What caught my eye this week.
It’s not been easy to find reasons to be optimistic about the shrinking British stock market in recent years.
But I think how private investors, fund managers, the investment trust industry, and investment platforms worked together to defeat US firm Saba’s designs on the trust sector might qualify.
As I wrote last month, there was something of a last alliance vibe about this coalition of the unwilling.
But so comprehensively was Saba defeated – it lost all seven showdowns, and on large turnouts of private investors who overwhelmingly voted no – that the result was quite heartening.
This was shareholder democracy in action, and I’m all for it.
Moreover the platforms showed that they can facilitate such a democracy if called upon.
Your vote counted
In the early days of Monevator, lots of readers urged me to write articles about the evils of nominee share ownership and the demise of paper share certificates.
I saw their point. But I also saw the changes as inevitable and not the most important battle to win compared to, say, lowering fees or spreading knowledge about index fund investing.
Anyway such appeals stopped long ago, whether because the proponents accepted the change or because they moved on to a realm where their voice was even less influential than here on this mortal coil.
But wherever they are, I hope they’re heartened too.
Nominee ownership and representation via electronic voting on platforms does not inevitably mean disenfranchisement, or to be kicked around by those with the billions and the biggest boots.
And that is good news, whether or not you agreed with Saba’s charges and proposals. (Personally I share some of his complaints. But I was not persuaded by the remedy he was offering.)
He gets knocked down, but he gets up again
Saba is now going after a new quartet of trusts, suggesting they be turned into open-ended funds.
Curiously, Moguls-featured Pershing Square isn’t on the list despite its yawning discount.
Anyway, we’ll have to whether Saba’s relentlessness eventually exhausts the opposition.
More UK investors are apparently getting in on the act too. For example, the hugely talented Christopher Mills is said to be raising money for a trust that will work to close discounts at rivals.
As somebody who sees rife opportunity in the trust sector, I’m not surprised.
Though ironically two Mills-affiliated investment trusts themselves sit on 25-30% discounts…
Passive engagement
I’ll leave more comment in that direction for our Moguls member posts though.
Indeed for most Monevator readers who sensibly invest in index funds, this might all seem a bit irrelevant.
But I’d suggest it’s very relevant.
As index funds take up an ever-larger share of the overall investing pie, it’s really important that cheap and effective investing for the masses doesn’t become a lazy synonym for disenfranchised investors and the fracturing of shareholder democracy.
That charge has already being made as index funds have grown to dominate the investing landscape. For example, from the New Statesman:
The upshot of this mix is an ownership regime with a chief interest in maximising assets – whether by minimising costs to take market share, or by promoting general asset price inflation – and takes little interest both in how capital is allocated and how any company within its diversified portfolio is governed.
In other words, such an ownership regime takes no ethical stance on what those companies produce, how they are run, what they sell or what impact they have on the planet.
It’s a valid concern.
Squint though and you can see this battle with Saba as upholding the thin end of the same wedge that ends with Vanguard cutting fees further in the US recently.
The common thread is what’s ultimately in the long-term interests of ordinary shareholders.
Perhaps there’s even a future where even index fund investors get to vote their wishes somehow on the vast range of issues raising by the firms their tracker funds hold – albeit perhaps by aggregating their general wishes at the fund manager level?
Time will tell. But I’m more hopeful about that sort of thing than I was two months ago.
Have a great weekend.
p.s. Two corrections! We featured a wonky graphic in the email of TA’s linker piece on Tuesday. Thanks to reader Richard for the heads-up, and see the corrected post for the right graph. Then the next day TA achieved a – very rare for him – double by misstating the age you can open a cash ISA. You must be 18, of course. Sorry cash-loving youngsters! And cheers to reader Tommo for spotting what I missed.
From Monevator
Did individual linkers hedge post-pandemic inflation? – Monevator
UK tax deadline: how to make use of all your allowances… – Monevator
…including that dreamy £20,000 ISA allowance – Monevator
From the archive-ator: Stonking gains, hedge fund pains – 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 jumps back to 3% – Morningstar
Fund managers step up calls for Reeves to ‘simplify’ ISAs [Search result] – FT
Treasury rejects farmers clawback compromise on inheritance tax… – Farmer’s Guide
…but government does backtrack on tax hike for private equity firms – CityAM
Reeves’ intervention in car loans case rejected – BBC
Confidence in economy among wealthy Britons falls to record low – This Is Money
VOO has dethroned SPY as world’s largest ETF [US but relevant] – Sherwood
How to fix Europe’s securitisation market – FT
Devon farmer culls 5,000 hens due to bird flu – BBC
House prices in Gwynedd in Wales plunge on second-home policies – BBC
London registers zero house price growth for 2024, says ONS [Search result] – FT
Products and services
Should you choose a savings account that offers a boosted rate? – Which
NS&I cuts rates on Premium Bonds and Income Bonds – T.I.M.
Get up to £1,500 cashback when you transfer your cash and/or investments through this link. Terms apply – Charles Stanley
Plum and Chip boost cash ISA rates above 5% – This Is Money
Major lenders cutting mortgage rates, but don’t hang around – T.I.M.
Co-operative Bank switch offer: £75 + £75 – Be Clever With Your Cash
The best car insurers you won’t find on the comparison sites – Which
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
Buy-to-let mortgage market update [Podcast] – The Property Podcast
Family homes with gardens, in pictures – Guardian
Comment and opinion
Exchange-traded absurdity – Dumb Money Dispatch via LinkedIn
Spending shock – Quietly Saving
Eight investment rules to live and die by – FT
Six ways couples can cut tax and maximise their savings – Which
Targeting apathy – A Teachable Moment
Dealing with uncertainty – Behavioural Investment
Allan Roth: examining Vanguard’s expected returns for the decade ahead – A.P.
Improbable outcomes – Fortunes & Frictions
The Midas touch: 4,000 years of getting it wrong about gold [Search result] – FT
William Bernstein: why I don’t use retirement calculators – Advisor Perspectives
A modest capital tax could help avoid austerity and boost economy – The Conversation
To stop or not to stop mini-special
‘Fuck you’ money is useless without the “fuck you” – The Way of Work
Never enough – Humble Dollar
Naughty corner: Active antics
A couple who spends hours a week in passionate stock talk – This Is Money
Can bubbles repeat? – Arcadian Asset Management
More thoughts on the Magnificent Seven – Brooklyn Investor
The top 15 value-creating stocks of the past decade – Morningstar
Hundreds of unicorns haven’t raised funding since 2021 – Crunchbase
Does trend following still work on stocks? [Research] – SSRN
Kindle book bargains
Fooled by Randomness by Nassim Taleb – £0.99 on Kindle
The Price of Time by Edward Chancellor – £0.99 on Kindle
Edible Economics by Ha-Joon Chang – £0.99 on Kindle
Taxtopia by The Rebel Accountant – £0.99 on Kindle
Environmental factors
Glaciers melting faster than ever… – BBC
…but Trump withdraws support for research that mentions ‘climate’ – Guardian
Expanding seaweed farms poses risks to marine life – The Conversation
EVs are 50% cheaper to run than a petrol car… – This Is Money
…so what are the pros and cons of buying second-hand? – Independent
Rewilding sees animals rebound in Hackney Marshes – BBC
Robot overlord roundup
AI cracks superbug problem in two days that took scientists years – BBC
AI research tools for the financial sector – Herb Greenberg
BrAIn drAIn – The Intrinsic Perspective
Surveying which AI tool will win… – Spyglass
…or is generative AI all a con anyway? – Where’s Your Ed At
Not at the dinner table
How I’m preparing for the next four years – Ryan Holiday
Golfo del Gringo Loco – Daring Fireball
It was never going to be me – Epsilon Theory
It’s time for Europe to stand up – Noahpinion
You can never go back – Garbage Day
The schadenfreude dilemma – Drezner’s World
Off our beat
Career catfishing – Guardian
TFL reveals the costs and challenges of driverless tube trains – Ian Visits
A short history of cryptography, from the Spartans to the FBI – MIT Reader
Live to 100 and die totally happily [Videos] – Men’s Health
Bridget Jones’ London property ladder – Standard
Will quantum computers disrupt critical infrastructure? – BBC
“I love my kids but I regret having them” – Guardian
There goes my hero – A Wealth of Common Sense
And finally…
“What is this sovereign remedy? It is to recreate the European fabric, or as much of it as we can, and to provide it with a structure under which it can dwell in peace, safety and freedom. We must build a kind of United States of Europe. In this way only will hundreds of millions of toilers be able to regain the simple joys and hopes which make life worth living.”
– Winston Churchill, University of Zurich, 1946
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‘Plum and chip’ and ‘co op bank switch’ this is money links are the same. Possibly an error?
Want to buy puts on the Battleshares™ 2x long TSLA vs. 1x short Ford (ELON 😉 ) ETF highlighted in the Dumb Money Dispatch Exchange Traded Absurdity weekend reading link above? Then again, it hasn’t worked out for the TSLA short sellers so far:
https://open.substack.com/pub/bradmunchen/p/trumps-presidency-helps-twitter-the
And, as a counterpoint to the optimism of the BBC AI cracks superbugs link this week, it looks like LLMs are learning to deceive:
https://open.substack.com/pub/bigtechnology/p/ais-are-deceiving-their-human-evaluators
Every technology that can be put to a good use can also be put to a bad one 🙁
@Rhino – Ack, thank you! Fixed now. Wish people would hammer ‘refresh’ all Saturday morning so they can read the Weekend Reading the instant it is posted and alert me to errors before I send out the email.
(Note: I’m obviously 100% joking! But I do wish I had a sub-editor sometimes, it’s very hard wrangling these links with zero mistakes. Though I do think I bat about 999/1000 😉 )
I share your ambivalence about Saba (diagnosis of trouble in the IT industry largely right, treatment to some extent flawed). But its hard not to see the shareholder revolts against Saba as a bunch of turkeys voting for Christmas. I can’t understand why anyone rational would vote against a strategy which would allow them to exit failing investments at the non-discounted share price. It’s not as if there aren’t other better places (eg index funds) to put your money. I am afraid I see a large dose of chauvanism, sentimentality and sorry to say ignorance amongst the motivations of share holders. ITs have been half-hearted in their measures to reduce their discounts because guess what that would often reduce their fees. Couple that with the unhealthy relationships between some platforms and the industry (Hargreaves Lansdown & Woodford come to mind) and it’s hard to view the UK IT industry any more favourably than the Saba hedge fund. A plague on both their houses I am sorry to say
@TI. I don’t really understand your negativity re: Saba. Saba offered close to full cash exits (99% of NAV) on these shares. That forced the managers to offer the same.
These trusts are mismanaging their investors’ money. If a trust is really operating on a 30% discount to NAV, then the managers should simply liquidate the investments to return the NAV back to investors, crystallizing the gain. They they then launch another fund the next day with the same objectives. If that starts trading on a 30% discount, repeat and rinse. What’s not to like?
I just don’t see any good reason for a trust to continue to exist at a substantial discount to NAV. It creates poor sentiment and does sort of imply there might be more of a problem under the hatch than they are letting on. A few successful liquidations of trusts, returning something close to 100% of NAV, might help the whole industry.
Question:
Is the discount on UT just a consequence of their fees? Let’s say market return is expected to be 8% and the trust charges 1.7% in fees (so ~ 1.6% over costs of a tracker). So the fees eat 20% of the return, in effect you only own the equivalent of 80% of the assets? Ie 20% discount to NAV
A bit like leasehold properties..
@Boltt – agreed but also interest rate sensitivity for certain ITs (infra, REITs etc)
@Passive Investor & @ZX: that’s quite a harsh verdict there on the investors’ votes.
@ZX at #11 (just below my own post as @TLI) on this thread here:
https://monevator.com/weekend-reading-mission-impossible-for-active-managers/
said that less choice is bad (“fundamentally reducing my choice to invest exactly as I please”) (I agree BTW).
Is that not what investors wanted here but which Saba tried to take away from them?
@DH. Choice is good. Private investors have the right to make their choice. I just don’t understand why they voted against. Just take the uplift to NAV and then reinvest in another product. There is nothing about these trusts than cannot be replicated elsewhere. In the meantime, they are just paying fees.
Moreover, if it’s not Saba, it will be someone else. You can’t expect a bunch of fairly vanilla holdings to trade massively away from their NAV forever. Someone is going to play for that arb. I think it’s naive for private investors to assume that every method that could be used to extract that value will leave them in as good as position as the Saba offer did.
@ delta hedge. Re-reading what I wrote it is a little harsh but I still don’t really get why people feel such loyalty to what as @ZXSpectrum48K so well describes are badly failing investment vehicles. In a nut shell there is very bad misalignment between the interests of the IT managers (keep the IT running at all costs to harvest the fees) and investors. I don’t understand why investors can’t see that. But then I’ve never really been a fan of ITs except as a way of accessing niche market sectors (eg I have small positions in BG Shin Nippon and Henderson Small Co). To my mind gearing is just another way of increasing volatility and mimicking dividend smoothing is easy enough to do yourself. PS Today in the FT I did read one rational reason for one investor not wanting to cash out which is to avoid crystallising CGT.
Regarding investment trusts / Saba / and so on, I think I’ve been pretty clear about seeing the cognitive dissonance in my own reaction… 😉 More so in the previous post perhaps.
But yes, it’s fair to say I’m pleased with this result.
Let’s leave aside whether any of these sort of active retail-targeted funds need to exist (most of this website is dedicated to saying “no” and I’m happy with that ratio).
I believe it’d be pretty hard to create the investment trust sector if it didn’t already exist. I believe it does offer interesting exposures for the adventurously active but otherwise pretty ordinary investor (in terms of knowledge and firepower). And I think the waxing and waning of discounts presents opportunities that one can exploit / scalp for a bit of extra profit. I like that all these things exist in the investing world for UK investors.
In terms of Saba specifically, the whole thing was as I saw it pretty much an AUM gathering exercise at a moment of extreme weakness for the sector. It was done for Saba’s benefit, which is of course fair enough, but not a reason for someone to vote for it.
But should all the targeted trusts wind themselves up instead? Or any trusts on discounts?
I don’t believe so.
While this particular downturn is now getting pretty drawn out, the general coming in and out of fashion (discounts/premiums) in investment trusts is not unusual. They are double layered in that way in terms of supply and demand. (Supply and demand for what they hold, and for the trust itself). Those targeted I wouldn’t describe as “failing” (except in as much as that as active funds most perhaps/will fail over the long-term versus passives, but we’ve put that to one side, and anyway they might not due to structural advantages like gearing and buybacks).
Today’s failing investment trust is tomorrow’s shoot the lights out winner. As I’ve said several times on Moguls, people say why should discounts close? Who knows (I can give reasons, and have elsewhere) but they do. This has already happened with several funds in this cycle. Not just Saba-scooped up ones, either.
I did well with a small holding of HGT capital over the past couple of years, for instance. It was on very near-30% discount a couple of years ago and now it is back at par.
I don’t believe its shareholders or the UK investor landscape would be better off had it been liquidated back in 2022 when it was in distress. The long-term record happens to be strong, but equally importantly it offers useful and differentiated exposure. I accept not all trusts do this. But even bog-standard equity income funds will trade at par again someday, I’d happily wager.
Reasonable people can disagree about all the above of course, depending on one’s perspective etc, but that’s how I see it.
@Delta Hedge was @TLI all along ?
Yeah. @TLI was a homage to Sir Roger Penrose’s diagrams:
https://en.m.wikipedia.org/wiki/Penrose_diagram
And was also a tribute of sorts to sci-fi author and former maths and physics teacher Steve Baxter’s book of the same name. It didn’t seem to map well to finance though, so I change over to Delta Hedge.
Not at the dinner table indeed. I’ve always been pretty engaged with politics, at least local to where I’m living at the time – UK, US, elsewhere – but I have lately switched off as much as possible. The US isn’t coming back from this one, at least not in the usual timespan of an administration or two. It is far easier to tear institutions down than to rebuild (and re-fund) them. Friends in public service are living in a daily state of anxiety as they watch their leadership, peers, teams, work eliminated, awaiting an email telling them their career is suddenly over.
I only learned of this yesterday.
“Starting Feb. 26, 2025 (via ZDNet) you will no longer be able to download copies of your Kindle books and use those files as a backup. After that date, you will only be able to download books via Wi-Fi or through the Amazon platforms.”
https://www.tomsguide.com/tablets/e-readers/hurry-download-your-kindle-ebooks-before-amazon-wont-let-you-anymore
I enjoyed investing in Investment Trusts during the evolution of my financial path to investing and retirement
Alliance Trust set up a first SIPP for me that worked well -now sold to Interactive Investor -I am still there with 2 SIPPs and 2 ISAs
I remember that I had some fun with a Turkey Investment trust and made a little money over a year or two
Personal Assets Trust seemed to be run on the sort of lines that a long term conservative investor like me appreciated though it was a relatively small fund
The erudite writings of Ian Rutherford and especially Robin Angus were a delight and a treasure trove of investing information
Then came John Bogle , Vanguard and Index Investing
Alliance Trust,F&C etc were obviously expensive closet index trackers
Investment Trusts were Active Management in investment style,relatively expensive and very dependent on their star managers so I exited the field -indexed from then on – and have never returned
For active investors they remain an exciting investment with the possibility (losing)of making money but too rich for me
xxd09
@Delta Hedge. Interesting. Stephen Baxter had passed me by. Tempted to give him a try.
I had been a bit concerned, not seeing @TLI comment for some time, so am glad to know you are alive & well.
Re: “Not at the dinner table” links this week and the President ‘Mump’ regime (as the world’s most famous living South African can’t hold Presidential office under the Constitution, we can’t quite call this the Musk regime): had wanted to post this link to the last (March 2021) Tesla piece in Monevator, but the thread’s now closed: so, accordingly, here’s Noahpinion today on don’t underestimate Elon:
https://open.substack.com/pub/noahpinion/p/only-fools-think-elon-is-incompetent
The cat phishing link rang true for my time in Japan. New hires from abroad just wouldn’t turn up for training. Typically they would not respond to emails and phone calls, so we never knew if they had cold feet and stayed at home, or found a better job using the work visa that we had sponsored.
Saba won. They bought large positions at a discount to NAV and forced most the fund managers to liquidate at 99% of NAV.
How is buying something for [75] and receiving 99 an “embarrassing failure” (to use the AIC’s language)?
To stop or not? I wish I knew the answer. My job is pretty decent at the moment, vacancies filled, friendly team. The main thing that would make me stop is if it becomes enshitified (again, been there done that, no thanks). I’m only 47 but I’ve seen too many colleagues die 55 – 65 die without retiring, so I’m aiming 50 – 55 (? Go for Fat FIRE)
@TI. I’m a big fan of investor choice. More funds = better in my mind. Yet, some of the trusts Saba was targetting were really too small to be viable. CQS Natural Resources Growth Income, Henderson Opportunities Trust HOT and Keystone Positive Change Trust are all sub £200mm. They are not making the managers rich. They are not making private investors rich.
My hypothesis is that many trusts have price dynamics that are showing real signs of contamination. Essentially, they should be trading at a higher price but because the’ve been trading at a major discount to NAV for an extended period, trading at that price becomes “normal”. Every time the prices starts to rise, you find trapped longs trying to exit. A new buyer won’t trade unless they can get a bargain the current NAV discount (i.e. if it’s been trading at 20-30% discount, they will only buy at 30%).
I’ve seen this happen in the EM distressed debt market. Something bad happens, the debt (correctly) revalues. The price falls too far. The problem stabilizes but the price never returns to fair value. The positioning is just too contaminated.
The answer is usually to restructure. If you’ve got the capital, you buy back the old debt in the market at say a 30% discount to par. If not, you offer the current holders par value on the old bond and spin them into a new bond. Guess what? The new bond doesn’t trade at a 30% discount to par. It trades at par. I think ITs might well do the same.
‘Does trend following still work on stocks?’ was an interesting read.
I had thought though that the technique they are using was generally referred to as Momentum.
Not in the paper, but from their charts it looks like switching from Momentum to a MarketCap strategy temporarily after a crash (2008, 2020) could be a good tweak (I guess that makes sense, since most of the market trends up after a crash).
@Algernond: Check out Dual Momentum Systems ‘Smart Leverage’ (the Triad + and Triad ++ portfolios)
https://dualmomentumsystems.com/strategies/
It’s a free site run by a Gary Antonacci fan who’s developed DIY ideas to improve the basic index (US v ex US) Dual Momentum including, for LETFs, using them only after an outsized fall in the S&P 500.
@ZX #21: An intriguing conjecture. Taking Occam’s Razor to it:
Scenario 1: there’s a failure of the EMH with all IT pricing due to the price contamination effect which you describe. As there’s no systemic and systematic bid for an active managed closed end wrapper (unlike, as we’ve discussed before, for passive large cap ETF trackers, due to market inelasticity and the relentless flows from active to passive and via auto contributions into passive) the IT discounts embed themselves. They then persist because of a combination of psychological scarring amongst investors and bag holders bailing on each attempted rally.
Scenario 2: hight interest rates devalue the NPV of the future value of the yield at par for the IT’s underlying assets. So the ITs have to trade at a discount to tangible NAV. When the 30 year conventional gilt is 2% getting 5-6% with some inflation protection in infra and renewable energy ITs looks attractive. With the 30 year is at 5.5% (as it recently touched) investors want ~8-10% from such ITs, all else being equal. That can only be accomplished by going to a huge (30-40%) discount.
Scenario 2 make fewer assumptions than Scenario 1.
Typo – that should be “higher interest rates” not “hight rates”. Only just spotted. Apologies.
@DH. Assume an closed-end fund (CEF) with a set of constituent stocks that are liquid. The CEF NAV is the sum of the NAVs of it’s constituents i.e. the weighted sum of the prices of the stocks. Those prices are already discounted. So the effect of higher govt bond yields is already incorporated into the price of the constituent stocks. You would be double counting to apply it again to the trust NAV.
Now, I do think that higher bond yields have clearly impacted trust prices. That though is not due to any fundamental impact from discounting. It’s because the investor base for trusts tends to be older and more dividend focussed. They are more inclined to sell their trusts and replace with Gilts now yields are higher. They are less inclinded to buy (since retired). More inclined to sell down to fund living costs. Younger investors just buy trackers. So it’s just a supply-demand imbalance. Sorry, the market is simply not efficient.
What I will say though is that at this point every hedge fund has this trade on (long trusts, short constituent stocks). So every time the discount narrows, they will sell the trusts and buy back the stocks to take profit. Repeat and rinse as many times as they can. That makes it even harder for the discount to narrow back to zero.
Yes you’re right @ZX. My Scenario 2 does double count the increased discount rate on future returns of the underlying trust assets.
And you’re also right that the fact that CEFs/ITs persistently and consistently trade at a discount to their NAV, which itself should be appropriately discounted to interest rates (etc), does show marked market inefficiency.
Whilst markets are mostly efficient most of the time; that must also necessarily mean that they’re sometimes inefficient across the board (i.e. an overreaction which gets corrected) and / or persistently inefficient in some specific areas (such as this).
But for the average small punter might this particular inefficiency not create opportunities long term?
Say the discount never closes but ITs like TRIG manage to maintain a 10% dividend yield, as it presently does, over the long term.
With the asset base for infrastructure and renewable energy ITs being somewhat inflation correlated, then – with dividend reinvestment compounding – that could allow them to eventually crush the general market return, which increasingly depends upon the jam tomorrow of future income growth promise.
I’m thinking a long term Philip Morris / Altria situation where everyone hates the stock but it eventually wins the race. The investing Tortoise and the Hare if you will:
https://www.dividendgrowthinvestor.com/2024/07/the-best-performing-stock-in-past.html
@ZXSpectrum48K — Good comments, no real disagreement as such, except that I am less sure that one could liquidate the trusts (or at least the ones with liquid stocks) at very near NAV and then reboot. I suspect they’d be lost, at least until and unless there was some sustained bull market.
And I’m surely a little more concerned about that outcome / sentimental about it then you are! 😉
Re: hedge funds, I should hope they have it on, I’ve been ducking and diving around in trusts with at least half my own NAV give or take for two years and I’m just humble old me. 😉
It’s fun, which is another reason I’d be saddened to see the opportunity set shrink (/choice diminish, as you say).
@Moonbrain (14).
I dislike Amazon’s way of doing business, and buy from them only when I can hardly avoid doing so. I’ve long been aware that in ‘buying’ a Kindle book, I don’t actually own it, I’ve just bought a licence to read it. My response to that is that I have returned to reading printed books. I either borrow from my local library, or buy s/h on Ebay. Of the latter, I generally buy from worldofbooks, as they operate on a circular economy model, and authors receive something from each book sold. Besides, I love to do some bedtime reading, and I much prefer to read from a real book, rather than a screen. And finally, I get just a little kick from a wee moment of “… up yours, Jeff Bezos…”
The whole basis for Europe’s post WW2 order changed last week and here we are taking about er… Discounts on UK IT’s and library books.
A day late and a dollar short as usual.
@Vic — True, but from the perspective of Monevator editor I’m damned if I do and I’m damned if I don’t…
As a long-time reader you’ve seen the turbulent / polarised response we get to political stuff, and yet I think you’ll be hard-pressed to find another investing/personal finance site that has been prepared to stick its neck out as much over the past nine years (and to lose readers in the process) than this one.
But to be fair to me / readers, we *are* an investing and personal finance (/FIRE etc) site first and foremost.
I don’t think politics can or should be entirely removed from that conversation, but there’s plenty of other places people can go talk about the latest instalment of a political descent that, yes, I’ve been doing my own tiny part to raise awareness of since the Referendum in 2016.
In contrast there’s far fewer places people can go to talk intelligently about discounts on trusts, index funds, or any of the rest of the bread and butter of this site. So that will always be the priority here. 🙂
@Vic #29: @xxd09, @TI and I have been discussing Ukraine recently here:
https://monevator.com/weekend-reading-in-a-m-a-d-world-all-correlations-go-to-one/
[NB: threads get locked after about 3 years now I believe.]
FWIW, IMHO the question for investors today is have ‘events’ (whether they be geopolitical, and/or epidemiological, and/or technological, and/or economic) shifted the investing world into a new gear – i.e. have we gone from low and slow (inflation, rates, growth) to higher and faster, or to something in-between, or indeed something different altogether.
@ The Investor
That’s fair comment, however this week’s events are far bigger than Brexit bickering and likely to be transformational for the European economy and its position geopolitically.
I gloss over the Brexit stuff as it’s been flogged to death here. The fall of the North Atlantic Treaty is bigger stuff and more far reaching however.
I agree but I also see Brexit and Trump as highly related, both directly (rise of populism and misinformation, little accountability, lack of punishment by voters for fanciful promises that are in no way enacted in office / on-the-ground, no acceptance for direct and negative outcomes — 6 Jan in US / GDP hit in UK) and indirectly (Brexit was the first proof of concept of the above, better informed people than me (but also me FWIW) said it would weaken the Europe’s posture versus our enemies etc).
This is the new politics, it’s all related, and it’s not good for weaker nations nor weaker citizens alike.
It’s bigger than 2016, or indeed any year specific start date trend, although the shocks of 2008/9 are perhaps the most immediate reverberation. But these things have been around for a long long time.
In the US, Nixon’s Southern strategy won election/reelection in 1968/72.
Regan created the coalition with the evangelicals in 1981 and introduced the Austrian school into government (voodoo economics as George Bush Snr called it out).
Recession, riots, Perot and a boring candidate did it in for the Reps in 1992 but Clinton had to govern from the right economically because of debt phobia and tried to build a coalition of white collar professionals, moderates and progressives on culture issues whilst ignoring blue collar. That was a foundational error.
In 1994 Reaganism had metastasized into Pat Buchanan and Newt Gingrich.
Then after the shock of 9-11 the neo-cons briefly had their day, but ostensibly liberal intervention (the new imperialism??) and ‘nation building’ (demolition??) never really suited the stay at home American temperament (until 9-11 required them for rentry from Canada and Mexico, only 10% of US citizens had a passport).
After the shock to conservatives and frankly racists of the Obama wins in 2008 and 2012 and with the unwind in growth in the 2010s we got the Tea Party and then a MAGA- Trump cult coming down the golden escalator in 2015.
The rest is history as they say.
But the trends go way back.
The militia movement. Segregationist George Wallace running for President in 1968, ultra hawk Barry Goldwater in 1964 and technocrat Perot in 1992. The John Birch society and McCarthyism in the 1950s. The resistance to the New Deal and joining the European war from 1933 to 1940 (including the attempted White House Putsch or Business Plot to use the army in 1933 to topple Roosevelt and install retired Marine corp general Smedley Butler as dictator).
These things have happened before. They can happen again.
The appearance of relative stability in international and economic affairs (which was illusory at the time) from 1992 to 2007 is not a norm to which the world naturally will revert. 2016 was a symptom, not a cause.
Granted it marked another forking of the path for the UK, but not a new world disorder. Think Billy Joel and ‘We Didn’t Start the Fire”.
@Delta Hedge — Absolutely, of course I am not saying Brexit *started* all this out of the blue. I said ‘proof of concept’ 🙂
IMHO however it did fire the starting gun on what was possible. I am 100% certain it was relished in Moscow and Beijing, and in the 2016 campaign war room of Mar-a-Lago for that matter.
Leave voters need to take responsibility for that — as do Trumpists.
Vote for political outsiders disdainful of social/establishment norms who promise to kick over said establishment, and you can’t complain when they kick stuff over I’m afraid.
Whether that be self-inflicted damage to the economy here in the UK, or mobs running rampant in the US capital only to be later pardoned, or indeed the ripping up of long-held alliances carefully nurtured by previous generations of ‘elites’.
Supporters of this populist wave can hardly complain at the consequences (though they do, here’s Nial Ferguson the other day for example: https://x.com/nfergus/status/1892480165546012776)
I *can* complain because I voted for none of it. In fact did my tiny bit in resisting it.
@TI, That George H Bush quote doesn’t carry even half of the weight Niall Ferguson puts on it.
Two months later, Oct’ 1990, the elder Assad sent his military into Lebanon to expel Michel Aoun from the presidential palace. Hundreds died, many after surrendering. Not a peep from the Americans as it was the price for Syria joining the anti-Saddam coalition.
@TI, @Azamino (#35, 36): One doesn’t need to be signed up to Mearsheimer’s version of realism (or cynicism, depending on your PoV) to see that there’s always subterfuge, deceit and double dealing going on in international relations*.
It’s not as though Nial Ferguson is some starry eyed liberal or lefty idealist status quo ‘disruptor’ who feels let down by the baser instincts of the populist MAGA wave here (he’s just finished writing up on Kissinger, the elitist architect of Realpolitik, after all, and is a senior fellow of the right wing Hoover Institute).
International affairs has always been a hypocritical and murky business. Judge them by their deeds not their actions.
Even so, Trump is not a refreshing breath of honesty, but rather a shameless bully without any moral compass.
No modern day Nixon or Bismarck here in the White House. Just the shallow self dealing and grift of the long con.
*Syrian and Iraqi Ba’athists hated each other with an intensity known only to the internecine strife amongst former comrades. In 1978 then Iraqi President al-Bakr and Syria’s Hafez al-Assad agreed treaties that would have lead to the unification of Iraq and Syria by July 1979. Saddam, then Deputy Secretary of the Iraqi Ba’ath Party, forced al-Bakr to retire and then derailed the union proposal with unreasonable demands of the Syrians. al-Assad’s support for the Coalition against Saddam in 1990-91 was payback. In one of those strange quirks of history, Syrian philosopher Michel Aflaq, who’d created the Ba’athist ideology in 1947, backed the Iraqis, who’d given him refuge from his estranged Syrian ex colleagues since 1968, right until his death in 1989.
Non-US NATO combined GDP is $27.5 tn, and the EU has provided approximately $145 billion in combined military, financial, humanitarian and other assistance to Ukraine since the war began.
So, reducing the 0.7% of GDP foreign aid target (set back in the 1980 Brandt Commission report, before either China industrialised or Indian growth took off) by the equivalent of 0.2% of non-US NATO area combined GDP should cover the shortfall in support to Ukraine if Trump now cuts off all forms of US assistance.
No need to try and stretch for a 3% of GDP defence spend (which I doubt we’ll reach anyway).
Ukraine will do the hard lifting of declawing the Russian bear for us.
They’re more than willing to, and it’s cost effective for us.
@BBlimp — The joke — and your pointless trolling — isn’t funny anymore, and ‘funny’ is doing a lot of heavy lifting there. Deleted.
Interesting times indeed
Reminds me of my teens in the 60s -3 minute warnings etc
The French currently offering to move some of their “Force de Frappe” -nuclear armed planes to German airbases
My brother was a Buccaneer pilot in the RAF in the 70s -80s-carrying a stand off nuclear tactical bomb for dealing with massed Russian Tank and Infantry attacks-flew at between 50-100 ft above the German plain to avoid Russian radar
I once asked him what were his thoughts about carrying and delivering such a device
He said not to worry -our pilots were so good that the Russians would never come which turned out to be true
It does seem here we go again sadly-hopefully our deterrence will be as good as back then
xxd09
@TI, please feel free to delete this as it is seriously off topic!
Post-1946 or so the Cold War European theatre was nonsense on stilts.
Gary Brecher put it much better than I ever could.
https://exiledonline.com/tag/fulda-gap/
Excellent link @Azamino. It did feel like that, living through Cold War 2 (1979-84). Collapse Detente & SALT II, Afghanistan, ‘Evil Empire’, SDI and Soviet leaders dying one after the other like it was going out of fashion. I’m no appeaser, like DJT is, but we just can’t afford to go back to a world of 5% of GDP on defense. We’re an older nation with a worse dependency ratio, going post growth. We have to do things on the cheap. A few billion extra p.a. for Ukraine to keep them in the ring, yes. British Army on the Rhine redux, no. Helping the victim, Ukraine, doesn’t mean going to the extreme of remilitarising. It means not abandoning the victim. Certainly Russia, the aggressor, is a menace, but she’s also a failed state. She’s never as strong as she looks. She’s never as weak as she looks.
Cheers for the shout out and the heads up of Saba’s beady eye on one of my investments (MCT), not that I’ve noticed a particularly high discount but well, let’s see. Some very interesting links, thanks!