What caught my eye this week.
I suppose it’s an occupational hazard of writing a weekly column that you become prone to thinking you’re living in particularly excitable times.
So for the record I agree that a 1930s Monevator would have been plenty preoccupied with the Great Depression and the backdrop to war.
Similarly, students dropping out of the rat race and Neil Armstrong popping onto the Moon would have provided plenty of food for thought in the 1960s.
Just since this blog started, we’ve had a financial crisis, riots in the capital and beyond, an economically witless rupture with Europe, and a global pandemic.
Even so, in 2026 the historical tumble dryer really does seem to have gone into a fast-spin mode.
And I’m not even talking about the latest grim Epstein revelations.
Top Trumped
Tellingly, the two factors driving this year’s tumult are tracked here in Weekend Reading by special link sections I introduced on account of their potential to cause mayhem.
The first is the ongoing disintegration of political norms in the United States under Trump.
As an independent floating voter, I happily ignored politics on this website for the first decade of Monevator’s existence.
The reason Brexit eventually loomed large on Monevator was, firstly, that it fell outside the normal political programming; secondly, that I was sure it would hit both our national and personal finances (see the chart below); and thirdly, because of what it represented – to me, a tech-enabled rekindling of an ugly old populism.
That was also why I began tracking US politics after Trump’s re-election.
That this man could be President after what happened in the 6 January Capitol attack was already beyond the pale. It pointed to those same populist forces growing stronger.
True, both Republicans and Democrats had been polarising into more extreme positions for years. But Trump represented a new and anarchistic impulse that boded even worse.
It seemed to me very likely that his taking office would have consequences for the whole world. And that, of course, is exactly what we’ve seen.
You needn’t be woke to wake up
I’m not talking here about whether you like Trump’s persona or not. (There’s no denying he’s charismatic.)
Indeed perhaps you can live with the President of the United States telling female journalists they should smile more – rather than answering questions about child abuser Epstein – or posting a video depicting the Obamas as apes.
For my part, it makes me feel angry and ill.
But all of us should be concerned by Trump’s kicking over the global order he inherited on entering the White House.
Trump’s domestic extremism is no exaggeration, as the Financial Times notes:
The speed, scale, flagrance and persistence of the Trump administration’s deviations from established legal and constitutional norms during his second term have been so dramatic that it bears stepping back and taking stock.
Within hours of his January 2025 inauguration, Donald Trump had pardoned hundreds of people convicted of political violence — a hallmark of aspiring autocratic regimes — and shown tacit support for violent resistance to electoral setbacks.
Days later he removed legal protections from civil servants and fired 17 oversight officials charged with tackling fraud and corruption.
By March the administration was in open conflict with the courts, summer saw police firing rubber bullets at protesters and the removal of the labour statistics agency chief in the wake of weak jobs numbers, and this month brought the criminal investigation into Fed chair Jay Powell and the shootings of Renée Nicole Good and Alex Pretti by Immigration and Customs Enforcement agents.
While US history is hardly free from political violence or maltreatment of disfavoured groups, this blitz on America’s citizens, institutions and — by many estimations — the constitution itself ranks as arguably the most rapid episode of democratic and civil erosion in the recent history of the developed world.
But to my mind Trump is not just an American problem. And not only because the way he runs his office can only embolden similar characters elsewhere. (See Trump’s Profiteering Hits $4bn in The New Yorker for a recap of his business as unusual).
It’s more because, from a selfish perspective, the end of the global rules-based order that Trump is undoing – to no benefit for the US, incidentally – enabled countries like the UK to earn more from trade, spend less on defence, and enjoy higher living standards.
Noah Smith describes what we’re getting in exchange for that system as ‘international financial anarchy’, arguing it’s why gold has been on a tear for the past year.
Smith warns:
Goldbugs are thus right about gold’s durable safe-haven status, but they’re not right that this is a good thing.
Gold isn’t a superior system — it’s a desperate fallback for a world in which the people who were in charge of the superior system abdicated their duties.
Which sort of takes the shine off the rally, eh?
AI is eating the software that ate the world (maybe)
The other big tumult in 2026 is being driven by – shock horror – artificial intelligence.
Huge market dislocations have hit both legacy software companies threatened by AI insurgents, and also the listed behemoths who are deploying oceans of capital into supporting all this AI that nobody else is really yet paying for.
Here’s just a sampler of the week’s news:
- Software stocks hit by Anthropic wake-up call on AI disruption – Reuters via Yahoo
- How the AI trade has changed (for the worst) in 2026… – Sherwood
- …and how it now threatens a Wall Street cash cow – Wall Street Journal
- Big tech loses $1.35 trillion as AI spending fears spark sell-off
It’s emblematic of the times when shares can sell off both because they are being disrupted by AI – and because investors are nervous about those same disruptors.
Though that’s not necessarily illogical.
Maybe cheaper AI models are going to crush margins for nearly all software companies, while delivering merely commodity profits to the big AI companies and the hyperscalers like Microsoft and Amazon?
An everyone-loses scenario, in other words. It’s enough to give a stock picker heartburn.
Disruptors disrupted
Passive investors may wonder, as some did before 2022’s rout, whether I’m crying wolf.
The markets are still near all-time highs, after all.
However, turnover beneath the surface has been pretty wild.
Multi-trillion-dollar Amazon began Friday down 10%, for example. Meanwhile a whole host of former ‘software as a service’ darlings are 30–50% below their peaks.
Even the UK market has not been immune, as some of the rare few companies in London that seemed to have a nodding acquaintance with the 21st century were overnight cast as losers on the arrival of a new plug-in for Claude AI:
The question: is AI going to destroy ‘old economy’ (guffaw!) tech stocks, or does the re-emergence of investor nervousness about the lavish spending plans of the likes of Microsoft and Amazon suggest more of a dotcom bubble-bursting type moment?
And if there is a dotcom crash parallel, will it still only be a matter of time, anyway – like how the Internet eventually did remake everything from music and movies to taxi cabs?
Or conversely, will AI run out of puff like, say, the metaverse or 3D printing or NFTs?
Pick your knows
For my part, I’ve rarely been more uncertain about how things will go.
How ironic! The potential dispersal among the winners and losers seems extreme, which in theory means lots of opportunities for portfolio outperformance, and yet the existential-level uncertainty is enough to make even a veteran active investor want to pause stock picking, buy the whole market, and let them fight it out for a decade.
I’m probably not going to do that. But that doesn’t mean it’s not a good idea.
Value conscious
On the other hand, perhaps it’s all just the age-old cyclical ups and downs dressed up with new buzzwords and fears?
The following chart is certainly suggestive:
Source: FA Mag
Who knows? But when it comes to ‘interesting times’, I think I’d rather have been confronted by the hippies!
At least they had good tunes.
Have a great weekend.
From Monevator
The Financial Services Compensation Scheme – Monevator
FIRE-side chat: Actively frugal – Monevator
From the archive-ator: Tax-efficient investment – Monevator
News
Interest rates held at 3.75% as BoE cuts growth outlook – Yahoo Finance
OBR: millions more to be hit by salary sacrifice curbs – Professional Pensions
The average house price is now above £300,000, says Halifax… – Guardian
…with one in 45 UK homes worth over £1m, per Savills – Property Industry Eye
Harry Styles and Anthony Joshua among the UK’s top taxpayers – BBC
One in seven UK landlords don’t make a profit – Landlord Today
At least 1m people missed the self-assessment tax deadline – This Is Money
FCA fails to act on premium finance insurance ‘rip-off’ – Which
Driverless cars in London ‘by the end of the year’, says Waymo – Standard
The latest estimate of the economic costs of Brexit on the UK – Econofact
Products and services
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Santander launches a 2% deposit mortgage for first-time buyers – Which
Some lenders are quietly hiking mortgage rates… – This Is Money
…so here’s how to get the best deal if you’re remortgaging – Guardian
Get up to £3,000 cashback when you open or switch to an Interactive Investor SIPP. Terms and fees apply, affiliate link – Interactive Investor
This YBS Christmas savings account pays a bumper 5% – This Is Money
Co-operative Bank switch offer: £100 + £75 – Be Clever With Your Cash
How fixing your energy bill can save you money – This Is Money
Get up to £1,500 cashback when you transfer your cash and/or investments to Charles Stanley Direct through this affiliate link. Terms apply – Charles Stanley
Buy-to-let mortgage rates are falling – Which
How to save at the cinema every week – Be Clever With Your Cash
The risks of buying holiday caravans and lodges – This Is Money
Flats for sale with outside space, in pictures – Guardian
Student loans mini-special
Rachel Reeves clashes with Martin Lewis over student loans system – BBC
Britain’s inequitable student loans [Paywall] – FT
The government should address ‘unjust’ situation – This Is Money
Bad and getting worse: for students, the system is a disaster – Guardian
Comment and opinion
How happy do you need to be to be happy with money? – The Root of All
Should you wait to claim your state pension? – Which
How to make your wealth and health anti-fragile – A Teachable Moment
What’s wrong with flats? 40% of owners are selling at a loss – This Is Money
Everything costs more because of the algorithm [Canadian but relevant] – Walrus
Is inflation higher than we think? – Of Dollars and Data
What we do when things go up (a lot) – Behavioural Investment
When it comes to retirement, fear is an invitation – The Purpose Code
A framework for understanding market (in)efficiency [PDF] – Morgan Stanley
Naughty corner: Active antics
The UK stock market has buyback fever – Schroders [h/t Snippet]
Older people consumer differently – Klement on Investing
What comes after the AI bubble could be electrifying – Tker
Investment intensity and long-term stock returns [Research] – SSRN
Kindle book bargains
The Wealth Ladder by Nick Maggiulli – £0.99 on Kindle
How to Work Without Losing Your Mind by Cate Sevilla – £0.99 on Kindle
Million Dollar Weekend by Noah Kagan – £0.99 on Kindle
The Retirement Handbook by Ted Heybridge – £0.99 on Kindle
Or pick up one of the all-time great investing classics – Monevator shop
Environmental factors
Peak oil is coming – Unchartered Territories
Flawed economic models mean climate crisis could crash economy – Guardian
Disease outbreaks in China’s fur farms threaten global health – Knowable
A UK climate report backed by the intelligence services was quietly buried – The Conversation
Vast seagrass meadows could shield the British coastline – BBC
Climate change threatens the Winter Olympics – The Conversation
Living with meat: humanity’s favourite food – Guardian
Robot overlord roundup
New site lets AI agents rent out human bodies – Futurism
Your phone edits your photos with AI. Is it distorting reality? – BBC
The music industry’s cautious embrace of AI – FT [h/t Abnormal Returns]
Pinterest sacks engineers for tracking AI-related job cuts – BBC
AI’s apocalyptic job prophecy is about to become reality [Paywall] – Telegraph
Grok AI undressing controversy mini-special
Inside Musk’s bet to turn Grok into a porn generator – Washington Post via MSN
Peak deepfake – Panoptica
Condemnation of chatbot reached ‘tipping point’ after French raid – Guardian
Not at the dinner table
It’s tragic a decent PM will be brought down by Mandelson’s sleaze – Guardian
Trump blames Canada – Public Notice
The ‘democratic recession’ is global – Guardian
Trump: Republicans should ‘take over the voting’ and ‘nationalise’ elections – BBC
Profiles in cowardice, tariffs edition – Paul Krugman
Where do billionaires come from? [Research] – SSRN
Off our beat
Japanese cherry blossom festival cancelled because of tourists – Guardian
How to use boredom as a performance enhancer – Two Percent
Many Victorian cities grew tenfold in a century – Works in Progress
India’s snakebite crisis is killing tens of thousands a year – BBC
Kenyan job seekers were lured to Russia, then died in Ukraine – W.P. via MSN
[I endorse] the case for A Knight of The Seven Kingdoms – Guardian
Spurious correlations – Kottke
And finally…
“He commuted to his Canadian office in a Ferrari, though sometimes snowy conditions forced him to use a Bentley.”
– Sebastian Mallaby, More Money Than God
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These do indeed feel like interesting times. I hold 20% gold, so in some sense the run up suits me but, like you, I see gold doing anything “exciting” as a bad thing. I’ve never invested in bitcoin but that’s also been fun to watch. I was somewhat convinced by the idea of it as digital gold, but it seems not!
All in all I’m less worried about getting good returns than I used to be and more worried about not getting shipwrecked.
“There’s no denying he’s charismatic.”
Oh come on. He’s a rich manipulative narcissist. That is not the same as “charismatic”. He’s… repulsive. Wake up, folks…
@Alchemist — I loathe the man, much more so then I disliked Boris Johnson, who I consider one of the most mendacious and damaging figures in British politics in several lifetimes.
But both of them are charismatic, there’s no denying it. Two minutes watching them talk tells you that.
Even Farage has a bit of it, to be honest. And the three of them together would certainly qualify for my worst dinner party invite list of all-time. 😉
I know it’s not optimal. I know it’s got its risks.
But this market, this economy and this world puts me in a position where my trust and faith in the abilities of anyone other than myself, in any field, is close to zero.
For the past two years I’ve been building and now am at 70% in money market funds. The remaining 30% is deployed, whenever the panic in any of the most volatile but unlikely to truly go bust assets is at its highest.
This means long duration bonds, and a couple of the mag 7.
I am in, and out like a sniper. 5% gained, 10% gain – even if I watch it then double – more than enough. Aim to do that 6 times a year when the slam dunk opportunity comes. You just have to be patient enough to wait for the max damage.
Which in a market as irrational and schizophrenic as what we now have, is quite often. If I do ten trades – naughty naughty but hey.
Then if I make 30% on my 30%, my overall gain on AUM is over 10% p/a. My risk is massively limited to holding the parcel after its had the **** kicked out of it, and rarely for more than two weeks.
This is the only way for me now.
I will change if and when things hit what I determine as truly below fair value.
Everyone will criticize me; I don’t care. It works and I sleep sound.
Thanks for the link on the Guardian’s Flawed Economic Models…I think this bit is worth highlighting:
“We’re not dealing with manageable economic adjustments,” said Dr Jesse Abrams, at the University of Exeter. “The climate scientists we surveyed were unambiguous: current economic models can’t capture what matters most – the cascading failures and compounding shocks that define climate risk in a warmer world – and could undermine the very foundations of economic growth.”
“For financial institutions and policymakers, it’s a fundamental misreading of the risks we face,” he said. “We are thinking about something like a 2008 [crash], but one we can’t recover from as well. Once we have ecosystem breakdown or climate breakdown, we can’t bail out the Earth like we did the banks.”
@Alchemist #2 > That is not the same as “charismatic”. He’s… repulsive. Wake up, folks…
I detest what Trump stands for as much as the next man. There’s much to be said for Sun Tzu’s know thine enemy. Trump has/had The Voice, I can hear the charismatic tone colour of his voice, that switches through the emotional centre how he said it before the analytic centre processes what he said. That funny little man with a ‘tache had it 100 years ago, my German is rudimentary but prosody/tone colour is used similar to English. I take some hope in that to my effete European ears over the last few months Trump is losing this rapidly, IMO the stress of this job is probably starting some process of decline. Or he’s just knackered most of the time.
Trump’s iconoclasm does also call out some inconvenient truths – the West is clearly in major Spenglerian decline and Europe more so than the US IMO. We spend far too much effort on trying to stop bad things happening and not enough on making good things happening. As an example, when I was a child the school system favoured those with potential, now most of my council tax goes on SEND and ASC, both of which are increasing as a proportion of the relevant populations and are examples of trying to stop bad things happening. I am not sure Europe is rich enough any more to afford these airs and graces.
So you’re absolutely right, he is odious, but he is there, he has been able to draw power towards him, and let us not ignore the few flecks of insight among the swamp of merde. Wishing him away is not a useful response
Moggers, “no, it’s everyone criticising my investment strategy that’s wrong”
Gosh! What a struggle to get past the first few paragraphs. When you stray into pure political commentary please don’t descend to ad-hominem, and when quoting incendiary facts make some efforts to validate them – eg “…after what happened in the 6 January Capitol riots…” – well, what did happen on 6 January? It’s well documented now.
But it was worth it. The rest of your writing is, as usual, informative, interesting and stimulating.
I hesitate to wade heavily into the political side – your site, you say what you want. The least controversial thing I can say is to be introspective about the yardstick used to judge success. If we judge a dog a failure because of its underwhelming wool output, then that tells us more about how much our paradigm values wool than about the dog. This is not a veiled defence of Trump per se – I actually dislike the guy too for what it’s worth – but the values of the modern Western professional classes are arguably a bit of a historical and geographical anomaly. I can certainly agree that all of the ‘naughty list’ such as Trump and Farage are terrible examples of successful EU-style technocrats, whilst not finding that especially damning.
Exciting read as always-especially the politics-just some thoughts……
Populism always seems to be used as a term of disapproval by those losing the democratic mandate of the people to describe their political opponents but democracy is our political system -at the moment-other systems are so much worse. All our current political leaders without exception are being exposed as shallow venal and hopeless-not a pleasant situation for the populace
Possibly these circumstances generate Trumpian and Farageian figures as a reaction -what else are the people to do?
Investment wise I do nothing -seen it all before -the conservative global index tracker portfolio (currently 35/59/6 – equities,bonds and cash) seems to motor along with no meddling by me -taking my withdrawals from which ever asset is up at the time-very boring but successful -so far!
xxd09
“ And the three of them together would certainly qualify for my worst dinner party invite list of all-time”
But would present you with a hell of an opportunity….
Trump, Boris and Farage are like excellent salesmen. Sure I’m not the only one who has walked out of a shop having bought some utterly useless tat wondering how the salesman convinced me I needed it. For people with only a passing interest in politics these people can (and do) sell false promises.
It’s probably no coincidence that these types have thrived since social media and the rise of 30 second sound bites. Cambridge Analytics and the like also recognised how to target people most receptive as well (in either direction), no doubt exacerbating the polarisation we see today.
@marco
There’s a nuance here that often gets missed in the rush for return. We aren’t all playing the same game.
The dangerous assumption is thinking that everyone is sitting at the table trying to maximize the “Best Possible” (CAGR) at all costs. If you are young, accumulating, and have a 30-year horizon with no immediate liabilities? Absolutely, you should ignore grumpy old cynics like me and buy the world. The math is on your side.
But some of us are playing a different game entirely. We aren’t playing for “Max Return.” We are playing for “Max Certainty” and “Sleep Adjusted Return.”
When the goal shifts from accumulation to protection – specifically protecting vulnerable people in a system that has stopped functioning logically – the rules change. I don’t care about beating the S&P 500 this year.
I care about having immediate, liquid, unencumbered resources to solve problems that the state (and the market) can no longer solve for me.
The market is an incredible machine for generating wealth, but it’s a terrible machine for generating safety on a Tuesday morning when you need it most.
So, nope. You guys do you. If the music is playing, you should dance. I’m just the guy checking the fire exits. The ecosystem needs both of us. You guys provide the liquidity and the growth capital during the sunny days. I just hang around to buy the wreckage on the stormy ones. It’s a symbiotic relationship.
Keep the faith, as Bon Jovi once said. We’re halfway there.
Sleep sound.
While it’s almost never appealing to disappoint long-time readers whose political stance differs from mine, the reason — as I tried to explain in the article — that I do foreground the politics every couple of months these days is because the climate/game *has* changed (markedly for the worse in my view) and it *is* having an impact on the investing climate and our financial lives.
Here in the UK we are in a particularly (not uniquely) poor situation because of Brexit. We are paying higher taxes, seeing less investment, suffering with worse public services, and enjoying a less dynamic economy because of a political decision driven not in the majority of cases by facts, by reason or even self-interest but (as has been debated ad nauseum so I won’t rehash) by feelings and prejudices.
(I leave aside the ‘maximum technical sovereignty’ Leave voting crowd as ever here. Fair enough but nothing like 52%. And also at best naive if they thought it would also improve economic outcomes).
The US lurch has its own domestic issues, as amply tallied by the FT in my quote. But Trumpism is also having international ramifications that are almost all bad, not least again when it comes to investing issues.
I would define populists as politicians who cut through the norms to appeal directly to voters’ prejudices, often by ‘othering’ their adversaries, be they immigrants, liberal elites, bureaucrats or anything else.
Of course the problems populist politicians highlight are virtually always real. If they weren’t there’d be no appeal. But they only highlight the correct causes when it is suits their narrative. And as for their solutions, they are typically at least as aimed at appeasing their supporters as producing any real change.
To give just one example, Trump’s tariffs. All serious economists agree these are counter-productive, even for the US. At best they will be offset by, effectively, being a tax on US consumers. At worst they will undermine in the long run US competitiveness and prosperity. The theory says this, and also history both in the US and elsewhere says this.
And indeed the current data for what is happening in the US supports it. There is no manufacturing renaissance yet to be seen, and studies show the cost of tariffs are largely being born by US companies and US consumers, not foreign competitors.
On the other hand, it plays into all the hot button points of the MAGA voting base. ‘Common sense’ tells you that if you make a foreign product more expensive it’ll be good for American factories and workers. ‘Common sense’ says we should be favouring our economy over ‘theirs’.
Besides the fact that this was shown not to be true hundreds of years ago (see Ricardo, Smith et al) it is also a sleight-of-hand that looks at one ‘us’ and not another. In this case ‘us’ being the factories that supposedly benefit and not the ‘us’ who is buying more expensive, or worse, or less abundant options when they go to the shops.
There is one beneficiary, however, at least in the short-term, which is the politician who gave their base what they wanted. That to me is as good a way of thinking about populism as any.
One objection has been made to “go on results”. The argument being I suppose that it might all look ugly and brutal and that it’s smashing up conventions, but if we see concrete action and outcomes versus endless dithering and friction, it’s worth it.
The trouble with this argument is one person’s endless dithering and friction is another person’s social or environmental safeguards, a search for a durable win-win solution, or an acceptance that conceding a bit in this particular negotiation might not be maximal, but it can benefit in the long-run if you’re seen as a stable and workable partner.
And of course that we all have to rub along on the same planet, ultimately one well-equipped with utterly destructive nuclear weapons.
This is the reason for a rules-based order versus a random game of international Hungry Hippos.
Any one can get results short-term by doing what the hell they like. We see this with the worst kind of private equity companies who take over a apparently inefficient (often just cashflow productive) business, cut R&D and other ‘extraneous’ costs, create loads of incentives to juice near-term sales, replace equity with debt, and run up the valuation to offload the shares onto the stock market.
All looks great for a year or two, and then the wheels come off.
Another objection I’d make to overly relying on ‘results’ — and to this ‘me first’ world order is — quite apart from the lessons of history as to where it will lead — that it’s only really an attractive shift if you’re a the top of the pack. Rome in 200AD or London during the heyday of the British Empire perhaps.
As Mark Carney eloquently outlined at Davos the other day, it’s far less attractive if you’re one of the middle-order countries. Which, on most measures, most assuredly includes the UK. (Yes we technically still punch above our weight with our nukes. Good luck using them productively).
In fact the UK is going down the pecking order because of the decision in 2016. It has less effective power operating outside of the EU, and it is economically well behind where it would have been in GDP terms, let alone national morale terms.
As for ad hominem attacks on Trump, well unfortunately that’s sort of the point when it comes to my thinking about this guy, as I tried to explain. It’s not about left/right or tax/free markets or even woke/traditional. It’s about one man and his acolytes (for as long as they happen to last, rather than recanting as so many of his last administration went on to do) and the harms they specifically (rather than a political school of thought) are doing.
It’s a curious observation how those who have time for Trump — especially of course his most vociferous supporters — react with deep hostility to any personal criticism of the guy — ‘Trump derangement syndrome’, deplorables etc — and yet here we have a man who has belittled disabled people in the same room, openly mocked world leaders, bullied a wartime ally in a television conference, accused former presidential rivals of being literally criminals, who barely goes a day without posting new ugly ad hominem attack on his own social channels.
Why should he should he not receive the same treatment? My jottings above are about 2/10 on his own attack ferocity scale.
Indeed, the position taken by ‘the establishment’ (not the rabid online crowd etc) has long been to ‘rise above’ and mostly not descend to his level. Look, for example, at how the Fed Chair Jerome Powell responded with dignity to Trump’s very personal attacks.
I’d question the efficacy of this given the man re-won an election, albeit polling shows us the only US president who has ever been less popular than Trump 2.0 was Trump 1.0.
But in any event, very serious players are not responding in kind. He is given the respect due to his office, not what’s due to the man.
Meanwhile the House and Senate are supine. The press is taken over or cowed or ignored. The situation is grim IMHO.
@moggers — You do you as far as I’m concerned. I certainly wouldn’t argue with anyone — who knows what they are doing, warts and all — changing up their investing strategy faced with this game board. And very true we’re all playing different games.
One thing I would suggest is that I hope you are keeping good records, however. It’s very easy to feel you are taking action when all you’re doing is reducing your returns, especially as moving wholesale out of the market (to avoid the ‘risk of ruin’ I presume) can never really be tested against alternative goes-around the universe, as we only live one life. (Which is of course equally why you’re doing it, I appreciate 🙂 )
The problem is that even if the elites truly know better than the ‘unwashed masses’, there’s a limit to how long they can call the shots without their support. For as long as I’ve been alive, the main solution I’ve heard from mainstream media, politicians and public servants to contentious things like the immigration debate is “we need to educate people”. The underlying assumption
is that they are right (perhaps morally as much as factually) and that they need to bring everyone to their position through reeducation, rather than seeking compromise. This assumption is increasingly fragile and I think darker forces than Trump will emerge in the absence of a profound political reset.
I’m sure it’s passed by the mostly English readers on here but Reform have chosen an ex Tory councillor from Barnet in London as their leader in Wales. If you look at the reports of the conference it shows all the hallmarks of how Trump runs things – just obsession with their usual scapegoats and apparently very, very hostile to the media present – (not sure if you will be able to read this ) https://open.substack.com/pub/willhaywardwales/p/what-we-have-learned-from-nigel-farages?utm_campaign=post&utm_medium=email
and the BBC Wales report https://www.bbc.co.uk/news/articles/ckgndvkv80ro
An excellent article and links. I have moved from the S&P500 index to a global index to protect against US Dollar weakness. Yes you can hedge but the fees are quite high.
@TI
Touché. You’ve hit the nail on the head regarding the “Action Bias” trap. It is the most expensive hobby in finance, and I audit myself on it regularly.
I keep two sets of books, mentally.
Book A: The hypothetical ‘Global Passive’ portfolio I could have had. (It is currently richer than me).
Book B: The ‘Sleep Well’ portfolio I actually hold. (It is currently more liquid than me).
The difference between A and B is simply the insurance premium I pay to ensure that “Risk of Ruin” remains a theoretical concept in a textbook, rather than a reality for my family.
If, nominally, I return a tax free £90k this year to total AUM …. On top of my income (which I never plan, god willing to retire from) …I’m good with that. Even if that could have been £300k by buying the world and holding my nose.
In a game where we only get one single run through the maze – path dependency matters more than the average outcome. I am happy to pay the premium to ensure I never hit a wall, even if it means I cross the finish line with a lighter backpack than you.
Appreciate the dialogue. It’s rare to find someone who understands the difference between the average life and the only life.
@Northern Lad — As I’ve agreed since the earliest days of the Brexit debates, the UK did lose the plot on immigration. Quite how intractable this problem is was of course evidence by Brexit deliverer Boris Johnson also delivering nearly 1m immigrants a couple of years back. It’s a multi-factored problem without easy solutions, and we can find a point of agreement that the mainstream parties were slow and ineffective — and in some cases I’d agree wrong — in how they responded to the growing public unease.
However it’s a bit of a one-off. Generally sensible rule by more centrist politicians has — allied with the market forces of capitalism I for one still salute — delivered a massive increase in overall standards of living over the past century or so for most people. Interspersed, notably, with setbacks for those who fell under the influence of (or were impacted by) populist or radical/extreme regimes, whether in Germany or Russia and China etc.
Perhaps another exception can be made for the relinquishing of too much power (certainly faith) to bankers et al in the run-up to the GFC.
Indeed I think we still underestimate how that loss of confidence has led to much of the unease you reference.
Your wearing dark tinted glasses of pessimism in your (brilliantly written) piece (polemic?) @TI 😉
Always pan out on the chart.
In everything not just investment returns.
Will this matter next week or month, in a year or two, in a few decades or a century from now, or in 10,000 years?
Separate the signal from the noise.
Trump is just noise (Issac Asimov’s ‘The Mule’, and not Frank Herbert’s Kwisatz Haderach / Kefitzat Haderech).
Brexit will eventually become noise.
Granted resurgent populism *may* be a signal, if it leads to a new Dark Age. But the world of 2026, for all it’s challenges, is a far cry from the one that (to some extent) fell apart in fifth and sixth centuries.
In a few millennia, even the Austrian corporal and failed painter who plunged the world into chaos in the forties may just become historical noise, like Genghis Khan today.
Of course AGI, *if* it arrives, will be *the* signal.
Fundamental step change. A paradigm shift. Full on phase transition.
Like the agricultural, industrial, energy and information revolutions all rolled up into one, and proceeding at a pace like it was “designed by a bored researcher who kept one thumb permanently on the fast forward button” (to borrow William Gibson’s memorable phrase).
Just two data points, of many indices of improvement (extreme poverty and the decline of violence) illustrate that D: Ream were right. Sufficiently long term, ‘things can only get better’.
Since systematic records began, extreme poverty was historically the dominant condition for a majority of the world’s population.
Today, it is just an aberrant minority condition, concentrated into specific regions and fragile states.
As recently as 1950, well over half of the world’s population lived in extreme poverty.
By 2015–2018, the global extreme poverty rate declined to about 8–10%.
From roughly 2.3 billion out of 5.2 billion people in extreme poverty around 1990, to just 800 million by 2015–2025, out of some 8 billion, an average reduction of ~120,000 people per day.
And ordinary poverty too (on higher lines) has also declined substantially, in share and absolute numbers (although of course still encompasses a large global population, reflecting that many people have escaped the very bottom, but remain well below secure living standards).
Historical reconstructions for Western Europe suggest typical homicide rates of roughly 20–40 per 100,000 people in the late Middle Ages, falling to about 0.5–1 per 100,000 by the mid 20th century, a drop of 40 fold.
Despite (I conceded) catastrophic spikes in the World Wars and some recent conflicts (very recent years have seen the highest conflict death numbers since the mid 1990s), the trend of organised and personal violence is down, down, down over centuries and millennia.
Even looking at recent conflicts in Sudan, Tigray, Yemen, Gaza, Ukraine, Burma etc; they pale against the million people a month on average losing their lives violently for several years in the last World War, when global population was less than a third of it’s current size.
So, on the whole, the life of man (and woman) is no longer a Hobbesian “nasty, brutal and short” war of “all against all”.
Things have, and still continue to get better, albeit with volatility spikes and counter trend crashes.
So, cheer up.
This too will pass.
And it will soon be spring again.
The financial discussions on Monevator are excellent and surpass just about anything available elsewhere. As for the politics, well the Guardian does exist.
@Delta Hedge — I’ll just note as at @Moggers has said that we only have one life to live. 🙂
Of course I agree that we’ve seen a lot of progress and things were overall going well. I’m the centrist (not) dad who believes all this Trumpism and Reform-ism is exploiting a prejudice driven feeling that ‘things have got worse’, not that America — which apparently needs to be made Great Again — isn’t the richest country in the world already. (Of course that wealth is not equally distributed. But anyone who thinks Trumpism is going to solve that — rather than exploiting it — has bigger problems…)
But firstly, we don’t live in the whole graph, we live in our bit of it; and secondly nuclear weapons.
Assuming this current coming-off-the-rails doesn’t bring the latter to the fore then doubtless this too will pass, eventually. A vaguely free market social democracy driven by the rule of law has many problems, but it’s been demonstrably the best for most people most of the time, so we can presume people will revert back towards it again, assuming the historical record isn’t abolished.
But it could well get worse before it gets better. That was why I started talking about everyone needing a ‘bug out plan / plan B’ nearly a decade or so ago now.
People underestimate how long nonsense can continue for. As Taleb puts it well in one of his books, just ask all the Lebanese or Iranian exiles still waiting for their native populations to ‘come to their senses’ after half a century.
“One in seven UK landlords don’t make a profit”
One in seven doesn’t make a profit. One is singular, not plural.
It’s important to think clearly about things, if one wants to be a successful investor.
@ermine On the topic of your latest HL post: mind the detailed terms re. the time extension for cashback. The extension appears to apply only to transfers, not contributions. So if you want to use it for 26-27, you’d have to contribute elsewhere and transfer to HL.
Trump’s personal character and the B-word are eternally fascinating but not this week’s news really. How about some thoughts on the financial aspects of the Mandelson – Epstein scandel ?
Were Mandelson’s leaks significant knowledge, or was he only telling his customers what they had already worked out for themselves ?
If Epstein / Goldman Sachs / Putin has profited, have we the public been harmed and how much ? Minor, one-off billions, permanent knock to growth etc as per B****t ?
The evidence that public markets are undermined and rigged against the general public by this sort of going -on should be of interest to an investment blog – is there anything we can do to protect ourselves as investors ?
The emerging details of insider information leaked from the top of the Brown Government ( + mis-deeds while in the EU organisation) just re-inforce disillusion with centerist politicians. Looking after No.1 and in pocket of big finance. Reform’s adverts will almost write themselves.
On another topic, the Peak Oil article is interesting. Of course Peak Oil has been wrongly predicted before based on running out of the stuff. But lack of demand is different. Echos of ” the stone age didn’t end for lack of stones” . Nevertheless, impact on Petrostates and oil companies might be gradual: (1) there are still uses of oil that don’t have alternatives and are growing ( jet fuel, petro-chem, shipping to some extent) ; (2) the industry did OK on the way up and at much lower production totals & parts could do equally well on the way down – less CAPEX for one thing; (3) the low extraction cost of oil, at least from onshore Saudi, UAE etc, is often overlooked – oil is fundamentally very cheap , single figures dollars per barrel for the lowest cost existing fields.
@JtE — I just repeated the headline, which I presume is referencing landlords as a collective body.
I am very much enjoying this lively thread, particularly so as it is a welcome distraction from the task I originally set myself for this morning, which is getting to grips with Michael McClung and his excellent book which arrived this week and has only just dried out, having been delivered and left on my doorstep in pouring rain, whilst I was out at the work I am hoping to soon escape from!
Having already read, re-read (many times) and absorbed the excellent No Cat Food series here, I felt ready to get stuck in but am dismayed to find that the website which should support this book (www.livingoffyourmoney.com) and contains the all important spreadsheets needed to allow me to handle the complex maths appears to have been hi-jacked by a dodgy looking business coaching company.
Does anyone know if it still exists somewhere on the web and if so, where, or how I might access the spreadsheets? Although the book provides detailed working examples, I think manually crunching the numbers is beyond me!
@TI:
Some nice links again this weekend.
Thanks.
FWIW, I particularly liked “The Purpose Code” one and “Is inflation higher than we think?”.
In the latter link Nick M makes some definitive statements about how shrinkflation and skimplflation are handled very differently by the BLS (the Bureau of Labor Statistics, who are responsible for the US inflation data). IMO, the position is not so clear-cut here in the UK, see for example footnote 14 to: https://simplelivingsomerset.wordpress.com/2025/04/03/inflation-in-the-uk-a-deep-dive-part-2/
Shrinkflation is definitely handled “correctly” in the UK, and the ONS has been writing about that since at least 2017, when they noted that the practice dates back (at scale) to at least 2012! IIRC, Toblerone was amongst the first to catch folks eyes.
Skimpflation however, is all together more subtle, and as yet I have not formed a completely clear view of how/if the ONS treat it, even though I have no doubt that the mechanism (quality adjustment) exists*. I think that some instances do get addressed but other do not as they fail to cross some trigger threshold or the like. It is also unclear to me how/if the ONS move to use more supermarket scanner data (and I assume less human price collectors) will effect this aspect.
There are other notable forms of gamification too, such as openly lowering the alcohol content of beers, ostensibly as a health measure but IMO more likely to reduce costs and dodge alcohol duty changes. Old Speckled Hen down from 5% to 4.8% in cans and bottles (in 2023) being a good example. A personal favourite is the practice of covertly lowering the alcohol content, see e.g. the “Carling case”: a 2017 UK tax tribunal hearing where it was revealed that Carling lager had been brewed at 3.7% ABV (alcohol by volume) since 2012, despite being advertised to consumers as 4% ABV. BTW, Molson Coors won and duty should be charged on brewed ABV and not advertised ABV. Also worth noting that the ONS collects prices of draught lager (3.4% to 4.2% ABV), so even at the lower strength (of 3.7%) Carling might not cross an inflation quality adjustment trigger threshold.
Apologies for this rather long and somewhat rambling comment – but at least it makes a change from all the politics!
*and is used frequently in areas where rapid quality improvements are a feature, such as tech, fondleslabs, TV’s etc; examples of the mechanism being used to adjust for quality reductions have proven to be much harder to locate
“Artificial Intelligence” is a masterpiece of mislabelling.
I don’t think “Uncritical Regurgitation Engines” would have had quite the same effect.
You could argue, though, that UREs doesn’t capture all the power of the software since it doesn’t include “That Sometimes Tell Lies”.
I really didn’t click on an article I assumed to be about finances to read a tasteless diatribe. Articles like this don’t belong in this forum. And if you want to critique a government why not write about your country’s brilliant decisons and robust economy. Oh, wait, that would be difficult, wouldn’t it?
@TI: your ‘social democracy as best’ framing has to do a lot of work IMHO.
The enlightenment began in autocratic monarchies (and aristocratic dominated Parliamentary monarchies) without universal enfranchisement.
The industrial revolution took place in an era without regulation and labour rights.
The country which has lifted more people out of poverty faster, and which (per the Uncharted Territories’ Peak Oil link charts) has absolutely crushes it on electrification (and on building ’22nd century’ cities, super high speed rail etc) is China; a one party Market Leninist state (a Party State with entrepreneurs) run by technocratic engineers. One which now is clearly also leading on algorithmic and ‘unhobbling’ (mixture of experts architectures, small language models) improvements to AI, all (contra USA) deployed at scale with immediate RoI into world leading robotics setups.
Your thesis is basically Niall Ferguson’s ‘Civilization, The West and the Rest’ (my least favourite of his works), i.e. (neo) liberal ‘democratic’ institutions incubate progress (I’m more in the Jared Diamond ‘Guns, Germs and Steel’ and Ian Morris ‘Why the West Rules, For Now’, schools of thought on this).
I don’t necessarily think the evidence shows that social democracy is always the best case.
It’s the rapid and effective deployment of technology efficiently at scale which changes everything.
This seems to require an admixture of free market price signalling and profit incentives mated to high levels of multi generational laser like focused state planning: think Japan and Korean in the fifties and sixties, Singapore since the fifties, China since the eighties.
Democracy per se often seems merely incidental. Mood music.
Nice to have, perhaps, until the 4 or 5 year electoral cycle gets in the way.
Its main benefit is as a potential ejector seat for bad rulers (without coups or civil wars).
But I’m not sure how far the historical record actually shows that it selects for the optimal part of the fitness landscape of socioeconomic systems on the metric of raw material advancement.
And sometimes it just selects for chaos, incompetence and weaknesses a la Trump, (twice), Johnson, Carter etc.
@Steveark — What belongs on this ‘forum’ is whatever I choose to put on it. You’re very free not to read or to contribute as you see fit.
@Delta Hedge — I think regarding China, it’s pretty clear that the country’s (undoubted) incredible advance is on the back of progress made by the West, both directly (selling to our markets) and indirectly (ripping off at worst or making use of at best) our scientific and technological achievements.
Not to mention it made it’s advances under a shift to capitalism (that was notable ‘freer’ than that in the past five years under Xi).
We’re now entering a new post-catch-up phase, and I agree China is making some meaningful progress and some advances under its own steam. It has vastly more resources than it did, and any semi-planned economy can direct such resources where it deems most appropriate for a quick hit.
But whether that is compatible with continuing to raise the living standards of its people and other goals it might have remains to be seen.
Given how it’s come off the boil for the past 5-10 years, I definitely have my doubts.
On a technicality the link, Your phone edits your photos with AI. Is it distorting reality?
was in fact titled “Your phone edits all your photos with AI – is it changing your view of reality?” which is a very different thing 😉 I know everybody other than me thinks phones are magical and all powerful things, but actually reaching out and grabbing a hold of reality was a new feature to me.
I bought a secondhand iphone 15 rather than the scruffy Samsung whatever I had before because iphone pictures looked better, and I hated every photo I took on the Samsung – noisy, rubbish and JPEG artifacts particularly in dim light, reminding me of what digicams were like in, oh 1999 to 2005.
I took photos with the iphone and initially thought they were OK but I have come to hate them in a different way, particularly pictures taken under challenging conditions – low light, or the feathers of birds. I took pictures of the harbour at Brixham and I noticed the water looked funny, both wrong and unevenly wrong. I returned to using a micro 4/3 camera and things like water, fur and clouds no longer look funny. Sure, there is some processing even on camera RAW files but it ain’t anything like what the iPhone did. So as a replacement P&S camera the iPhone was a fail, though it did most everything else better than the old phone.
So this old curmudgeon still remembered was the world looked like and observed independently that looking at the world through a phone gives you a rum view of reality 😉
@Tetromino #24 Thanks muchly – fine print reading fail on my part 🙁 As it is I can transfer part of my Vanguard ISA and get the HL bung but I’ve flagged this issue up in the post, heads-up much appreciated!
I’ve gone Moguly. Sorry it took so long. Don’t know why. Some good articles behind the paywall.
Stevark – enjoyed reading your blog from the other side. Shame you’ve stopped writing.
Re the article & politics – I’ve little interest beyond the perspective that no person’s an island and it’s hard to disentangle your outcomes from govt decisions. But I’m giving it a pretty good go.
It was obvious a decade ago living standards were going to keep falling following Brexit. I’m going to make a reasonable bet they’ll keep declining for at least another decade following which all bets are off – bring it on unlimited renewable energy maybe.
So you’ve got to have more resources to maintain your standards of living. There is the intersection of political decisions and personal finance. If I was Norwegian, I’m not sure I’d have the same issues.
I’m not sure at all that it’s more uncertain than before. This ‘rules based order’ idea sounds pretty flimsy if you are a resident in any number of countries where the US has casually flexed its muscles since 1945. Just so happens that it’s now happening to us in a visible fashion – arguably the US has been pushing us around though for best part of a century on the quiet. The absolute fascade of a ‘special relationship’ label was designed to pander to the part of the public who still just about remembered the tail end of the empire.
I think the UK has made a colossal strategic error in tying itself to the mast of the United States since Suez. We’re more dependent on one country than any time since old Harold took a painful arrow in the eye. We’ve been hollowing ourself out for decades across all elements of our society. Nvidia is roughly worth more then the entire FTSE just for one example. We are totally dependent on the US in any number of ways. You reap what you sow.
The Schroders article is interesting. Nothing looks that cheap but the UK certainly looks less expensive. VMID seems a good way of spreading across a number of investment trusts and a still relatively inexpensive FTSE 250.
@dearieme — We’ll see where it goes, but I would say one underestimates the potential of these developments at one’s peril.
A friend of mine who has done very well from his programming smarts — easily earning his way into seven-figures, including at least one year of that in dollar terms — was lamenting to me the other day that he will never really code again, and wondering how he could have been so slow to see what AI was heralding a few years back.
However he sounded optimistic despite all that (he still sees a role for AI code orchestration, basically) so I asked him for more and he replied:
Of course there’s a long way between that and some of the wilder claims being made for AI (let alone imminent AGI) but the impact in software is already here and profound.
@Al Cam (28)
I feel that shrinkflation goes back a lot further than 2012. Even in childhood I seem to remember chocolate bars at the same price point 6d, 1s etc. steadily reducing in size. Then, of course, there was there was the infamous example of Hartley’s New Jam. Jam had always been sold in 1 lb jars, or occasionally 1/2 lb, but then this ‘New Jam’ came along in its stylish tapered jar and, guess what, it was only 12 oz. This soon became the new standard for most jam manufacturers, even though it was obscured by subsequent metrication rendering it as 340 g. I’ve just checked my jar of Hartley’s jam in the fridge – it’s no longer ‘new’ and it’s now only 300 g! I also have a posher jar of Bonne Maman jam that’s 370 g (13 oz) – you really do have to look at the price per 100 g or whatever these days.
@DavidV (#36):
I am sure you are correct. I vaguely recall Mars bars & Curly Wurlys seeming huge back in my childhood – mind you we probably all ate a lot less then and were also definitely relatively smaller too.
FWIW, my comment did say “at scale”.
Furthermore, your comment about metrication reminded me that I am sure I read somewhere that the ONS used their quality adjustment mechanism to process how metrication issues impacted inflation back in the 60’s and 70’s.
One other thing worth bearing in mind is that “super-sizing” (or whatever is the opposite of shrinkflation) exists too. The latest ONS shrinkflation report gives details of both phenomena, as well as some interesting graphs/analysis too, see: https://www.ons.gov.uk/economy/inflationandpriceindices/articles/theimpactofshrinkflationoncpihuk/howmanyofourproductsaregettingsmaller
P.S. strawberry jam or???
@Al Cam (38)
From the ONS report you link: “We found previously that the only category in the basket of goods where size changes had a notable impact on the class-level index was sugar, jam, syrups, chocolate and confectionery”
No coincidence that these are just the products I have been talking about. And seeing you ask – black cherry jam. This has recently become scarce in common or supermarket own brands – hence the upgrade.
“On the other hand, perhaps it’s all just the age-old cyclical ups and downs dressed up with new buzzwords and fears”?
I’ve had exactly the same thought, when I looked into my portfolio Yesterday, and surprisingly found that it reached another all-time-high this week despite all this turmoil in the market. In fact, this week the Russell 2000 overtook the NASDAQ100!
@DavidV
In one of his books, the late biologist Stephen Jay Gould investigated the evolution of the weight and cost of a hershey bar, and came to a conclusion along the lines of that in 2080 the bar would be weightless and cost $100 000.
@Tricky #27
> and contains the all important spreadsheets needed to allow me to handle the complex maths appears to have been hi-jacked by a dodgy looking business coaching company.
Wayback Machine is your friend In particular a little bit of URL hacking will take you to (prefix with the usual web prefix)
mhmcclung.gumroad.com/l/OfsGt/free
which seems to be still operational if you are prepared to yield your email, I balked at this
If the wartime ally comment refers to Zelensky then I must of missed the declaration of war between the US and Russia.
#25 Mark B I agree with that the Mandelson saga was more relevant. It made me laugh out loud this week when I was listening to it live and realised the Epstien files may actually end up forcing our PM to resign and not really effecting Trump.
Also has the term populist ever been used by the winning side? Or is it just a term used to delegitimise the outcome of a vote?
@DavidV (#39):
I did notice that, which is why (in part at least) I gave the link.
For similar reasons, I found it interesting to note that the report covers “changes in various quantity measurements including weight, volume, number in pack, sheets per roll, Alcohol By Volume (ABV) (%) and page yield (for inkjet cartridges)”. Although I guess they must mean changes that are openly declared as opposed to those made surreptitiously? Which AFAICT are not even mentioned by the ONS.
Just in case you missed it, the ONS report [linked above] also gives a link to the earlier ONS report that gives more details about sugar, jams, etc.
@reactive (#41):
Not sure I will still be around to see that though!
@Jim (#43):
Re: “It made me laugh out loud this week …”
Maybe it is just me, but I smell a rat or two thereabouts. Makes me wonder: a) what is within all the redactions; and b) what has not yet been published/lost/set-aside?
FWIW, methinks somebody somewhere is settling some old scores!?!
@Tricky #27 @ermine #42
Filling in the form with an email address you can’t actually check results in a spreadsheet download.
[Canadian but relevant]
WELP. Putting that on my gravestone.
Although not in the links,what brought home the uk decline is a report by the Less Survivable Cancer Taskforce.out of 32 comparable countries uk was placed a dismal 28 for survival outcomes and 10 to 15 years behind the leading countries.If this isn’t a national disgrace I’m not sure what is.Its amazing it barely gets a mention in the national press.
@TI #33 “off the boil”: of course, an economy can go full Schroedinger’s cat, and be simultaneously both thriving and collapsing, which China’s is.
On the one hand, on every metric of industrial production, energy generation, exports and innovation it wipes the floor with everyone.
On the other hand, it’s mired in youth unemployment, risible demographics, price deflation, collapsing consumer confidence and a property crash which makes the GFC’s look like a tempest in a teacup.
However, should China ‘win the AI race’, whatever that looks like, then the consequences will be profound, lasting and possibly irreversible.
I think that point in time might be closer than is currently widely realised, for which see, in particular, my link to Michael Power’s (of Kaskazi Consulting’s “A View from the Indian Ocean”) piece (“No more Moore? So, what then for microchips? And for China?”) at the second hyperlink on my comment #514 on the May 25th 2024 “First they Came for the Call Centres” thread here:
https://monevator.com/weekend-reading-first-they-came-for-the-call-centres/comment-page-3/#comment-1932221
@Jim — The US has spent at least $100bn directly on Ukraine, as well as for instance using its leverage over the international payment system to try to cripple Russia’s financial operations. It has imposed swingeing sanctions. It’s trivially an ally.
I don’t even think Russia has declared war on Ukraine, so the lack of a formal declaration isn’t as revealing as it might appear. (From memory the US hasn’t declared war since WW2).
Populism is used to describe populist leaders and populist politics. It’s very easy to identify it when you see it if one has a nodding acquaintance with politics and one isn’t blinded by a delusion that one is caught up in some particularly novel cause / movement which is finally pushing back against the corrupt elites or self-interested merchants or whatever other casus belli is animating the camp followers at the time.
@Al Cam and others — Yes, I thought the skimpflation concept was well worth airing and thinking about. I have no idea how service/qualitative experiences are measured in inflationary terms. It seems even thornier than the age-old ‘my latest iPhone costs the same as the first but is 20x more powerful’ issue. But I suppose the info is out there if one digs. (Or, hey, asks an LLM 😉 ).
@Tucker — Ha! 🙂
@Tricky #27
I downloaded McClung’s spreadsheet a few years back and have never actually used it. If there’s some way of getting it to you, you’re welcome to it.
(I plan to implement his method without using the spreadsheet by simply skimming off from equities into bonds when they exceed CPI + 20% (which hasn’t happened yet unfortunately)).
@TI (#51):
The key concept is that (in principle at least) measures of consumer price inflation should reflect the cost of buying a fixed basket of goods and services of constant quality. However, one of the more difficult issues in producing the consumer price indices is the accurate measurement and treatment of quality deltas due to changing product specifications. For declared changes, the details of both the data collection processes and the quality monitoring methods obviously matter. Undeclared changes, however – and not literally – are a whole other can of worms!
@Delta Hedge
re: China’s situation. I wonder if that is the fate that awaits the West as well. If you industrialise effectively, there’s minimal need for labour in many business activities.
I work in a reasonably respectable (few FRS’s in the building, Nobel winner a few buildings away) research group. Even in this environment, it is very visible who has the potential to really contribute genuine innovation, and it is not a large fraction of the staff.
I struggle to see in the medium term what genuine employment demand there will be for a large part of the population, with the added problem that as taxation rises then employers will be keener to seek cost savings by reducing headcount.
@Delta Hedge – your contributions are thought provoking as ever. I agree that we need to separate the Noise from the Signal in times like these.
For me the clear signal is increasing levels of government debt. The rest is noise. The worry is the rise of new economic theories [i.e. MMT] that claim this is in many ways a ‘fake’ problem.
@TI I have always found the vast archive of articles on Monevator helpful (especially on Bonds/Index Linker Ladders, which I have now put into practice). That said, I am not sure when we last saw levels of sovereign debt that we see today and what the patterns were in the aftermath. Is there any good research on the topic worth sharing?
For AI, I remember touring around Silicon Valley for a couple of weeks in 2015 as part of an Executive Leadership programme in my company, including some time at Stanford. It was eye opening to say the least. However the one thing I cannot get out of my head to this day was Ray Kurzweil’s work on Singularity, extending Moore’s Law. Nothing to do with LLM algorithms etc but the point at which processing power would exceed the processing power of the human brain. [Spoiler Alert 2029 for AI to reach Human-level intelligence and 2045 as the point of Singularity].
To complain that @TI spends too much time on politics and not enough on personal finance is bizarre. Right now, the big drivers of personal finance are politics (with tech), not whether you are paying 6 or 10bp for a fund. Or getting a bit more or less on a savings account.
In reality, @TI isn’t spending enough time on politics. The global hegemon has decided to undermine those policies that made it the global hegemon. The US, the biggest beneficiary of globalization, has decided it doesn’t like globalization. A bigger own goal than 1930 Smoot-Hawley Act. The status of the USD as global reserve currency is clearly under threat.
This is easily as big, financially, as the end of Bretton-Woods. Or the end of the Cold War. Much bigger than 2008. All those nice historical charts and statistical analyses from 1970 to now could well be worthless. This is a economic and financial phase transition driven the a political choice of the US population. This is what they wanted.
Just to take one small example. Take a look at US government bond issuance. In 2015, it was 88% bonds and 12% short dated T-bills. In 2025, it was 20% bonds and 80% T-bills (UK by comparison 98% bonds, 2% T-bills). The biggest fiscal risk for any sovereign country is rollover risk – the ability to refund your debt. To offset that, prudent risk management recommends issuing a variety of debt maturities including a substantial amount of long-dated debt. The US used to do that. It now does virtually no long-dated issuance. It’s current issuance looks closer to Turkey than the UK. Hmm.
On AI renting bodies, it‘s well accepted that progress in AI requires embodiment. Models can’t just run on silicon but should have a physical form that interacts with the world. That’s no different to the way the abstract principles of religion require a messiah (or a civil rights movement needs a leader) to show how to translate the abstract into the practical. It’s also scary.
The ‘boredom and performance enhancer’ poster seems to be talking about a form of meditation (and rawdogging) without realising it. Another approach is a secular form of prayer where you ask yourself a question in supplication and wait to be answered through your own internal revelation (who is answering if not you?)
@Gizzard, Tricky, Ermine
Gumroad is pretty good at not spamming you even using a legit email address, but as Tricky says you can put in a random email and it will still yield up the file.
WRT the political discussion, I would refer everyone to “Motive attribution asymmetry for love vs. hate drives intractable conflict”: https://pubmed.ncbi.nlm.nih.gov/25331879/
TL:DR we attribute negative motives to “Them” and positive motives to “Our own” no wonder we can never reconcile opposing points of view. If we accept that everyone acts according to “what is right” to them, no matter how abhorrent they seem to us, it makes it easier to create dialogue. It doesn’t make current events any less dark or regrettable, but at least illuminates the road that got us there.
@xeny #46
This link should work:
https://gumroad.com/r/09bfce973b6f537f89f7b3b34a3f77bb/
Separately, this is a great sheet but US focussed:
https://www.bogleheads.org/wiki/Simba%27s_backtesting_spreadsheet
@ZXSpectrum48k
Your own post is a model of how to address the impact of politics on finance without the repetitive invective that alienates, or bores, so many.
I enjoyed both the blog and the comments/discussion (the links I take as given high value not yet subjected to shrink- or skimp-flation).
I want to hear the analysis of current global and local politics as it relates to finance, as this represents my biggest risk. I am no longer adding significantly to my pot and so have a strongly defensive wealth-preservation outlook. Given the current turmoil in the post-1945 world order, it is the biggest thing happening. And I don’t know where it leads.
Right now I am doing nothing different because I have no idea if I risk zigging when I should have zagged. But I am reviewing a lot of work by historians, sociologists, economists, and assorted prognosticators. My conclusion, uncharted territory, but human and physical science verities remain (i.e. the world is still the world and people are still people, so a lot of driving forces remain the same, even in the magical world of AI).
At least the thoughts of TheInvestor are argued and evidenced to the point where I can agree or disagree. Unlike some of the confident bollocks we get exposed to. For a real laugh, read some of the comments by the tech fans hailing Musk’s idea of putting data centres in space.
@All — Cheers for the comments. Need to be briefer today than yesterday as it’s a busy SuperBowl day, but still moderating in the background.
@SeekingFIRE — Thanks so much for signing up to Moguls! Better late than never 😉 Very glad you’re enjoying some of the archived articles also.
Re: the rules-based order, I agree it was a semi-fictional privilege enjoyed by a cohort of mid-level countries (as Carney too acknowledged) however we were not a small central American country, we were in that cohort. 🙂 So — from a selfish perspective as I admitted — we had/have a lot to lose. As does the US…
@Al Cam — Thanks for the further info on inflation. I must admit my eyes tend to glaze over when I go into the minutia on this stuff! I will try to look out for more ‘skimpflation’ coverage though.
@ZXSpectrum48K — Cheers for thoughts. You’re right that I perhaps don’t cover politics enough given the import of the shifts taking place, however mostly this is because I am not sure I have any great actionable insights as to how to invest re: the fallout macroeconomic factors etc, beyond understanding what is happening and as I say trying to build in some back-up plans and de-risking. (I could make pronouncements, e.g. beware financial repression etc, but truthfully I am uncertain how this plays out. What if populism actually creates a deflationary depression instead? At least for a period. Or a war. Etc.)
As for the anti-political comments, there is a virtually one-to-one correlation between the people who complain about my talking about politics and people who do not share my political beliefs.
(Not party political beliefs, I float vote. These core democratic / technocratic / centrist beliefs, for want of better words.)
The very occasional reader is of a similar mindset to me re: populism, Brexit etc, but doesn’t like political discussion. But my sense is they are very much in the minority — provided I don’t cover it too frequently anyway.
Overwhelmingly it’s the usual suspects moaning that I can’t write what they don’t like to read on my own website, whilst they’re busy being generally wrong (Brexit, climate change, Trump etc) and admitting nothing even as the evidence becomes clear.
Monevator is unusual in investing circles in us being adamantly anti-Brexit from day one, a bit less so with Trump in that plenty of other investing sites see the fallout from his antics I suppose.
Ditto we’re not climate change sceptics, which five minutes on ADVFN, say, shows you is a minority opinion among the UK’s active investing class.
Nevertheless I see almost no unsubscribes et cetera when I write about politics. We have a better class of reader and subscriber! 🙂
So the people who complain are vocal but a tiny minority in terms of Monevator readership. They also greatly overestimate how concerned I am with their views about what I should write about.
(I am unconcerned. They are welcome to read elsewhere.)
@ermine#42, @xeny#46, @mr_jetlag#58 Thank you all for your help and advice, I now have the spreadsheet needed, downloaded from gumroad using an obselete email address. I wasn’t previously aware of WaybackMachine, what a handy tool it is.
@Gizzard#52 Thank you for your kind offer. I agree with you and am going to Prime Harvest using the same formula with a “guard rail” set to trigger if and when the equity portion of my portfolio hits 80%. I’ll probably do this for at least the first 10 years, or until I’m confident that I am still on track and can relax a little. Maybe abit over cautious, I know!
It seems strange that a few folks got “triggered”, but there we go.
There seems so much going wrong all at once that it’s difficult to know what to focus on (that goes even more so for the USA). The friends I made while studying atmospheric & climate physics there are now treading on eggshells and wondering when the axe will fall or diverting into less-controversial topics (e.g. the “weather” on Jupiter). The National Science Foundation was essentially booted out of its Alexandria offices by the Dept of Housing and Urban Development, and those assessing grant applications have been told that they have to approve proposals that “align with the interests of the President”. How the top research country in the world is cutting off its nose to spite its face is extraordinary.
But hey, the £10k of physical gold I bought in 2008 is now worth £23k! (Or was last time I looked.) Everyone do your best, and it really doesn’t hurt to be kind.
@TI – Our political views differ greatly, but I would never complain about you talking about politics in your posts.
The change in the way that I view geopolitical events has completely reshaped the way I invest over the last 5-6 years, starting with what happened from March 2020 onwards. But I have to temper what I post in relation to such things, as to not get deleted, which is difficult when it affects my investing decisions.
@xeny #54: the employment situation is worrying but production is only half the picture.
The other function of work is to provide the sociocultural and psychological cover to transfer resources via pay to enable employees to be spending agents in the economy, supporting the demand side. A nation of digital geniuses in a data centre might in the future far outstrip human cognitive capabilities but they won’t go on holidays, buy cares, pay for weddings or get new sofas.
Knowledge economy workers may end up getting paid for the pretence of doing something useful just to keep the flywheel spinning.
Less unconditional UBI, and more like a cross between furlough and those pre-1989 era Japanese conglomerates where they’d put workers they’d otherwise fire (but for the, in those times, job for life culture) into a room eight hours a day for years on end with nothing to do.
I fear though, if and when the agentic capabilities of models become ‘generalised’, such that they can do anything which a human office worker can do over a computer to a level where the gap in performance of the ‘AGI’ over the best human employee is at least twice that of the gap between the best employee and the average one; that the cuts will then come thick and fast.
@FrequentFlyer #55: thank you ever so much for the kind words. There’s an insightful piece on YouTube yesterday (“US Treasury Trap: Why I won’t buy them”) by Ramin Nakisa of PensionCraft, on why US Treasuries are no longer the gold standard uncorrelated / risk off liquid asset.
TL:DR is 6% (of GDP) annual deficits (outside of a recession) as far as the eye can see. Political polarisation at extremes. Foreign central banks divesting into gold over threats to Greenland and Canada, or over fears of a China-US (economic or worse) confrontation.
Not as good an environment for fixed income as you might hope for when the consensus (even with Kevin Warsh now nominated) is still for lower US rates for longer.
And then there’s all the issues which @ZX (#58) alludes to.
The shift to shorter duration issues is especially concerning.
I ask myself, *if* DM sovereign debt is the new EM (sovereign debt) why not just selectively buy some of the better EM gov’ bonds?
Brazil is at 76% debt to GDP on a 13.6% yield on its 10 year on Friday compared to between a 121% and 133% debt to GDP/GNP (depending on how measured) and a meagre 4.2% yield for the 10 year in the US.
One offers a return for risk; the other underappreciated risks for inadequate returns.
On the impact of AI on employment, I think the pivot is whether or not recursive self improvement works at scale and can be sustained over years with results that generalise across many domains of human intellectual competencies.
I’ve put my thoughts on that here:
https://monevator.com/weekend-reading-first-they-came-for-the-call-centres/#comment-1936514
with a little something immediately underneath it for @old_eyes #62 on those wild claims by Musk about space based data centres.
BTW: my current assessment of the state of AI is at #564 in that thread
Just wanted to add some 2 cents that the politics is very welcome. I know the criticism from certain people is like water of a duck’s back to you and you’ve stated, rightly, that you’ll do what you like with your blog but just thought worth reiterating.
Never quite understood people who think ignoring politics is a viable option, especially now. Maybe it is because my parents and I were originally from a country with corrupt governments (& multiple coups thrown in for laughs) in our lifetime and the subsequent hits to life standards and wealth that brings that I find it hard to understand that mentality
There is also something to be said about symbolic v structural thinking in our current age too.
Symbolic thinking being what we get from schools where it is fairly surface level and good for learning what already exists because the rules are stable and can be verified. While structural thinking is ‘true’ (if you forgive me for being a bit flowery) thinking; where you understand the underlying bones of how something works, how it can break and solutions/problems are novel.
It seems to me that with geopolitics & tech together we’ve entered a period where we need to be spending far more time on the structural thinking side of things (which ZX does so well in the comments). The thing about a lot of this investing stuff is that there’s ample information for how to do it right and get a decent outcome but that’s only because we have been in largely stable environment for decades. It now feels to me that we’re on the cusp (or already in) of a state where that is not necessarily true so business as usual (which is basically symbolic thinking in this framework) can start to sound a little bit wobbly
@Delta Hedge #66
Thanks for the link. My objections to space-based AI data centres were based on physics and engineering. I had not appreciated how much of the engineering was financial!
When I first moved to the UK around late 2009, I spent years boasting to my friends back home about how refreshingly ‘boring’ British politics was. Coming from a much more volatile political climate, I loved the stability – no scandals, no drama, just a functional system.
Nothing to see here, back to Simon Mayo’s Drivetime feeling like all was right with the world.
How times have changed!
Thanks @old_eyes #68. I’ve just posted my own further thoughts on space based data centres and the starry fever dreams of dear Elon to the ‘First they came for the Call Centres’ thread. Long story short: Go long engineers, and short charismatic politicians and evangelical entrepreneurs.
@TI (#62):
Understandable, just so happens inflation (including the minutia) has become something of a hobby of mine since retiring – odd things people!
I have done a bit more digging and am probably now somewhat less concerned about the ONS move towards using supermarket scanner data, see: https://simplelivingsomerset.wordpress.com/2025/05/06/inflation-in-the-uk-part-3-they-arent-cooking-the-books/comment-page-1/#comment-45807.
Lastly, I find Nick M’s assertion (with, at best, anecdotal “evidence”) in his post that skimpflation could be at least 100 times more impactful on overall inflation than shrinkflation rather fanciful. Perhaps, it was not meant to be taken literally but rather just offered up as (a first-cut) counter to the even more fanciful claims of others that skimpflation is responsible for the US being in a “hyperinflationary state”.
I’ll look out for other examples of skimpflation too.