What caught my eye this week.
I think my favourite Shakespeare play is Coriolanus. It’s certainly not the best Shakespeare play, but it’s shot through with a bitter edge that appeals to my inner cynic.
You can keep your Danish snowflakes, your passive-aggressive wizards, and your talking walls – it’s this Roman riches-to-rags-to-dead-in-a-ditch story of what happens when you court the mob that ticks my boxes.
No, I’m not (yet/only) referring to Brexit.
I’m not even thinking about the Extinction Rebellion protestor who was mildly lynched this week for interrupting a horde of London commuters.
I’m talking about the spectacular fall from grace of formerly famed fund manager Neil Woodford.
Told you so
Now, you might think this would be the perfect opportunity for a passive-championing blog like Monevator to cough politely and say: “Ahem, we told you so.”
And obviously we did.
Not that Woodford would fail, particularly, nobody could know that for sure. But we’ve written many times that you can achieve everything you need to by investing in index funds and getting on with the rest of your life.
Recap: There’s always a few winning fund managers at any one time. Mostly they don’t win forever, and even if they do you’re very unlikely to invest all your money with them throughout. Mathematically you’re better off in index funds.
Or, as The Evidence-based Investor writes:
I don’t mean to sound smug or clever. I had no reason to believe that Woodford would perform quite as badly as he did.
I was just pointing out that the odds were heavily stacked against him beating the market on a cost- and risk-adjusted basis over any meaningful period of time.
And that is all very well.
But ploughing through outraged article after outraged article this week, I started to feel almost sorry for the bloke.
Why oh why did he have to do different?
Woodford’s flagship fund is to be wound down, his second fund frozen, and his company is to be shut down.
Winding up the big Woodford fund wasn’t his choice, but to be honest it’s a bit late for that. His investment trust is trading at a ginormous discount because his reputation is trashed. The man who was lauded by the masses is now feeling their wrath.
They feel like they were scammed, they say. How does Woodford sleep at night? He has his millions, they’ve lost thousands. It’s not fair. They blame the platforms, too. And the media! The same media that now reports on him like he’s been discovered with 40 barrels of nuclear waste in his wine cellar that was only to happy to gush about his new company five years ago.
It might sound like sour grapes, but of course that’s not it. Because we can be sure (can’t we?) that had Woodford lived up to the hype and outperformed the markets by as much as he actually lagged them, then there would have been equal outrage from the same people.
Wouldn’t there?
It’s not right, they’d shout! Woodford’s winning gains came at someone else’s expense! Also he cheated by including all that illiquid and unlisted stuff in his funds – so it wasn’t a fair fight. In fact, they’d like to give their winnings back!
What’s that? You think people wouldn’t have said such things if he’d actually outperformed? You believe the way Scottish Mortgage – the UK’s largest investment trust – is praised for its private equity holdings shows nobody cares as long as you’re winning?1 You think the fact that the masses still invest in open-ended property funds shows they only care about inappropriate investment vehicles if they get bitten on the ass?
Well well, I guess you might be right.
Own it
Look, I agree with UK Value Investor that there are lessons to be learned from the fall of Neil Woodford. When things go this badly wrong, Questions Must Be Asked.
And I don’t enjoy seeing ordinary people lose money. Quite the opposite – I write this blog to try to help ordinary people end up wealthier.
But at the end of the day, the story is pretty simple. People let him do what he wanted – and applauded it – when they believed he could beat the market. As he faltered they began to withdraw their money, and this induced a doom loop that ultimately trashed the wealth of everyone involved.
Woodford certainly cannot escape the lion’s share of the blame – in retrospect at least he created a doomsday device. Full transparency, hot retail money, massive funds under management, Brexit, a contrarian position, and a series of off-piste investments all exploded when they met the catalyst of poor returns.
But people didn’t need to buy into his fund. This shouldn’t come as a newsflash. We’ve been writing about passive investing since 2007.
If you want to fly closer to the sun – if you must try to do better than the market – then sometimes you’re going to get burned. End of.
P.S. So Boris Johnson has negotiated a slightly new withdrawal agreement, giving us a second chance at an orderly escape from the best deal we’ll ever have – the one we’ve already got. Hands up, I didn’t think he’d bother, so some credit is due. But I doubt he’ll get it through Parliament (the FT’s maths suggests he’ll miss by three votes) and I don’t think he’ll mind. A wet sock would jump at the chance of taking on Jeremy Corbyn in a General Election, with or without a dangerously populist rallying cry of Parliament versus the People at its back. Ultra Brexiteers will see another chance for a no-deal Brexit, everyone else will weep into the ballot box. As things stand I believe a super-soft Brexit best reflects the very close 2016 advisory vote, but on balance I also think we’ve all learned enough since then to justify a second chance. Hence I’ll be marching in London on Saturday for a new, informed Referendum. See some of you there!
From Monevator
10-year retrospective: Commodities – the lost asset class – Monevator
From the archive-ator: Day three in the Big Brexit house [From June 2016] – Monevator
News
Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!2
IMF warns world growth is at its slowest since the financial crisis – BBC
State pension to rise by up to £343 a year in 2020 – Which?
Interesting infographic showing what a £1m pension pot will buy you annually – ThisIsMoney
For what it’s worth, respected fund house GMO mostly sees low returns ahead – Irrelevant Investor
Products and services
HSBC and First Direct slash interest on regular savings accounts from 5% to 2.75% – ThisIsMoney
How good are smart tech products, and will they save you money? – ThisIsMoney
Ratesetter will pay you £100 [and me a cash bonus] if you invest £1,000 for a year – Ratesetter
Beware scam Amazon Prime calls asking you to renew – Guardian
Has your local credit union launched a savings account with a monthly £5,000 prize? – ThisIsMoney
Homes with political [/Conservative] connections [Gallery] – Guardian
Comment and opinion
Could the “6 to 2 times 200” encourage young people to think before spending? – Humble Dollar
You’re wealthy. Should you marry in secret? [Search result] – FT
Bank of America says bond rally cements ‘the end of the 60/40 portfolio’… – MarketWatch
…LOL, really? says Ben Carlson – A Wealth of Common Sense
Some data purporting to justify staying with active managers does the opposite – Yahoo Finance
When frugality bottoms out – The Simple Dollar
Investors need to ask what, not why – A Teachable Moment
A simple plan for financial independence – Morningstar
The riddle of the well-paying, pointless job – More To That
Disinheriting your children might be for their own good [Search result] – FT
Stamina, stubbornness, and the infinite mindset – Abnormal Returns
Naughty corner: Active antics
The best predictor of equity fund performance – Morningstar
Machine learning in UK financial services [PDF] – Bank of England
2019 is shaping up to be a record year for UK start-up fundraising – Beauhurst & Crowdcube
Oryx International Growth: Small cap, big discount – IT Investor
IPO lessons for public market investors – Musings on Markets
There’s some evidence that a divided focus holds up better in a drawdown – Wisdom Tree
Brexit
This is the moment Remainer dreams may die – Guardian
Tony Blair: Like him or loathe him, he is right about this [Video] – Via Twitter
UK wins agreement to give up the best deal any EU member state ever had – New Statesman
David Cameron’s ‘greased piglet’: the perfect image for the Brexit moment – Marina Hyde
Tories ‘Spartans’ to back Johnson to pave way for no-deal exit next year, one reveals – Independent
An on-point acerbic reader comment on UK citizenship post-Brexit [Wait for the comment to load] – Guardian
Top City figures cautiously back Government’s new Brexit deal – ThisIsMoney
Kindle book bargains
Fooled by Randomness by Nassim Nicholas Taleb – £1.99 on Kindle
Who Moved My Cheese? by Dr Spencer Johnson – £0.99 on Kindle
Grit: The Power of Passion and Perseverance by Angela Duckworth – £0.99 on Kindle
Little Black Book: A Toolkit for Working Women by Otegha Uwagba – £0.99 on Kindle
Off our beat
Why new technology is a hard sell – Morgan Housel
From the Silent Generation to ‘snowflakes’: Why you need friends of all ages – Guardian
Battling time [On age and assisted living] – Humble Dollar
Have we got any happier over the past 200 years? An AI tries to find out – Vox [via A/R]
Some of the UK’s phone number infrastructure relies on Yahoo Groups, which is shutting down – The Verge
Team older feminist: am I allowed nuanced feelings about #MeToo? – Guardian
And finally…
“In the past, the thorny issue of how long you might live, and how much it would cost to provide income for that indefinite period, was your employer’s problem. They paid your pension, so they had to find the money, somehow.”
– Richard Dyson & Richard Evans, Your Retirement Salary
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- I own a few shares in Scottish Mortgage. And before you say anything, I fully agree it’s a more appropriate way to invest in unlisted holdings. But it’s not hard to imagine that if these had failed then people would ask why a mainstream investment trust had put money into such ‘exotic’ fare. [↩]
- Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”. [↩]
There are other aspects to the Woodford story. Personally I find it puzzling how an “Equity Income” fund ended up with the holdings that it had. It wasn’t just that the fund performed poorly and some of holdings were illiquid, but these holdings were most definitely not producing any income. The companies in question are early stage tech companies. Not only do they not pay any income, the risk / reward profile is clearly very different and more in line with a VC fund. The fact that some of the holdings were shared with the Patient Capital Trust is a pointer.
And of course there is the question of how the fund was marketed on retail fund platforms. As an example, I just saw that Fidelity’s news coverage of the fund closure this week helpfully suggests a couple of alternative leading active income funds for those customers who don’t know where to put their money anymore.
Most of the Joe public investing in the income fund were expecting an INCOME fund similar to the previous funds he managed at Invesco….I don’t think the promoters and Woodford himself managed to put across enough that it was something completely different…in that sense, I don’t feel sorry for him at all.
I made a little money from his Equity Income fund. 10% or so?
Luckily I found Monevator a few months after the PCT was launched and was convinced. Strictly passive since then.
Thank you Mr T(I).
Hi guys, I don’t disagree but all that stuff is well-rehearsed so I didn’t want to repeat it all over again. 🙂
It’s not an excuse exactly, but the weird/illiquid stuff made somewhat more sense when the fund was over £10bn in size. In that context it was (theoretically) in there as a growth kicker. Woodford has/had a problem in that he doesn’t like a lot of the income staples (notably banks and big oil, and also from memory big pharma in the end) so he had to hunt elsewhere for returns. This was also (allied to his contrarian take on Brexit and the UK economy) why he ended up owning lots of domestic companies like housebuilders etc.
When the fund began to hemorrhage money, the more exotic stuff became a bigger and bigger proportion. It was illiquid and stuck out like a sore thumb at this point. Then more recently you had other market participants shorting what they knew he’d have to sell, adding energy to the death spiral.
It’s all very obvious in retrospect, but I think it’s a bit of hindsight bias in many quarters to say it was so obvious from the start.
As I say active funds/managers that beat the market do things differently, by definition.
It’s when they fail (in this case spectacularly) that the post-mortem is conducted in earnest…
My daughter, The Lawyer, tells me that what gets them struck off isn’t the initial mistake or oversight, it’s the consequential actions they take to disguise or evade the consequences. Mr W too I guess, and yes it’s hard not to feel sympathy.
Now about this march. I will be in London tomorrow, will you be wearing something distinctive ? We all need an aim in life :).
I enjoy some of your writings , value some of your advice / experience , stayed away from woodford from wise words on passive investing here , but
you will not see me in London supporting a informed Referendum, I voted out as did the majority and I want out and I understand the potential consequences.
This is a link to the full report about retirement spending needs referred to in the This is Money article:
https://www.retirementlivingstandards.org.uk/
If it had been a 52 to 48% win for remain, would you have advocated partly leaving the EU in order to reflect the result? Or, would you have been willing to accept a second referendum if leavers didn’t accept the result?
It seems that everyone and their dog were onto Woodford obviously after the event. I for one had_have a few quid in the locked fund and I for one would have been quite happy if the fund was still trading and me still happily (to an extent) still init. I knew the risks but was willing to ride it out post Brexit . As it is in my humble opinion, the fund value will tick up slowly all beit come the wind up when they sell the illiquid stuff that’s when it will get dirty. As for your trip to London for the demo, no thank you I seem to remember voting on the issue a few years back. I am off the same opinion. Have a nice day out though.
@Cerys @deano @Griff — I understand your point of view, and this isn’t a glib decision on my part. I’m in favour of a second referendum on balance, but it’s a very close decision for the reasons you cite and for others.
In my view — and I understand many feel differently — the story sold by the Leave campaign was so far from reality, as the last three years have abundantly shown, that a second referendum is warranted. I don’t really understand how anyone can look at the last three years and say “yes, that’s what most of the 52% voted for” — just compare the claims made before the vote compared to what happened afterwards.
But I as I say I can completely see why others would say “we voted, that was that for good or bad”. That’s why I’ve said several times, including above, that a soft Brexit (leaving the EU but staying in the single market and the customers union) would best reflect the extremely close result in my view, and it’s what Parliament should have striven to deliver. Perhaps we could take a view again in 10 years say about whether to go further or to dial back.
“But that’s not Brexit” you will say. Well there we go, that’s what the past three years have been about. Your Brexit is different to my Brexit is different to Theresa May’s Brexit is different to Corbyn’s Brexit is different to the Tory Ultra’s (who voted against multiple opportunities to Brexit, let’s remember) is different to the various less-informed stereotypical Leavers who seem abundant in pro-Leave demos and interviews etc but apparently we’re not allowed to mention them because we’re supposedly tarring all Leave voters with the same brush.
My hope — and it may very well be forlorn — is that a second informed Referendum would come out say 60% in favour of Remain (because everyone surely knows how things stand now). The nightmare scenario is, as Cerys implies, a close result.
Another win for Leave would be pretty much a mandate for a hard Brexit I guess, which would at least move us forward over the cliff so we can get started on bobbing around and swimming back to shore.
Do I like that it’s come to this? No. Do I think this is a great set of choices we have before us? No. But then I didn’t call the Referendum, I didn’t mislead the electorate with fanciful numbers slapped on buses and promises of a deal in a few weeks, and I didn’t vote Leave and bring this on the country. (As I’ve said many times I can respect the sovereignty aspect of the Leave vote as intellectually coherent, and it might have got me 30% towards voting for Leave. But for me it doesn’t at all stack up weighed against the downsides, not least with our opt-outs and our sitting outside the Euro.)
So we are where we are. A very soft Brexit and say in 10 years another referendum on whether to go further would have been my choice. That opportunity was missed in favour of party political posturing, an immediate and willfully divisive reading of what was in reality a very close (advisory) referendum result, and a takeover of the future of this country by an ultra-minority’s dream of Hard Brexit.
Hence it seems to me, reluctantly, that a second Referendum would at least clarify how people now feel after three years of national trauma.
I think there might well be a 60% vote in favour of Remain in a second referendum, because most people just want the Brexit question to go away. Perhaps 25% of the population strongly want to leave and 25% strongly want to remain. The other 50% don’t feel too strongly either way but very much want the arguing to stop.
When we leave the arguing will go on for years as the politicians try to sort out what type of Brexit to have.
If we remained, 25% of the population would be very angry for a while but they would soon find other things to be indignant about.
Re: Brexit. I didn’t vote either way. I’m an anarchist and we don’t. But if I had considered voting the absence of a simple fact based summary of the pros & cons of leaving v remaining would have deterred me (I guess it didn’t exist because everyone’s Brexit is different).
Lastly, I didn’t think it would make a meaningful difference to the politics of the UK which is basically a mixture of a really boring soap opera and a reality TV show where the same kinds of participants keep leaving and then coming back. Still, the Brexit Westminster pantomime has been an OK watch generally and probably will continue to be for some years to come.
PS. Glad to see the opinion/analysis pieces return alongside the links roundup. They are a highlight of my browsing week.
No, the 2016 referendum did not implicitly mean a hard brexit. On trade and the single market the Leave campaign leaders repeatedly said things like:
We would “be part of the EU free trade zone” and “have access to the countries of the single market being in a free trade zone”. – Michael Gove
“Absolutely nobody is talking about threatening our place in the single market,” Daniel Hannon
“Only a madman would actually leave the market,” Owen Paterson
TI, I agree 100 percent with your comment and reasoning. I’m not happy about a second referendum but it is the only option which may allow some closure on this, one way or the other. I’m on the train now heading to London for the March.
The “why technology is a hard sell” article and “the riddle of the well paid pointless job.”
For me, these are what makes your links a pleasure to trawl through every Fri/Sat. Wide reading and diverse opinion.
Hope the weather holds for tomorrow.
JimJim
Now that we have a concrete proposal it is commonsense to have a referendum between the two actual options, the initial vote was a dream versus the imperfect reality.
“Hence I’ll be marching in London on Saturday for a new, informed Referendum. See some of you there!”
Lol. Be careful what you wish for.
The biggest national poll since the referendum has just given a bigger majority to leave.More people waiting to leave the EU than waiting to leave Niel Woodfords funds!
Woodford made his very own cliff edge, and the regulators watched him do it, and everyone applauded how much money he brought to the fund and cheared him on.
As you have pointed out open ended funds don’t really mix well with property or any other illiquid assets.
Going back to another referendum is stupidity, we have already had one with a big turnout, also the battle cries of it was only a small majority means we will only accept a remain vote of it wins by much much more than leave won (Rod for your own back springs to mind).
And all the polls that are not attached to a very remain news paper or similar are showing leave will still win so would give a massive mandate to leave without a deal.
Anyway if we finally get a general election it will reflect the mood of the people just like it has before, libdems will win by a country mile if the UK wants to remain.
And the Conservatives and Brexit party will do very badly.
You will just have to believe that self determination is generally good for countries and doing deals by ourselves will give us tailored bespoke deals that will be good for our country instead of deals that are good for us but not good for France (for instance) being thrown out.
I am sure Americans didn’t know how good independence from the UK was going to be at the time, and I am sure there was a lot of unknown problems, but it was the best thing for them looking back.
And this will be the same.
The trouble is the people now know how corrupt the EU is and you can’t undo that.
By having a meeting with the speaker they have confirmed how low they will stoop for a favourable outcome for them and it hasn’t escaped the publics eye.
A deal of sorts is inevitable with the EU, but this may come after we have left.
Both the UK and the EU will have more incentive once we have left.
Corbyn is the biggest risk to this country in my opinion. He opposes everything good or bad.
Some of the things he does and says are just unbelievable.
If a hard Brexit isn’t delivered a minority will be radicalised and the Tory party will probably fracture. Everyone else will vote Labour or Lib Dem and hopefully they’ll form centrist coalitions.
Well it’s a dream anyway. Most people never wanted Brexit let alone Hard Brexit until the nonsense began.
@Eugene
I don’t particularly recall Brexit being much focus of the 2017 election, article 50 had been triggered and negotiations were ongoing to leave. In my mind Brexit was happening (although I didn’t like it) and the referendum was won/lost on domestic issues such as the so-called dementia tax.
However since you brought it up – the 2017 election provided no mandate for a hard Brexit / no deal. 54% of voters voted for party manifestos that ruled out No-Deal Brexit.
I enjoyed the riddle of the well-paid pointless job article. But the entire article is a category error, and he let the cat out of the bag in the conditional clause of a throwaway sentence
This is why a side hustle is so important if you have a pointless job (and if you want work to be a source of meaning in life).
Work is not the only possible source of meaning in life 😉
Eugene. Understood your point and you are possibly right.
What’s your view therefore on the future positioning of UK globally economically and or politically if we’re not part of the european union. People who want to remain want the status quo. Do you want for example (a) full alignment with US – Dominic Raab seems quite keen (b) singapore on thames – JRM / Lizz Truss – seem quite keen on this (c) Norway plus – aka Nick Boles – I assume not given your comments (d) another? How successful do you think the UK will be able to negotiate economically and geo-politically with the US, China, India and EU as a smaller partner. Do you think the US will see us as less useful now we are now part of the EU and therefore have less ability to influence? How will curb immigration given India have said very clearly a trade deal is dependent upon looser controls. Would a harder brexiteer be able to negotiate a better deal than Boris has?
I’ve personally paid over £1m in tax over the past decade working in financial services and having seen my companies plans for a hard brexit it seems fairly clear my job would move to European Union over time in a hard brexit. What’s the plan for encouraging in jobs to replace that? If no plan how can we fund public services?
I personally believe the main q is – are we or are we not going to be part of the single market and if we’re not, how do we economically make up for being out and geo-politically make up for our loss of influence (or maybe we don’t care on the latter).
Love to hear the plans!
There are many reasons why Woodford’s empire ended in ashes but hubris is high on the list. A Patient Capital Trust stuffed with moonshot start-ups is a very different proposition to the unlisted but mature and profitable unicorns in Scottish Mortgage. Allocating the lion’s share of the capital in an Equity Income Fund to such firms, which don’t pay dividends and likely never will, was inexcusable. I feel sure that the FCA, useless though it undoubtedly is, will eventually conclude that money was raised on the basis of assertions that proved to be untrue. Woody, and Link Asset Services, the Authorised Corporate Director, are unlikely to trouble the City for much longer.
I won’t be joining you on your march. Instead I’m watching Parliamentarians debate whether or not to honour the UK’s largest ever electoral mandate and catching up via social media on the fate of citizens in Hong Kong, Catalonia and France who are prepared to risk life and limb to advance the case for democracy, rather than obstruct it.
There will be no economic benefit for the UK as a whole. It’s pretty much axiomatic outside ultra Brexit circles. Even the government predict a 7-8% GDP loss over a decade from a negotiated ‘good’ Brexit.
You can say that cost is worth it for full control/sovereignty, fine, but you can’t have both.
There will of course be individual winners and losers. I doubt many who voted Brexit will find they’re winners.
As I’ve said before a hard Brexit would be ok for me personally financially. Possibly even good apart from the likely London house price crash. 😐
I suspect that predictions of economic decline caused by Brexit reflect a combination of groupthink among economists and a shared economic alignment with Big Capital, which gains from the protectionism and ability to import cheap labour that the status quo provides. It seems to me speculative to suggest that switching from EU membership to trading with that bloc through a CETA+ free trade agreement would meaningfully reduce economic welfare, and misleading not to ascribe meaningful upsides to leaving. These include free trade agreements with some large, high-growth markets, reduced tariffs on our imports (and hence lower living costs) and the positive impact of switching to high-waged, merit-based, nationality-blind immigration policies.
Mark, the reason there is a prediction of economic decline is that free trade is nearly always additive, everywhere. When you’re biggest trading partner is 21 miles off the coast Kent this is quadruply true.
As I’ve said before it won’t be a catastrophe. It will likely be a big or small bump depending on terms then slightly slower growth forever.
@Eugene — We has an opt out from ever greater union.
Right, have to focus on my marching friends now. As usual amazing atmosphere with all the lovely people. Whereas I walked through a pro Leave demo a few months ago that was like being on the set of Football Factory. No, not all Leavers (not even many) but none here. Zilch. Ho hum.
Will attempt to keep on top of comment moderation.
@ The Investor, I agree that free trade is additive. That’s why I want more of it. Switching our relationship with the EU from membership to CETA+ will not be materially subtractive, but leaving the Customs Union (or specifically the Common External Tariff) will enable us to sign additional FTAs that would otherwise be denied us. For instance, switching our relationship with the US from WTO to an ambitious FTA will surely be additive. Such a deal is unavailable to us within the EU, as Macron has promised to veto any deal that emerges from the restarted talks, driven by a desire to protect the influential agricultural lobby in his country.
The EU requires unanimity to sign new trade agreements, so protectionism from one member waters down the deal or blocks one for the rest. A free-trading UK won’t just sign new deals with the likes of the US but will upgrade some existing ones, notably Japan and Canada, which have indicated they’ll go further in bilateral deals with the UK than was possible with the EU.
It feels like no one is happy with where things are.
– NI Unionists don’t want to be treated differently. Complex paying / reclaiming tariffs might mean less trade. I’ll hold off buying that apartment in Belfast – although it might work or pave the way for a united Ireland and then I’ll wish I had.
– The majority in the North of Ireland voted remain and don’t want a border. They might be worse off under this deal.
– The Scottish generally wanted to stay in and have to watch while NI “stay in” and they are taken out.
– Hard Leavers want out on WTO – they won’t get that with this deal.
– Hard Remainers want Brexit cancelled – they won’t get that with this deal.
– Everyone in the middle had very different ideas about what Brexit was / should be. That was my frustration with the original vote – Leave friends and family were all voting for different versions of Leave (WTO, Trade Deal in a few weeks it’ll be easy, Canada+++, Norway, Switzerland, etc.). Some versions sounded OK to me – others sounded terrible.
– The government’s own data says we will be worse off. Some are fine with that – others aren’t.
The fairest thing would be to have a peoples vote where we can select an actual approach with three options: 1) Hard Brexit 2) The Deal 3) Remain. A period of public debate would ensure everyone is absolutely clear on exactly what is being voted for. If Boris thinks his deal is that good he should have no problem building public support for it.
Preference voting to ensure there’s a winner. And make it legally binding!
I’d accept the outcome – at least it would be a vote on something concrete – not a vague idea / ideology.
@FlyByNight, the idea of a People’s Vote (nice branding, but the people already voted once) is superficially tempting but suffers a fatal flaw: it resolves nothing. There are only three possible outcomes and none of them provides a clear way forward:
– Remain wins. So it’s one all. Does your win trump ours?
– Leave wins. Two all. Remain descends into chaos. Illiberal Antidemocrats and Greens have already said they’d ignore a second Leave win. My guess is corporatists from both main parties would end up in the same place
– Leave boycotts the referendum. Remain scores a Pyrrhic victory
None of these scenarios gives a mandate to Remain. One strengthens Leave’s mandate but would likely be ignored.
With hindsight I wish the Bill that introduced the referendum had envisaged a two-step process: a binary in-out followed by, if Leave won, a binary choice between whatever deal the UK and EU negotiated and leaving on WTO terms. This would have incentivised both sides to negotiate a good deal, knowing that the alterative would be WTO, which is not a trade-maximising option.
This didn’t happen and we are where we are. Under these circumstances I think the current WA, though imperfect, is a path to a deep free trade agreement with the EU that doesn’t impede our ability to sign further trade agreements, so I hope it passes.
I honestly believe if you remainers succeed with your march and get a second referendum, a larger amount will take part in civil disobedience or riots. These people I believe will be justified. We had a vote, enact the result or democracy is a farce. Let us leave, campaign to rejoin after if you must.
You guys are unethical.
@Mark – while I agree with much of your post – I still believe that we should re-test public opinion – not just on Brexit but in general.
This was the second vote on Europe given the 1975 referendum when the UK voted by a resounding majority to join Europe. If we applied the “people already voted once” then we should never have had the 2016 referendum. But then things change as do peoples views.
We now have much more information – and we know what the options are. While I understand and agree with some elements of your view and the difficulties you’ve identified – a further vote wouldn’t be a simple in or out – but an informed choice between real implementable options.
Nobody prior to the referendum said that if “leave” won, that they’d have to win twice.
The remain/leave decision was made in the referendum (which was a vote by the people – “a people’s vote”). If there is to be a further referendum then the question should be “this deal or no deal”. Remain shouldn’t be on the ballot as the country already decided to leave. If “remain” is on a ballot, then I demand a referendum on whether the 1987 general election result should be accepted.
The second referendum reasoning from the die-hard remainers is laughable. On the one hand, they put forward that we’ve all been on a journey. This is no ordinary journey however, as no matter where one begins, the journey always ends in remain.
However their confidence in these travels is not high, and the referendum question must therefore have three options: two of which conveniently split the leave vote, in the name of ‘fairness’ you understand.
There is a difference of opinion in our household between my wife (who will be a Fourth Class citizen post-Brexit) and myself (who will be a First Class, Elite citizen).
She thinks that the UK ought to leave, preferably with a bad deal, so that it will become crystal clear what we have lost.
I would still prefer us to remain, for the sake of the country where I was born and which I still love.
But then, members of the Elite are out of favour at present. And my wife is usually right about things. As Matthew Arnold wrote:
Let the long contention cease!
Geese are swans, and swans are geese,
Let them have it how they will!
Thou art tired; best be still!
March was very low energy today. Lots of people but pretty wearisome. I think it’s clear all sides are pretty fed up.
@cerys -I believe you had your repeat vote on the 1987 general election, in 1992. And in 1997, 2001, 2005, 2010, 2015, 2017….
I get that leavers would rather not be bothered voting again. But surely, if Brexit is still a good idea and what the people want, they’ll romp it this time. And if they don’t, then it will have been worthwhile checking.
Cerys
” If “remain” is on a ballot, then I demand a referendum on whether the 1987 general election result should be accepted.”
That referendum has already been held, it was called the General Election of 1992.
But, I didn’t like the 1992 general election result. So we should re-fight the 1987 election.
Plus, I didn’t like the issues it was fought on, and I’m sure some of the politicians in the 1987 and 1992 election campaigns may have said things, that then didn’t turn out to be true. So, on that basis alone the 1992 general election should be discounted. etc. etc.
Also, I want a proper referendum regarding the 1987 general election with three questions.
(a) go back to 1986 (it would involve some negotiation with the Soviets amongst others).
(b) go back to 1991.
(c) accept everything that has happened since, and move forward.
It’s the only true way of understanding what the people want.
@FlyByNight, 41 years passed between the 1975 and 2016 referendums. Between those times the Common Market died and the European Union was born; we were denied a referendum on whether to join the latter, a very different proposition.
Very little has changed since 2016. OK, we have a bit more info on how the transitional arrangements may look, and a few people have died and others came of age. But is this justification for another vote? No. Two reasons. First, the world never stands still. If changing circumstances justified re-running plebiscites, we’d have to keep doing it, and we’d never implement a result because there would always be a re-run on the horizon. Second, it misunderstands the nature of democracy. It’s not people voting about stuff, it’s the establishment enacting the results – even (and especially) when it disagrees with what we decide.
When the public voted to remain in 1975, we remained. We voted leave in 2016 and should leave. Once we’ve fully left the EU and experienced life outside for a reasonable period of time, I for one would welcome a second referendum. If rejoin wins, we should action that decision. If remainers were democrats who really believed that leaving is a mistake, they’d be pushing this line, confident that the UK would in time see things their way.
Game theory would suggest that this is the optimum approach. Currently, nobody can be sure whether leaving will benefit the country. If we remain, we’ll never know – and the nation would be disunited for a generation. If we leave, we’ll experience the counterfactual, for good or ill. You’re entitled to believe that the latter will be the case; in a democracy, I’m entitled to insist you let us find out.
“March was very low energy today. Lots of people but pretty wearisome. I think it’s clear all sides are pretty fed up.”
The reason it’s low energy is because you Remainers know in your heart of hearts that what you’re doing and what you’re saying is fundamentally wrong. You’ll never admit it, of course, but it’s clear to all. You have systematically misrepresented, hijacked and blocked the democratic decision of 17.4 million people. And now you want another vote so you can override it completely. However you dress it up, it’s disgusting. Shame on you.
I was in favour of Brexit in 2016, as my studies of EU law and the Brussels mob made me feel that the UK could do a better job.
Three years on, the performance of our politicians on both sides has made me a lot less sure of this.
I also have a lot more information about the implications of it, and although the majority of it is very partisan, making it hard to know what to believe, on balance it looks as though Brexit would make the country worse-off overall (though I’m sure there will be some positives).
So personally, for these reasons, I am in favour of another referendum. I agree that it is not ideal to do it again, as it questions the point of it, but I think when there is so much new information, then there is a justification, though I am sure most people will vote emotionally and for the same thing again.
Howver I would very much like the government to explain in simple terms how the current deal would change things for us, so we could get a better idea of what it involves – who knows, maybe this would make me change my mind again and vote for Brexit, but there has been so much smoke and mirrors about the ultimate effect that it is very hard to take an informed view.
Woodford, Woodford, Woodford.
1) As an active investor in funds, I fear that it will bring in another wave of pointless ‘fighting the last war’ regulation that will put extra costs on firms, further penalising the quality boutiques who need all the help they can get, and so indirectly helping the rubbish benchmark-hugging institutions. For people who want to actively invest, we should support the ‘good guys’ i.e. those with a strong fiduciary duty to their clients and a strong alignment e.g. Lindsell Train, Fundsmith, Capital Gearing, Stewart & First State etc.
2) It’s a good reminder that you should diversify (unless you really know what you’re doing – there’s a Buffett line about this, isn’t there) as some things will blow up, even the things that appear to be super blue-chip like Woodford.
3) Beware active manager style-drift! Are there any who have done it successfully? I can only think of Findlay Park who’ve successfully morphed from US small-cap to large-cap but using the same fundamental investment process.
4) People who are brilliant at doing things, are not always so good at running their own company. It will be interesting to see how Alexander Darwall gets on, though at least he should be a bit more aware of the potential pitfalls.
5) I think there’s a difference between a) investing in small parts of small-caps and unlisted companies and b) taking a 25-50% stake in those companies. I appreciate that he probably felt that he was more able to support early-stage businesses in the UK and elsewhere, a noble aim (and how sad that the end result has been quite the opposite), but it was always a liquidity red flag. If WPCT had been say £250m (still a decent size) then it might have been different.
Ok here goes…..
Eugene
“The status quo has never been on the table….”
That is a fair comment and you are right. You read the treaty of Rome / Nice and trajectory of travel is closer integration. It is a political project as well as economic. Speeches by Macron and Junker etc support this. Plenty of people who are part of the European Union are nervous about this. Plenty of people are nervous about the military catastrophe’s that have faced europe since the napoleonic wars and so weigh it up and think the current route is preferable. Successive governments have been economical with the truth with the UK electorate. In January of this year, when May failed to win support for her deal, the biggest piece of news that night was not the vote imo but the fact the EC wishes to end state veto on corporate tax. Why? because they want harmonisation of taxes because of the euro (see https://www.euractiv.com/section/economy-jobs/news/eu-wants-end-to-member-state-veto-on-tax/). Ireland and Luxembourg have no interest btw in this and so its unlikely to happen.
“Maybe you’re happy with the end of Britain as a sovereign nation, however many people aren’t.”
What loss of sovereignty are you currently concerned about? We have almost total control (a) domestic policy be it public spending, taxation, home affairs (b) foreign policy. If you are concerned over sovereignty are you not equally concerned by NATO? We have to give up 2% of our GDP each year and limitations over our foreign policy in return for mutual security. I’m ok with that but it’s a loss of sovereignty no? And Cameron obtained an opt out against every greater integration. For sure we have a loss of sovereignty over EU immigration – that really bothers me. We also have a loss of sovereignty over movement of capital although no one talks about it, mind you we don’t seem to mind the Chinese buying up lots of UK assets – don’t you think we should given it’s a dictatorship?
Aren’t you more unhappy with the fact the UK foreign policy has been a disaster for the last 20 years as we have coupled ourselves to the US (for much longer to that), which is becoming increasingly nationalistic in the face of a rising Chinese power.
I’d be happy leaving on WTO terms…
That is an epic statement to make. What’s the basis you are making it on? 80% odd of the UK economy is services, roughly 50% of which is with the European Union. If we trade on WTO terms only this is the outlook https://www.instituteforgovernment.org.uk/blog/brexit-four-options-uk-services-industry
I work in financial services, 6% of the UK GDP in 2018, one of the largest and it will be dramatically impacted as we will lose passporting under WTO terms – the bank has told us, we had our no deal training recently – it’s laughable and mt the only option is moving to continental europe (we’re going for Paris btw if we do). Does that not concern you? There will be a way round it btw – we’ll sign up to financial equivalence whereby we agree to follow the rules to obtain passporting. But we’ll have no say over the construction of the rules. That btw is giving up control not taking it back.
BTW – I have no interest in a second referendum and I think Brexit should happen given the referendum. But people who don’t think it’s going to harm us economically I think are wrong based on the evidence. My preference is to join the EFTA / EEA on the basis that the customs union is not really relevant, it is single market membership that matters.
@Karma — Would have more sympathy for your polemic if Brexiteer MPs hadn’t repeatedly voted against the withdrawal agreement. Glass houses etc.
I have pointed out before, not sure whether on this website or a similar one, the UK is not a country which runs its democracy by referendums. We work by proportional representation, i.e. electing MPs to consider issues in depth and make informed decisions on our behalf. Their ability to do that has been undermined by those who say the result of the 2016 referendum should direct their parliamentary vote even if the consequences are totally different from that “promised” by Vote Leave.
There are some countries which use referendums extensively (e.g. Switzerland, and for some issues Ireland) and they operate with carefully defined rules. For example, for a proposal of major constitutional change (and Brexit is certainly in that category) they need the proposal spelling out fully (Brexit wasn’t) and a defined voting requirement for the change to be enacted (typically ratios like 60:40, or an absolute majority of the electorate rather than just of those who vote).
Given that the original referendum was so poorly thought through, and has created an inability of MPs to do their job of enacting what they themselves determine is good for the country rather than their interpretation of a more or less undefined “mandate” I am afraid another referendum is the only resolution available. I am sure it would polarise people like the last, which is hardly desirable, But whichever way it goes, provided the precise nature of exit and its consequence is clear to voters this time, then that will resolve it. But I hope parliament will then define ground rules for any future referendums to stop a repeat creating a similar parliamentary crisis.
(And on the Woodward issue, surely anyone who invests actively either by themselves or through a manager has to recognise that some investments will beat the average, others do worse, and a very few will fail – or of course succeed – spectacularly).
A second referendum would not be a re-run of the 2016 one. Last time we were being asked if we wanted to remain or leave. This time we would be voting on a specific withdrawal proposal (i.e. Boris’s deal) – one that has been negotiated and agreed by the UK government and the EU and which would implement (a version of) leaving the EU. I think it’s entirely reasonable to ask UK voters to confirm whether or not they are happy with that deal before it gets enacted. Personally I don’t this should be a single stage referendum (I’m not a great fan of preference voting). I would prefer a two stage process (similar to the one used for presidential elections in France): first stage, Boris’s deal yes or no (if yes, then that’s what gets implemented – no ifs no buts; if no, proceed to second stage); stage two, no deal or remain. This would give the UK electorate some tough choices to make – and there would be no guarantee of a ‘sensible’ outcome – but as the current House of Commons has been unable to agree on any concrete alternative proposition, I think it would be one (democratic) way to break the impasse.
So called ‘no deal’ cannot be put to a referendum because it is not an outcome that can be defined. What does it mean? Are we instructing our politicians to not engage with the EU to agree a future trading relationship? Or cooperation on security etc? So called WTO arrangements are not a permanent destination. All the Brexiters say they want a free trade agreement with the EU. We can’t negotiate that from a position of having crashed out without agreement – we will have to travel through the portal of an agreement on money, citizens rights, and Ireland. ‘No deal’ is not a stable destination, just a state of chaos from which we would crawl to agreement and then onto a negotiated trading relationship. No sensible or sane politician could put that as a serious option to be voted on.
In fact, even just putting the WA to a vote could be criticised as it is not, on its own, a clear outcome in terms of our future relationship with the EU. I’m beginning to think that we are now so close to the end of transition, and hence another cliff edge, that nothing should be agreed until everything is agreed – ie we legally agree the shape of the future relationship (at least in outline as a template) before we make a final decision.
@Karma (42)
I really find it rather wearisome to hear brexiteers continuously harp on about ‘will of the people’, 17.4 million, democratic rights, majority, traitors etc.
Just to set the record straight, out of a total of those eligible to vote, being 46.5 million, 17.4 million voted leave, or 37.4%. https://en.wikipedia.org/wiki/Results_of_the_2016_United_Kingdom_European_Union_membership_referendum.
In other words, 62.6% did not vote to leave.
And of those who voted to leave, how many actually envisaged what has turned out to be the reality, being fed a dual bullshit show from BOJO with his bus, and Farage with his posters.
Why should we feel ashamed because we want to get it right for our grandchildren?
Is it your call to claim what is ‘ right’- for your grandchildren ? Surely what is wrong is to not accept a democratic result on the basis that those with a counter opinion are stupid, just plain wrong or were lied to ( good luck accepting any future election result). To me Remainers are just plainly undemocratic: they won’t accept a result they don’t like and will say anything to disguise the fact. I voted remain. I would vote leave now. However leave it a few years and I might be dead, a demographic factor disgracefully raised here previously.
@Mr O (51)
I not only believe it is our call to try and do what is right for our grandchildren, it is our obligation.
I fail to see how a confirmatory vote can possibly be undemocratic simply because it might overturn the result of the referendum (and I believe that to be the real cause for the objection of leavers), especially given the closeness of the original result, but I suppose, like the rest of the country, we can only agree to differ.
@ The Borderer, no other referendum and no General Election, By Election or local government election in UK history has ever resulted in the Establishment doing all it could to prevent implementation of the result, followed by a second, ‘confirmatory’ vote, just to make sure the people meant what they said. To do so now would be unacceptable unless we made it a blanket policy for every plebiscite in the future, which won’t happen.
You say the reason Leavers won’t want a second referendum is that we fear we’d lose. I disagree. Let’s imagine we did lose. It’d be one all. Is that a mandate to hand victory to Remain? Only if you consider one side’s votes worth more than the other’s. Or perhaps we might win. Two all. The Illiberal Antidemocrats and Greens have already said they’d ignore the result. Or maybe we’d boycott the poll, so Remain would win numerically but with no mandate at all. Again, I suspect it’d proceed regardless.
Remainers are entitled to believe that leaving the EU will harm the UK. They may be right. If we leave, we’ll soon find out who was right; if we stay in the Union, it will always be speculation. Once we’ve fully left and experienced life outside for a reasonable period of time, Remainers should win a GE on the basis of a manifesto that includes a second referendum and campaign hard to rejoin. If they’re right that leaving was a bad decision, I’ll be at the head of the queue to vote to rejoin.
Obviously I have no time for this idea that ‘the establishment’ is doing all it can to stop Brexit.
The government of the day – the Tory government no less – has tried and tried again to implement it.
It has partly failed by trying too Hard (labour would have supported a soft Brexit) and by its own Brexiteer MPs not voting for Brexit.
Seriously I’ll never stop bringing that up because Leave supporters keep ignoring it. You could have had Brexit by now were it not for the ideologues who wanted *their* vision of hard Brexit.
But with that said I also don’t think there’s much truck in this “think of the grandchildren” argument.
I’m sure most Leave voters ARE thinking of future generations and what they believe is best for them. Indeed as all but the most deluded would concede the pain of Brexit will be front loaded and any benefits only manifested years later, one could even argue they are putting the short term aside for the long term.
I don’t agree with their reasoning but I don’t doubt they’re thinking of future generations, personally.
I voted remain and couldn’t understand the pig-headedness of the leavers. However, I accepted the result. You simply cannot ignore the result of a democratic vote. No ifs, no buts, no complaints about campaigns. You may disagree with the outcome as I still do, but you must honour it.
For me the only worse outcome than a no-deal Brexit would be revocation or a second referendum as I think they would be likely to lead to troubles. History has taught us that democracy is a fragile thing and when you start messing with it you are on a very slippery slope indeed. If there were to be an ill-considered second referendum I’d probably vote to leave. I’ve just come to see both sides as equally pig-headed now.
I can’t invest in the UK with any certainty while this circus continues and have been putting my naughty UK start ups, small caps and AIM 100 money into a global tech tracker. It’s only a bit of money as a side hobby, but Brexit is ruining my fun! It also strikes me that the longer this abject mess continues the more investments the UK will lose.
Another referendum is ok with me and one every 10 or 20 years is ok too. We already have had a few for EC/EU. A trade deal with the EU will come with a lot of conditions and rules attached, might even look very like being in the EU without a say in the rules. The EU attitude is that you cant sell your stuff in our backyard if you undercut us. As regards Mr Woodford I think it all went to his head a bit and he just lost the plot. The FT article is really good and worth a read, especially the part where woodford bought a large farm and just rode around on horses gicing instruction on what to buy and sell while on horseback.
@Mark – I think we will have to agree to disagree…wherein lies the problem. There are so many differing versions of what leave actually means – from the hardest to softest of Brexit’s. Add into that – some people think we have a pretty good deal and would like it considered as an option. There is clearly no consensus.
I guess the question is – how do we decide what the future relationship with the EU should be? And which of the options on the table will work out the best in the long run? The problem again is – there is a lack of consensus on how we should answer the question.
Woodford didn’t invest as he was expected to. This was no usual UK equity income fund. He invested in unquoted companies, which was not the area in which he had built his previous reputation. These were entirely unsuited to a unit trust, and especially one which had been heavily promoted, or hyped, to small investors. He would have done better to have had one genuine income fund and one separate unquoted fund rather than create a hybrid fund that has dragged all three of his funds down.
@TI et al
I opted for Remain in the original referendum because I was generally happy with the status quo, albeit not with the “overcrowding” of the UK through immigration (some of which being from the EU). I hope that there will now be a second “confirmatory” referendum and I shall again opt for Remain, assuming that this is one of the offered choices.
There was no actual Leave “deal” at the time of the original referendum but there now is, and it may possibly be the case that the details of this Leave “deal” will cause a significant swing in the result if the second referendum does take place.
Assuming that the second confirmatory referendum does happen, with “the cards now on the table”, I shall accept the result without demur.
The thing is, our elected representatives have not yet agreed on how to leave. In fact every flavour that has been presented to them has been rejected (thinking of the votes on various options in the past) showing they are not there yet. I think it is a stretch to think that revoke article 50 would command a majority either. But the process of finding an acceptable way forward is underway (there are arguably a large number of possible deals, given enough time to negotiate). The only way I see a second referendum as acceptable is if parliament (who as many point out know a lot more on the specifics than we do) have approved a deal and then the only options are to take the deal or send the government back to negotiate further. Any other approach repeats the mistakes of the last referendum (presenting options that the general public have little real understanding of) and results in broken unity if remain win. Or hold a general election, let Parliament refill and see if no deal, remain or one of the existing deals have a majority. But if we don’t leave, my view is this question continues to bog us down for a generation, and it will continue to be nasty for the foreseeable future.
Interesting comments.
As a remainer I can’t see a 2nd ref working. As TI said he’d hope for a 60% to remain, but we all know there hasn’t been a material change in opinion. At best the guess would be a 52% to 54% remain win. Where does that leave us (excuse the pun)? Nowhere. And that will only be due to the demographic changing over the past 3.5 years.
That’s the problem with Brexit – it’s not solvable. You may think it’s political, but it’s more than that. It causes family arguments, divorces, and lack of solidity in the UK.
This is very much Pandora being let out of her box.
My personal opinion is it would be best to Brexit with this deal on the assurance the Spartans don’t demonstrably destroy it by putting multiple spanners in the FTA negotiations (for the record I believe they will try, but politically if there’s a deal Boris runs away with a GE and the Spartan’s power is less influential). Why do I want the deal to go through despite being a remainer? Mainly because this 3.5 years stagnation I believe is worse than making a decision. Sometimes any decision is better than no decision, and I believe this is one of those times. Yes we will be poorer, but we can get back to work on minimizing that opposed to nothing being dealt with domestically (schools/education are the big one for me – you can’t be a better nation without well educated people).
I could go on endlessly on why Leavers are wrong, but at the end of the day we’ve got to move on however much I dislike it. I’d prefer to know how to plan for the future rather than be on the fence – my backside is getting pins and needles!
@Mark (53)
I’m afraid I think your reference to general elections is somewhat of a straw man argument. We get to review that decision once every 5 years in a GE, and often change our minds, particularly when the incumbent government doesn’t live up to it’s promises.
Brexit, on the other hand, is a one off, lifetime changing event.
Once we leave, I fear there will never be the opportunity to rejoin the club on the same terms and conditions we currently enjoy. Think Schengen, euro &etc.
So it strikes me as just sensible to check if the people accept that the politicos have delivered what they wanted. If so, then full steam ahead, if not, then cancel the whole fiasco – the ‘people have (finaly) spoken’.
Gooey Blob October 20, 2019, 12:58 pm
“I voted remain and couldn’t understand the pig-headedness of the leavers. However, I accepted the result. You simply cannot ignore the result of a democratic vote.”
But what about the 3m EU citizens, that live here assuming it is their home for life. Why didn’t they get a vote? Sounds fixed to me. Remain may have won if they voted. And as Brexit will/is having significant impact on our economy surely if your job isn’t going to be effected (because, say, you’re retired), why should you have a say. Maybe if we leave then the pensioners should accept a pay cut to help the rest of us.
The Borderer (63)
I don’t know this for sure, but I’d presume if we ever want to rejoin in 5 , 10, 20 years time which I think would be a question asked then we’d probably be required to convert to the Euro. It would be interesting at that time to see if the younger generation(s) desire that or if nationalism comes out again. We’ve done, in retrospect, pretty well out of not being in the Euro after the financial crisis of 2008, but having an opt out of the Euro may not be possible on any future accession to the EU
Of course anyone that talks about the billions rebate that Thatcher got is wasting their time since it will be chump change compared to the extra costs leaving the EU will create.
Only ray of light is perhaps the other trade deals sealed by then may offset it (longer term gain for short term pain – we’ll see). I don’t see it myself as we do more trade with Ireland than all the BRICs put together purely down to being a close a neighbour (and of course commonality of language).