What caught my eye this week.
Going on the comments I’ve heard and read this week, many stock market types have flopped into the Easter Weekend like a late-night drunk who only makes it as far as the living room sofa.
Relief! Sweet relief.
Of course, UK investors may have a four-day break from seeing their portfolios cosplay a fruit machine – US investors just three – but Trumpomania no more respects public holidays than it does anything else.
Today’s plot lines include Trump scapegoating US Federal Reserve chairman Jerome Powell and going after the New York attorney general, more fights over wartime-law deportations, the administration threatening to walk away from Ukraine again, and a new front opened up against Harvard.
Please do read my (quarantined) political links every week if you’re still complacent and want to learn more.
Diversified distractions
Markets are certainly not complacent – at least not about the economic engine of Trump’s project – as the whipsaw volatility and wholesale dumping of US assets in recent weeks has proved.
But there’s been a silver lining for those of us with vaguely diversified portfolios.
Which is that for the first time in a long time, we don’t feel like chumps for owning anything other than US stocks – or even just the Magnificent Seven tech giants.
It’s been a long time coming. But in a typically top-drawer post this week, Nick Maggiulli described such diversification as ‘the price of peace’, even while acknowledging that:
…when you have the best portfolio possible for a given time period […], you should still expect to lose money about once every four years (on average).
That might seem crazy but it’s true.
But underperformance and occasionally losing money are just the tip of the iceberg.
The real mental challenge of holding a diversified portfolio is watching some of your asset classes underperform almost every year.
Meanwhile Adam Grossman at Humble Dollar noted that though not everyone has celebrated diversification, well, not everyone has the investing chops of Warren Buffett and Charlie Munger.
For the rest of us:
What does it mean to build a sufficiently diversified portfolio?
For starters, it should be diversified along more than one dimension. Nearly every investor, in my view, should own a combination of stocks and bonds. In addition, holding cash can help carry a portfolio through years like 2022, when both stocks and bonds were down.
Next, look to diversify within bonds and within stocks.
Be sure to check out too this great post from Portfolio Charts on what has worked best before in the biggest drawdowns.
We don’t study such data to divine the perfect asset mix to survive a bear market. That’s an impossible goal.
No, the purpose of looking back is to understand why we need to try in order to best face the future.
Strategy versus tactics
The other major part of getting through a bear market is continuing to hold. Or perhaps to buy more.
This has always taken fortitude. But in recent years it’s also taken quick reflexes.
Okay, I guess 2022’s downturn dragged on a bit unless you owned a lot of US technology stocks.
But the Covid crash was over in a few weeks. And we’ve already bounced back a bit from the initial Trump tariff tantrum, though who knows for how long:
Note again too the benefits of diversification – for the UK, so far tis but a flesh wound.
Whether you should be holding, buying opportunistically, or even trimming risk if you’ve really got the wobbles will depend on your age, risk tolerance, and portfolio mix, as well as your overall financial goals.
In other words, it’s personal. That’s why you need a personal plan, not predictions or platitudes.
But here’s some more of this week’s buy-the-dip reading to get you thinking:
- Why buy stocks before a recession? – Downtown Josh Brown
- The fear and volatility we saw in early April portends higher returns – Charlie Bilello
- Buy the dip or buy the bottomless pit? – Arcadian
- How to actually buy the dip – The Joint Account
- Is it finally time to buy British? – This Is Money
Have a great weekend all!
From Monevator
What asset classes are best for hedging UK inflation? – Monevator [Members]
The Hemline Index and other fashionable follies – Monevator
From the archive-ator: Social care late in life is a black hole – Monevator
News
Note: Some links are Google search results – in PC/desktop view click through to read the article. Try privacy/incognito mode to avoid cookies. Consider subscribing to sites you visit a lot.
UK inflation slowed to 2.6% in March – CNBC
Morningstar is retiring its popular portfolio management tool – Morningstar
Broker X-O has been sold to Interactive Investor – Research Tree
High income households could pay more for electricity, says Ofgem – Yahoo
Second homeowners marketing their beauty spot properties to dodge council tax – Daily Mail
How child benefit is changing this year – Which
Londoners earn the most but spend very little – City AM
Starbucks’ UK retail business paid no corporation tax last year – Guardian
Neil Woodford to launch subscription-based investment service – Guardian [become a Monevator member instead!]
Analysts are getting pessimistic – fast – about US corporate earnings – Sherwood
Products and services
HSBC and Co-Op cut rates as Halifax and Lloyds ease rules – Guardian
Vets say they are under pressure to bring in more money per pet – BBC
Number of 5% mortgage deals at post-GFC high – This Is Money
Get up to £4,000 when you transfer your ISA to InvestEngine our link. (Minimum deposit of £100, other T&Cs apply. Capital at risk) – InvestEngine
Save up to 5% with every supermarket shop – Be Clever With Your Cash
“What happens if my annuity provider goes bust?” – Which
NS&I’s one- and five-year British Savings Bonds return after 16 years off market – Trustnet
Get up to £1,500 cashback when you transfer your cash and/or investments through this link. Terms apply – Charles Stanley
The affordable IKEA pieces designers keeping coming back to – Home and Garden
Why are chocolate Easter eggs so expensive this year? – This Is Money
You can get up to £250 cashback when you open a SIPP with Interactive Investor. Terms and fees apply. – Interactive Investor
Five very fancy (non-FIRE-friendly) gadgets for the home – FT
Stylish new homes for down-sizers, in pictures – Guardian
Comment and opinion
Would you buy a ski chalet? – The Waiter’s Pad
The problem with wealth taxes [Search result] – FT
What is risk? – Behavioural Investment
Paul Johnson: it’s time to raise the basic rate of income tax – IFS
My husband covered up the fact that he was retired – Guardian
Money dysmorphia: why you think you’re poor when you’re not – Independent
Big swinging dicks – We’re Gonna Get Those Bastards
Alternative asset allocations have cost endowments dear – CFA Institute
Naughty corner: Active antics
The US stocks that are most at risk from tariffs – Morningstar
Dollar weakness: a panic signal or a healthy rebalancing? – Klement on Investing
REITs are in a rut [US but relevant] – Institutional Investor
Time to buy emerging market debt? – Trustnet
Kindle book bargains
A Man for All Markets by Edward O. Thorp – £0.99 on Kindle
Million Dollar Weekend by Noah Kagan – £0.99 on Kindle
Great Britain? by Torsten Bell – £1.99 on Kindle
The Moneyless Man by Mark Boyle – £0.99 on Kindle
Or read one of our 24 investing favourites – Monevator shop
Environmental factors
How mine water could warm up the UK’s forgotten coal towns – The Conversation
Project to suck carbon out of the sea begins in UK – BBC
Abandoned lynx, ‘beaver bombing’: has re-wilding got out of hand? – Guardian
If we must bring back extinct species, let’s focus on giant herbivores – The Conversation
“I needed heart surgery after swimming”: sewage spills reach decade high – Independent
The life and death of a ‘laundered’ cow in the Amazon rainforest – Guardian
Robot overlord roundup
Demis Hassabis is preparing for AI’s endgame – Time
OpenAI is a systemic risk to the tech industry – Where’s Your Ed At?
Why do AI company logos look like buttholes? – Velvet Shark [h/t Abnormal Returns]
ChatGPT spends ‘tens of millions of dollars’ on people saying ‘please’ and ‘thank you’ – Tech Radar
Not at the dinner table
The silence of the CEOs [Search result] – FT
State terror: a brief guide for Americans – Thinking Aloud
The economic consequences of a mad king [Search result] – FT
Compliance is the new American dream – Kyla’s Newsletter
Why Trump can just declare ’emergency’ to do whatever he wants – Vox
Boycotting America – Optimistic Callie
What would a real anti-China trade strategy look like? – Noahpinion
Is China the ultimate free-rider? – Marginal Revolution
Off our beat
See where London tube trains are in real-time – London Underground Live
Have scientists found the secret of happiness? – Guardian
UK rearmament: lessons from the 1930s [Podcast] – A Life Time in Finance
How to cure ‘premature enumeration’ – Tim Harford
Is there life after banking? [Search result] – FT
The truth about life on other planets – BBC
Over-60s get long-term protection from a one-shot RSV vaccine candidate – New Atlas
Don’t push it – Humble Dollar
And finally…
“A part of all you earn is yours to keep.”
– George S. Clarson, The Richest Man in Babylon
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Thanks for the article.
Stuart Kirk in the FT has raised a good point about the pusillanimity of US CEO’s (your link). Could add the US Congress to that as they sit and watch US democracy get trashed. Mind you, they did that for the Maga Congress riots and let Trump off as he disputed the election results.
Thanks for the heads-up on Morningstar’s portfolio manager, it’s slow, but has all of my info.
Does anyone have recommendations for a free alternative that will preferably accept a file exported from Morningstar?
Thanks All.
@all — Darn, a few people have already pointed out that the S&P has bounced back to overtake the world tracker again year-to-date.
Serves me right for typing with a hangover, but also this is what I mean by volatile markets!
(Plus I clearly own too much US tech already, even if underweight. My mind was elsewhere…)
Apologies for the confusion all.
Nice piece and nice links, thank you @TI . Particularly like Tim Harford’s ‘premature enumeration’. Agree @Synonymous, very annoying of Morningstar to discontinue the Portfolio Manager. If @TA could be persuaded to update his excellent but sadly now redundant portfolio-tracking-tool piece of a year or two back, that would be hugely appreciated!
@TI your original point about diversification was correct but maybe you need to avoid mixing indices with ETFs in the chart, because of currency moves? i.e. for an unhedged GBP investor, VWRP is doing better YTD than VUAG
Following on from comments by “Synonymous” and “2 more years”, I’m also now looking for a replacement to Morningstar’s Portfolio Manager (thanks for the original tip TA). I’m considering moving my stocks portfolio tracking into a spreadsheet that links to live quotes. In addition to total current value it’d be great if it could also work out my personal rate of return over the last 15 years. Does anyone have a nice little template that can do those 2 things?
I have switched to Trustnet Portfolio, similar to Morningstar. Allows cash holdings to be included in portfolio.
Ah, nuts. Double whammy this week in the links for me. Morningstar portfolio manager getting dropped. Argh! That’s going to be a pita . And X-O getting bought by ii ♂️. So much for spreading investments around for FSCS coverage. I guess the platform and accounts will stay distinct from ii but accounts held in both will now count for one £85k backup from FSCS. Fabulous.
The other pair of links that immediately caught my eye were those on wealth taxes and Torsten Bell’s urging an increase in the basic rate of income tax. Richard Murphy surprisingly perhaps is soundly against a wealth tax simply as it’s impossible to implement, and I think Dan Neidle would say the same. We’d end up having to put valuations of our old Saab’s and collections of Victorian pen nibs on our tax returns – or is that just me? Murphy published The Taxing Wealth Report last year that is very comprehensive about how to really go about it. Look here if you are interested https://taxingwealth.uk/ I think we’re going to have to bite the bullet as a nation on this eventually or we’ll all end up picking our way around giant potholes and mountains of bin bags in our ancient Saab’s (see above) coughing our way through the poisonous smog to where there used to be an A&E, for old times sake. Apart that is from half a dozen folk jetting around the skies in rocket ships avoiding the chaos below.
I’m going to the pub.
Happy Easter.
The usually sober Economist titles “How a dollar crisis would unfold”. They speak of a risk premium for US assets and a possible full-blown bond market crisis. Worth reading:
https://www.economist.com/leaders/2025/04/16/how-a-dollar-crisis-would-unfold?giftId=af3c27d3-6d06-4e87-91b4-3976a713314e&utm_campaign=gifted_article
@Ian Edward Holliday: I was disappointed too, but x-o are waiving their usual exit fees if Interactive Investor is not where you want to go with your holdings. I have initiated full ISA transfer to AJ Bell. Will report back (maybe on the broker comparison comments) if that is not straightforward.
@onedrew thanks for the heads up on the xo fee waiver. I’ll look into it though
but my investment there is tax exposed so I may well be stuck with them.
@Ian Edward Holliday: I’m expecting a full in specie transfer for my x-o ISA, as AJ Bell have all my current holdings available. Outside tax-wrapper, I would hope this would not trigger any CGT. Good luck!
This just cropped up in the ‘recommended reads’ on my Firefox home page.
I am not convinced the maths stack up…
https://inews.co.uk/inews-lifestyle/money/isa-millionaires-retired-early-by-40s-3635283
@Ian Edward Holliday #8 I hope they raise basic income tax by 6%. And lower basic employee national insurance by 6%. Or just merge national insurance into income tax in full, across all bands, resulting in a nice tax simplification and reducing salary sacrifice complications.
“Working people” (using Labour’s definition) are unaffected, and people living off capital are taxed more in line with employees. It should result in increased tax receipts in most parts of the UK.
Scottish middle income employed tax payers (£43k-£51k) should benefit most, as they currently pay 42% income tax + 8% national insurance, as the higher rate threshold was never increased to £51k north of the border. Assuming the Scottish government would be embarrassed enough to fix this when forced to show combined rates
@Vilehackwriter #13 (great pseudonym BTW 🙂 ): it can be done, although by 40s and 4% SWR look a bit punchy.
Extreme parsimony, each maxing SIPP AA, 100% pedal to the metal in equities and starting from GFC or post Dot.com crash lows holding to through to Trump 2.0.
Yeah. A couple on £75k-80k each or more could quite easily get there by 50s (although early 40s looks a stretch).
No skill required. Just patience and focus.
Trick after that, IMHO, when actually ‘in the zone’ for FI and RE, is to look where in the RoW do your £s go much further with lower CoL and taxes.
Best bets have migrated northward over recent years from South Asia and South America (with the great levelling of globalisation) and now is looking at Turkey, bits of the Balkans (Bulgaria, Bosnia and North Macedonia) and rural Sicily (all of which seem especially in contention for the pound stretcher prize).
As the couple in the piece say, it’s all just a game.
On the diversification debate (per @TI’s intro above), less is often more, especially if you actually know what you own.
Diworsification is the silent killer in a lot of UK portfolios right now. Everyone’s chasing “diversification” without actually understanding what it means.
So you end up holding 6 global equity funds, 3 ESG equity trackers, some exotic thematic ETFs (via their Freetrade or Trading 212 account), and a handful of ITs—many of which overlap massively.
It’s especially noticeable after the recent Trump tariff wobble in US tech.
Even with all these “different” funds, portfolios still dropped in sync because they were all correlated to the same underlying market drivers—mainly the US.
And because most of us can’t access US-listed ETFs directly in ISAs or SIPPs, we’re stuck with expensive or overly broad alternatives.
True diversification should mean owning assets that behave differently when markets get rough—not just different fund names.
Otherwise, it’s just diworsification: more holdings, more fees, less clarity, and no real protection when the FTSE and Nasdaq both take a hit.
Happened to look on RIT’s website to see if there was an update – looks like thefinancialzombie.com has been hijacked/taken over/cuckcooed
#VHW – yes the Donegans are retired in the sense of running an international finance school business.
I.e. a million miles from being retired.
It does look like a lot of fun what they’re doing though so all power to them.
I’m not sure if they run it as a not for profit/charity or whether they make a few quid from it?
No kids which must help with the numbers. They don’t seem too far fetched to me, though I noted in the article they were ‘ISA millionaires’, but had 700k in ISAs so it’s not ultra rigorous journalism..
Hopefully no news is good news from RIT. Means he’s finally honed in on something that works for him. I always viewed that blog as useful in as much as outlining what not to do rather than other way around
@Rhino #17 > or whether they make a few quid from it?
They seem to claim they don’t need to make money from it.
Though always remember xkcd 1827. More useful than the fact that they made it, or TI made it, or RIT, is the odds of crossing the problem space. You can cross a country lane with your eyes shut and usually get away with it. Don’t infer that applies to the M25 😉 You never hear from those that crashed and burned – success has many fathers but failure is a bastard. Which is the essential worm at the bottom of the glass of so much motivational self-help rah-rah BS.
I know nothing about these guys – they may be fine. For the counterfactual, however, in my late forties I didn’t know the answer to their question #1 other than not enough. Arguably epic fail on all of their questions, but I was outta there five years later 😉
That’s the kicker @ermine.
If this is the start of Dot.con v2, catalysed by tariff woes, and LLM approaches to AI run into the desert sands; then the Donegans would be out of luck if they had gone ‘all in’ with, say, SP20 (iShares S&P 500 Top 20 Select ETF), or even QQQ, with no position size discipline or true diversification.
There’s no market sage, or shares’ shamen, to ring the bell at the top in order to be gone like Enron. Two years of sucker’s rallies later, like in October 2002 with the Nasdaq then, they’d be 80% down.
Outta luck, and financially eviscerated. FIRE mañana.
A rising tide lifts all boats, so that even blind skippers look like geniuses.
I think they get paid by councils, organisations etc. to put on the courses, rather than charging the end users. I’ve seen a few of their sessions and they’re fine. It’s effectively teaching same as what is available here – i.e. slow steady portfolio, DIY, passive, etc. etc.
They hang out with Mr mustache and people like that at the chatawaccas. Pals with TEA and so on and so forth…
They come across very friendly and community orientated.
Looks like from here RF is a division/spinoff of the MrMoneyMustache. in 2015
Now there’s lots to be said for MMM, the punch in the face metaphor for money muppets being one of his greatest hits. But the rah-rah on that page gets right up my mustelid snout. I didn’t leave work BS to go and replicate all that metrics BS for myself. But each to their own, if measuring the bejesus out of your quantified life works then hey, they should knock themselves out.
Red flags IMO is they are 46 & 41, and they only have £2.1M. Many Lottery winners find out that £1M in midlife is not enough, and the brandishing of the 4% SWR on repeat would give me the willies. £1M apiece on an average age of 43 is not enough to switch the engines off and coast. Now stick a head out of the cockpit and look at the scenery. Behind you a 15 year bull run. Ahead of you a 78-year old muppet with more grudges than the Mafia, current WIP is ousting the Fed chair, and ringfencing the US to bring the 1950s back, good luck with bring back the faded glory, Boomer. General sabre-rattling and the realisation that the West exported all its manufacturing capacity and skill, so even if we could manifest the capital plant we can’t train the skills needed to operate it for 10 years.
Now against that, you have the trusty shield of the 4% rule, they cite the Trinity study for a 30 year retirement, which will take them to 76 and 71, unless they’ve changed the rules of arithmetic since I went to school. The Trinity study looks at Americans retiring using the American markets, which until earlier this year had a relatively stable macro management for a long time. In short, do you feel lucky, punk?
I should add to the latter that if you are in the early stages, then this may be your great opportunity. DNFS and keep on keeping on. It’s being just retired in midlife at this stage with £1M a head that seems a teeny bit heady!
OTOH if they are being paid by councils to run free courses, well, they’re still working and will probably be fine. Nothing wrong with that but it stretches the retired early by 40 strapline. FI probably, RE no. Each their own.
If £1 million in the bank and a paid off home doesn’t qualify someone as FIRE then the whole concept really is out of reach for the masses!
The UK median full time annual salary is supposedly £37,500. To rustle up £1 million on that money you need to be doing a lot more than watching your spending and chasing the overtime.
@Azamino valuations are quite high at the moment, though DJT is doing his best to fix that. I retired on a lot less, but just after the GFC, when valuations were lower. It was easier then, but more scary because everybody things the lighting will strike again tomorrow.
As a check ofthe £1M a SWR of 4% implies a capital value of 25 times that much, 25 * 37500 = £937k. What is working against the donegans is both the high current valuations and that they are young, to the extent that the Trinity 30 year study won’t take them far enough IMO. They will probably make it because they are financially savvy enough to change course, and they haven’t actually retired early.
@Ermine – I’d probably push back a bit on 2.1m not being enough for a couple with no kids. I think it could be plenty. I’d have been tempted to keep a toe hold in the property market if I were them though. Sounds like they sold up on all their bricks and mortar. That’s a dangerous game long term.
Yes, I think £2.1m for a couple is fine. I assumed much less for me when single, and they can at the least split their housing costs, plus plenty else, before getting into the individual additional spends.
Of course there are scenarios where they fail at 4% etc. We know this, but I think having a crack at £2.1m in 40s is good odds.
I know nothing about them at all, but I achieved similar by my late 40s and I suspect I earned less, though probably invested ‘better’ / luckier 😉
@Azamino
I think you’ve hit on the truth (FIRE) “ the whole concept really is out of reach for the masses!”
Although I’m don’t believe it was ever for the masses, or at all realistic for median earners without bitcoin like lottery wins.
The typical Monevator readership isn’t very median-like judging by the comments, we’re a niche. Not sure if we ever did any survey monkey’s on our profile. There’s some on Financial Samurai, and they are very skewed.
@Boltt — A clue is that we did a tiny survey back in 2023, and found 60% of respondents were higher or additional-rate taxpayers. The latter surprised me in particular, the former did a bit too but thinking back I don’t think it should have given how tax bands haven’t moved.
https://monevator.com/weekend-reading-earning-learning/
I don’t think I’d ever have thought really early FIRE was for the masses, if only because the masses still (just about) have kids on average. But I do think it remains accessible for decent wage earners who want it and are prepared to sacrifice. In some ways maybe even easier with so much information around now, and a lot of efficient investing architecture.
Edit: I changed to ‘given how tax bands haven’t moved’, I was thinking of fiscal drag bringing people into the tax bands as ‘tax cohorts’ but it wasn’t very clear. 🙂
@TI:
Re: “In some ways maybe even easier with so much information around now, and a lot of efficient investing architecture.”
Agree and FWIW I have been droning on about your former point for a good few years now. I am old enough to remember the time when such info (especially wrt de-accumulation in the UK) was only available from a US perspective.
Big HT to all @Monevator (and others) for the significant contribution you have made to addressing this information shortfall! I assure you it is well worth your efforts and I trust it is widely appreciated.
Jarvis is trading at £5.7m market cap while holding £5.9m net cash and is set to receive £11m in sale proceeds from II (£9m day one) for ~£17m total cash. They’ve said they will wind the business down and distribute the excess cash.
Will wind up costs really be ~£11m? Current overhead is ~£7m pa but presumably that can be a lot lower without the retail business.
II does have a relatively low trigger to retrade the deal with only 10% of customers by number or assets needing to not transfer.
Looks like Jarvis got themselves into a mess acting as execution for brokers on “highly speculative” low market cap companies.
@platformer: the field of platform providers seems to be thinning out. Too many zero fee loss makers, and too little scale in the market, out there. On Jarvis, is it a melting ice cube now with the just 10% customer/AUM loss threshold for II to walk away, or a Grahamite ‘bargain’ net net? i.e. too much risk of a falling knife – value/ liquidation trap or too much opportunity with cash in bank? See that some of the Directors were buying in 2020 @ over £6. Now 13p. Painful for any exposed to this one.
@Howard They are no longer running the business as a going concern so this is just a question of residual cash left after wind-down costs. If they had been ambigious about their future plans then agree it would have been a much more complicated story.