What caught my eye this week.
Nobody asked for it and now it’s here – the new Monevator shop is open, offering in-joke themed investing T-shirts and vaguely punny sweatshirts to all.
Perhaps you’ve already spotted Monevator members striding about town sporting fancy wares like this:
Yes, those cool cats got early access. Thanks to everyone who bought something and so beta-tested the new store for us.
Now to repeat what I said to them, being a Monevator member is by far the best way to support the site. The margins on digital products are unbeatable – after the taxman has taken his share most of the money goes to us. This helps to keep the lights on and us publishing, week after week.
In particular, please don’t buy anything from the shop if you think there’s a chance you’ll return it. The margins are terrible and returns will wipe them out. We’re only really doing this for strategic brand-building mindshare capture mutual fun.
There’s an FAQ. Our merch is made by print-on-demand giant Printful, and all payments are securely handled by the globe-spanning Shopify.
Finally, you’ll also find a digital bookshop (it links to Amazon) of our 24 favourite investing books.
Hope to see you at an investing conference or under a Canary Wharf skyscraper – or failing that at the gym – in a Monevator hoodie soon!
Have a great weekend.
From Monevator
Train sets for grown-ups – Monevator [Moguls members]
Why market cap investing still works – Monevator
FIRE-side chat: income isn’t the only obstacle – Monevator
From the archive-ator: Skyscrapers a big bet on the City of London’s future – 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.
Deadline for National Insurance top-ups to be softened – BBC
Now Schroders boss urges Reeves to cut Cash ISA limit – This Is Money
Michael Sheen writes off £1m of debt for 900 people – BBC
Centuries old leasehold system to be abolished in England and Wales – Guardian
The hidden dangers of family offices [Search result] – FT
UK house prices fell unexpectedly in February, says Halifax – Guardian
Treasury to shelve plans for VAT on funds – CityAM
abrdn changes name back to aberdeen – Morningstar
Source: FT
UK small caps ‘most unloved’ stocks in the world [Search result] – FT
Products and services
Mortgage fees rise and cashback options disappear… – This Is Money
…and how long do the top offers stick around anyway? – Which
Get up to £1,500 cashback when you transfer your cash and/or investments through this link. Terms apply – Charles Stanley
Royal Mail to increase price of first-class stamps to £1.70 – Guardian
16 tricks for cheaper train fares – Be Clever With Your Cash
UK mortgage brokers expect interest rates to jump – CityAM
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
Six questions to ask before taking out private medical insurance – Which
The big mistakes people make when applying for mortgages – This Is Money
Commuter belt homes for sale in England and Wales, in pictures – Guardian
Comment and opinion
“Why do I need more than the average salary for a comfortable retirement?” – T.I.M.
Scams, damn scams, and investors – Of Dollars and Data
The crystal ball test – Behavioural Investment
Ray Dalio predicts a financial crisis. Again – A Wealth of Common Sense
Skewness and kurtosis [Nerdy but useful] – Verdad
Short-term vs long-term investors – Klement on Investing
Understanding the stock-bond correlation – Alpha Architect
Global Investment Returns Yearbook 2025 [Summary PDF] – UBS
Market mini-crash mini-special
Perspectives on market downturns – Fortunes and Frictions
What we’ve learned from 150 years of bear markets – Morningstar
Precedent in the unprecedented – Optimistic Callie
How big is the stock market’s America bubble? [Search result] – FT
Naughty corner: Active antics
Reacting to the bond market’s once-a-generation sell-off – Morningstar
Private infrastructure as an asset class – Alpha Architect
Wealth managers dump investment trust shares [Search result] – FT
What if Buffett never bought Apple? – Market Sentiment
Unlocking shareholder value on Japanese small cap balance sheets – Verdad
Bounded rationality and the limits of decision making – Polymath Investor
Kindle book bargains
Poor Charlie’s Almanack by Charlie Munger – £0.99 on Kindle
How to Run Britain by Robert Peston and Kishan Koria – £0.99 on Kindle
Invisible Women by Caroline Criado Perez – £0.99 on Kindle
Chip War by Chris Miller – £1.99 on Kindle
Environmental factors
ULEZ: dramatic fall in London’s level of deadly pollutants – Guardian
Britain is throwing too much green energy to the wind [Search result] – FT
Age and migration influence bird groups’ song repertoires – Guardian
Dead fish dumped on seabed after getting caught in trawl nets – Sky
Robot overlord roundup
Why China might lead the robot revolution – Faster, Please
Power cut – Where’s Your Ed At
Eric Schmidt: try an AI ‘Manhattan Project’ and get MAIM’d – The Register
Not at the dinner table
Trump takes a baseball bat to the US economy – Noahpinion
An orchestrated recession? – Kyla Scanlon
US support to maintain UK’s nuclear arsenal in doubt, experts say – Guardian
The Gilded Age is back – Politico
The crypto industry got what it paid for – The Verge
What China can teach the world about geopolitical independence – Reuters
Trump hates Canada for its decency – Paul Krugman
Off our beat
How Covid remade America – New York Times [h/t Abnormal Returns]
Mise en place – Art of Manliness
Why a Chinese gadget company can make an electric car and Apple can’t – NYT [h/t Lefsetz]
Discworld rules – Contraptions
Everything will be okay – More To That
And finally…
“The best job a concert pianist can get nowadays is trader for Citibank. It pays very well.”
– Gary Stevenson, The Trading Game
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Congrats on getting the “merch” up and running. I hadn’t realised that you had given members early access: was that in a email/newsletter? Note that I intentionally killed off emails/newsletters as I prefer to read posts on this website, so may have missed the alert this way.
@Curlew — Yes, besides it being a little membership perk I introduced the shop to members in stages to stagger any support issues if anything didn’t work and also to stop our working capital getting overwhelmed with demand (because we have to pay up front for the merch to be made) Needn’t have overly worried on either score 😉
Boom. In like Flynn for a DNFS t shirt to wear in the gym. Great way to be able to support a fantastic resource. Free shipping too! You spoil us.
@TI
Thanks for the clarification. Note that I couldn’t find anywhere in the account settings to turn on/off newsletters/emails…I had to resort to the blunt instrument of creating an email rule to delete to anything from you, no offence 🙂 Moreover, after signing up to membership I never received newsletters at all (which was fine) but after a few months they suddenly started appearing in my inbox. Odd. Hence why I tried to find a way of stopping them.
You could have caps, like Make Investing Great Again caps…
Typoette
“Michael Sheen writes of £1m of debt …..”
With regards to Kindle books…. I keep getting YT videos and article links about the removal of a download option from 26/02 onwards, see example below
https://www.theverge.com/news/612898/amazon-removing-kindle-book-download-transfer-usb
On the subject of filling in missing years of NI, has anyone tried to model the expected marginal payoff of one additional year of contributions vs investing the money (eg LifeStrategy 60 Acc) I tried it this week and found that for my case it was preferable to invest, but it obviously varies with a few parameters and some soft factors that are not straightforward to predict (eg means testing potentially being introduced one day)
.ls. “arbdn” sh..ld b. abrdn sh..ld .t n.t 🙂
@Factor – you missed Dali/Dalio
@Rob (8)
That’s like comparing the certainty of an annuity with the vagaries of drawdown. The drawdown option would probably pay off but there are no guarantees. Everything I’ve heard suggests that buying missing years of NI contributions is a bargain for the near-certain guaranteed income it buys. This should remain at least CPI-inflation-protected even if the triple lock does not survive. Of course, it is important to ensure that the extra years you buy will actually improve your state pension. If you will reach 35 years anyway before SPA it will not help, and you have to be very careful about filling in gaps before 2016.
Thanks for the orders guys — and for the typo spots! (I’m embarrassed about missing the Dalio ‘o’ but I’m absolutely letting myself off the abrdn SNAFU 😉 )
@Rob
It’s currently £17.45 for a class 3 stamp (per week)
State pension is £6.32 for each of the 35 required stamp years. £221.20 pw for 24/25 with 35 years )
If I was a 66 year old the annuity rate would be 36% v current open market annuity rates of about 4%.
To me it looks close to the best investment one could make. The best being class 2 Ni £3.45 per week. Paying for extra year a long time before retirement may change the numbers but surely not enough to be worth not buying the extra year.
I think Ermine has some thoughts on one of his posts
@Rob #8 has anyone tried to model the expected marginal payoff of one additional year of contributions vs investing the money (eg LifeStrategy 60 Acc) I tried it this week and found that for my case it was preferable to invest
Perhaps you have the gift of exceptional youth and hence a long appreciation time, but it’s really hard to beat a over 100% annuity rate at Class II rates – my old post on the SP has been overtaken by some changes but the principle is still there.
Provisos are that it is rational to make up missing years later in your working life rather than earlier (you must make them before reaching SPA) because you don’t know your career path. Early retirees by definition have a shorter working life than most. You need 35 qualifying years – my working life was 30 so I was 5 years short. I bought an extra SP annuity for ~£900 what it would have cost me 23k on the open market. You run, not walk, towards that sort of proposition.
Early retirees ought to be able to swing the Class II NI by declaring self employment and earning pin money. You don’t actually have to make any money, and you are usually in self-assessment anyway due to investments.
I’d certainly say double check your working and I’d be intrigued as to how you come to that conclusion, assuming you do not have any reason to expect a shorter life expectancy than usual.
@Pinch #7 > With regards to Kindle books…. I keep getting YT videos and article links about the removal of a download option from 26/02 onwards, see example below
Normal users won’t notice any difference and if your Kindle breaks you can register the replacement to your Amazon account and get your old stuff, barring rare edge cases.
Amazon are doing this to stiff people who break the DRM’d books out of the digital rights management. So they can read the books on other ereaders or their computers. I will investigate alternative suppliers because I reject monopolist’s rights to control what I do with my stuff and my equipment. At any rate I will buy fewer books form them and favour secondhand real books, even if I give them away after reading.
But it’s not a problem if you are a normal consumer 😉
@ermine – 14
Last I read was that making investments left you eligible for Class 2 NICs, regardless of earning pin money, or am I missing something?
https://www.gov.uk/self-employed-national-insurance-rates talks about
“people who make investments for themselves or others – but not as a business and without getting a fee or commission”
@ermine
Books…
I’ve been giving Amazon the heave ho for quite some time. I mostly use World of Books, they operate on a circular economy model, and authors receive something on the sale of s/h books. I use the WoB website, rather than on Ebay. Cheaper that way.
Thanks for the useful replies about NI contributions.
I would reach SPA in 2046 (as things stand currently) and expect to have 25/35 years completed by 2033. I have the option to make class 3 contributions at slightly reduced rate for five missing years.
If I can make class 2 voluntary contributions from 2033 then I should reach full record not long before I would be eligible to receive state pension.
I was not aware that making investments for myself qualified for class 2 contributions, that changes the calculation enormously.
There is always the risk that the system is changed somewhat by then but this seems the best bet for now.
I’m surprised that there has been little or no discussion on Monevator around the talk of possible changes to the rules relating to cash ISAs and the possible reduction to a £4k annual limit.
@Rob #18 >investments
Yeah, but do make sure your profits are < 6,725 pa else you’re paying 6% marginal NI tax on top of any other taxes 😉 I’d be wary of using investments for that reason. Even if it were in your ISA it would be a pity to make your ISA taxable!
You do need to register as self-employed for the year, and make sure it is the entire tax year. Being in self-assessment (SA) is not enough.
Self-employment requirements are pretty lax. I once declared a £50 profit for running the PA for an event, that was enough. You don’t even need to make a profit to be self-employed. Sell something on ebay, but do not take the £1000 trading allowance in your SA form if you want to pay class II NI.
Certainly agree it’s irrational to pay now if you will have 13 years post-retirement in 2033 to make up 10 years. All sorts of things can change in the next 8 years, you may need to work longer, or not, those 8 years the capital could be used to invest. The point I was querying is that compared to investment this was a poor deal – but it still makes sense to defer buying the years later where it makes no difference, you may as well use the money in the meantime!
There have been rumblings about canning Class II NI since forever, the post-GFC coalition gov made a lot of noise about that and I was frightened of that disappearing in 2012. Never happened. There was talk of it post-covid as the Covid bung for the self-employed caused some reflection. Didn’t happen. Even at Class III rates it’s a steal compared to an open market annuity rate.
Still worth keeping a watch on the space for rule changes.
@ermine #20
> make sure your profits are < 6,725 pa else you’re paying 6% marginal NI tax on top of any other taxes I’d be wary of using investments for that reason
If you are registered as a self employed investor (people who make investments for themselves or others – but not as a business and without getting a fee or commission) then you are on special rules where you have the option of paying voluntary class 2 contributions. But how would you calculate profit for class 4? My understanding of the rules is that in that category your profit is zero as you are not “getting a fee or commission”. Hence them giving you the option of paying voluntary class 2. If you had any profit to make you pay compulsory class 4 then the special regime would not be necessary.
This is the same for example for another profession in that list of special rules, “ ministers of religion who do not receive a salary or stipend”. No salary, no profit, no class 4.
@Grumpy Tortoise — We were on this ages ago, see the following post from early Feb and comments that follow:
https://monevator.com/weekend-reading-surely-not-cash-isas/
Returning to it would just be speculation and clickbait really. We’ll certainly cover it again if there’s concrete legislation, or solid confirmation! 🙂
https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim74250
I’m not convinced FIRE style home investors qualify for class 2 ni , the discussion (tldr) on landlords seems to err on needing to begainfully employed on the activity rather than bring passive etc.
Happy to be wrong I’ve got my 35. Means testing and country bankruptcy are my bigger concerns
Class 3 is still too generous- perhaps Rachel will spot it
Market mini crash mini special/Naughty corner Active Antics:
1). Verdad x 2:
a). kurtosis + skewness so important, yet undercovered;
b). Land of rising sun shows promise in SC space (overweight both Jap SC and Value, and looking for options for Jap micro/nano caps and SCV).
2). FT x 3:
a). can’t see why investors would avoid UK SCs and ITs. There’s opportunity there.
b). The big picture (5 yr+) on US large cap’s always looks good:
https://www.tker.co/p/stock-market-performance-after-down-days
But I’ve a bad feeling about this. The SPY and the S&P momentum index now both at/below 200 DSMA (latter for 1st time since 2023).
With the orange emperor in charge and set on tariffs, valuations stretched, GPT 4.5 flopping, hyperscalars forgoing more power generation (a bad demand signal regardless of DeekSeek efficiencies): things looking less than rosy in the US large/mega cap space.
A crash, if it comes, could be a good long term (decades view) entry point though.
@Boltt #23
Thanks for that link, shame it only seems to be able to give landlording examples.
I can see how managing a portfolio for you and your partner perhaps does not qualify as “gainfully employed for self-employed NICs purposes” unless it involves lots of active trading.
But then I wonder what HMRC’s view would be on “a £50 profit for running the PA for an event” for a whole tax year. That can’t possibly be “gainfully employed for self-employed NICs purposes” either.
@Delta Hedge — Well, the house Monevator view is of course “who knows”.
Stranger things have happened than the market rallying on the back of an arsonist administration apparently wanting to bring back the 1930s quite wilfully, in terms at least of the Great Depression via tariffs and who knows what else besides. Maybe if the market sniffs out hyperinflation, though stagflation would seem likelier if they really do enact these announced tariffs and the same on Europe.
That said BTCUSD seems to be giving up the ghost, and if the US market really was priced-to-perfection then it’s hard to argue that this is perfection, surely…
@TI #26, first sentence second paragraph is perfection, like reading Evelyn Waugh (passages in bridesmaid) and thinking ‘wow, what a feat of language’…
I enjoyed the link to Noahpinion for similar reasons..
We should hope for the big bear. The money is made in deep bear markets. That’s the opportunity to buy quality growth at an attractive risk to reward.
AMZN split adjusted (1 share at May 1997 IPO @$18 = 240 shares at Feb 2025 peak @$225 each) hit $4.5 in Dec 1999 (~60x the split adjusted IPO of 7.5 cents), but could be had for just 37 cents in Sep 2001.
Likewise PLTR went from $10 at Sep 2020 IPO to over $35 in Jan 2021 before falling to ~$6 in Dec 2022, after which it hit ATH a few weeks back of $125.41.
*If* Trump now crashes the US economy then high beta tech should crater the most in the short run, even though (provided that stagflation is avoided of course) the lower rates eventuating from the contraction should follow IDC, thereby lifting all equity valuations, but most especially for high growth potential firms.
Rather than going 100% in/out now, the wiser course (given that, as Peter Lynch liked to say, more money has been lost in trying to avoid the crashes than actually in them); might instead be to just stay invested broadly/ passively and, if there’s no crash, then do nowt; and, if there is a crash, then go buy up the deeply discounted high growth plays in expectation for the upswing (which might be 6 months, 2 years or a decade out, but always comes eventually, and is invariably longer lived than the bear market it replaced).
@Bolt23 “Means testing and country bankruptcy are my bigger concerns.”
I get what you mean of course but isn’t the state pension already means tested? For example, as it stands today, when I get to the date at which my state pension will due, I’ll quite likely be a higher rate tax payer, so 40% will go directly back to the state? Isn’t that the same as just reducing the state pension by 40%?
For that reason, I suspect ‘actual’ means testing is less likely. I think an increasing component of peoples state pension will just have effectively 20% or 40% lopped off once any withdrawals from a private pension is taken into account. Particularly as inheritance tax changes, means you cannot pass it on. Seems reasonable.
@Seeking Fire
I have very similar thoughts about the state pension.
Means-testing would lead to a lot of VERY angry voters – however the ‘financial drag’ by having ever more people dragged into a higher taxband will barely register.
Have seen a few posts mention 35 years of NI contribution but did see Martin Lewis say that while its a not a bad rule of thumb it can go as high as 40 ish years for some especially if you contracted out of SERPS.
I checked mine and i am 2 years short after 39 years of paying so it can vary by circumstance so always worth checking
Re: class 2 NI:
Tend to agree with the @Boltt (#23) interpretation. Although this HMRC forum is rarely that well regraded IMO this particular chatter tends to further back up his conclusion, see: https://community.hmrc.gov.uk/customerforums/ni/e8144d59-2df5-ee11-a81c-6045bd0d629d
Re: means testing SP:
The new SP is already means tested for salaried employees! It provides a flat rate payment but contributions are generally determined by your salary. In principle, a higher paid person pays in more than a lower paid person for the same pension.
@Seeking Fire
I agree – the State pension is effectively, partially, means tested by income tax.
I’m working hard on avoiding HRT – retired early, max’s 2x ISA for 12 years, started draining SIPP, taking max tax free lumps etc. I will achieve a near 11% tax rate on the sipp over the next 6-8 years.
Given the state of the country’s finances, and direction of travel, changes will come. £20k pa ISA allowance looks unsustainable (elitist), Labour could easily make it £5k pa and no new funds once the total is over £200k (pick any number between £100k and £1m, it isn’t many people and won’t affect votes too much)
Taxation of pensioners is incredibly light v workers – a high earning well-prepared pensioner using ISAs could get to £100k pa income and pay just £7.5k in tax (£50k isa, £50k pension).
A worker getting £100k gross (inc employers NI ) pays almost £39k in tax/NI- I had to triple check that number, it’s so crazy.
Given our weak politician and insatiable appetite for free stuff there’s one place left to raid, and it’s us.
On a positive note wealthy people are a hot commodity and other counties are fighting for our tax residency. Current number 1 slot goes to Cyprus – no IHT, CGT, tax on dividends, tax on interest and pensions tax less than 5% for 17 years.
@Delta Hedge #28
> and, if there’s no crash, then do nowt; and, if there is a crash, then go buy up the deeply discounted high growth plays in expectation for the upswing
The problem with this theorising is first shown in what do you do with the money that you would have applied to buying up the deeply discounted high-growth… in the event that there is no crash. Why do you have this large lump spare and why is it not in the market anyway given the nobody knows anything presumption 😉
The more practical problem is its corollary for most people, who in the second case follow
> just stay invested broadly/ passively
in which case if this represents a large part of their networth which is accumulated income, then they do not have unexposed reserves to fling into the bear market of the second case, it’s pretty much whatever they can spare from their earnings.
I had the good fortune to be able to throw a large amount of resources into the post-GFC bear market because I came from a standing start. This is an unusual case. Say I rewind the tape 17 years from where I am now and assuming I were still working, my holding of VWRL would be thrashed in the GFC* and I would only have the free cash flow of my earnings, assuming I followed TA’s DNFS instruction.
To buy into a bear market having just taken a large loss is tough. Even without that background I found it really hard. I have taken the free ride of the markets since the GFC, arguably I can eat a loss of 50% and it still will have been worth the effort. What about someone who started more recently and is nursing a real (hopefully still paper) loss?
The theory is fine, but the practice not so much, a non-professional investor will probably only have earnings to commit to that bear market. Sure, they will realise a decent return on that part of their holdings, but they still have to wait for the larger part to return. Bear markets can last a couple of years, that’s a lot of rotten mood music and red ink to tolerate.
I’m not disputing throwing a large packet into the bear market would be a wise path to take, but most won’t have a large resource to lob into the bear market, and there is also the philosophical argument that if you can’t call the top of a market you can’t call the bottom either, so even if you had that large resource, when do you go buy up the deeply discounted high growth plays.
The practice is not that simple. I’ve also had the experience of throwing money into a bear market and it keeping on going down, down, deeper and down, and that really is the pits. Yes it was a good thing to do in hindsight, but that only came after a couple of years – pound cost averaging into a bear market is almost a worse experience that just sitting watching it sink and putting on your DNFS T-shirt. Perhaps that merch has been released at an opportune time 😉
*VWRL only started in 2012, presumably other world index funds existed
@Boltt #33 > Current number 1 slot goes to Cyprus
Is this the same Cyprus that levied a haircut on bank deposits of €100k in 2013?
@klj
I has a COPE (contracted out) adjustment of about £30 but still managed to get the 35 years in by about age 50- and starting full time work at 22.
Three year’s free credits while at school (which was nice) – and there must be an element of earnings related credits in the calculations somewhere. I don’t want to ask in case they’ve make a mistake!
So it looks like there’s upside for high earners, even if it’s temporary
@ermine
Yes, but avoid by not putting too much money in their Banking system.
Hmm, perhaps that’s a risk here too in the future.
Sorry @ermine #34. I didn’t explain myself very well in #28.
So instead of x % in the market and y % on the sidelines, you stay 100% in the index tracker until a technical bear market (chosen index 20% off ATH or, if you prefer, 20% off 52 week high).
You then sell some of the passive tracker to buy higher risk/return ideas.
A growth stock with a beta of about 3 to the market is likely to go down roughly 50% on a 20% index fall (i.e. 0.8 x 0.8 x 0.8).
There are many more sophisticated versions to the above but in all you essentially set a max % of the tracker to sell in order to buy the stock etc, and restrict sales/buys to only when the index remains at least down 20% on ATH and/or the growth stock (or other alternative) is 50% down.
One can (instead of a lump sum investment) DCA a set amount into the stock each week/ fortnight/ month that the 20% down on the index (or at least 50% on the stock) criterion remains in place.
Again this is funded by selling some of the index ETF.
Another possibility (especially if one doesn’t do individual stocks) is as above but, instead of going into one or more growth stocks on a discount, you do a 2x or 3x index LETF.
Lower volatility indices are better here – so for example 3LUS LETF would be preferable to QQQ3 LETF.
Long only equity index LETF performance is quite strongly negatively correlated with prior index performance – i.e. crap index prior performance often precedes very strong LETF outperform versus index.
This approach can be refined to only sell the index ETF to buy the LETF when the additional criteria are satisfied that either or both the index has gotten (back) over the 200 DSMA and/or the VIX is (back) below 25.
This helps mitigate volatility drag as the 200 DSMA is more predictive of volatility (higher below the 200 DSMA, and lower above) than price performance per se.
Michael Gayed has a paper on SSRN on this and the Dual Momentum Systems website covers something similar in its LT (Long Term) Gain + and LT Gain ++ DIY strategies.
Neither relies on market timing. Both are rules based systematic.
@Delta Hedge @Ermine — My response to the (theoretically correct) notion of welcoming a bear market in order to go crazy risk-on was the same as @ermine’s. There’s no doubt bear markets are the business for new/young investors, or at least they always have been, because we’ve always recovered. But it’s a harder slog for older/deaccumulating folk.
Hopefully of course there will be some defensive assets to sell and rebalance into equities in a big bear market. (Provided, say, you haven’t sold *all* your bonds because of 2022 cough cough. Though currently they’re moving a bit with equities too, though not this morning I notice…)
Re-deploying stuff that’s not down into growth-ier stuff that’s been pummelled I can get behind for naughty active investors. It’s what I’ve tended to do since the GFC, though as I’ve noted before I screwed up in 2022. (Basically I did this strategy, but the growthier stuff kept falling, and I dialled it down at the worst time. My worse year ever really, not in absolute terms but I think in relative and ‘scored by the judges’ terms).
Buying leveraged ETFs in a bear market is madness though IMHO, whether you’re passive or active.
Personally I’d only buy those* in markets that were trending up, again whatever the textbooks might imply. It’d be a quite trip to the madhouse if the bear market continued after you bought, if not the poorhouse…
*Actually I don’t currently use leveraged ETFs at all but I’ve read my @Finumus and I understand the theory. 🙂 Maybe with fun money they’re okay in a down market but not in any meaningful sense, unless one feels more lucky than wise… 😉
@Boltt 33,
Feather-bedded pensioner here. Absolutely agree with your comments about taxation of pensioners vs workers. I’d also support all benefits being increased but made subject to income tax; that’s what should have happened to the Winter Fuel Allowance instead of the government’s crass own goal of a measure.
An obvious start in redressing the generational tax imbalance would be to progressively reduce NI and increase basic rate income tax . This is the reverse of what has happened over the last 45 years: in 1978/9 tax rates were NI 6.5%, basic rate income tax 33%, VAT – 8%. NI rates peaked at 13.5% in 2022.
@Delta Hedge #37 – Fair enough, I got hold of the wrong end of the stick of quite a complex strategy 😉
I will note, having managed to buy into a bear market having got a kick up the backside from TI that it doesn’t really matter what you buy when everything is slaughtered. The main thing is do it, do it now and keep on doing it.
It’s also a tough game, the time for high complexity is not in the middle of that sort of fight, as the boxer said, everybody has a plan until they get punched in the mouth. But if you have the Zen-like detachment and the balls of steel, hey, go for it and the best of British luck to you! I do wonder if the time for that is at least visible in the distance.
It never does any harm to ask yourself what will I do if anything, in a bear market. Putting on your new DNFS T-shirt is good, developing a complex wheeze is also good. If it goes well, then you get richer, if not, or you abandon your wheeze in the fog of war, well, you have learned something about your nature that you could not learn in any other way…
@GOP
Agreed.
At risk of going off topic, middle (median-ish) earners don’t know they’re born from a tax perspective v other eu countries. Plenty of benefits and barely any tax.
IMO we need to get close to –
1-Flat 35-40% tax on all income, no tax free allowance
2- UBI style flat allowance for all adults with 5+ years working history of around £80 a week.
3- no unemployment benefit (see £80 above), a max % of gdp allocated to pip/DLA and paid depending on severity of “physical” condition
4- limited housing benefit, no lifetime tenancies, social rents to be 80-85% private sector etc
I could go on, but I’ll just be winding myself up (and probably some readers…)
@TI #39: on LETFs, I’m landing with @Finumus in his first Moguls piece, so I’ll just:
a). refer readers to that, and the many research links I left as @TLI (and as @DH) in the comments to that one ( 😉 ).
b). Note the TL:DR from the research is only use LETFs wisely. You must have a system. Volatility drag is real, the idea of decay less so. Leverage low volatility asset classes and indices if you must, but never high volatility individual stocks. Less is usually more beyond 2x. Often 2x outperforms 3x, even with a decent system. The ideal Sharpes are from 1x to 1.5x leverage, but not necessarily the max CAGR chance. One needs to scale the position size down to reflect to leverage. This reduces the risk of catastrophic loss (as a % of starting portfolio) but still leaves open chance to outperform. Cases in point:
a). $10,000 invested in USD NYSE listed QQQ ETF (1x NASDAQ) in 2010 would have grown to $120K (12x return) in Dec 2024. $10,000 invested in TQQQ LETF (3x NASDAQ) in 2010 would be worth $2.1 Million (210x return) by Dec 2024. So just 10% in TQQQ and 90% in cash B&H would have beaten 100% in QQQ both in return and in risk.
b). LSE listed £Stg 3x NASDAQ equivalent QQQ3 went from £3 at launch in Dec 2012 to £238 in 2021, down to £50 in 2022, upto £280 this year and now £193.
Those could be lucky timing with start and end dates (TQQQ would have been utterly annihilated in 2000 to 2002, for example, and for that matter battered in 2007-09 and 2022), but investing with some leverage when rates are low (so leverage is cheap, unlike now), or heading low (maybe), when markets have recently cratered (not yet) and are cheap (not now) does seem to tilt the odds.
This boot strapped Monte Carlo research:
https://arxiv.org/abs/2103.10157
suggests that going from 100% unlevered index ETF to 35%-45% 3x levered index ETF often increased performance whilst actually reducing overall portfolio risk.
@Boltt #33: “Cyprus”: check out Italy too. 7% tax rate on foreign pension income available. Rural Sicilian, beautiful, under populated villages with 100 m2 (1,076 ft2) shell homes for €5k with generous grants to do up (cost typically €70k) or for €75k fully refurbished, renewed and ready to move in:
https://youtu.be/-RGdwrymSas
@Delta Hedge — Cheers but it doesn’t really matter to me what the theory is. I don’t want to be holding more than token amounts of a leveraged fund through a bear market. 🙂
Your illustrated returns are for Leveraged ETFs coming OUT of a bear market. That’s great! Now do 2007 to 2009 and imagine holding them (or even adding to them) as they cratered. Really *feel* it.
I say this as somebody with a high fortitude for volatility and plenty of experience of not (net, over the course of decline) bailing out, buying into the face of further falls, and whatnot.
From memory you bailed in the 2009 crash? Not a dig or a criticism, just an observation. There’s probably a lesson in there.
For me the lesson might be not to add leverage to the mix, at least not until there’s some strong signs that the market has turned (e.g. moving decisively above 200-day MA though that’s hardly foolproof etc 🙂 )
But as always absolutely NOT personal advice, every reader is 100% going to have to make their own decisions etc, you do you. 🙂
@Boltt #33:
Re your SIPP d/down @BRT:
UFPLS, or max PCLS plus flexible drawdown*? FWIW, I went latter route and my only possible regret was that I did not draw to the top of BRT band** each and every year. I am almost through flattening my SIPP (in percentage or monetary terms) – but squeezing out the final remnants of the erstwhile SIPP/DC [at BR] is going to be quite the palaver and will certainly take another few years; assuming it can be done at all. Never saw that coming! OTOH, the removal of the SIPP IHT wheeze should probably mean that this once rather niche pursuit [flattening a SIPP] will be much more widely discussed.
A lot can (and almost certainly will) happen over your indicated timescale. I initially tried to optimise (ie minimise) tax paid rather than focus on speed of emptying. With 20/20 this was probably a mistake. Take a few minutes and try and recall what has happened since 2017/18 tax year!
*11% figure may hint at the former, but just wanted to be clear;
**which, from experience, is an awful lot easier said than done if you have any other sources of taxable income, and especially so if they are rather variable in quantum.
Oops,
Meant to say:
*11% might hint at the latter …
Totally agree. I’d never suggest being levered going *into* a downturn save the interesting case (which we’re not talking about here) where it’s a capital efficient product where the leverage is only used to gain exposure to hopefully negatively correlated risk off assets like bonds (e.g. WGEC ETF holds 90% unlevered DM equities and uses the last 10% to get exposure to the equivalent of 60% bonds via rolling three month futures).
Once the market has crashed though – to the extent that equities *unambiguously* look cheap (eye of the beholder I accept) – as they did in 2009 (and perhaps as late as 2012/13 for tech) – then the odds change (perhaps massively) and using some outright leverage on the risk on side can help.
I bailed after Bear Sterns went bust in early 2008 b
and IIRC, the market then went up all that summer. Although staying out seemed to work from September 2008 to March 2009, at the bottom things snap back fast and hard. The best days often follow the worst. So when do you actually buy back in? It’s just impossible. In the end you only capitulate and buy back in (as I did in 2013) when prices are higher than you sold at. You just can’t win that way.
Now it is true that 2009-21 was *very* begin for using leverage for equity indices. One can’t use that period as a template.
And it’s also correct (recalling what I can where people have tried to simulate) that if TQQQ or QQQ3 LETFs had existed then (they didn’t, the first 2x LETF was launched in 1997 IIRC) that they would then have gotten whacked 99.8% down from the March 2000 (then) peak through to the end ot 2002.
You can’t recover from that.
But if you’re a cautious investor and looking to preserve starting capital then putting 10% into an LETF and holding the remaining 90% in risk off when things have crashed, but where an up trend is in place (either 12 month positive absolute momentum or above the 200 DSMA) and where volatility had fallen (VIX or VIXN below 25) is not so crazy as it might otherwise seem when it means only risking that 10% of the starting value in circumstances where there’s a big enough asymmetry that it is not implausible that you could ultimately end up with more than with 100% in an unlevered equity position (as happened from 2010 to 2021 with 10% in UPRO and 90% cash versus 100% in SPY).
Granted that the Sharpe and Sortino ratios on this are poor, but it’s CAGR that we get to eat in terms of buying power, not risk adjusted returns.
Position sizing is the key IMHO. The art of execution and all that. If you size right you can eff up and still survive. But it also helps enormously to have a system with preset parameters for when you will and will not venture further up the risk scale.
Sorry the formatting on that comment screwed up. Hopefully it still makes sense.
@A1Cam #45
Agree, many others were keen on keeping the Sipp (iht) and using the ISA during the gap (Rhino comes to mind) – I/we were more interested in tax efficiency when alive rather than when dead. Makes a nice change to have backed the right horse (I’m not bitter much about s&p500 and my 0% allocation!)
My plan is to hit £50k pa to squeeze the value out of the 20% band – savings and rentals now mostly in my wife’s name (well beneficial interest) so my income is pretty well known and I may wait until March every year just in case)
You have previously suggested deferring my DB by a couple of years – this is my current plan as it empties the DC (more or less) and LTA rule no longer bites.
The other major consideration is how to make real life use of a large ISA – I will stop contributing in a few year (no non-isa Funds left). I think 6-8%pa drawdown seems sensible, use it while you can or the kids will. Looking at my parent and in-laws they simple don’t spent much. FiL is accumulating with less than £250 a week coming in!
* 11% works both ways, but yes max PCLS
@Boltt (#49):
Yup, I am pretty content with my SIPP decision* – the alternative approach you mention would have left my SIPP [in due course] as “a 100% hostage” to HRT. Yikes!! TBH, I have yet to address the what to do with the ISA Q – but worth noting only your wife can inherit it tax free, and not your kids. FWIW, I think this whole SIPP saga is very much a case of “a bird in the hand”.
Recognise your March proposal. FWIW I have tended to kick things off a bit earlier as my erstwhile SIPP/DC was/is slow to process w/d’s. I kicked off my first one ever in the Jan of the year in Q with plenty of h/room to HRT. IMO until you have tested this path out you have no idea how slow/quick it really will be – and beware all glossy marketing puff stating how quick/easy it is to draw from a SIPP. It is NOT!
I ended up taking my DB earlier than initially planned – and that is primarily why I now have such a protracted tail to flattening my SIPP at BRT.
And in spite of all this fandango-like fancy footwork, fiscal drag has well and truly got me. Barring something akin to “a miracle” I will be a HRT payer again once my SP kicks in! So my SP will have been means tested during accumulation and will be HRT taxed in payment – but still IMO pretty good VFM**. Ho hum.
P.S. I reckon if you do UFPLS to c. 50k the income tax is a tad under 10% with a full standard personal allowance.
* whilst I had no need for that IHT wheeze, I never believed it would survive
** but just nothing like as good as it used to be
@Curlew — Sorry for the delay, I was away for a long weekend / anniversary type thing so comment moderation was more of the ‘is anything on fire?’ variety this weekend.
Yes it doesn’t seem to be possible for me to fine tune email settings and membership. The system basically assumes you want emails if you’re a member, and you don’t want any emails if you either (a) don’t want member emails but prefer to read on site or (b) don’t want regular emails but do want member emails.
Your position is not common, fortunately from my POV! 🙂 Most of the problems are people who at some point marked a Monevator email as spam, perhaps by accident or perhaps because they didn’t like some particular topic and thought this was helpful feedback (it’s 100% NOT because of the following…) which basically gets their email flagged as a no-no for receiving any more emails from us. (Basically a GDPR / email provider thing, they don’t mess around.)
Then because they actually liked us all along they’ll become members, but they don’t get the emails, and I have to unpick the above.
A few members don’t want emails. If I get a chance when things quieten down I’ll see if there’s some plug-in or workaround. But honestly your system is probably as good as any.
Like I say thankfully most people want emails. 🙂 The number of readers who read via email and never visit the site is now multiples of on-site readers most days.
S&P 500 down a further 3.5% today.
TSLA down 15%……, so far today.
Looks like US downturn gathering pace.
@Trufflehunt #52: I don’t like to kick a man when he’s down, but it’s hard not to think of the irony of Musk – with everything that he’s become now – being down so many tens of billions because, in all likelihood, of the policies of the very monster whom he so helped to get elected.
At the same time, the investor/opportunist in me wonders where the bottom might be and at what price below which DCA’ing into TSLA might be attractive given the seemingly ever receding but not vanished prospect of FSD, the growth of the energy division and the possibilities of Optimus.
If you’re a shareholder, then it seems far too late to sell, and if you’re not then far too early to buy.
But perhaps a price point will emerge where it’s attractive. Only a year ago it was $160, so it’s still up since then, despite being close to 55% down in short order from the ATH.
@DH, @TI, @ermine:
Interesting chat.
IMO anyone holding excess cash may consider using [some] of that cash to try to “buy the dip”.
However – and FWIW – using leverage in any form of such an opportunistic [buying] strategy looks well dodgy to me!
@Al Cam: It’s likely, IMO, more attractive, if one were to redeploy capital from unlevered trackers into higher risk, to then do so into potentially oversold single name blue chips or arguably higher quality high growth smaller caps than into leveraged index trackers. Volatility drag/constant leverage trap is a huge issue whose implications may outweigh the picking winners issue with single names even allowing for Bessembinder etc. However, if leverage is ever going to work well then it’s going to be on the rebound from a crash.
Since 2021-22 the clearest example of the possibility for successful rotation into oversold blue chips might be Meta. From $379 in August 2021 to a mere $93 in October 2022, and then up to $740 only a few weeks ago, and now showing $600 in the pre-market. Current P/E is 24 which means that in October 2022 one could have in effect brought the current earnings on a P/E of less than 4. Possibly a risk worth taking.
Preference shares up 8% this morning – interesting, will S&P go pop later today? Sub 400 would be nice.
@Delta Hedge
Tbh, you sound more like a day trader than an investor.
@Trufflehunt #57 hahaha 🙂 Seriously though, an index is made of companies. Some good. Some bad. Some in-between. One can’t like the index but not it’s constituents taken as a weighted whole. Bessembinder shows the top 0.25% by performance of companies globally (from 64,000 firms 1990-2019) or 0.3% in the US (from 26,000 firms 1926-2016) accounted for 50% of the entire excess returns over T-Bills. Buy and hold just one winner, brought for the ‘right’ price and, given enough time, there’s tremendous asymmetry. And you only need small exposure, and time, to make a difference. AMZN up 3,000 times (with splits) from the 1997 IPO until this most recent market turbulence being a prime example. Just 0.5% allocated at IPO, and the rest in a global tracker, and it would still transform overall portfolio performance. The paradox of Monevator is you have an ostensibly passive promoting site where @TI invests actively. There are many ways to win. I try and keep an open mind to all of them but actually I’m fairly cautious. If anything I’m too cowardly on allocations in practice. But everyone’s mileage varies. I’m fortunate to have a generous DB pension that’ll give me £37k-£38k in present value terms at 60 in about a decade. I should get the full SP at 68. And just before the recent turmoil I’d gotten up to £1.17 mn in ISA/SIPP (although down plenty since) with around £100k in GIA (increasingly for holding gilts) and £200k in cash savings and premium bonds. The mortgage is paid off. Mrs DH’s financial’s are not so far behind, if one accounts for a larger DB accrued. We have no kids. Frankly, I can afford to take risks. Maybe that does put me on a par with a day trader or a degen gambler, but I like at least to think not 😉 It’s true I’m still overwhelmingly in equities but it’s also still overwhelming via plain vanilla trackers. At some point for me though, certain individual shares could, perhaps, become attractively priced and, for me, a buy. The time to buy is when there’s blood in the streets, even when some of it is your own, and all that. And when that time comes, if it does come, to buy those shares then they’ll be plenty of headlines about why it’s a terrible time to buy, of that I can be sure.
@DH (#55, #58):
If (and only if) you can pick the winners ahead of time then that is clearly the way to go; the numbers are clear. I know this also from experience as (over the years) I have had a couple of very good individual shares – but it is notable that they both also had significant problems en route too. Also, and probably most importantly, in both these cases my good fortune was far more luck than skill!
IMO you are very well set up for the future and I would view your interest as more of a hobby with play money – which you can well afford to lose. Not everybody is so fortunate though. Good to chat.
@Delta Hedge #58 I’m not a passive investor but the obvious riposte to
is that this is presumably why when I list VWRL the top 10% of holdings are the Mag 7, which so far have been the big hitters of late. Indexes self-select the winners, the losers get ignominiously booted. All without any need for smarts on the purchaser’s part.
I get all the theory. Sell your beaten up indexes in the darkness before the dawn, and buy sharply focused growth. Axiomatic to that strategy is that you can see both signals in the noise – where is the point of most significant darkness, to within 5%, say, and what does future growth look like? You’re looking to shoot straight for the what, say a 1 in 400 target implied by your 0.25%? In the heat of a bear market?
I salute your stable position. Agreed you can afford to screw up. But tawk is cheap, as Nassim Taleb’s NYC taxi driver said in Antifragile. Going through a bear market is a bloody awful experience particularly when you have a significant existing holding which you have.
If there’s one thing I have learned in a couple of decades of investing, it is yes, in bear markets there is money to be made, but doing so is hard, very very hard.
It is possible that we are on the threshold of a suckout, or perhaps it will be a flash crash like the one last year. It’s always possible to see with hindsight what you should have done. But investing in a bear market is mainly about self-mastery – If you can keep your head when all about you are losing theirs.
You don’t have to be a skilled stockpicker in a bear market, the bear mauls pretty much everything, the flipside is valuations are improved including for indexes. The DNFS T-shirt is apposite – the first rule if you can’t see what to do is Do No Harm -DNFS. As it was I didn’t follow that instruction, but whether the resulting good fortune was skill or luck, well, damned if I know…
I’m not convinced that a highly tuned strategy is optimal for most of us in a bear market, while absolutely respecting you do you. God knows I’ve tended to overthink things far too often, but really, a bear market is a mosh pit, finely tuned delicate strategies easily get mauled in the bunfight. Bear markets are noisy, the good gets hammered with the bad and the ugly.
Finally, there’s the obvious question. You’re clearly a very bright fellow and positioned well. No kids, paid down mortgage, decent stash. I am reminded of Warren Buffett’s sage words about the good people at LTCM and the pity quote
Good luck, but in the interests of the rest of us the point should be made that leverage is Kryptonite in investing, as Keynes didn’t say, the market can remain irrational for longer than you can stay solvent.
@DH (#58):
I assume your DB projection requires you to work until you are sixty?
In any case, given the size of your SIPP it may be smart (at least tax wise) to jump ship earlier than 60 (with a presumably reduced DB) and start emptying the SIPP, before starting your DB and then SP. Apologies if we have discussed this trade-off before.
On the opportunity point, I actually reduced my massive US underweight today by adding a small amount of Mag 7 back via the Allianz Tech Trust (ATT). It’s down 20% in a month.
Zero confidence this is the bottom — in fact I think lower is probably more likely than higher for the foreseeable — but these remain quality companies, and if the AI trade blows up then ex-nVidia hopefully the capex will go down too. (Microsoft is already scaling back).
The price isn’t outrageous for the quality here IMHO though the growth is slowing.
But still very massively underweight to be clear. Just also always trying to be humble, within the constraints of thinking I can beat the market long-term haha.
(Definitely not advice, DYOR, remember as a naughty active investor I do trade a lot and could be out of this by tomorrow AM though that’s not the plan at all).
I don’t disagree with a word of what you’ve written there @ermine, and I hope I don’t come across like that Mick fella with his Australian mining minnows in the comments from a couple of years back 😉
And everything you say is all very true, but it might not be the whole picture.
If you only ever invest in the index then you’ll only ever get the index return less fees. Adding a small amount (%age wise) of direct holdings will cause variance to the index.
That can can be good or bad compared to the index performance over the same period. But it will not be the same.
The worse it can be is a wipeout on the individual shares. The best is uncapped.
Bessembinder’s winners’ returns drive the entire market. Many manage to average (albeit with inevitable massive drawdowns) 20% + p.a. over decades to go up 100s of times.
Cap weight trackers capture some of that late phase when the companies in question are massive. No so much before then, and not at all before they get listed in the index.
It could (quite plausibly reasonably) be said to be a fool’s errand to try and pick the winners at all. On the other hand, at some point it perhaps becomes clearer which are the winners and, when they’ve sold off deeply without the fundamentals adjusting downwards to the same degree, then there’s arguably some risk arbitrage there.
It’s impossible to know where the bottom is so don’t try to time.
Instead decide in advance the max %age allocation to any individual shares (it might be 5% for example) and the price below which you will DCA and the amount you will invest per month until either a) the share in question trades over the price point you chose to begin buying or b) your chosen %age allocation to the share is reached, whichever happens first.
In any event, I definitely wouldn’t lump sum something like this.
@Al Cam – Good point on State Pension. It’s effectively means tested on the way in through varying contributions and on the way out through taxation.
Stock market falls are just a minor minor flesh wound looking at one & three year performance and not of the Monty Python variety. You need to be comfortable with significant volatility from here. It’s been low vol for a while. US valuations are still mega stretched.
If you have a significant portfolio already, I think all this talk about positioning into a bear market is for most people absolute rubbish. You are unlikely to have much cash lying around to make a difference.
If equities are cut in half, for many people, their job will be at risk. At that point you are hunkering down, slashing costs, trying to ride it out. Sure if you are 30% in cash go for it. Mostly likely you’ve been like that for years and are well behind anyway. If you are just starting out – good news.
It is incredibly hard to leverage up, deploy any cash safety net if you have kids and a mortgage to pay. If not well then go for a blow out. DH has got no mortgage, no kids and a DB pension in 10 years – the perspective is completely different to the average punter.
For me, I’ve worked out a roughly sustainable withdrawal yield based on my portfolio’s earning power. Given income is generally more stable, I told myself, I had no increased spending power when equities went up, equally now they are falling, I’m not particularly worse off. It’s not quite accurate but assists.
@SF (#64):
Thanks; I have been making this point for years and IIRC you are one of (if not the) first person to acknowledge it @M.
There are many other much more subtle issues associated with the new SP (NSP) system vs the old SP system. The most obvious of which is that the NSP has no spousal death benefit. The others [that I am aware of – and I am sure there are others that I am not aware of] are generally more subtle and often quite complex. A phrase regularly used by HMG prior to introduction of the NSP was “that there will be winners and losers”. I was definitely on the losing side, and in spite of @Boltt’s comment (#35) above, I suspect he will also be in my team – as he has effectively surrendered all his additional state pension contributions.
@SF (#64):
P.S. did you mean to say “so do not deploy any cash safety net …” or similar?
Also, if my experience and acquaintances are anything to go by, there might be quite a few retirees out there with excess cash and I am not sure how you get fired as a pensioner. IMO, there are an incalculable number of scenarios in play.
S&P 500 on the slide again this late (UK) afternoon. Looks like investors unimpressed with the scenario of Trump petulantly doubling down on tariffs against Canada, being unconcerned about plunging stocks and prospects of recession…., whilst offering support to his pal Musk, to prop up the share price of TSLA.
Not a great look. Never mind, there’s always Bitcoin as a strategic reserve.
Gulp.
Do you think this might be connected with the mad idea of the Donald that Canada could become a 51st State (at least 80% of Canadians oppose strongly, and it’s hard to get 80% of any population to agree on anything these days)? I shudder to think what a MAGA attempt at an anschluss for Canada would look like. Hopefully no worse than a bungled farce that goes no further than failed economic strong arming. But you can never tell how far people like Trump might try and go.
@DH. As much as I would love to see Elon and some of his Trumpy-techno-fascist-bros lose it all, I think we might be putting the cart before the horse. The recent drop in the Nasdaq 100 has made it as far back as … late Sep 2024.
The gospel according to US retail is BTFD (buy the fckin dip). We need that to fail. The Fed put needs to fail. The Trumpster will throw the kitchen sink to keep it up. That needs to fail. The whole techno-bro “AI revolution” needs to fail. In 2008, the US found out it had banks that were TBTF (too big to fail). Now, the whole US stock market is TBTF.
In South Africa, under the deeply corrupt President Zuma, the word used to describe what we are seeing evolving in the US was State Capture. Drop any pretense that you are investing according to some weak form of the efficient market hypothesis. This is so much more than just a corrupt financial system. The political imperative from the current administration is for it not to fail, or, to be precise, for it not to fail until a time of their choosing.
When it does fail, I wouldn’t bet it will be bounce up in two or three years. If it cuts through all the above, then I suspect it will stay down for a very long time.
@ZX: Where Trump differs from at least any post Warren Harding Presidency (if not long before) is that, unlike Nixon (who is unfairly tarnished by a comparison) Trump does his dirty work out in the open. He has no shame. It’s deeply disturbing:
https://www.lawfaremedia.org/article/richard-nixon-donald-trump-and-breach-faith
It’s no exaggeration that Trump is evil. That much has been clear since when he mocked reporter Serge Kovaleski’s chronic joint arthrogryposis condition at a South Carolina rally in 2015, if not earlier.
How much value should be attributed to the companies of a country in the midst of – if not of a moral collapse – then a moral subsidence.
Markets, economies and companies are successful in open and principled societies (the democratic tradition) or ones where there is at least instead a coherent and vaguely sensible long term plan (Chinese syncretic market Leninism).
Trump is an agent of chaos and, I fear, of multiple forms of decline.
It will be miraculous if he catalyses a techo-accelerationist success. It’s such a long shot.
@ZX (#69):
Thanks for your thoughts – interesting.
@TA:
Re “No Cat Food” post, comment #8: good to see you embracing F&U, including Reserves. Just not sure anybody should [fully*] annuitise from the off for reasons previously given about possibility of over-estimating retirement expenses in advance, e.g. see also comment #6.
*to the extent you think you need to
@Boltt (#49):
Re my reply at #50 [about your March proposal], see also: https://www.msn.com/en-gb/money/other/pension-delay-as-savers-rush-to-access-pots-before-inheritance-tax-raid/ar-AA1AQu5L?ocid=msedgntp&pc=U531&cvid=69364cf160de44739aebf2016e1fc8da&ei=8