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Weekend reading: British passport no longer rules the waivers

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What caught my eye this week.

Got your passport ready and your bag packed for the last flight out of Heathrow when Britain goes all 21 Days Later on Brexit Day?

The good news is even I don’t think that’s going to happen. We’ll be in for more months of Dad’s Army amateurism should we leave with no-deal on the 29th March. But the reviled metropolitan elites will immediately put their brains towards sorting out the mess foisted upon them, and anarchy will be avoided.1

The bad news is Britain has slipped again in the Henley Passport Index. This ranking of how many countries a citizen can visit without a visa is now topped by Japan. Its popular citizens can visit 190 countries around the world visa-free.

Britain has dropped to sixth place – from the top spot in 2015 – though to be honest that isn’t disastrous. You can still visit 185 countries without a visa if you have a UK passport.

Despite the tilt towards nationalism in the UK and US (which has also fallen down the list) most of the world increasingly recognizes the power of hassle-free movement. In 2006 the average citizen could visit 58 countries without a visa. That has nearly doubled to 107.

Brexit surely won’t change things much – it’s unimaginable you’ll need a visa to visit the EU anytime soon – although I do expect we’ll be doling out more visas to the likes of India and China after Brexit.

We’ll need the workers, and they’ll demand visas in trade deals that we can’t refuse.

From Monevator

The Slow & Steady Passive Portfolio Update: Q4 2018 – Monevator

From the archive-ator: Beware the lure of the exotic – Monevator

News

Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!2

Four in 10 UK first-time buyers will retire with mortgages, FCA warns – Guardian

One in five baby boomers are millionaires [Search result]FT

UK house prices rise at fastest rate in almost two years, says Halifax – Guardian

Open banking: the quiet digital revolution one year on [Search result]FT

[Former?] hedge fund star David Einhorn was down 34% in 2018 – CNBC

Would Alexandria Ocasio-Cortez’s 70% tax proposal work in UK?- Guardian

Do you live in a burglary hotspot? – This Is Money

Treasury to review ‘loan charge’ proposals that retrospectively tax contractors – Accountancy Daily

Australia’s house price slide prompts worries about its economy [Search result]FT

JP Morgan: Most markets began 2019 pricing in an imminent mild recession – FT

Products and services

Why US-style zero-fee funds won’t catch on in Europe – Institutional Investor

Hargreaves Lansdown under fire over Wealth 150 list – Guardian & Simon Lambert

Ratesetter will give you a free £100 [and me a cash bonus] if you invest £1,000 for a year – Ratesetter

Do you have any of these rare and valuable euro coins rattling around? – This Is Money

Farms and smallholdings for sale [In pictures]Guardian

Market timing mini-special

No, you almost certainly can’t time markets – Institutional Investor

The evidence says index funds still beat active funds in down markets – Preston McSwain

The wrong debate – The Irrelevant Investor

The jury is still out on timing factor [i.e. return premium] investments – Morningstar

Lump sum investing versus drip-feeding [From the archive-ator]Monevator

Comment and opinion

When markets are tough, don’t look – Morningstar

Professional investors are bad at selling stocks – Bloomberg

The economics of divorce – Young F.I. Guy & [Search result] FT

US equity returns since 2009 are staggering, and likely unrepeatable – ETF.com

On the demographic path to human self-extinction – Ed Yardeni

The price of greed – Of Dollars and Data

30 years of living the bull market life… – Morningstar

Related: Two pieces on future returns [US but relevant]Morningstar & ZenInvestor

In praise of having a big cash reserve – Bone Fide Wealth (via Abnormal Returns)

Advice for the young as the market weather turns rougher – Simple Living in Somerset

Is J.D. Roth still financially independent, and does it even matter? – Get Rich Slowly

UK Value Investor reviews his performance in a tough 2018 – UK Value Investor

Brexit

Audience member on Question Time sums up where we’re at [Video] – via Twitter

Brexit is dividing Britain. So is a Brexit movie. – New York Times

Outrage at John Bercow is the sound of a constitution working [Search result]FT

No-deal Brexit would shrink economy by 8%, claims CBI – ThisIsMoney

We’re now a country where right-wing yobs chant “nazi” on live TV  [Video]via Twitter

It’s not perfect, but Norway plus may be Labour’s least worst option – Owen Jones

David Lammy MP urges MPs to tell the truth to misled voters [Video]via Twitter

Kindle book bargains

Creativity, Inc. [Must read!] by Ed Catmull – £1.99 on Kindle

Barbarians at the Gate by Brian Burrough and John Helyar – £1.99 on Kindle

Start Now, Get Perfect Later by Rob Moore – £0.99 on Kindle

Turning the Tide on Plastic by Lucy Siegle – £0.99 on Kindle

Off our beat

Lonely George the tree snail dies, and a species goes extinct – National Geographic

Don’t reply to emails: The case for Inbox Infinity – The Atlantic

Blow to low carb diet as landmark study finds high fibre cuts heart disease risk – Guardian

Interview with Deep Mind’s founder and AI pioneer [PDF]The Times via Google

Africa’s biggest conservation success was once a poacher’s paradise – Bloomberg

And finally…

“The reason so few people optimise their finances and become wealthy is because they never spend any time researching and never properly try their hand at investing. There is a very high correlation between understanding finance and being wealthy.”
– Andrew Craig, How To Own The World

Like these links? Subscribe to get them every Friday!

  1. Before someone says “So what’s the problem then?”, an analogy here is that an expert surgeon can give you a quadruple heart bypass, but that’s not a mandate to chain smoke between bacon butties for 30 years. []
  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”. []
{ 34 comments… add one }
  • 1 hosimpson January 11, 2019, 7:27 pm

    I thought Brexit was supposed to be, like, a great national moment.

  • 2 dearieme January 11, 2019, 8:57 pm

    “But the reviled metropolitan elites will immediately put their brains towards sorting out the mess foisted upon them”: you’ve got that arse about face. It’s the MEs, starring David Cameron and Theresa May, who have completely cocked up both negotiations and preparations, so foisting the rest of the country with a mess.

    “One in five baby boomers are millionaires”. This hate speech against the baby boomers should really be given a rest. It’s their parents’ generation that did really well out of DB pensions, cheap housing, and living in a safe environment. Well, once The War was over anyway.

    “fastest rate in almost two years”: golly, a whole two years. Gosh!

    “Australia’s house price slide”: Brexit? Trump? Spoiled for explanations, really.

  • 3 The Investor January 11, 2019, 10:39 pm

    @dearieme — Cameron isn’t Metropolitan Elite, he’s Westminster village elite. Metropolitan elite is millions strong. If you went to university, have drunk a flat white, and have a job where you don’t wear a tie, you’re at least aspiring ME. (I didn’t make the rules).

    Re: Sydney, included it as I’ve been featuring various cities sliding. It’s a withdrawal of liquidity / affordability / bubble story I think.

  • 4 dearieme January 11, 2019, 11:11 pm

    “If you went to university, have drunk a flat white, and have a job where you don’t where a tie, you’re at least aspiring ME.” That’s me to a T.

    Wahoo, I’m in an elite, in an elite, in an elite.

    But I think I drank flat whites long before they were known in Britain. Does that disqualify me? Was I premature? Am I instead an ocker?

  • 5 Algernond January 11, 2019, 11:16 pm

    “We’re now a country where right-wing yobs chant “nazi” on live TV” – ahem..
    People right of centre, right of left, or for Brexit have been repeatedly labeled or called Fascists and Nazis over the last couple of years. And now when an establishment MP gets called a Nazi, suddenly the MSM is outraged.

  • 6 The Investor January 12, 2019, 12:59 am

    @Algernond — Forget the media, I’m outraged. I don’t remember a live TV interview in my lifetime where a bunch of yobs were able to chant that repeatedly at a sitting MP. Perhaps I’m misremembering, or perhaps the BBC has got slacker with where it does its interviews, but I really don’t think so. This country has become mildly unhinged.

  • 7 Stephen Almond January 12, 2019, 1:18 am

    Referencing David Lammy, Owen Jones?
    How is it in that echo chamber?

  • 8 Lord January 12, 2019, 4:03 am

    No longer rules the waves, and is increasingly shameful to be honest. The thought of having a blue one disgusts me. Everything it represents (inward looking nationalism, little Englanders; WW2/1950s nostalgia, anti foreigner attitudes) is something I really don’t want to be carrying about and using.
    I wish I had Irish roots.

    I spoke with my friend recently whose just started out in investing. He sold everything before Christmas because of his fears over the markets. Though I’m loathe to get too involved I will send him that Morningstar article. Thanks.

  • 9 The Investor January 12, 2019, 10:46 am

    @Stephen — Much like your own chamber I expect, except with better opinions and perhaps more diversity given a mere two references in a list of several dozen seems to have prompted your comment. 🙂

    For the record I think Lammy is one of the few politicians who sounds like a statesman on Brexit (Clarke is good, too, and some of the Lords such as Heseltine. I actually can listen to Rees-Mogg, too, who at least seems to understand the gravity of the decision). I don’t agree with Owen Jones’ conclusions — I rarely do — but as he’s close to Labour thinking and that could be crucial in the days ahead his mental movement seemed interesting to me.

    I fairly often post articles in Weekend Reading which don’t quite line up with my own thinking, though much less so in the Brexit section I admit. From my POV, the pro-Leave position is fundamentally feeble beyond the hollow truth of max-sovereignty and the fact of the Referendum result (as opposed to May’s hardcore immediate interpretation) and unfortunately I rarely see articles by Leavers who have accepted and digested the contradictory coalition that got them their win. So I read little worth repeating.

    I’m sure I do miss a few good ones. I did manage to post Merryn Somerset-Webb’s unconvincing explanation of her Leave credentials the other week. Didn’t agree with her either but she’s generally great and was very happy to give her a listen.

  • 10 JimJim January 12, 2019, 10:56 am

    The Groniad article on smallholdings in pictures? are you thinking of buying all that work? Very fluffy but a pound to a pinch of pig poo bets the interweb speeds suck in all of them!

  • 11 The Investor January 12, 2019, 11:12 am

    @JimJim — It’s a long-term daydream, generally foiled by becoming single again every few years. 😉 (Or in a couple of cases, dating perma-London women!) Maybe one day.

  • 12 JimJim January 12, 2019, 11:32 am

    @The Investor
    Country living is (in my opinion) a very fine thing and something I have managed to do for over 25 years now. I keep an eye on smallholdings and places with woodland and dream too! (A wood is something I have long hankered after, ideally a coppice or something I could coppice) It is all work and not practical,
    There are some bargains out there, (mainly because no one can make a decent living off them, Brexit might exacerbate this) they would never make you rich but if the technology develops to provide adequate broadband to such properties at a low enough cost then I can see their value increasing greatly. Meanwhile, my garden and the building I live in are enough of a maintenance task for me as I have to work… and my borrowed view of the lake district fells and the Irish sea will suffice. It’s good to dream 😉

  • 13 Ben January 12, 2019, 11:38 am

    Re zero fee funds

    Do we really need them? Yes it would be nice, but the £1000000 in my 0.01% fund is costing me £100pa.

    I feel I can afford that.

  • 14 Gentleman's Family Finances January 12, 2019, 11:56 am

    Simple solution the passport problem – find out about your Irish granny and become a Paddy.
    Alternatively there are always those ads in the ba in flight magazine that advertise the benefits of paying £100k and becoming a national (and barely any tax payer) of a Caribbean tax enclave. Got yo be worth every penny!

  • 15 Algernond January 12, 2019, 12:01 pm

    @TI.
    My point is that Antifa types continually hassle & abuse those who are right of left or anti-EU and the MSM doesn’t report on it because it doesn’t fit the Establishment narrative.

  • 16 A beta investor January 12, 2019, 12:10 pm

    It’s hard work but reading Crashed by Adam Tooze provides a good explanation of how the financial crash of 2008 benefited the indebted elite at the expense of the asset-light masses and led directly to Brexit, Trump, AfD, Syrizia, gillet juanes and so on over the last 10 years.

    Political decisions were taken then to solve short-term problems, like maintaining a banking system, but that had long-term negative consequences for most voters.

    Eventually they took their revenge by voting against the “establishment”.

    A particular culprit identified in the book is Germany, and the Bundesbank in particular, with its refusal to accept restructuring in the EU, ( a polite label for writing off sovereign debt). That problem of pretending that Greece, Italy and possible even France will pay all their debts to the ECB, (and hence the Bundesbank) has not been resolved and will be the issue that eventually destroys the euro and probably the EU as well.

    Staying out of the euro has removed the UK from that specific problem of the euro.

    Although leaving the EU will limit the direct damage to the UK from its problems there is no way the UK will be immune from the stress in the EU as it struggles to deal with its deep-seated issues. Which is basically that the whole project benefits Germany more than anyone else and eventually the voters of the other 26 will twig that.

    Although as former German Finance Minister Schauble once said
    “Elections don’t change anything” so it won’t be an easy task.

  • 17 Factor January 12, 2019, 12:14 pm

    @TI (3)

    Typo alert

    “….. where you don’t where [sic] a tie …..”

  • 18 The Investor January 12, 2019, 12:33 pm

    @Algernond — I’m sorry and perhaps unfair, but when someone uses “MSM” and “anti establishment” in the same sentence they pretty much lose me. (And I have a good friend — and Oxbridge grad no less — who believes 9/11 was staged and the moon landings genuinely didn’t happen, so I’m well-versed in the screed).

    Besides which, like many such complaints of media bias from both left and right your complaint doesn’t really hold water. (Again, same friend above believes the entire press is pro-Brexit, versus the established narrative of overwhelming anti-EU press in the UK for decades. And perhaps I am missing some nuance due to my own partisanship.)

    Here’s the result of literally two minutes searching:

    https://www.bbc.co.uk/programmes/articles/X56rQkDgd0qqB7R68t6t7C/seven-things-you-need-to-know-about-antifa

    https://www.bbc.co.uk/news/world-us-canada-40930831 (“left wing militants on the rise”)

    https://www.bbc.co.uk/news/uk-politics-46495595 (rival Brexit marches)

    https://www.bbc.co.uk/news/world-europe-45324804 (bottles etc hurled by “both sides”)

    https://www.bbc.co.uk/news/world-us-canada-45075830 (Portland police arrest / “counter protest”)

    https://www.bbc.co.uk/news/world-us-canada-45075830 (anti fascist chant “nazis go home” (which his fair enough IMHO when describing proud and self-declared nazis!)

    https://news.sky.com/story/fascist-fighters-or-criminals-on-the-streets-with-portlands-antifa-group-11217880

    https://www.theguardian.com/artanddesign/gallery/2018/aug/13/charlottesville-one-year-on-far-right-and-antifa-clash-again-in-pictures

    https://www.theguardian.com/us-news/2018/aug/06/berkeley-activists-arrested-police-identified-twitter

    https://www.theguardian.com/us-news/2018/jul/01/riot-in-portland-as-far-right-marchers-clash-with-anti-facists

    https://www.theguardian.com/commentisfree/2017/aug/31/step-aside-antifa-you-undermine-the-resistance

    https://www.theatlantic.com/magazine/archive/2017/09/the-rise-of-the-violent-left/534192/

  • 19 The Investor January 12, 2019, 12:34 pm

    p.s. I think we should stop this aspect of the discussion here. We’ve both expressed our point of view, and this subject is way off-topic for this blog and likely frustrating for many readers. Cheers!

  • 20 The Investor January 12, 2019, 12:43 pm

    That problem of pretending that Greece, Italy and possible even France will pay all their debts to the ECB, (and hence the Bundesbank) has not been resolved and will be the issue that eventually destroys the euro and probably the EU as well.

    Alternatively, if it ever comes to that, and if this diagnosis is correct, then 10-20 years after the financial crisis and threatened with the collapse of the Euro the Germans can *then* choose to write off debts and solve the problem.

    Much like we could have Brexit-ed if and when the projections of Brexiteers looked likely rather than theoretical, and enjoyed the huge benefits of EU membership (especially with our special benefits and own currency) until then.

    I agree the EU (and Germany) probably needs to take further steps towards a fiscal union and cash transfers to underwrite its monetary union. The political steps this will require is why I repeatedly state I have some sympathy (but not enough to make me a Leaver) with the pure sovereignty Brexiteer view. Even I’d probably be happier on balance if the EU went back to pre-Euro days and just acted as a big trading bloc etc, but that wasn’t on the ballot. We are where we are.

  • 21 old_eyes January 12, 2019, 1:11 pm

    Thanks for the market timing mini round up. Always good to be reminded at a time when markets are nervous/falling. Avoids the temptation to think -“this time I know what I am doing!”

  • 22 Algernond January 12, 2019, 3:15 pm

    My reading of the morning star article (“When markets are tough, don’t look”) is that in the last 25 years, even investing just before the worst market dip (2008) it would’ve only taken 5 years to be ahead of inflation now. That’s really comforting.

  • 23 Ben January 12, 2019, 6:58 pm

    @Algernond 22
    I did! And also took me 5 years, despite RBS being my biggest* investment.

    *biggest is in most money poured in, my ‘investment’ is still underwater.

  • 24 Mathmo January 13, 2019, 9:23 am

    “I hate those Illinois Nazis”

  • 25 Stefan January 13, 2019, 9:34 am

    The “Why Zero-Fee Funds Won’t Catch On” article’s 2 reasons why Europe hosts an unwelcome climate for fee-free funds:

    1. It says the cost of subscribing to an index (e.g. FTSE100) makes fee-free funds difficult. But Fidelity’s US fee-free fund FZROX already gets around this using its own index (Fidelity U.S. Total Investable Market Index). What’s to stop a European fund provider from doing the same (in-house indices already exist in European funds today!)?

    2. “Regulators will be seeking to ensure that subsidization of zero-fee products by fee-paying investors is either not occurring or is at least fully disclosed”. Okay, maybe European funds will be unable to subsidise fee-free funds but this article doesn’t mention securities lending, which is where funds earn an income from the assets they manage. This would be an important thing to mention when claiming that the business model doesn’t work.

    I’m having a hard time finding much substance to this article but am genuinely interested in the prospect of fee-free funds in Europe. Does anyone have an informed opinion on them?

  • 26 MrOptimistic January 13, 2019, 10:15 am

    Not quite zero fees but close, from LGIM.
    https://moneyweek.com/499134/a-do-it-yourself-etf-portfolio/

  • 27 ZXSpectrum48k January 13, 2019, 11:59 am

    Stefan
    1. EU regulations do add costs over an above the US model. A retail UCITS fund will be more expensive that the equivalent US Act 40 fund. This stems from costs of reporting and a more complex master-feeder structure (since it may span more countries in the EU) leading to higher fund administration and custodial costs.
    2. Switching from external index providers to internal has a clear cost benefit. The negatives, however, are more nuanced. First, there is the potential conflict of interest. It’s not hard to produce an index that will produce a consistently, lower return to offset the lower fees. Second, you’d get less transparency with regard to comparing the tracking errors of funds, which is what really matters. Third, index construction can vary. Is the index market representative, easily replicable, liquid and is the data quality high? This is less of on issue for an S&P 500 clone but is very relevant for a Russell 3000 or corporate bond index.

    Personally, I don’t really care for fee-less funds. Fund mangement costs something and if they are charging zero then (assuming it’s simply not a loss-leader, subsidized by other funds) then somewhere market or operational risk is being taken to offset this. I don’t see those risks as acceptable for 5-10bp in fees in what is meant to be a passive fund.

  • 28 Xenobyte January 13, 2019, 5:39 pm

    @Algernond

    for the life me, I cannot find that article in the Morning Star. In fact, I don’t believe it has an investment section.

  • 29 Tyro January 13, 2019, 6:35 pm

    On passports, and re GFF’s “find out about your Irish granny and become a Paddy” – I recently heard from an old friend that (a) he voted Leave, (b) he has since got himself an Irish passport to go with his UK passport and so remains an EU citizen with all the rights that his vote has removed from his fellow UK citizens, (c) he is gleeful about retaining his freedom of movement in the EU, and (d) thinks it amusing that his remain-voting friends who don’t have Irish/European grannies are “bitter” – direct quote – about what he’s done.

    But yes, I’m still considering him a friend. For now. Just wonder how many more of his ilk there are out there.

  • 30 fireplanter January 14, 2019, 12:37 am

    Anyone know how to bypass FT paywall?? Or subscribers only?

  • 31 Brod January 15, 2019, 12:41 pm

    @fireplanter – if you search for the title of the article you casn’t read, often the link works. Alternatively, delete your cookies might work.

  • 32 ermine January 15, 2019, 5:51 pm

    @TI, re smallholdings

    It’s a long-term daydream, generally foiled by becoming single again every few years.

    A word in your shell-like. Animals. Avoid at all costs . Well, unless you think Brexit means you’ll never be able to go on holiday. Seriously, you need other people, and many of them, to have cover. To round the blighters up when they escape. The form-filling is out of this world. They taste better, sure, although I am sure in London you can find some bijou small scale supplier 😉

    Go for the lord of the manor approach, rather than the Good Life.

  • 33 The Investor January 15, 2019, 6:26 pm

    @ermine — Ha ha. Wise words from both you and @Jim. I am actually still between cash-incinerating aquariums, on the grounds that I will find it easier to take a holiday with no living charges splashing around. As it is I’m doing neither holidays nor aquatic adventures for now. (Chalk that up to fear of the mortgage. 😉 )

  • 34 martyn January 18, 2019, 12:46 am

    I have long looked at the case for UK membership of the EU and I find no compelling arguments to do so. No one lasts long in an argument. I start off with what they like about Europe. They tell me they like freedom of movement, trade, etc. I point out to them the EU likes freedom of movement and freetrade within the block. It does not like freedom of movement or free trade into the block. In other words these things are done not because there is some ideological belief that this is good. They are in place for a practical reason. What is the practical reason? It’s the gradual and complete integration of all member states into a single European superstate. In other words supporting the EU should eventually lead to an end state where the UK is just another region governed from the centre. This is in the treaties it’s written down and it’s not a secret – no one I ever argued this with wants to swap remote rule from Westminster with even more remote rule from Brussels, yet supporting the EU is construed in Brussels as exactly that.

    My point – all the things people like about the EU are a collateral consequence of the gradual shift of power from the memberstates to the centre, they are simply enablers. Almost no-one who grasps the real purpose of the EU supports it. The lame argument deployed is it’ll never happen, Maybe not, but it won’t be for want of trying.

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