What caught my eye this week.
Jason Zweig is an investment writers’ writer – the man my co-blogger The Accumulator models himself after, and the author of the only book @TA ever gave me as a present. (I’m hopeful the second one will be the completed draft of the Monevator guide to investing…)
Why, you might ask, does The Accumulator hold Zweig in such high esteem that he keeps a mugshot of the guy above the desk in his study, dotted with gold stars and a fake signature he forged by squinting his eyes and thinking of exorbitant expense ratios? (Probably).
I suspect it’s because the US veteran author has a similar ability to turn dry financial matters into pithy words of wisdom.
For a taster, here’s a few lines Zweig shared the other day:
- In investing, as in life, too many people confuse wishes for beliefs and beliefs for evidence. Things aren’t valid just because you want them to be.
- As you “learn” more, if your confidence doesn’t go down before it goes up, then you probably aren’t learning.
- The future isn’t a straight line you can extrapolate from the past. The future is a storm into which we are blown backwards.
- Walk as often as you can through the graveyard of your dead beliefs, especially the ones you murdered by your own hand.
- Investing is a profoundly lonely activity, and it’s hard to pick your way through endless minefield of bullsh*t and boobytraps that the financial industry lays down unless you find a community of other investors at least as smart as you.
Those aren’t even particular meant as pithy one-liners by the way – they are all teasers to full articles that Zweig has written before.
See his post for the links – and set aside a couple of hours to devour them.
From Monevator
Who’s right about London commercial property – the suits in hard hats or the ones in the City? – Monevator
From the archive-ator: Why we must all think long-term – Monevator
News
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.1
Dividend tax proposal threat to rich savers and company owners [Search result] – FT
US launches criminal investigation into Bitcoin price manipulation – Bloomberg
Call to end emergency tax on pension lump sums [Search result] – FT
Noel Edmonds hijacks Lloyds AGM to accuse bank over £1bn fraud cover-up – ThisIsMoney
London house prices in worse annual slowdown since 2009… – ThisIsMoney
…as number of home owners in England rises slightly for first time since 2004 – Property Wire
Warning over “money flipping” Ponzi schemes on social media – ThisIsMoney
Retirement Pyramid 2.0 – A Teachable Moment
Products and services
Did you know you can get a no-claims discount on home insurance? – ThisIsMoney
Reputation of hedge funds hacked back hard [Search result] – FT
Survey of pension millionaires reveals they own a lot of active funds – ThisIsMoney
Starbucks is beating Apple and Google in mobile payments – Quartz
An interesting interview about the state of ETFs and market tracking – ETF.com
What conditions and treatments aren’t free on the NHS, and what do they cost? – Telegraph
RateSetter will pay you £100 (and me a bonus) if you invest £1,000 for a year via my affiliate link – RateSetter
Comment and opinion
How to build a low-risk, high-yield portfolio of shares – UK Value Investor
Why it makes sense to invest in Government bonds [Search result] – The Economist
More: Do long-term investors need bonds? – A Wealth of Common Sense
What is the point of fund platforms? – Pension Playpen blog
The market-timing game – Crossing Wall Street
All the money in the world – Fire V London
Fund managers and the illusion of skill – Rick Ferri
Philip Carret on forecasting market swings – Novel Investor
Fascinating interview with economist Jim Rickards [Podcast] – Part 1 & Part 2
European companies just aren’t growing earnings like their supposedly over-valued US counterparts – Wall Street Journal
Why did Walmart buy India’s Flipkart, and will it pay off? – Musings on Markets
What venture capitalists actually care about when you’re raising money – Fast Company
Also: How much should you raise as your business grows? – Fred Wilson
Kindle book bargains
Total Competition: Lessons in Strategy from Formula One by Ross Brawn and Adam Parr – £0.99 on Kindle
Surely You’re Joking Mr Feynman: Adventures of a Curious Character – as told to Ralph Leighton – £0.99 on Kindle
Talking to My Daughter About the Economy: A Brief History of Capitalism by Yanis Varoufakis – £1.99 on Kindle
Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist by Kate Raworth – £1.99 on Kindle
Brexit: Still going better than anyone could have imagined
Mark Carney: Brexit already has households £900 a year worse off – BBC
EU talks with Australia and New Zealand deal blow to UK free trade plans – Guardian
How Britain’s departure from the EU stretches to mid-2020s [Search result] – FT
HMRC estimates Brexiteers preferred customs system could cost £20 billion a year – BBC
Why a French philosopher wants to stop Brexit [Search result] – FT
Polluting UK being sued by ECJ claims leaving EU will improve our air – via Twitter
Ex-mayor of Ipswich denied residency after 40 years in the UK – The Guardian
Off our beat
How Britain let Russia hide its dirty money – The Guardian
Electric scooter charger culture is out of control – The Atlantic
The Pygmalion effect: Proving them right – Farnham Street
And finally…
“The fact that making money from money is ultimately easier than making money from work is entirely logical when you consider that you only have a limited number of hours to work. On the other hand, your money “never sleeps”, as the old saying is quite right in telling us.”
– Andrew Craig, How to Own The World
Like these links? Subscribe 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”. [↩]
I can never get the ft links tk work nkw it just takes me through to the subscribe page snd I’m in desktop view
The Office of Tax Simplification report is a mine of useful information, explaining the sequence of tax allowances so clearly and pointing out when HMRC SA system got it wrong. https://www.gov.uk/government/publications/simplifying-the-taxation-of-savings-income
Of course simplification is likely to mean “rounding up” to Hammond, but did anyone really expect dividend tax rates to be lower than income tax ones long term
@Fatbritabroad — I just checked, they work for me. Perhaps clear your browsers, or try incognito mode? (I did have to fill in a quick survey to view.)
Hope that works. There’s no other option really, except to pull the FT out of the links, but they are the most consistently strong personal finance pages of the major newspapers from an investing perspective (the Times is good too, but truly pay-walled) so loathe to lose them.
(I have an online subscription, and would certainly recommend one to any serious active investors / business types who are reading).
Thanks for the links this weekend, TI. The only serious money subscriptions worth having are one to this site and one to the FT. Both excellent value.
Love the market timing game, but I keep beating the market when playing it. Should I add “don’t time the market” to my graveyard of beliefs? Help!
Have to agree that this site is well worth the subscription :). Re the active fund/ pension millionaires article, worth noting that passive funds are relatively new. If you have been invested for long enough to get a million your formative years were in active unit trusts or investment trusts. The latter are so stuck in the mud that they haven’t really got round to dealing with costs and with the low discounts now I am selling them down in favour of passive funds and the odd OEIC or whatever. Not a millionaire however 🙂
Bonds:
(i) The Economist ejected me. Did it have much to say that stands up?
(ii) “Finance 101 tells us stocks should earn more money than bonds over the long-term most of the time.” You could equally well argue that fixed interest bonds should pay more than equities because the coupons are far more vulnerable to inflation than dividends are. But they don’t always pay more, do they? “Should” is not much help in finance, it seems to me.
Right-click / long press (yep, works on mobile) then open in incognito works reliably for me. I think they count & limit free access with a cookie if non-incognito.
Thank you, learner. I have no idea what your detail means but the gist worked beautifully in Safari, where I opened a “private window”.
Thanks the incognito mode works great
@Optimistic
The key thing about the millionaire pension investors survey is that it’s all taken from Hargreaves Landsdowne customers
Mostly HL customers haven’t shopped around for a cheap platform and just responded like trained seals to the HL marketing avalanche
Once they are in HL they will just respond to another avalanche of advertising about which active funds to buy
@neverland. Yes that is probably true. My own bugbear us Fidelity who charge almost as much (0.35% v 0.45%) but for very much more limited fund choice and service. Think Fidelity are after workplace schemes and are aiming to let them drift into their SIPP. HL are worth the extra 0.1% in my view. However, I only have a limited amount with them.
The Economist article, btw, is well worth the read.
Wow, writing* an article about “How to become a pension millionaire” and not mentioning the Lifetime Allowance is quite something!
The right answer to the question “How do YOU become a pension millionaire?” is: you don’t. If you’re heading in a direction where your pension would exceed the LTA, switch it into lower risk assets and put your equity exposure elsewhere.
(People who already have £1m of course probably built up their assets in the past and taken protection from the LTA… but “pension millionaire” isn’t a sensible goal if you’re starting out now.)
* The term is used loosely – “unquestioningly transcribing a press release from HL” would be closer to the mark…
Rolling rate at Ratesetter down to 2.3%! Lowest ever!
@Rhino
Indeed – rates in recent months have been so low that it’s no longer worth the additional risk when compared with a savings account (or faffing about with a few current accounts) – I’ve withdrawn pretty much everything as a result.
I was thinking the same. There’s no risk premium with P2P. Maybe everyone in it is like me, i.e. dumb-money? I’m going to ease out of it. Its wasting my time.
@arty & @rhino
P2P – I’m typically getting ~3% for rolling and some older 5 year loans at 5.5%.
I moved from 3/5 year loans to rolling loans to mitigate risk (albeit not transparent risks).
If not p2p then where do you invest next?
– more equities?
– gilts (no thanks at those prices)
– pref shares, I’m still suffering from Aviva’s poor behaviour
– BTL/REITS
At this rate I will need to take a more Active approach!
(5-6% total return would be enough)
B
“Electric Scooter Charger Culture Is Out of Control”
Wait, what?
Well I am an outlier at HL as I have a 7 figure SIPP in drawdown and none of it is in active funds. Just ETFs and gilts.
If they want to take an enormous risk with their money to earn 5% p.a., a couple could open three current accounts at TSB.
Just need to point out that the ex-Ipswich mayor hasn’t been denied residency. She already has Indefinite Leave to Remain (permanent residency).
It’s British Citizenship she’s been refused (quite different).
Still poor/ inefficient treatment by the passport office though, which will means she has to fork-out another £1000+ to apply again.
@Naeclue – then I guess you are hoping HL do not upgrade their systems like TBS did…..
@Kraggash, not being able to access my SIPP when I want to could prove very inconvenient and is something that has crossed my mind. To mitigate such a problem I do complete my drawdown for the year in January, 3 months before year end. I hold my ISA and other investments at another broker as well, just in case of some unknown unknown hitting HL.
dearieme – IFISA have made P2P a lot more attractive to me again. If you’re a higher rate payer then earning ~6% after (ignoring) tax justifies some risk. I said 6% because that’s what we’re projected on new lending over 3 platforms on new loans; lending on 3-5 year basis.
I don’t have enough S&S that I’m losing any capital gains benefits by having ~£30k in IF ISAs instead of S&S ISAs, and as we’re likely to remain higher rate payers we want to get as much as we can within an ISA wrapper without but cash ISA rates are aweful.
@JG – maybe the sweet spot of P2P is the more illiquid end? i.e. up at the 3-5 year mark?
6% is pretty much double what you could get on 3-5 years for cash, which seems reasonable..
2.3% instant access at ratesetter vs 2.5% for cash at nationwide – well that is the very definition of dumb-money (thats where I sit as of right now!)
I use ablrate at 12%to 15% but this is very definitely my high risk end. I then have the same amount in lending works at 6%. Five year loan but can sell out for a 0.6% fee basically gives me 9% average on 10k of which half is insurance and provision fund backed. I have 60k total atm non pension investments I wouldn’t put anymore than 20% of my non pension assets in p2p. If i view lending works as fairly low risk but i still wouldn’t chance it
@TheRhino — The rolling market was long an anomaly, and where I had all my RateSetter P2P cash for that very reason! 🙂 Of course there was an element of ogre’s dinner party arrogance about assuming you’d get out before the crowd. (But as we all know I’m an ogre in my spare bedroom ha ha. 😉 )
I seem to have been getting 3% on the ratesetter rolling account today – I do set mine to 2.9 – 3.1 rather than accept the live rate.
I have been moving out of the 5yr into the rolling account as the basis if they have problems the rolling money is unlikely to be affected to the same degree as longer term money.
Has anyone read the full t&c to find out if all accounts are likely to take a haircut if Ratesetter find themselves in trouble?
B
Ps the best Instant account rate I found was ~1.25%
@Boltt – thats a good idea – I think I’ll do the same.
@TI – whats an ogre’s dinner party? have you ditched RS now then?
Like a lot of these things where one says ‘ooh I’d only devote a few % to it tops’ you end up wondering whether its worth bothering at all?
@Boltt – not sure I’d bother putting the upper limit on it though 😉
@The Rhino — I bought a flat, you recall! 😉 That has taken care of most of my “where shall I put this cash” queries for now. 😉
Also, @Bolt is quite right to point out the best instant access accounts are far lower than the 2.5% you are quoting for cash. You are comparing instant access at RateSetter with fixed rate (or special regular saving or similar) in a normal cash account. Quite a bugbear of mine.
It’s fair enough to say RS isn’t worth it for you here for this or that reason, of course. But conflating different categories adds some darkness where there might have been more light. 😉
Ogre’s dinner party is where everyone rushes for the exit once the last bit of pudding has been eaten and whoever is left gets eaten by the host! (It’s an old market expression for markets where everyone assumes they will be cleverer than the other people at the table and get out first…)
@Boltt – cheers for the tip, just got 2.9%, that was worth 1 seconds work
Coming to this late, but if you insist on including a swathe of Brexit stories, maybe fact check some of them first? They discredit the rest of your useful posts.
– Mark Carney: Brexit already has households £900 a year worse off
Status: unproven: https://fullfact.org/economy/are-families-900-worse-brexit/
– HMRC estimates Brexiteers preferred customs system could cost £20 billion a year
Status: dodgy maths and double counting, could be as low as £2bn – https://brexitcentral.com/getting-facts-straight-true-cost-maxfac/
– Ex-mayor of Ipswich denied residency after 40 years in the UK
Status: denied citizenship, not residency, as above in comments, due to Home Office incompetency, not Brexit.
I know, your site, your rules…
@Mike — Well, I wouldn’t say it’s fact-checking with Brexit, these are always moving stories with multiple perspectives. The Ipswich story does seem to have been misreported, and I agree it does look more like HO incompetence (albeit the “hostile environment” modus operandi that arguably helped lead to Brexit) rather than Brexit.
Carney is a matter of opinion, I think it’s probably an underestimate if anything, given how GDP growth has slowed to treacle. Yes it’s an estimate, that’s what we’ve got when making decisions about the future. We can’t really say it’s right or wrong, I’d agree it’s “unproven” but that is the nature of an estimate.
Re: Maxfac, I later saw the clarification that c.£6-7bn would be on the EU side to bear, and I agree it changes the maths somewhat. The rest is at least as speculative as Carney, if not more. And even with £7bn on the other side, we’re still adding friction to trade and spending money on paperwork when we could be spending it on something useful such as R&D or planting trees or ice creams. Which is why, of course, the free trade area was agreed in the first place.
As ever I remains sympathetic (but unconvinced personally) that sovereignty was a valid reason to vote Brexit. The economics will never make sense IMHO, especially as we were not in the Eurozone and have our own currency. Cheers!