What caught my eye this week.
Happy Near Year! I hope you spent your New Year’s Eve in a Covid-proof bunker with Jools Holland – unlike those living near me or on my dating app who seemed to think the end of 2020 was a reason to get together for a party.
Most of us can’t think of a better celebration than seeing the back of that dreadful year, but we’re not out of the woods yet.
It’s been clear since October (and I’ve eaten my own [1] humble pie on this) that hopes for a ‘one and done’ wave of Covid were misplaced. Its ongoing persistence has now been made even worse by mutation, with the new strain saying “Hold my beer” to good old SARS-CoV-2.
The result of this cocktail of misplaced optimism, mixing, and mutation is that this wave is already looking close to out-of-control in the South East, and it’s spreading fast.
There may yet be a tale to tell about Covid’s all-in impact on mortality. But it’s undeniable people are dying horrible deaths [2] from it right now – even as others protest [3] the virus is ‘a hoax’ outside their hospital doors. (So much for the change of calendar year… plus ça change, right?)
Peak pandemic
Now the interesting thing from our perspective as an investing website is how the stock market must hold these two contradictory facts in mind.
The pandemic is as bad as it’s been in Britain. Yet at the same time the vaccines are here. And while I believe our singularly inept Brexit-enabling government is even bungling the vaccine rollout they so longed-for, it is happening. [Update: I take back ‘bungling’. The UK is moving faster than I appreciated at the time of writing, by comparison with other countries.]
More convincingly, look at how how Israel is getting the job done:
Israel: The vaccine nation
Nearly 1 million vaccinated (11% of pop)
Daily rate: 150K (1.7% of pop)
~43% of all 60+ years old vaccinated
Expect to vaccinate ~80% of all 60+ in a week
Cases still rising across all age groups. Next week will be interesting pic.twitter.com/xtfEfpwY70 [4]
— Eran Segal (@segal_eran) January 1, 2021 [5]
In a fortnight or so, most people at risk of dying from Covid in Israel will have been vaccinated. At that point we can expect the death rate to collapse towards zero, even if the virus continues to spread.
It should eventually, belatedly, be the same story in Britain.
This is what the stock market latched on to a couple of months ago. Silly pundits railing against ‘irrational’ markets climbing even as Covid case counts rose forgot the stock market is a discounting machine – the world’s best guess at the future.
And – absent more mutative bad luck – in mere months that future should see deaths reaching a ghastly crescendo before suddenly falling away, at least in the West, even as the virus continues to rage.
How do you discount that forecast? How do you price that into the share prices of retailers on the edge of bankruptcy or holiday firms with enough cash to make it to May, but not to July?
How indeed.
We continue to think that in 2021 the vast majority of people will be best off putting money into index funds [6], month in, month out – and in 2022 and beyond, too.
If the past year has taught us anything, it’s that speculation can be dangerous for your wallet, and much else besides.
From Monevator
From the archive-ator: New London skyscrapers are a big bet on the City of London’s future – Monevator [7]
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!1 [8]
Islington records UK’s highest house price growth of 2020 at 13.4% – Guardian [9]
Study finds companies can prosper with a four-day week – Guardian [10]
UK investment platforms raise alarm on misleading adverts [Search result] – FT [11]
If history is any guide, the value factor should outperform from here – AQR [12]
Products and services
Brexit: what are consumers’ rights on holidays, banking, and more? – Guardian [13]
What the Brexit deal means for your finances: travel, property, pensions, and bank accounts – ThisIsMoney [14]
Cost of annual travel insurance expected to surge post-Brexit – ThisIsMoney [15]
Sign-up to Freetrade via my link and we can both get a free share worth between £3 and £200 – Freetrade [16]
Flat pack, rising prices: Ikea furniture is now collectable – Guardian [17]
Grand castles and houses for sale, in pictures – Guardian [18]
Comment and opinion
“This year I finally learned that work alone is not enough to sustain me” – Guardian [19]
Leave a will, not a financial mess – The Evidence-based Investor [20]
Too thrifty? – Humble Dollar [21]
Type I and Type II charlatans – A Wealth of Common Sense [22]
What money can buy – Humble Dollar [23]
A theory of (almost) everything [Passive investing ‘distorting’ the market, part gazillion; Search result] – FT [24]
When an asset goes out of style – Abnormal Returns [25]
Should you buy an all-time high? – Of Dollars and Data [26]
Josh Brown and Patrick O’Shaughnessy: The coming custom indexing tidal wave [Podcast] – via aCast [27]
Why are there interest-free deals for everything now? – The Atlantic [28]
RIT has moved to Australia – Retirement Investing Today [29]
A new content aggregator for personal finance blog fans – Sovereign Quest [30]
Naughty corner: Active antics
Lock it in – The Belle Curve [31]
Promotion: Attention naughty active investors! Hargreaves Lansdown has published its popular five shares [32] and five funds [33] to watch in 2021.
A crowdsourced hedge fund fizzles in an era of democratized finance – Bloomberg via MSN [34]
“Why I’m not selling Bitcoin” – The Irrelevant Investor [35]
Valuation for companies with real options [Dust off your master’s before reading] – Morgan Stanley [36]
Covid corner
New variant ‘raises R number by up to 0.7’ – BBC [37]
UK government urged to use pharmacies to speed up vaccine rollout – BBC [38]
Tracking global and domestic vaccinations [Statistics] – Bloomberg [39]
All primary schools to remain closed in London after U-turn – Guardian [40]
Sweden seeks new pandemic law to curb virus infections – RTE [41]
Swedish Covid-19 data exposes Australia’s fatal lockdown hysteria – The Australian [42]
With a heavy heart, Johnson will always remind us who the real victim is: him – Marina Hyde [43]
Brexit
Adieu to the single market created by the UK – BBC [44]
Britain outside of the EU: a treasure island for rentiers – Guardian [45]
David Henig [a veteran trade bod] analyses the deal – LinkedIn [46]
Institute for Government: a deep dive into the trade deal detail – IFG [47]
‘My deal was better’, says Theresa May – Yahoo News [48]
The UK-EU Brexit agreements and sovereignty – Mark Elliot, University of Cambridge via PLfE [49]
Sovereignty delivered on the longest night of the year – SLIS [50]
"We've got our sovereignty back!" pic.twitter.com/JPs381EIWF [51]
— Jono Read (@jonoread) December 31, 2020 [52]
Kindle book bargains
Why the Germans Do it Better: Notes from a Grown-Up Country by John Kampfner – £1.69 on Kindle [53]
Essentialism: The Disciplined Pursuit of Less by Greg McKeown – £0.99 on Kindle [54]
The Organised Time Technique: How to Get Your Life Running Like Clockwork by Gemma Bray – £0.99 on Kindle [55]
The Wealthy Retirement Plan by Vicki Wusche – £0.99 on Kindle [56]
Don’t have a Kindle? Buy one [57] – they’re great and save a ton of space!
Off our beat
Want the perfect Zoom bookshelf? Buy it by the foot – Politico [58]
Turns out it’s pretty good to wake up early – The Cut [59]
How 2020 changed London dining [Various articles] – Eater [60]
The breakthroughs that will make 2021 better than 2020 – Bill Gates [61]
Retro: How the office ruined your life [Funny video from 2019, should quash your pre-Covid nostalgia] – via YouTube [62]
And finally…
“Saving is about moving resources from the present into the future; financing is about moving resources from the future back into the present.”
– Jacob Goldstein, Money: The True Story of a Made-up Thing [63]
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