What caught my eye this week.
Here’s a sign that we’re neck deep in a bull market in global equities – shares are by far the riskiest mainstream asset class, but we hear much more concern, comments, and confusion about bonds.
In the absence of high inflation, the government bond portion of your portfolio is very unlikely to blow up. And even if we did see high inflation, it’d be a slow-motion car crash sort of disaster, as opposed to the hurricane of a true equity market crash.
Yet people fret about the bogeyman of a bond market rout, with some even saying they feel safer with 100% in shares. (I’d say cash is a far better replacement right now, if you must play swapsies).
Bond phobia is clearly a global affair, because other sites are wading in on bonds more, too. Here are a couple of good articles from just the past week:
- Why your bond ETF is not losing money [Canadian perspective, so don’t worry about the specifics. It’s an excellent general primer.] – Canadian Couch Potato [1]
- Rates change, but the role of bonds doesn’t [This one is US, so just ignore the bit about IRAs] – Vanguard blog [2]
We’ve also written a lot of articles [3] about low-risk government bonds in the past. Enjoy!
Note: Some links below are Google search results – in PC/desktop view these enable you to click through to read the piece without being a paid subscriber.1 [4]
From Monevator
Investing with principles: What you need to know – Monevator [5]
There was an interesting discussion about UK share dealing accounts for ex-pat investors in the comments on our broker table – Monevator [6]
Out of the archive-ator: Lump sum investing Vs drip-feeding – Monevator [7]
News
Legislation to cut the dividend allowance from £5,000 to £2,000 from April 2018 has been postponed due the Finance Bill being rushed through Parliament before the urgent General Inauguration. Will probably return after the coronation, sadly. There have been a few other postponements, too – Guardian [8]
Government also quietly drops that new £1,000 tax break for micro-entrepreneurs – ThisIsMoney [9]
Britain’s top financial regulator Andrew Bailey (of the FCA) says debt is a bigger problem than we think. As I said on Twitter [10]: “If you owe the banks £100,000 in consumer debt, you have a problem. If a million people owe £100,000, the Bank of England has a problem.” – ThisIsMoney [11]
Vancouver’s curbs on empty homes is working: Should we do it in London? – Daily Mail [12]
Nationwide will not lend on homes with punitive leasehold clauses – Telegraph [13]
Old £5 notes are no longer legal tender as of 6th May, but you can swap them for good money at the Post Office – Guardian [14]
The Bank of Mum and Dad – now dubbed BoMaD in some excitable quarters – is the UK’s 9th largest lender – Mortgage Finance Gazette [15]
50 cent trading mystery focuses on $20bn London fund [Search result] – FT [16]
Look at the widening gap between the average asking prices quoted by estate agents & the average sold price. Negotiate, negotiate, negotiate pic.twitter.com/uJKMhuvr6F [17]
— Henry Pryor (@HenryPryor) May 3, 2017 [18]
Products and services
Virgin’s new five-year ISA pays a joint table-topping 1.75%. Be still my beating heart… – Telegraph [19]
…although to be fair that’s slightly more than borrowers will pay for HSBC’s new super-cheap 1.69% five-year fixed rate mortgage (£999 fee, 60% LTV) – CityAM [20]
Portfolio Charts is going global, so you can now test how various asset allocation strategies would have worked in the UK – Portfolio Charts [21]
Remember Thriva, the DIY blood test for the Instagram generation? Not only will you get £10 off your first kit with the following link, you can use the code MAYBE50 to get a further 50% reduction – Thriva [22]
Comment and opinion
Open the Lifetime ISA up to over-40s, say fund groups [Search result] – FT [23]
Professor Eugene Fama explains why he believes you can’t time or beat the market [Video] – Bloomberg [24]
“Why I lost my bet with Warren Buffett”. (You know, the ‘hard charging hedge funds will beat a cheap tracker’ bet). A spirited but too-much protested riposte – Ted Seides [25]
What’s the most appropriate planning age for retirees? – Wade Pfau [26]
The timing is right for emerging market equities – Wisdom Tree [27]
Investing in Europe: Where is the return? – Enterprising Investor [28]
This is the easy part (on the bull market) – Bason Asset Management [29]
S&P 500 valuation and projection – UK Value Investor [30]
GMO’s James Montier thinks US equities are in a big bubble. But the perma-bear could stomach a “kamikaze” portfolio made up of emerging market value shares – Finanz und Wirtschaft [31]
The ultimate alternative investment: Happiness – Tony Isola [32]
How to earn a living from Instagram as a ‘micro-influencer’ – Guardian [33]
7 money-making lessons from Jacob Fugger, the richest man who ever lived – MarketWatch [34]
Off our beat
The woman who invented the fidget spinner [35] hasn’t made much money from the craze – Time [36]
Men without women, by Haruki Murakami – Guardian [37]
Our apathy makes politics vulnerable to capture [Search result] – FT [38]
Forget contracts, there are no guarantees in life – Mr Money Mustache [39]
Yanis Varoufakis’ thoughts on negotiating with the EU and the tactics they will use on Theresa May are worth a read – Guardian [40]
The siren song of homogeneity – Noahpinion [41]
And finally
“Books tell you how to become rich from stocks. Software programs and training courses claim to help you trade successfully. Their authors assert that, with their help, you can make a comfortable from living by playing the market. Before you succumb, ask the following question: if I had a system that held the secret of lazy riches, would I publicize it in a book that will earn – at most – a few thousand pounds? Writing a book is hard work, believe me.”
– John Kay, The Long and the Short of It [42]
Like these links? Subscribe [43] to get them every Friday!
- 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”. [↩ [47]]