world for a long time. I myself spent two years working in the Sultanate of Oman. Correct me if I’m wrong, however I don’t believe Oman is in the EU?

    How many Brits speak a second European language? Virtually none? How many Europeans speak English as a second language? Most educated ones? Freedom of Movement is a one way street of Europeans moving to the UK to work and very few Brits working in Europe. There are circa 400,000 Romanians in the UK. How many Brits live in Romania? Maybe 400?

    Anyway, I’m sure the well heeled readers of monevator will be welcome to live in Europe after Brexit.

    @Neverland. The U.K. Started quantitive easing in 2009. Are you suggesting the BoE started QE a full 7 years before in anticipation of the Brexit vote? Does the ECB not have a QE programme as well?

    The brexit vote was two years ago, I think most people can remember the hysterical forecasts from bremainers about an imminent economic collapse if we voted Brexit. The U.K. Voted Brexit and the the sky did not fall in.

  • 48 Neverland June 23, 2018, 6:24 pm


    Fact: The bank of England created £375bn of new money in its QE programme between 2009 and 2012 during the world banking crisis. Quantative easing stopped in 2012. Then in August 2016, the bank of england said it would buy another £70bn of bonds and issue another GBP 100 bn to banks in liquidity as a crisis measure

    There was no intention to restart QE until the unexpected brexit vote

    You just make stuff up don’t you?

  • 49 Gordon June 23, 2018, 6:41 pm

    @Neverland. OK, in 2016 the BoE created £60 billion out of thin air. So what? Before the Referendum the media/ politicians guaranteed that a Brexit vote would result in immediate economic collapse. Economic collapse never happened… In fact British manufacturing got a boost from cheap sterling…

    If the only evidence you can present that the Brexit vote was disasterous is £60B of QE maybe you should reconsider your opinion on Brexit?

    Maybe we should discuss something else instead? How about the FTSE 100? Is anyone else’s portfolio at an all time high?

  • 50 Neverland June 23, 2018, 6:51 pm


    Quantative easing was only adopted by the bank of england only under two circumstances:
    – the near collapse of the world’s commercial bank system (2009-2012)
    – brexit (2016)

    The bank of England base rate was lowered to 0.25%, the lowest level it has ever been in history, as a result of… brexit

    …but there was no crisis….” In fact British manufacturing got a boost from cheap sterling…”

    You just make things up don’t you?

  • 51 Gordon June 23, 2018, 7:05 pm


    So the point you’re making is that the BoE had the economic tools to smooth over any post referendum Brexit jitters? I think we can all agree with that. It’s just a pity that the BoE had to join in the hysterics with the BBC and George Osborne.

    With respect, bremoaners seem really rubbish at identifying with the concerns of the average voter. QE is of little interest to the average voter. Voters are more concerned about getting on the housing ladder/ getting well paid secure work/ getting NHS treatment/ getting their kids in the local school. All these things are made harder for Brits by millions of EU migrants moving to the UK….

    Anyway, you must excuse me. I’m going to take my shotgun out and look for some grey squirrels.

  • 52 Michael Leuty June 23, 2018, 9:51 pm

    Perhaps we can apply our investing acumen to analyse the situation?

    I don’t have an ‘edge’ to tell me what is going to happen, so I am investing passively by holding both UK and world stocks and both UK and an EU-27 nationality. 😉

    We know that people are biased in favour of decisions they have already made, so I expect few Remain and few Leave voters to have changed their minds yet. If the immediate prospects look less than rosy, Leave voters may ascribe this to the intransigence of the EU (which may further commend their decision), Government incompetence, or Remoaners ‘talking down’ the country. Alternatively they may see poor prospects as temporary difficulties before a bright future, or they may see them as sacrifices worth making to retain national autonomy and self-respect.

    I think a major shift in public opinion will only occur if and when things get significantly worse, such as major job losses that are incontrovertably linked to Brexit. Leave voters may say that an economic downturn would not make them change their minds, but that rather depends on how bad things get. An awful lot of people say they can tolerate investment risk but then sell when a bear market gets into its stride.

    One thing we can all agree on is that we live in interesting times and they are absolutely fascinating.

  • 53 Grislybear June 23, 2018, 10:00 pm

    Oh Gordon do be carefull its getting late and the light isnt too good try not to shoot any red squirrels or worse trip over and blow your own head off.

  • 54 Neverland June 23, 2018, 10:18 pm

    “Voters are more concerned about getting on the housing ladder/ getting well paid secure work/ getting NHS treatment/ getting their kids in the local school”
    Being poorer as a country helps with none of these things.

  • 55 Mr Optimistic June 24, 2018, 1:12 am

    @ Neverland. Please stop saying we make things up. We post what we believe and feel. We have just been through a banking crisis. Brexit is a side show. You may not agree but that is no reason to suspect fabrication.

  • 56 britinkiwi June 24, 2018, 2:24 am


    “The Nazi Party won the greatest share of the popular vote in the two Reichstag general elections of 1932, making them the largest party in the legislature by far, but still short of an outright majority. Because none of the parties were willing or able to put together a coalition government, in 1933 Hitler was appointed Chancellor of Germany by President Paul Von Hindenburg, through the support and connivance of traditional conservative nationalists who believed that they could control him and his party. Through the use of emergency presidential decrees by Hindenburg, and a change in the Weimar Constitution which allowed the Cabinet to rule by direct decree, bypassing both Hindenburg and the Reichstag, the Nazis had soon established a one-party state.

    The Sturmabteilung (SA) and the Schutzstaffel (SS) functioned as the paramilitary organizations of the Nazi Party. Using the SS for the task, Hitler purged the party’s more socially and economically radical factions in the mid-1934 Night of the Long Knives, including the leadership of the SA. After the death of President Hindenburg, political power was concentrated in Hitler’s hands and he became Germany’s head of state as well as the head of the government, with the title of Führer, meaning “leader”. From that point, Hitler was effectively the dictator of Nazi Germany, …….”
    From Wikipedia which I know can be somewhat unreliable.

    So, my reading suggests that Hitler was not elected in the sense that Trump was…. but I’d be interested in your thoughts?

    Now we’ve done it and invoked Godwins law!

  • 57 Matthew June 24, 2018, 6:31 am

    In the short term Brexit will let us escape a US-EU trade war. And in the short term there will be some pain in adjusting, more from impractical border checks etc rather than trade barriers I think (as currency swings can be bigger than trade barriers)

    Long term however we can deregulate and will have new trade deals. The EU isn’t that much of the world economy

  • 58 Brod June 24, 2018, 7:08 am


    Post-Brexit the UK will escape the fall-out of an EU-US trade war? Really?!? In the sense of being an irrelevance you mean?

    And “impractical border checks etc rather than trade barriers” – you have heard of just in time manufacturing, haven’t you?

    And you’ve seen how the EU gazumped the UK in a potential trade deal with Australia? Why have a trade deal with 60m people when you can have one with 300m people?

  • 59 The Borderer June 24, 2018, 7:26 am

    This splendid blog is normally enhanced by the high quality of comments.

    But I have to say that I’m terribly disappointed by the level of rancour and downright bad manners the topic of Brexit has brought out.

    Shame on you all.

  • 60 The Borderer June 24, 2018, 7:26 am

    This splendid blog is normally enhanced by the high quality of comments.

    But I have to say that I’m terribly disappointed by the level of rancour and downright bad manners the topic of Brexit has brought out.

    Shame on you.

  • 61 The Borderer June 24, 2018, 7:30 am

    Didn’t mean to post twice. Sorry.

  • 62 Gordon June 24, 2018, 8:25 am

    @neverland. Has the EU made us richer though? Ok, some things like being part of a free trade block are good. However, the EU also puts tariffs on goods like African fruit to support Spanish fruit growers. Does that make Brits “richer”? I’d suggest not…

    Anyway, why would the EU not want a free trade agreement with an independent UK?

    Has Freedom of Movement made Brits richer? Do you think East European “Big Issue” sellers make the UK a wealthier place? They clearly don’t….. The BBC repeatedly reports research from a certain Professor Dustman to prove that EU migrants contribute more than they take out. His research shows that EU migrants contribute £2billion a year more than they take out in benefits. So EU migrants make the average Brit £30 a year better off…. That’s not a lot of money….. However Dustman ignored the costs of the NHS and schooling…. So EU migration makes us poorer…..

    Lord Rose (leader of the remain campaign) even said Brexit would increase wages….

    With the greatest respect to remainers. It honestly seems like you let emotion cloud your judgement regarding the referendum.

  • 63 Malcolm Beaton June 24, 2018, 8:33 am

    Gentlemen-there is a storm coming whatever side you are on!
    As a financial blog we need to hear how to ride it out without being financially destroyed
    Can I ask that we get back to this idea
    I need ideas and thoughts from you all in order to survive
    Looking forward to them

  • 64 Neverland June 24, 2018, 8:43 am


    That’s the way governments typically get elected in democracies where no one has a majority of the seats, eg the recent Spanish and Italian elections

  • 65 Neverland June 24, 2018, 8:47 am


    In 1976 the uk needed to apply to the imf for an emergency loan so that’s how great things were

    Of course North Sea oil helped too

  • 66 ermine June 24, 2018, 9:24 am

    @Malcom Beaton I too would be interested in how to batten down the hatches. Some is probably general good sense, like shifting into foreign assets. But it’s probably not the only thing you can do, and it lacks detail. I’ve read a reasonable amount of Brexit-supporting material, and even these often expect serious adjustment pains.

    @Neverland > Being poorer as a country helps with none of these things.

    I am able to follow Gordon’s argument, which is that being poorer as a country is usually determined by GDP. If his case that you need to be earning £30k or more to be tax/benefit neutral, then it is perfectly possible that a country with a higher GDP (because of low-value-job immigration raising economic activity) may have a poorer lived experience for non-migrants, there isn’t the tax revenue to supply the extra hospitals, schools, jobs. The New Scientist gagdetmind posted very definitely supported his Remain thesis on migration, but the side effects are terrifying – to wit

    She blames an increasing loss of cohesion in society due to “individualising” forces from mass media to the structure of work. As people rely more on their own resources, they have a longing for community. The presence of foreigners appears to disrupt this, creating a “desire to control differences”

    I don’t want to live in a richer country which is at civil war. There are genuine problems with EU freedom of movement in some, possibly many communities. I haven’t lived in any, so I didn’t see that. It would be helpful if we’d tried to analyse this issue and address it instead of just calling it racism/xenophobia.

  • 67 Matthew June 24, 2018, 9:26 am


    Disruption to supply lines for just in time is part of that short term pain, although they have had 2 years to come up with a plan b – ie local suppliers, storage, etc.
    Long term deregulation should help

    And if we were tied with the eu we would then face trump’s tarrifs, alone we can be on good terms with everyone

    We won’t always be the first to make deals, it will take time, just give it time to happen

  • 68 Tony June 24, 2018, 9:31 am

    There hasn’t been a material shift in public opinion because as per posts 5 and 18, it was fundamentally about identity for many. For them being poorer is worth it or they believed/hope we’d be better off (despite the pound immediately tanked on holiday) or they didn’t follow the economics or considered it project Fear. I don’t blame such people. They were misled.
    In other EU countries, people see themselves as both a national of their state and an EU citizen. Not so in England. Theresa May gave a speech saying how Brits were never comfortable with being in the EU. Sadly, she was right. It’s the historical Island separation from the continent.
    Migration was linked to these identity issues. Free movement, fine for 40 years, became seen as uncontrolled migration from Eastern Europe. Even in Wales where there was little. And a belief this drove down wages. Fear of loss of and a lack of national identity, linked to immigration and increasing political correctness, led to a desire to assert “We’re British, not European.” Hence the huge proportion of pensioners voting leave. These are important issues. However, Brexit isn’t going to do anything to reduce net migration in practice nor to address the national identity issues in the UK.

  • 69 Neverland June 24, 2018, 10:15 am


    All of the individualising policies you are talking about are the subject of national government policy. Even immigration. There was even a five year migration brake on offer from the EU on the E8 accession. The UK government chose not to take it.

    Rich or poor the uk is still divided; Scotland; Northern Ireland; sooth vs north england

  • 70 zxspectrum48k June 24, 2018, 11:01 am

    The problem with the Brexiteer view is that it won’t deliver what they want. The idea that leaving the EU will mean you get on the housing ladder, find well paid secure work, get better NHS treatment, get your children into a good local school is just a fantasy.

    The basic problem is that the nation state, as it was formulated in the 20th century, is totally obsolete and unable to provide the above demands from the population. As obsolete as the state-nation became in the 19th century or feudal states became post the Treaty of Westphalia. Take “secure well paid jobs”. These are just a thing of the past for 99% of the population. The basic issue is that a homo sapien in the UK now has virtually zero competitive advantage over a homo sapien in India. You can cut migration but instead companies will simply offshore or automate. Given our demographics, the tax base will drop 25% over the next 15-20 years, so without migration, who is going to pay for the NHS or good schools? Our standard of living will simply need to drop (at least in relative terms, perhaps not in absolute terms).

    Worse, the Brexiteers seem to think “they are taking back control”. Well, somebody might be taking back control but it won’t be them. At the extremes, people were voting for choice between being ruled by a supranational bureaucratic machine or a bunch of Brexit ultras, sort of transatlantic Ayn Randian acolytes. Both see 99% of the population as cattle. It’s just that the EU bureaucrats are happy to simply milk you, while the Ayn Rand acolytes plan on slaughtering you.

  • 71 Andrew June 24, 2018, 11:36 am

    This is hysterical. You all need to get a grip.

  • 72 Factor June 24, 2018, 11:51 am

    Children please stop squabbling! Dad voted Remain but they lost – so he will adapt intelligently to whatever transpires, and right now he just wants to be able to enjoy (hopefully) watching England v Panama.

  • 73 Jim Brown June 24, 2018, 12:00 pm

    It would appear that the downside risks of leaving outweigh the upside risks.

    If we leave without a suitable deal or do deal ,these downside risks will be significantly greater than the upsides.

    We cannot afford to cut off our nose to spite our face. Yes there are issues with the EU, but from my vantage point brexit is more likely to make us worst off .

    I do hope we can leave with a good deal and without much disruption, Leave won and we have to respect that . Hopefully all political parties can work together in the best interest of the nation and ensure a success of brexit

  • 74 Gordon June 24, 2018, 12:03 pm


    “without migration, who is going to pay for the NHS or good schools? Our standard of living will simply need to drop”

    Remainers make this argument all the time. However I’ve not actually seen any evidence* that migrants are net contributors to the taxpayer. Do you have any peer reviewed research that shows migrants are net contributors to the taxpayer?

    I walk along my local high street. I see the East European “Big Issue” sellers, I see the numerous Turkish barber shops, I see the Thai nail bars, I see the Pakistani UBER drivers, I see the ethnic takeaway shops. I seriously doubt they pay more in tax than they contribute…..

    * Apart from the biased research the BBC cites.

  • 75 zxspectrum48k June 24, 2018, 2:14 pm

    Gordon. Nearly all research I’ve seen tends to imply that the average EU migrant (whether EU15 or A10) is a net contributor (see for example https://www.ft.com/content/c49043a8-6447-11e4-b219-00144feabdc0). They are also better qualified and more highly skilled than the average UK person. The UK, compared to the rest of the EU, has been very good at attracting the highly qualified. The evidence from non-EU migration is far less clear. It may well be this is a net cost in purely fiscal terms though it may be argued that in some areas we need those skills.

    Is a purely fiscal measure, however, the correct metric to understand someone’s value? Given that we tend to run a fiscal deficit then it follows that the average UK person is a net cost and that they take out more than they put in. Do we throw out all of those people aswell? The reality is that it is not immigration that is causing issues with wage levels or unemployment (http://cep.lse.ac.uk/pubs/download/EA019.pdf, page 8 and 9 show a zero correlation). Technology tends to commoditize and human labour is no different. We have entered a post-scarcity era for human labour and wage levels will continue to fall. Underemployment will be the norm. We need to stop thinking in terms of whether people are net contributors since the majority of the population will be net takers. Time for UBI, UBS etc and to stop seeing a job as the be all for human worth. It’s back to bread and circuses for most of the population (albeit virtual circuses probably).

  • 76 Jim Brown June 24, 2018, 4:19 pm


    Have you been to hospital lately , or in care home or in a lab doing research? You will find in all of those lots of migrants from EU and across the commonwealth.

    I know you are focusing on the low hanging fruits , taxi drivers, west indians barbers etc , you have been selectively disingenuous.

    The NHS would collapsed without migrants also lots of the biomedical research and engineering .

  • 77 Grislybear June 24, 2018, 5:59 pm

    @Gordon You walk along your high street and see Turkish barber shops, Thai nail bars, ethnic food takeaway shops and you wonder how much tax they pay and what their contribute.
    Im sure there is a Spanish citizen in one of the numerous Costas walking past mile after mile of “June and Georges takeway” , “British Bar showing faulty towers” etc. all staffed by UK migrants. I bet he is wondering after they pay for imported HP sauce and send their kids to the local school use subsidised local transport how much tax they really pay and what theu contribute to Spain.

    wondering the same thing ad he/she

  • 78 Gordon June 24, 2018, 9:38 pm


    OK, you cite research from Professor Dustmann that says EU migrants paid an extra £20 billion in tax than they received in benefits from 2000 to 2011. That’s £2billion a year… It’s not a lot…. £30 a year for each person in the UK….. It’s hardly gong to pay the pensions for Brits that Remainers repeatedly claim they will do….

    However I’ve already mentioned why Professor Dustmann’s research should be discounted in post 62…. He didn’t include the cost of the NHS and schools etc. He didn’t include the costs of Brits being put out of work by EU migrants. He didn’t include things like the cost of congestion. He didn’t include the cost of pensions as the migrants got older.

    During the Brexit debate I actually done my own research to see who I could trust. I find it exceedingly disappointing that Remainers still cite the same flawed research that I judged as being poor.

    Does anyone remember back in 2003 the newspapers quoted research saying that there would only be 13,000 EU migrants coming to the UK? The research was from Professor Dustmann….

  • 79 Scrooge June 25, 2018, 1:18 am

    We could rehash the referendum arguments ad infinitum, however unless the government falls or some mechanism is passed through Parliament for another referendum are we not wasting our breath?

    It seems parliament is as split and diverse as the body politic, so much for a “Brexit that works for everyone”.

    As someone who voted remain for economic reasons I hope some compromise is arrived at like Efta/EEA+, as a manufacturing business we carried out the risk assessment for our one UK site and it looks bleak for them if tarriffs apply, excepting non-trade barriers….we’re fortunate that we’re a low volume/high value OEM manufacturer in a niche market…..

    Personally? I am considering how best to arrange my portfolio to protect it from the risks of the various forms of brexit that might occur.

    All cash to be put into a usd nominated global short term bond fund, otherwise maintain the globally diversified funds Vanguard already provide (24% UK). I’m already heavily oriented to gbp through my day job (income) and home ownership (asset).

    I’m prepared to take a hit if things turn out better than the worse case scenario

    I’m waiting for Vanguard to open their pension platform later this year so we can move Mrs Scrooge’s crapita pension (would you believe the available equity fund is only UK!) into a globally diversified fund.

  • 80 Scrooge June 25, 2018, 2:42 am


    Btw I quite like my local Turkish Barbers, particularly the ear hair by meths removal they do – highlight of the experience!

    To paraphrase colonel Kilgore ‘I love the smell of burning ear hair in the morning’

    Last time I was there they informed me they were off to London to vote against Erdogan, unfortunately looks like they are to be disappointed.

    I expect you don’t know any foreigners who are living here, if you did you might not see them as mere £ signs in your fiscal balance sheet.


    Ps my cousin is married to a Romanian, she’s a finance director….I suspect she pays more tax than your sums suggest….

  • 81 Mathmo June 25, 2018, 9:22 am

    I was going to post about how fascinating it is to read YoungFIGuy’s post on asset and fund allocations (appreciate my views have not always been favourable of this particular blogger), but a dozen posts below the Godwin Line in the comments is never going to get a lot of traction.

    It’s quite similar to my allocations on two of the portfolios that I run, although more aggressive on the allocation and it raises many questions that I’ve been pondering about my portfolio:-
    — why not just lump-in on a balanced fund and have a quiet life (my answer so far is fees, but I suspect it is mostly to give Mr Tinker free reign)
    — why 10yr gilts and not a wider class of bonds? The role is to preserve wealth in an equity downturn, so why not international bonds if we are to buy international gilts? Or is “wealth” purely measured in GBP? How does inflation / interest / currency risk affect this. Hmmm. At 10%, it barely makes any difference, but I have more dry powder.
    — Why consider cash/property etc outside of investment portfolio rather than a total balance sheet approach? It’s part of FI. Separate because of liquidity? I have settled on a balance sheet view as well as a liquid rebalancable portfolio.
    — Home tilt. Never really got myself comfortable with my home tilt with the FTSE100 being what it is – and on the whole it’s been a bad bet, too. 250 and AIM are interesting (AIM doubly so for IHT hounds). But there’s some nagging reason that home markets might not do so well internationally over the next few years. Can’t remember what it is, though.
    — Will any of us who have lived through this last ridiculous period since 2008 have the nerve to buy? The returns graph looks remarkably like the S&P return graph because — well that’s a large chunk of the driver — and it’s been the golden decade of passive investing. Volitility and fees are dead. A remarkable 10 year bet. What’s next?

  • 82 AAJ June 25, 2018, 10:11 am

    If there is no great swing in prosperity, some remain voters may begin to think it’s OK and move to the leave camp and some of the leave voters will die off, leaving a pretty neutral position. Personally, I’d expect a similar result if there was a fresh vote.

    My personal regrets are not keeping my eye on the ball and investing for a leave vote. The leave vote cost me money, simply because I thought the polls were correct and people would be too scared to vote leave.

    I need to be more focused on how the politics will affect my money/investments. Right now, I’m wondering how interest rates (US and UK) will affect the markets. This is a long term theme change. Brexit may cause short term volatility, but I’m not very good as short term decisions, only long term trends.

  • 83 Fremantle June 25, 2018, 10:40 am

    Leave, Remain, I don’t care, but for the love of God, please spell “asinine” correctly…

    /pedant off

  • 84 Matthew June 25, 2018, 11:14 am

    Aaj – you can’t second guess things unless you have insider knowledge, just buy & hold and index through it all

  • 85 AAJ June 25, 2018, 12:21 pm

    Matthew – I don’t invest in index trackers, due to (maybe laziness) not being able to find trackers that track any index that I want in invest in. I am happy with that decision. However, I feel uncomfortable investing at a set time each month, investing a set amount into sectors I have a good degree of faith will not perform over the short timeframe.

    Investing is all about making an estimate that markets will rise over the long term. There always a degree of choice if you want it. Markets are changing and are always changing. I didn’t need insider knowledge to realise the Trump trade spat with China would have a short term effect on China stocks. I don’t need insider knowledge to know raising interest rate will put pressure on bond yields. Maybe people here realised Brexit would affect the price of the £ and the stock market and maybe these people made money from it. I did nothing (I was busy with other things) and lost out.

  • 86 Fremantle June 25, 2018, 12:27 pm


    Most people who benefited from the Brexit £ slide and Trump shenanigans were also busy off doing other things and simply following some version of modern portfolio theory, diversified asset allocation, allocating their monthly pension contributions to a mixture of bonds and equity. Even the most expensive managed fund benefited from these events.

  • 87 ermine June 25, 2018, 12:38 pm

    @AAJ what were you invested in? I did nothing too, other than buy a hunk of gold ETFs a bit before the vote, and while I can grouse about the way the Brexit vote damaged the future value of my DB pension and cash I have absolutely no complaints about its effect on my equity portfolio, other than that the nominal increase isn’t real, it reflects the fall in the £. But as a way of sheltering from the localised storm and the economic nonchalance of my fellow citizens, a roughly MCSI World portfolio did pretty much what Lars Kroijer said it would do

  • 88 Matthew June 25, 2018, 2:01 pm

    Aaj – the perceived probabilities of those things happening is already priced in, such that it’s hard to find a mispriced probability that you can trade on, so hard in fact that you’re more likely to miss out over fear.

    I.e . Bonds might not make sense at that price for you (or me) but they have underlying demand from institutional investors who are forced to buy them, so although they might suffer in a rate rise they won’t fall off a cliff completely

  • 89 The Investor June 25, 2018, 2:29 pm

    Just quickly before I get buried in the Brexit mire, re: Hans Rosling etc, I do agree the world is getting better for more humans across the world in most ways EXCEPT environmental. I see little evidence for that except some minor landmark extinction avoidance (the odd New Zealand parrot, blue wales etc). Reforestation is happening too slowly and it’s anyway typically the wrong kind of forest from a biodiversity point of view, certainly not sufficient to replace primary rainforest in Brazil or Tasmanian ancient hardwood stands.

    I fear what we’re seeing environmentally (bees, plastics, temperature, ocean acidification, a massive biodiversity extinction) is probably the tip of the diminishing iceberg, and that this will become ever more apparent in ways that affect our lives, and certainly our enjoyment of life on Earth in the West (a subsistence farmer in a super-poor country lifted out of poverty by getting a job at a miner or a petrochemical company may understandably have a different view on the utility of a world with environmental abundance).

    It’s hard to hedge against, too, which is why I think it’s one of the greatest threats to your personal wealth:


    Moving on to the B-word, two years in and having read around, and I now believe Brexit was voted for primarily as the wrong solution to some real and some other imagined problems.

    It’s true it’s highlighted emerging social divisions that were perhaps ignored before, as well as economic frailties and insecurities. But Brexit won’t help most of them.

    I see no economic case for Brexit on a national level. The economics of free trade are pretty well-established over the past 500 years. That’s why I guess Remain voters of my ilk focused on the economy.

    The other side of this argument — we’ll build our own cars again, we’ll have proper English barbers instead of foreigners, and fewer Big Issue sales people will be draining the NHS — are akin to active managers saying trackers are all very well for lazy/stupid people, but smart funds can beat the market because they work harder, and by the way you deserve one because you’re special, too.

    There’s no data or evidence or theory that can support it, but it appeals to a certain way of thinking so people vote for it.

    I actually find anyone who says “I voted Brexit because I want fewer foreign accents on my High Street” or worse actually a lot easier to understand and have intellectual sympathy for (not agree with/side with!) than superstitious arguments about economics. Although as has again been pointed out a thousand times, we had ways to restrict the big wave of EU migration (c.2003/2004) that we didn’t take, and we had (/have) ways to curb ex-EU migration that we didn’t take (and presumably won’t after Brexit, too).

    I did think the economy would slow pretty hard on a Leave win — much more than it did at first — and while that was wrong for a bit, it now looks like it was directionally right. It seems to have taken triggering Article 50 to, well, trigger it. Uncertainty is one reason I expected a short-term hit, which is now playing out.

    I think there was also a bit of disbelief among the infamous metropolitan elite / higher echelons of business that they’d ever have to go through with coping with the reality of Brexit — that it would be reversed. As reality has sunk in they’ve started to make the decisions or halt the projects, which at the margin is having an impact. But anyway my economic fears about Brexit wasn’t for a short hit, it’s the IMHO absolute certainty long-term drag of less favourable terms of trade forever. Compound that for 20 years and we may be able to estimate what impact it’s had in GDP terms.

    GDP isn’t everything, but I’m not holding my breath on the grievances of many Leave voters being addressed — because many of their beefs (pretty much all except the sovereignty argument) are evident in countries as far apart in every sense as the US, Brazil, and China.

    (As ever it’s hard to talk about Leave voters when one is an unemployed 60 year old ex-miner in the North and the other is a ultra-free-trade supporting hedge fund manager in London and the third is a racist housewife and they all get offended if you allude to the fact that not everyone Leave voted Leave the way they did.)

    Similarly, I’m sure it felt great to “thumb your nose” (or worse! 😉 ) at the establishment in late June 2016, but as an amateur student of history I’ve seen that happen many times in the past. While people probably won’t wake up to see their homes burned to the ground, the Earth salted, and their leaders paraded through the streets in manacles, the metaphorical chickens will come home to roost I fear, in lower national wealth, more economic insecurity, worse health outcomes than we would otherwise have seen, and so on.

    What about the “they came over here and took our democracy” argument?

    Well I don’t think in pure terms of being responsible for a nation’s political decisions one can credibly argue that you have more power when you need to win a coalition decision with a couple of dozen states rather than less, so even though the EU is democratically elected and accountable, I understand the sovereignty argument.

    But real democratic power — especially for the average voter — is about more than that. The EU was a bulkwark against anti-democratic forces, as well as arguably a contributor to them. When we’re *taking* rules from the EU to continue trading whilst seeing our national politics oscillating between a more big business / fewer regulations Tory party and a more trade union and over-tax-and-spend Labour party whilst scrabbling around trying to make up the difference from the extra costs of trading with our largest market, we’ll have plenty of time to reflect on how much more in-control we each feel individually. Let alone if we fancy living or working abroad for a bit in Europe and find we’re back to second-class status with fewer rights and certainties.

    I still see few Leave voters grasping why Free Movement exists, incidentally. It’s in large part to avoid a race-to-the-bottom scramble where a country exploits some of the benefits of EU membership for its own populace while denying it to others.

    I concede the refugee crisis has made this a more difficult issue. Brexit isn’t a solution to that really, certainly not any wide sense than pure self-interest and possibly not even there. (Are we going to sink boats and children if the next step is a hop from France to Brexit Britain for mass migrants? Some would support it but good luck getting 52% on your side. Clearly we need pan-national solutions.)

    The timing of Peak Refugee Crisis was certainly diabolical from a Remain supporter’s perspective. (I notice we rarely hear about it now? I wonder why…)

    In a similar concession, I personally regret the “ever closer political union” line from the EU. And I’m not a great fan of the Euro, which is really the flipside of the same coin (they drive each other). But we weren’t in the Euro so had a glorious immunity to most of those issues. (If the Euro collapses the UK will still be massively hit by the fall out, Brexit or no Brexit).

    These as I’ve said many times before would get me to about 30% support for Leave, 70% for Remain, when I sum up the ledger.

    It’s true the Remain argument is technocratic. But I pretty much see the Leave argument as faith-based. Half the world believes in unseen higher forces without any evidence at all and they believe in a thousand versions of those deities so perhaps I shouldn’t have been so surprised when regional voters directly assisted by the EU are told a Polish plumber has made them poorer despite almost all evidence, and by the way we can Take Back Control in a way that will see them personally only further disenfranchised as far as I can tell.

    If the Leave case was “Vote out of Europe — we’ll be poorer as a nation forever and we’ll be less powerful on the global stage, more vulnerable to economic forces, and have less money to spend on state services, but at least our MPs will be the only ones who decide where the money is spent” then at least that would have been honest.

    In terms of what to do about it personally, as most of our portfolios have demonstrated over the past couple of years being globally diversified covers most of the bases. (The snag being it’s hard to globally diversify your house or your job).

    Discussing it specifically here more than that, as some have suggested, would in practice mean continual Brexit debates, which I prefer to quarantine into quarterly/six-monthly opinion purges like this one. 🙂

    Taking specific steps because you think you know better than the market’s current best pricing is also much more active than this blog’s core message.

    For instance, continually taking a view (/having a wild guess on the pound) as Brexit milestones pass is easy to shout about in hindsight, but difficult and counter-intuitive in practice. As an active investor I’ve been thinking with the £ at the back of my head for 30 months now having never previously thought about it much at all as a stock picker. It’s extra tiring, and I doubt it has added any value beyond some windfall luck (I mean compared to just accepting what the market gives and takes away on the currency side of a globally diversified portfolio. Obviously as I said above I like nearly everyone else around here benefited massively from the £’s fall in investment terms measured in Sterling).

    Using more hedged equity share classes and accepting you won’t be totally right but not totally wrong either is a saner way to go about life:


    (Re: @Mathmo’s international bonds, incidentally, the trouble there is low returns being outweighed by currency risk (which isn’t such a big deal with equities over a long enough time horizon) so you need to hedge, which may bring in other problems, such as costs and tracking error.)

    Finally, I think having a hard Plan B is worth citizens of almost any nation considering in these anti-intellectual and increasingly belligerent political times we live in and are the vanguard of as a nation. Even though I think (hope?) it won’t come to that.

    I have one, but it’s outside of the remit of this blog and will be personal to each reader.

  • 90 The Investor June 25, 2018, 2:36 pm

    p.s. Sorry, I messed up the migrant bit in all the wordage. Fixed now! 🙂

  • 91 The Investor June 25, 2018, 4:03 pm

    p.p.s. I also just realized that most of my comment — like most of the others in this thread — could have been written two years ago. Which, as some alluded to here, isn’t encouraging or particularly constructive.

    That said it’s also where as I Remain voter feel no need to concede an inch. The implementation/vision of Brexit post the Referendum has been a shambles, revealing what many of us suspected about the project.

    Inevitable then, perhaps, but it does mean there’s almost nothing substantive to discuss unless we get into the realms of the woeful machinations at Westminister (“Taking back control” indeed), the fantasy flip-flop rhetoric, or the populism and the papers, which is even further from the subjective of this website.

    Perhaps the next time to post on the subject is when we have something concrete to assess.

  • 92 Gordon June 25, 2018, 5:41 pm


    It’s the remain side of the argument that have again and again and again said that we need migrants to pay for the NHS and pensions. Before the Brexit referendum it was the Remainers that dehumanised migrants and talked as if they were cash cows for the taxpayer….

    I’m just pointing out that there is no evidence that shows migrants make any more than a tiny net contribution to the taxpayer (obviously they are negative contributors by the time you include the NHS etc).

    I don’t understand what point you’re making about your Romanian sister in law being a finance director. Is it some kind of ironic joke? Or do you really think millions of migrants are OK because you know one that is a net tax contributor?

    I could argue that active funds are worth the management fees because some beat the index 😉

    PS I work in an office full of EU nationals. Just because I don’t think EU immigration has been good for Brits it doesn’t mean I don’t like Europeans…

  • 93 PF June 25, 2018, 6:18 pm

    “I work in an office full of EU nationals. Just because I don’t think EU immigration has been good for Brits it doesn’t mean I don’t like Europeans…”

    Well, you can test that theory by asking your colleagues how your point of view comes across to them.

  • 94 Matthew June 25, 2018, 7:22 pm

    It’s just a case of wanting to eliminate competition in the labour market, it’s respecting that EU nationals generally are good workers who have to slave away to pay rent, and it’s also protectionism for your kids jobs – globalisation can feel a very one way thing when labour flows one way for such a long time

  • 95 Gordon June 25, 2018, 8:13 pm


    “Well you can test that theory by asking your colleagues how your point of view comes across to them.”

    I could do that. I could maybe also ask them why many EU countries don’t want migrants? Maybe you should do some research on President Orban?

    I’ve got an interesting fact for all you Remainers. Each MEP represents a different number of people. In the UK an MEP represents circa 800,000 people. A MEP in Malta represents about 50,000 people. How is that democratic or fair? The population of the U.K. Is about 15 times bigger than Ireland’s. Yet we only have 6 times as many MEPs. Is that fair?

    However before the referendum we all did our research and found these things out? Surely we didn’t solely believe the propaganda pushed out by the BBC?

  • 96 Neverland June 25, 2018, 9:31 pm


    “PS I work in an office full of EU nationals.’

    …and there was me thinking Russian troll-farms just employed Russians o.O

    Any more random statistics you care to make up?

  • 97 The Investor June 25, 2018, 10:20 pm

    Can we please (all sides) keep this civil. Cheers!

  • 98 Gordon June 25, 2018, 10:32 pm


    You think I’m a “Russian Troll”? Seriously?

    I feel sorry that this is the level of debate from the remain side of the argument.

    Cost of NHS per year is £130 billion.
    Cost of welfare state per year £260 billion.

    Net contribution from EU migrants (from 2001 to 2011) £2 billion a year.

    Even using your wildly optimistic figures shows that EU migrants make virtually no real contribution for paying our pensions and for the NHS….

    Remember folks, one of the main arguments from Remainers is that we need to stay in the EU because “EU migrants pay our pensions”!!!!!!! The facts just don’t support that fairy tale!

    I think a lot of Remainers should be contacting their old schools/ universities and asking for a refund.

  • 99 S June 25, 2018, 10:43 pm

    Thanks. I’m one of these EU Nationals (probably not in Gordon’s office).
    You’re obviously entitled to your opinion. Which differs from mine and that’s OK. But you can probably agree that your European colleagues might not be that happy about being used to somehow make your point against the very arrangement that allowed them to come to the UK. I don’t know. Maybe they don’t mind. But that’s the point – no need assuming they would really want to be mentioned here. I certainly wouldn’t.

    Also, I find that calling people Russian trolls is not really helping the discussion. The term is by now evolving into somewhat of a second Godwin’s law.

  • 100 Wephway June 25, 2018, 11:09 pm

    Gordon, I don’t think there are many Remainers saying we need to stay in the EU so immigrants can pay our pensions, that is a straw man argument if ever I heard one.

    I also think you’re misreading the statistics. Immigrants make a net fiscal contribution, that means they pay more in taxes than they receive in services, and those services include their use of the NHS, schools, etc. Generally speaking, the working age population (British and non-British) makes a positive fiscal contribution, while the very young and the very old make a negative fiscal contribution, because obviously they receive a lot more in services than they pay in tax. The immigrant population is largely of working age, hence the positive contribution.

    In any case, it’s a bit of a moot argument. EU immigration could have been massively reduced by successive governments before the referendum and it wasn’t. You can hardly blame the EU for UK govt policy.

  • 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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