The Financial Dashboard – June 2020

The goals for June were:

  • Tidy the loft and begin to clear
  • Read three books
  • Update my investment tracker spreadsheet and sync with allocations
  • Explore overpaying mortgage

Checking the assets and liabilities:

Assets JuneLiabilities June

These are taken, as always, from my Beast Budget spreadsheet. My savings rate for this month fell back to 22% thanks to DIY spending, with my total net worth increasing by 1.4%. I’m actually astonished my net worth increased given our spending on the building work (currently at £2k). The usual cash regular savers were topped up (pretty happy about my 5% and 3% now), but my First Direct account is coming to an end, so we’ll start overpaying our mortgage instead.

Goals:

Goal failed: Tidy the loft and begin to clear

This got pushed down the priority list, but remains a goal.

Goal failed: Read three books

Still wading through Intelligent Investor. Currently 350 pages in, but I find myself needing to read it in small chunks to give me time to digest.

Goal achieved: Update my investment tracker spreadsheet and sync with allocations

I’ve moved into the 21st century, and transferred my investment tracker spreadsheet to google sheets, incorporating it’s price lookup function to track my worth in real time. Quite nifty, and I’ll share some images in my Q2 update.

Goal achieved: Explore overpaying mortgage

Having spoken to our mortgage provider we’re going to aim to channel spare cash from our joint account into overpaying our mortgage. It’s a split pot, and part is currently on the standard variable rate while we wait for them both to come out of their teaser rate period. That (much smaller) SVR part is on ~4%, while the rest is on 1.69%. We’re not going to beat that with savings rates, so it makes sense to try to clear down this debt.

Budgets

  • Groceries – Budget £200, spent £237.31, last month £176.91 – A pricey month, with lots of nice meals in cancelling out our usual eating out.
  • Entertainment – Budget £100, spent £56.50, last month £16.50
  • Transport – Budget £460, spent £432.65, last month £237.36
  • Holiday – £150, spent £0, last month £0
  • Personal – £100/ £137.18/ £65.74 – Mainly gifts
  • Loans/ Credit – £0/ £0/ £0
  • Misc – £50/ £724.15/ £71.45 – Building work
  • Fees – £70 /£347.17/ £295.49 – Amazon Prime, some other membership fees

In the garden:

I’ve been keeping up with watering, but everything else has gone to pot, so it’s now a riot. I planted far too many courgettes, squashes and pumpkins, and they have exploded to colonise most of the end of the garden. Ditto tomatoes in the greenhouse, which now looks like a tropical rainforest. Lessons for next year.

Goals for next month:

  • Tidy the loft and begin to clear
  • Read three books
  • Audit regular spending ahead of job change
  • Track building work spending accurately

Happy July everyone, I hope you’re all keeping well,

The Shrink

The Full English Accompaniment – Why a seismic economic shift won’t happen.

The end of the month fell since the last Full English. That means a link-fest below. To save time for all the other writer’s out there I only have a few short thoughts today.

A YouGov/ New Economics Foundation poll published in the Guardian this week demonstrated that 31% of people want to see big changes to the global economy in the wake of the COVID-19 pandemic, with only 6% wanting no changes (1). I take any poll or news-worthy statistic with a pinch of salt, especially those espoused to support lefty claims in a lefty rag. However it makes sense, we’ve all experienced big changes through lockdown:

  • Less commuting and more working from home
  • Supply chain changes, less in the shops, more available locally
  • A push to support local businesses
  • Less spending for the sake of it on consumerist tat (because the shops have been shut).

Why not take this opportunity to change things? The Government is already bankrolling huge sectors of the economy. Now is the perfect time to do the big rejig. Perhaps switch towards:

  • renewable, green energy and policies (2)
  • home-working supported by massively improved infrastructure
  • on-shoring industries to support rapid supply chains.

But we won’t. For two reasons.

  1. Inertia (3)
  2. Management.

People do not like dramatic change. Individually we may find it exciting and exhilarating. The potential. The opportunities.

That requires you to get up and do something about it. And we’re fundamentally lazy, stupid, panicky animals. We are much happier doing things the same way we’ve always done than having to learn something new. It requires effort, and motivation. Motivation on a national scale is a challenging construct.

The top level management are also not going to be on board. They have a vested interest in the status quo, it’s how they got there, it’s how they get power/money/fame (delete as appropriate). Why would they risk that?

Plus when have top-down restructures worked well? The Government’s management of the COVID tracking system says enough here.

So, like Soho’s pubs, we’ll soon be back to where we were before. Minus a few tens of thousand dead.

Have a great week,

The Shrink

News:

Opinions/ Blogs:

References:

  1. https://www.theguardian.com/world/2020/jun/28/just-6-of-uk-public-want-a-return-to-pre-pandemic-economy
  2. https://www.forbes.com/sites/joanmichelson2/2020/06/30/how-to-rebuild-the-economy-and-create-jobs-with-clean-energy-innovation/
  3. https://indeedably.com/inertia/
  4. https://www.bbc.co.uk/news/business-53222765
  5. https://www.economist.com/finance-and-economics/2020/07/04/a-latin-american-economic-tragedy
  6. https://www.thisismoney.co.uk/money/cars/article-8475855/No-road-tax-cheaper-run-E-car-recharge-finances.html
  7. https://www.theguardian.com/business/2020/jun/30/tesla-shareholders-urged-to-oust-elon-musk-over-55bn-pay-deal
  8. https://www.theguardian.com/money/2020/jul/01/uk-annual-house-prices-fall-for-first-time-since-2012-coronavirus
  9. https://www.theguardian.com/business/2020/jun/29/central-banks-could-face-political-pressure-to-allow-high-inflation
  10. https://www.bloomberg.com/news/articles/2020-06-28/the-future-of-inflation-is-the-biggest-question-in-finance?amp_js_v=a3&_gsa=1&usqp=mq331AQFKAGwASA%3D#referrer=https%3A%2F%2Fwww.google.com&_tf=From%20%251%24s&ampshare=https%3A%2F%2Fwww.bloomberg.com%2Fnews%2Farticles%2F2020-06-28%2Fthe-future-of-inflation-is-the-biggest-question-in-finance
  11. https://www.bbc.co.uk/news/business-53272411
  12. https://www.moneymage.net/2020-june-savings-report/
  13. https://www.onemillionjourney.com/portfolio-update-19-june-2020-100347e/
  14. https://firevlondon.com/2020/07/04/june-2020-disadvantage-month/
  15. https://awaytoless.com/monthly-spending-june-2020/
  16. https://thesavingninja.com/savings-report-24/
  17. http://quietlysaving.co.uk/2020/07/01/june-2020-plus-other-updates/
  18. https://gentlemansfamilyfinances.com/2020/07/01/month-end-june-2020/
  19. https://playingwithfire.uk/june-2020-life-spending-and-investment-update/
  20. https://www.thefrugalcottage.com/dividend-income-june-2020/
  21. https://moneygrower.co.uk/june-stock-purchase-the-new-economy/
  22. http://fiukmoney.co.uk/june-20-net-worth-and-monthly-update-22-569037-13570-89-fi/
  23. https://sparklebeeblog.wordpress.com/2020/07/03/monthly-update-jun-2020/
  24. https://pathtolife2.com/2020/07/02/financial-independence-update-june-2020/
  25. https://www.moneyforthemoderngirl.org/i-did-an-antibodies-test-plus-saving-side-income-and-learning/
  26. http://eaglesfeartoperch.blogspot.com/2020/07/investment-review-june-2020.html
  27. https://firelifestyle.co.uk/2020/07/01/financial-update-16-june-2020-going-up-up-and-away/
  28. https://earlyretirementinuk.blogspot.com/2020/07/total-portfolio-37113-1688-debt-0-0.html
  29. http://www.cantswingacat.co.uk/2020/06/30/june-income-report/
  30. https://monevator.com/the-slow-and-steady-passive-portfolio-update-q2-2020/
  31. https://drfire.co.uk/q2-2020-report/
  32. https://igniting-fire.com/2020/06/29/2020-q2-update-long-days-short-weeks/
  33. https://firevlondon.com/2020/06/29/help-wanted/
  34. https://www.firemusings.org/time-to-change-the-car-part-1/
  35. http://thefirestarter.co.uk/dont-faint-its-a-blog-post/
  36. https://thefifox.wordpress.com/2020/07/05/why-everyone-should-start-a-blog/
  37. https://hustleescape.com/anchoring-and-adjustment/
  38. https://gentlemansfamilyfinances.com/2020/07/04/8-great-things-about-working-from-home-during-the-lockdown/
  39. https://playingwithfire.uk/hi-im-the-new-girl-expat-financial-mistakes-learnt-the-hard-way/
  40. https://monevator.com/financial-planning-software-wide-of-goal/
  41. https://youngmoneyblog.co.uk/apprenticeships-are-we-failing-disadvantaged-young-people/
  42. http://bankeronfire.com/hunters-farmers-and-financial-independence
  43. https://indeedably.com/better-days/
  44. http://diyinvestoruk.blogspot.com/2020/07/powercell-portfolio-addition.html
  45. https://www.foxymonkey.com/day-trading/
  46. https://earlyretirementnow.com/2020/07/01/passive-investing-bubble/
  47. https://www.itinvestor.co.uk/2020/06/blue-whale-growth-fund-the-next-big-thing/
  48. https://www.muchmorewithless.co.uk/lockdown-spending-habits/
  49. https://www.finumus.com/blog/school-fees-are-now-very-expensive-or-are-they

The Full English – Strength in Unity

This blog is mainly apolitical, and this post is not intended to be politically biased. With that in mind I’ll start this post with a statement:

Boris Johnson will not lead the UK to growth through Brexit.

How did I come to this conclusion?

I’ve been reading a lot of posts through the Way Back Machine on Slate Star Codex (1). I’m late to the SSC party (many thanks Indeedably for the pointer), but there are a lot of parallels of thought. Relevant to this point, is the 2014 essay ‘I can tolerate anything except the outgroup’ (2). It’s particularly pertinent with the current Black Lives Matter movement.

Scott Alexander essentially makes the point that we define ourselves as part of a tribe. Those definitions are often built upon stereotypes. Those stereotypes, that definition, and that tribe provoke more intense feelings than race, ethnicity, gender or sexuality alone. The concept that you are more likely to have intense negative feelings towards someone outside of your, essentially political, tribe has been validated again more recently. A 2017 Stanford study found that political identity is that which we hold most dear (3).

Boris Johnson built his current political success through a combination of his previous irreverent populist persona and alignment with the Brexit campaign. Cummings further drove that campaign and the subsequent political party direction towards populism. Defining themes included that Westminster and the political elite were not hearing the ‘man on the street’, ‘taking back control’ and investing in UK-centric policy (4, 5).

In doing so they created a new political schism. The ‘outgroup’ were centrist and included the existing ‘political elite’. The new division was Leave/Stay, and BoJo was a strong enough persona to unite people behind him. Corbyn, for all the positives he may have, was indecisive on the a difficult question, but one through which people began to define their tribe.

Johnson and Cummings won their battle. They created a large enough tribe with a strong enough identity to not only result in Brexit, but also in the 2019 election win.

But a telltale sign of the future comes from that 2019 election win. Boris Johnson’s manifesto was essentially a bit of everything, sort of business as usual, and without any great rallying points (6). If the great defining point of their tribe up until now has been Brexit, taking back control, railing against the political system and instigating policies for the UK people, where was the definition in this manifesto. Or even currently?

The current cabinet core rose to power through defining themselves as an in-group. Mostly by defining an out-group, and then denigrating them. Lots of ‘they aren’t listening to you’, ‘they didn’t do this’, ‘yes but, no but’. Those defining characteristics are becoming irrelevant. They have reached the top, and now the reasons for the tribe are gone.

Boris Johnson’s response to COVID-19 has been good evidence of this. At times he has been statesmanlike. At others he has been nowhere to be seen. The UK’s outcomes and conduct in fighting COVID-19 will be reviewed in the future, likely with lots of inquiries that result in bugger-all.

Ultimately when the current government has tried to unify the country, in my opinion, he has lacked a methodology. BoJo’s MO is to divide, deny, distract and with Cummings, define a foe.

There are no more internal foes.

Good political leaders are defined by their ability to unite people behind a cause. The greatest, by their ability to unite without criticism or negative connotation. JFK (and to a less public but more politic extent LBJ), Thatcher, Obama… all could bring people together who previously would not have stood so.

The current government has brought people together, but there was no further plan, and the methodology to bring those people together was negative, not positive.

Either we see a re-invention of the Conservative party, into a new political tribe built upon Johnson’s foundation. Or the tribe splinters, to the next strong unifier.

Have a great week,

The Shrink

News:

Opinion/ Blogs:

References:

  1. https://slatestarcodex.com/
  2. https://web.archive.org/web/20200618075102/https://slatestarcodex.com/2014/09/30/i-can-tolerate-anything-except-the-outgroup/
  3. https://news.stanford.edu/2017/08/31/political-party-identities-stronger-race-religion/
  4. https://www.theatlantic.com/international/archive/2016/06/uk-brexit-guide/482730/
  5. http://www.voteleavetakecontrol.org/briefing_newdeal.html
  6. https://www.bbc.co.uk/news/election-2019-50524262
  7. https://www.bloomberg.com/news/articles/2020-06-22/boe-s-bailey-says-he-d-shrink-balance-sheet-before-raising-rates?_gsa=1&usqp=mq331AQFKAGwASA%3D&amp_js_v=0.1#referrer=https%3A%2F%2Fwww.google.com&_tf=From%20%251%24s&ampshare=https%3A%2F%2Fwww.bloomberg.com%2Fnews%2Farticles%2F2020-06-22%2Fboe-s-bailey-says-he-d-shrink-balance-sheet-before-raising-rates
  8. https://www.telegraph.co.uk/business/2020/06/22/andrew-bailey-warns-markets-bank-england-will-reverse-money/
  9. https://www.bbc.co.uk/news/business-53148678
  10. https://www.bbc.co.uk/news/business-53164304
  11. https://www.cnbc.com/2020/06/25/imf-global-financial-stability-markets-disconnect-risks-a-correction.html
  12. https://www.bbc.co.uk/news/business-53183504
  13. https://techcrunch.com/2020/06/23/zopa-granted-full-uk-bank-licence/
  14. https://www.reddit.com/r/UKPersonalFinance/comments/hdax3m/is_there_a_financial_vehicle_that_i_can_use_to
  15. https://life.spectator.co.uk/articles/are-we-heading-for-hyper-inflation-or-deflation/
  16. https://www.vice.com/en_us/article/qj4ka5/covid-19-broke-the-economy-what-if-we-dont-fix-it
  17. https://www.itinvestor.co.uk/2020/06/european-opportunities-trust-whacked-by-wirecard/
  18. https://youngmoneyblog.co.uk/credit-covid19/
  19. https://www.ukvalueinvestor.com/2020/06/quality-companies-sustainable-growth.html/
  20. https://drfire.co.uk/double-down-pivot-or-start-over/
  21. https://sparklebeeblog.wordpress.com/2020/06/25/net-worth-analysis/
  22. https://indeedably.com/inertia/
  23. https://firelifestyle.co.uk/2020/06/26/garden-explosion/
  24. http://fiukmoney.co.uk/the-power-of-mrs-fu-money/
  25. https://simplelivingsomerset.wordpress.com/2020/06/26/priapic-solstice-perambulations-in-pursuit-of-weed/
  26. https://lifeafterthedailygrind.com/is-your-life-getting-better-or-worse/
  27. https://monevator.com/weekend-reading-is-your-isa-keeping-up-with-the-joneses/
  28. https://monevator.com/bond-prices/
  29. https://monevator.com/lars-kroijer-onavoiding-covid-19-losers-ultra-low-interest-rates-and-dividend-cuts/
  30. https://theescapeartist.me/2020/06/26/i-hereby-declare-this-pandemic-over/
  31. http://eaglesfeartoperch.blogspot.com/2020/06/hedge-gap-in-filling-by-underplanting.html
  32. https://gentlemansfamilyfinances.com/2020/06/27/climbing-mount-fi/
  33. https://hustleescape.com/hanlons-razor/
  34. https://www.thefrugalcottage.com/the-next-investing-workshop-is-nearly-here-limited-spaces/
  35. https://medfiblog.wordpress.com/2020/06/26/ethical-investing-fifty-shades-of-green/
  36. http://bankeronfire.com/a-matter-of-time
  37. http://bankeronfire.com/when-your-money-makes-more-money-than-you
  38. http://bankeronfire.com/weekend-bonus-edition-low-risk-corporate-bond-investing

 

The Full English Accompaniment – Racism in the NHS

I think it’s hard to be racist whilst working in the NHS, when a full fifth of your colleagues are from BME backgrounds (1). Many of the friends I’ve made through work are first or second-generation immigrants. We’re all as good as each other. Earlier in my medical training I operated on people from all backgrounds; inside we’re all the same.

Without immigrant workers the NHS would have collapsed during COVID-19. Those individuals have been on the end of racial slurs (2). When you’re employed to provide free care for all it’s difficult to turn people away if they insult you. Discrimination by managers has been reported by 15% of BME staff, and bullying by 29% (1, 3). Sadly BME staff are also more likely to be on the end of disciplinary hearings, and less likely to be in managerial positions (3). There are questions over whether the NHS is institutionally racist, and inquiries are starting as BME NHS workers have born the burden of COVID-19 exposure, and subsequent mortality (4, 5).

When we hear racial insults and discrimination in work we call it out when we can. But sometimes they get missed, or staff let it slide. ‘They’re drunk’. ‘They’re old and out of touch’. ‘It doesn’t matter’.

Reading and hearing from Black Lives Matter, I’ve learnt more about the effects of these words. The effects of turning the other cheek all the time. How we become complicit by not calling it out (6). Listening to the BBC Rugby Union podcast on race really brought it home (7).

Outside of work my exposure to racism is very different. I was fortunate to be born in western country, white, to affluent(ish) parents, with good education. I grew up in a country town. My primary school was all white. My first secondary school had a handful of non-white kids. The second school I went to was even whiter. I remember farmer’s sons perpetuating racial stereotypes. These were kids who had never had interactions outside of their small world. We were the kids playing rugby where racial slurs would fly around. Is that stuff still going on? The BBC podcast suggests so.

I remember my grandmother informing me as a small child I would be disowned if I married a non-white person. She came from another time, grew up with staff, from a family wealthy enough that they didn’t need to work. These are the excuses we make. By making excuses we allow it to continue. That isn’t right.

Have a great week,

The Shrink

News:

Opinion:

References:

  1. http://www.nationalhealthexecutive.com/Health-Care-News/nhs-must-tackle-systemic-racism-as-report-shows-staff-discrimination-on-the-rise
  2. https://www.theguardian.com/world/2020/apr/05/nhs-heroes-and-targets-of-racists
  3. https://www.independent.co.uk/news/health/nhs-staff-racism-bme-ethnic-england-data-a9340601.html
  4. http://www.irr.org.uk/news/institutional-racism-in-the-nhs-intensifies-in-times-of-crisis/
  5. https://medfiblog.wordpress.com/2020/06/19/positives-and-negatives/
  6. https://indeedably.com/complicit/
  7. https://www.bbc.co.uk/programmes/p08gh94p
  8. https://www.ft.com/content/4eda8fe4-a100-4b0c-b38a-7ac9f4df4aa8
  9. https://www.bloomberg.com/news/articles/2020-06-15/morgan-stanley-economists-double-down-on-v-shape-global-recovery
  10. https://www.thisismoney.co.uk/money/pensions/article-8422807/Triple-lock-pension-guarantee-threat-inflation-falls.html
  11. https://www.thisismoney.co.uk/money/markets/article-8419729/Buyers-return-lockdown-fuel-rise-house-prices.html
  12. https://www.cnbc.com/2020/06/18/young-trader-dies-by-suicide-after-thinking-he-racked-up-big-losses-on-robinhood.html
  13. https://www.bbc.co.uk/news/science-environment-53097572
  14. https://www.reddit.com/r/wallstreetbets/comments/h945ly/dddd_retail_investors_bankruptcies_dark_pools_and
  15. https://www.cnbc.com/2020/06/19/the-stock-market-may-be-pricey-but-its-nothing-like-the-genuine-market-bubbles-of-the-past.html
  16. https://moneyweek.com/economy/inflation/601534/a-years-worth-of-inflation-in-a-single-month
  17. https://www.finumus.com/blog/google-skynet-hedge
  18. https://igniting-fire.com/2020/06/14/revisiting-the-race-for-fire/
  19. https://www.onemillionjourney.com/global-index-funds/
  20. https://www.foxymonkey.com/pay-for-cash/
  21. https://www.itinvestor.co.uk/2020/06/scottish-american-investment-company-built-for-resilience/
  22. https://drfire.co.uk/investing-demystified/
  23. https://simplelivingsomerset.wordpress.com/2020/06/16/ermine-egging-on-the-economy/
  24. https://earlyretirementnow.com/2020/06/17/passive-income-through-option-writing-part-5/
  25. http://diyinvestoruk.blogspot.com/2020/06/sse-full-year-results.html
  26. https://indeedably.com/deuce/
  27. https://youngmoneyblog.co.uk/debt-covid19/
  28. https://monevator.com/income-or-capital-growth-us-uk/
  29. https://monevator.com/walter-schloss/
  30. https://monevator.com/negative-interest-rates/
  31. https://awaytoless.com/the-benefit-of-salary-sacrifice-pensions/
  32. https://pathtolife2.com/2020/06/20/unlikely-topic-of-conversation-1-quantitative-easing/
  33. https://gentlemansfamilyfinances.com/2020/06/20/6-months-6-ways-to-save-the-planet/
  34. https://thefifox.wordpress.com/2020/06/18/investing-strategy-the-barbell-approach/
  35. https://firevlondon.com/2020/06/18/how-sustainable-is-your-investing/
  36. https://lifeafterthedailygrind.com/less-choice-not-more-makes-for-a-happy-life/
  37. https://thesavingninja.com/something-happened/
  38. http://bankeronfire.com/how-to-lose-your-job-in-10-years
  39. http://bankeronfire.com/pedal-to-the-metal-how-to-build-wealth-in-your-40s

The Full English Accompaniment – Gamble your COVID days away

Opinion: We’re in a stock market bubble driven by bored amateur traders (speculators)

The market has come a long way since mid-March.

We’re now almost back to post COVID-crash valuations. Some of my investments are actually higher than they were then. Yet our economic situation, though now clearer, are no less dire.

Why?

COVID-19 is not as terrible for the global economy as the markets thought?

QE and other government/ central bank policies have propped things up?

Tech companies are making bank?

Perhaps some of this.

There’s a lot of news and opinion calling the current climb the ‘FOMO rally’. Driven by people who saw others ‘buying the dip’ and don’t want to miss out. Novice investors testing the ‘buy low- sell high’ off the back of the March fall (1). Some of that is new users of trading apps and platforms. Freetrade hit 100,000 users in February (2). By their latest crowdfunding raise they had reached 150,000 (3). Small fry compared to Robinhood’s 13 million active users (4).

Image Credit: /u/theycallmeryan (5)

I have skin in the game with Freetrade, having invested in their crowdfunding and using them for my ISA. If you would like a free share for signing up, drop me an email.

The number of trades per day is shooting up. Small traders, for the first time since 2000, have made more than 50% of the daily trades (6).

Image Credit: /u/theycallmeryan (5)

Some of that money is going into funny places. As bond yields fall people are investing in riskier corporate bonds, (1, 7). Robinhood users are making interesting plays and swapping more. They piled into Hertz (the car rental company) after it declared bankruptcy, sending the stock market sky high (1, 4, 8). See also JC Penney. These weren’t long term purchases to hold. This was pure speculation on the price rising during bankruptcy proceedings, as many economic authors in classic tomes describe.

Image source: (8)

And as people are sat at home, furloughed or out of work, with no sport to watch or bet on, they’re turning their amateur hands to the markets. The number of searches for ‘how to trade options’ has shot up:

Image Credit: /u/theycallmeryan (5)

And the number of small time traders buying options is climbing (6). As a result of delta hedging the price of the underlying securities of the options traded rises (5).

This has the effect of uncoupling market valuations from underlying stock value; the speculative options are irrelevant of value, and as others buy stocks as a hedge against the risk introduced by the speculation the stocks themselves become separate from the value. To make this picture even more complicated, the Fed’s policy of QE this time has also included corporate bond ETFs right the way down to junk bonds, offering direct loans to risky companies, buying dodgy mortgage-backed securities, and buying the debt of the riskiest companies (5, 9). The QE methods taken by international central banks have basically eliminated risk from the equation by supporting those companies which should have bankrupted, in an effort to stop a depression.

This drops interest rates. It drives people to take more risk for returns. The risk averse pay down debt, which explains the falls in consumer credit debt we’re seeing.

Debt is very cheap, and cashflows are uncertain due to Coronavirus, making the Discounted Cash Flow Model and underlying values difficult to calculate (10).

The Buffett indicator; composite market value of the market compared to GDP, is currently back at dotcom levels. Then they were 71%, now they’re 74%, where >30% is overvalued.

So things are likely to remain rocky for a while.

The sensible course of action remains to ignore the movements, and bet on the gradual returns. Drip feed and dollar-cost average.

We live in interesting times.

Have a great week,

The Shrink

N.B. I aim to keep this blog apolitical. Some issues transcend politics. I share my voice as an ally. Black Lives Matter.

News:

Comment:

References:

  1. https://www.marketwatch.com/story/heres-how-investors-think-fomo-could-power-fresh-gains-in-the-stock-market-2020-06-13
  2. https://blog.freetrade.io/there-are-now-100-000-freetraders-c12a27ee2843
  3. https://freetrade.io/crowdfunding-2020
  4. https://www.techradar.com/news/robinhood-growth-is-floating-the-stock-market-despite-pandemic
  5. https://new.reddit.com/r/wallstreetbets/comments/h0ytcy/the_liquidity_trap_how_qe_and_low_rates_might_be/
  6. https://www.bloomberg.com/news/articles/2020-06-09/speculative-fervor-in-u-s-stocks-surges-to-stunning-levels
  7. https://www.cnbc.com/2020/06/11/treasury-yields-fall-after-gloomy-fed-outlook.html
  8. https://uk.reuters.com/article/uk-global-markets-themes-graphic/take-five-pump-it-up-idUKKBN23J1RC
  9. https://www.theguardian.com/business/2020/jun/10/its-not-capitalism-why-are-global-financial-markets-zooming-up
  10. https://new.reddit.com/r/wallstreetbets/comments/gynyi8/dddd_equity_valuations_and_why_they_no_longer/
  11. https://www.bbc.co.uk/news/science-environment-52973089
  12. https://www.theguardian.com/business/2020/jun/10/uk-economy-likely-to-suffer-worst-covid-19-damage-says-oecd
  13. https://www.bbc.co.uk/news/business-52977098
  14. https://www.bbc.co.uk/news/business-53005454
  15. https://moneyweek.com/economy/inflation/601481/ten-reasons-inflation-could-be-set-to-return
  16. https://www.wsj.com/articles/vanguards-new-robo-service-offers-low-cost-financial-and-retirement-advice-11591873200
  17. https://www.theguardian.com/money/2020/jun/13/ethical-investments-are-outperforming-traditional-funds
  18. https://www.independent.co.uk/life-style/motoring/boris-johnson-driving-electric-car-scrappage-scheme-2020-a9558361.html
  19. https://earlyretirementnow.com/2020/06/10/passive-income-through-option-writing-part-4/
  20. https://www.moneyforthemoderngirl.org/black-lives-matter-power-control-and-money/
  21. https://indeedably.com/complicit/
  22. https://cashflowcop.com/policing-without-consent/
  23. http://quietlysaving.co.uk/2020/06/08/goodbye-dogs-2019/
  24. https://theescapeartist.me/2020/06/09/its-in-the-price-the-stockmarket-has-already-taken-that-stupid-internet-article-into-account/
  25. https://thesavingninja.com/the-fire-movement-wasnt-for-me/
  26. https://gentlemansfamilyfinances.wordpress.com/2020/06/13/were-not-going-on-a-summer-holiday/
  27. https://hustleescape.com/open-plan-offices/
  28. https://monethalia.com/matched-betting-with-multiple-accounts/
  29. https://www.moneymage.net/what-is-a-pension/
  30. https://playingwithfire.uk/how-to-not-lose-friends-and-alienate-people-with-fire/
  31. https://sparklebeeblog.wordpress.com/2020/06/12/the-world-of-work/
  32. https://www.firemusings.org/the-memories-in-photos/
  33. http://fiukmoney.co.uk/21-year-old-net-worth-and-fire-plan-update/
  34. https://www.muchmorewithless.co.uk/grow-your-own-veg/
  35. https://moneygrower.co.uk/using-furlough-to-practice-being-fired/
  36. https://simplelivingsomerset.wordpress.com/2020/06/12/a-walk-on-the-wild-side/
  37. https://www.ukvalueinvestor.com/2020/06/dividend-growth-rate.html/
  38. https://monevator.com/new-account-how-to-make-money-in-shares/
  39. https://southwalesfi.co.uk/2020/06/13/learn-from-my-f-i-r-e-mistakes/
  40. http://diyinvestoruk.blogspot.com/2020/06/nibe-industrier-portfolio-addition.html
  41. http://bankeronfire.com/how-people-get-rich-with-real-estate
  42. http://bankeronfire.com/reach-financial-independence-faster

The Full English Accompaniment – Cold turkey interest rates

A few weeks back I considered the deflationary risk weighing on the global economy. A discussion on the This Is Money podcast, and comments from the BoE have taken me in the other direction this week. Why would we end up with high inflation and high interest rates?

First we need to talk about debt. Consumer debt has actually seen a record fall since the start of Coronavirus, something to do with not being able to spend and no need to keep up with the Jones’ (1). The same can’t be said for Government debt. As I write this The Economist’s Global Debt Clock is rising through $61,594,467,000,000 (2). This was a problem before COVID-19. 2019 saw record global debt to GDP ratios (322%), following slight falls in 2017 and 2018 (3, 4). China’s ballooning debt was of particular concern, with plenty of tenuous business loans supporting growth (4, 5).

The word addiction had been bandied about with reference to debt. Below is a favourite short that I use to explain addiction when doing teaching sessions about the dangers of gambling and drugs. You come to rely on the object of abuse to feel normal. Credit cards and lifestyle anyone?

Credit: Andreas Hykade, Filmbilder & Friends (6)

The reasons for increasing debt woes are country specific. In Europe and the US it’s a combination of household spending, QE and zombie companies. There’s the massive junk bond bubble scare brewing; corporations kept going in 2008/9 through borrowed money now being refinanced, on the verge of reaching junk bond status, at the same time low yields push people to riskier bonds in aid of returns (7, 8, 9). Yet people keep buying bonds (10). China is just straight up building infrastructure projects that are getting abandoned or never used, while Japan can’t get it’s GDP to grow (11). Individual investors continue to seek returns. Interest rates on savings are minimal, with decent returns disappearing (12, 13). Bizarre investment structures, like this Buy-to-Let-Cars scheme, hoover up those desperate for income on their holdings (14).

And then there’s COVID-19. The Government were very happy to deny a massive money tree for the NHS/ social care. Then they’ve opened their metaphorical chequebook and are handing round a whole forest of blank cheques. Which is needed. But the cost could be £298 billion in debt for Apr 2020/21 alone (15). Analysis from the Resolution Foundation suggests that currently £80 billion has been raised with no deterioration in cover ratio (16). Predictions therein suggest a further extension to QE in June (16).

Image Credit: Resolution Foundation (16)

So we’ve got a mounting pile of government debt as we borrow our way out of trouble. Low, or even negative interest rates are helpful for the Gov here. Favourable to continue borrowing. As TA at Monevator covered this week, we’re seeing some negative UK bond yields (17). The noise from the BoE is that proper negative interest rates are unlikely, but not impossible (18). Certainly there’s no push towards an interest rate rise (19).

Why should there be. Inflation sits at 0.8% for April 2020,(20) well below the BoE’s goal 2.0%. We’re worryingly close to stagflation; rising prices due to rising demand with static growth (21). There’s an argument that there’s a lot of pent up demand due to lockdown, with limited supply also thanks to lockdown. The QE money creation rears it’s head.  Deflation is a feedback loop international governments definitely do not want (22). It will only increase their debts.

The magic bullet

So what about inflation. Measures of inflation like the CPI may not have spiked since the 2008/9 financial crisis because Joe Bloggs in his northern terrace has practically seen little inflation of prices. Consumer goods have probably decreased in cost. But the high ticket items like sports car, larger houses in certain postcodes, watches, wine, art and even gold have all risen in price.* The QE wealth got stuck on it’s trickle-down in high net worth owner’s assets. It created a high net worth inflationary micro-environment.

How are we getting out of this mess? A survey of top UK economists suggests that they feel there is no need to tackle public debt soon, and tax increases may the best method in the end (23). We can keep borrowing in the short term. In the long term there is the suggestion that inflation is the only sensible answer (24). QE and other factors are likely to push towards inflation anyway (25). Running inflation higher than 2.0% would reduce that Government debt burden. This method has been used before; after the second world war inflation ran at 4-5% for a good couple of decades (26).

My generation is just not used to that sort of inflation. One of my takeaways from The Intelligent Investor is the change in financial policy/climate. Graham wrote in a period where 4-5% inflation was not unheard of, and savings accounts could yield 5-7%. I vaguely remember those sort of numbers from my childhood building society, but I’ve never been conscious of that financial world. The risk of a 1970s/ Weimar Republic style inflation spike is present (27). The fear of that sort of inflation seems greater than the 1950s 4-5%, maybe due to recency bias, or because those with the most to lose are those who remember the 1970s (28).

Ultimately it seems we’re unlikely to see interest rates or inflation change in the short term. But maybe, in the medium-long term, we’ll see 5% interest rates again. We’re preparing for such eventualities (29). We can tolerate up to 12% on our mortgage with some belt-tightening. I’m sure many can’t. Those zombie companies would go to the wall. The BTLs may struggle. Perhaps a period of 4-5% inflation is the economic reset we need.

Have a great week,

The Shrink

*Gold is slightly more interesting because of just how much the price has rocketed, the argument for it’s use as a hedge, and it generally being the ultimate lesser fool’s gambit (30, 31). No-one wants to be left holding the hottest potato.

N.B. Again, as a more involved speculative post, I would love feedback and opinions on these thoughts.

News:

Comment:

References:

  1. https://www.thisismoney.co.uk/money/cardsloans/article-8380019/Consumer-debt-falls-record-7-4bn-April-borrowing-spend-slumps.html
  2. https://www.economist.com/content/global_debt_clock
  3. https://edition.cnn.com/2020/01/13/economy/global-debt-record/index.html
  4. https://blogs.imf.org/2019/12/17/new-data-on-world-debt-a-dive-into-country-numbers/
  5. https://www.ft.com/content/d93a95d0-2ee9-11e9-80d2-7b637a9e1ba1
  6. https://www.youtube.com/watch?v=HUngLgGRJpo
  7. https://en.wikipedia.org/wiki/Corporate_debt_bubble
  8. https://www.independent.co.uk/voices/coronavirus-economy-wall-street-debt-boeing-shares-junk-a9513176.html#gsc.tab=0
  9. https://www.barrons.com/articles/the-corporate-debt-death-spiral-shows-no-signs-of-stopping-51584023200
  10. https://www.cnbc.com/2020/02/07/junk-bond-scare-is-rising-no-one-cares-people-are-buying-everything.html
  11. https://www.forbes.com/sites/peterpham/2017/11/24/why-are-we-addicted-to-debt/#136e4b2515fd
  12. https://www.thisismoney.co.uk/money/saving/article-8381231/Top-fixed-rates-disappearing-Average-account-pays-just-0-3.html
  13. https://www.theguardian.com/money/2020/jun/05/savers-uk-covid-19-lockdown-cash
  14. https://www.buy2letcars.com/
  15. https://www.bbc.co.uk/news/business-52663523
  16. https://www.resolutionfoundation.org/publications/the-economic-effects-of-coronavirus-in-the-uk/
  17. https://monevator.com/negative-yields-bonds/
  18. https://www.thisismoney.co.uk/money/news/article-8357383/BoE-not-remotely-close-decision-negative-rates-Haldane.html
  19. https://moneytothemasses.com/owning-a-home/interest-rate-forecasts/latest-interest-rate-predictions-when-will-rates-rise
  20. https://tradingeconomics.com/united-kingdom/inflation-cpi
  21. https://www.theguardian.com/business/2020/may/31/for-all-his-woes-at-least-sunak-does-not-need-to-worry-about-stagflation
  22. https://foreignpolicy.com/2020/04/29/federal-reserve-global-economy-coronavirus-pandemic-inflation-terminal-deflation-is-coming/
  23. https://cfmsurvey.org/surveys/covid-19-and-uk-public-finances
  24. https://www.independent.co.uk/news/business/news/coronavirus-recession-bank-england-inflation-mandate-change-jim-o-neill-a9539796.html#gsc.tab=0
  25. https://moneyweek.com/economy/global-economy/601179/heres-why-the-coronavirus-crash-is-likely-to-end-in-inflation
  26. https://www.bloomberg.com/opinion/articles/2020-05-07/inflation-is-the-way-to-pay-off-coronavirus-debt
  27. https://simplelivingsomerset.wordpress.com/2011/03/15/when-money-dies-a-1975-cautionary-tale-from-the-weimar-republic/
  28. https://simplelivingsomerset.wordpress.com/2020/06/03/at-some-point-during-this-bear-market-i-realized-that-i-probably-shouldnt-keep-doing-this/
  29. https://www.moneyadviceservice.org.uk/en/articles/how-to-prepare-for-an-interest-rate-rise
  30. https://fee.org/articles/which-is-the-best-inflation-indicator-gold-oil-or-the-commodity-spot-index/
  31. https://pureadmin.qub.ac.uk/ws/portalfiles/portal/120196463/gold_inflation_s.pdf
  32. https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(20)31142-9/fulltext
  33. https://www.thisismoney.co.uk/money/news/article-8372271/Homes-face-14-price-slump-says-Nationwide.html
  34. https://firelifestyle.co.uk/2020/06/01/may-2020-financial-update/
  35. https://firevlondon.com/2020/06/02/may-2020-a-sunny-month/
  36. https://thesavingninja.com/savings-report-23-back-to-break-even/
  37. http://earlyretirementinuk.blogspot.com/2020/06/end-of-month-report-1st-of-june.html
  38. https://playingwithfire.uk/may-2020-savings-and-spending-update/
  39. https://obviousinvestor.com/p2p-lending-portfolio-update-for-may-2020/
  40. https://www.foxymonkey.com/property-partner-coronavirus/
  41. http://quietlysaving.co.uk/2020/05/31/may-2020-plus-other-updates/
  42. https://www.moneymage.net/2020-may-savings-report/
  43. https://awaytoless.com/monthly-spending-may-2020/
  44. https://thesquirreler.com/2020/06/06/may-2020-net-worth-update/
  45. https://asimplelifewithsam.com/2020/06/06/may-review/
  46. http://diyinvestoruk.blogspot.com/2020/06/mcphy-energy-portfolio-addition.html
  47. https://www.itinvestor.co.uk/2020/06/20-global-investment-trusts-compared/
  48. https://lifeafterthedailygrind.com/buying-used-electronics-can-earn-you-money/
  49. https://monevator.com/what-is-behind-the-coronavirus-trading-boom/
  50. http://bankeronfire.com/who-is-smarter-than-the-stock-market
  51. http://bankeronfire.com/it-wont-happen-to-you
  52. https://medfiblog.wordpress.com/2020/06/05/chasing-inflation/
  53. https://monevator.com/weekend-reading-boom/
  54. https://igniting-fire.com/2020/06/05/the-joy-of-creation/
  55. https://drfire.co.uk/building-wealth-in-my-20s-successes-and-failures/
  56. https://money-side-up.com/will-coronavirus-infect-the-fire-retire-early-movement/
  57. https://hustleescape.com/hindsight-bias/
  58. https://www.ukvalueinvestor.com/2020/06/dividends-and-dividend-cover.html/

The Financial Dashboard – May 2020

The goals for May were:

  • Tidy the loft and begin to clear
  • Read three books
  • Update my investment tracker spreadsheet and sync with allocations
  • Strip out kitchen for renovation
  • Fix minor problems on the modern(ish) car

Checking the assets and liabilities:

May AssetsMay Liabilities

These are taken, as always, from my Beast Budget spreadsheet. Lockdown is treating my finances well, as a reduction in commuting and socialising means I can squirrel away more cash. My savings rate for this month was a best ever 57% (44% excluding pension), with my total net worth increasing by 3.6%. The usual cash regular savers were topped up (pretty happy about my 5% and 3% now). Two previous Crowdcube offerings, FreeTrade and Cornish Lithium, both opened up pre-emption rounds which I used to increase my speculative investments. A further £350 also went into my FreeTrade ISA, to be deployed on a new passive tracker.

Goals:

Goal failed: Tidy the loft and begin to clear

This has been rate limited by the availability of the loft legs/ stilts we’re installing to add extra storage. Lockdown means they’re not being shipped, so waiting for them to come in.

Goal failed: Read three books

Set myself up to fail here, as one of them was The Intelligent Investor. Making heavy weather of it.

Goal failed: Update my investment tracker spreadsheet and sync with allocations

Continue to work on this, particularly trying to get the googlesheets systems to pull in prices working.

Goal achieved: Strip out kitchen for renovation

Bricks and mortar work starts next month, with floors and walls coming out. DIY naturally.

Goal achieved: Fix minor problems on the modern(ish) car

Going to call this a success as I fixed the worst of the problems. There’s still minor niggles, but on exploring them it seemed impractical (many hours of work and the potential for damage to other systems). As there’s no effect on the daily drivability they can be ignored for now.

Budgets

  • Groceries – Budget £200, spent £176.91, last month £238.77
  • Entertainment – Budget £100, spent £16.50, last month £55
  • Transport – Budget £460, spent £237.36, last month £429.79
  • Holiday – £150, spent £0, last month £0
  • Personal – £100/ £65.74/ £156.85
  • Loans/ Credit – £0/ £0/ £0
  • Misc – £50/ £71.45/ £3.25 – Bought a refurbished vacuum
  • Fees – £70 /£295.49/ £522.94 –  The punishment continues

In the garden:

Everything is going great guns now. I’ve avoided most root veg this year as it takes up a lot of space, but the leafy greens, potatoes and alliums are all doing well. I companion planted sunflowers, climbing french beans and pumpkins/courgettes, which are starting to create a nice little jumble of green. Greenhouse full of tomato plants too.

Goals for next month:

  • Tidy the loft and begin to clear
  • Read three books
  • Update my investment tracker spreadsheet and sync with allocations
  • Explore overpaying mortgage

Happy June everyone, I hope you’re all keeping well,

The Shrink

The Full English – No extraneous opinions

I’m working this weekend, so much like Monevator I’m afraid it’s links only. Usual service resumed next week.

Have a great week,

The Shrink

News:

This image from the FT demonstrates how little of ‘infinite QE’ has actually been deployed (1):

Comment:

This amazing image from the Visual Capitalist (28):

References:

 

  1. https://www.ft.com/content/a1fba7cd-5329-46e6-82a8-57149e409f6c
  2. https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/conditionsanddiseases/bulletins/coronaviruscovid19infectionsurveypilot/28may2020
  3. https://www.bbc.co.uk/news/business-52820814
  4. https://www.bbc.co.uk/news/business-52795376
  5. https://edition.cnn.com/2020/05/25/tech/airbnb-hosts/index.html
  6. https://www.thisismoney.co.uk/money/news/article-8351337/Britains-plan-25bn-sovereign-wealth-fund.html
  7. https://www.bbc.co.uk/news/business-52829348
  8. https://www.thisismoney.co.uk/money/cars/article-8365581/Electric-car-owners-PAID-charge-prices-turned-negative.html
  9. https://www.forbes.com/sites/robtoews/2020/05/25/deepfakes-are-going-to-wreak-havoc-on-society-we-are-not-prepared/
  10. https://www.itinvestor.co.uk/2020/05/monks-investment-trust-with-change-comes-opportunity/
  11. https://www.moneymage.net/6-reasons-to-quit-your-job/
  12. https://monethalia.com/monthly-savings-report-may-2020/
  13. https://cashflowcop.com/our-numbers-tax-year-2018-2019/
  14. https://www.mouthymoney.co.uk/would-you-move-into-a-house-youd-never-seen-i-did-and-heres-what-i-learnt/
  15. https://drfire.co.uk/stoicism-financial-independence/
  16. https://hustleescape.com/delayed-gratification/
  17. https://pathtolife2.com/2020/05/30/financial-independence-update-may-2020/
  18. http://fiukmoney.co.uk/may-20-net-worth-and-monthly-update-21-555467-21028/
  19. https://playingwithfire.uk/leasehold-property-explained/
  20. https://the7circles.uk/market-timing/
  21. https://moneygrower.co.uk/may-stock-purchase-corona-virus-rally/
  22. http://thefirestarter.co.uk/priveleged-rule-breakers-dominic-cummings-and-luxury-car-drivers/
  23. https://monevator.com/14-weeks-and-12-numbers-that-have-changed-the-investing-history-books-forever/
  24. https://theescapeartist.me/2020/05/29/are-online-side-hustle-worth-it/
  25. http://bankeronfire.com/the-illusion-of-passive-income
  26. http://bankeronfire.com/the-future-is-tech-or-is-it
  27. https://indeedably.com/changing-gears/
  28. https://www.visualcapitalist.com/all-of-the-worlds-money-and-markets-in-one-visualization-2020/

The Full English Accompaniment – How are we all managing?

Last year I started writing a blog post called “How the other half live”. I never finished it for various reasons. In it I started to explore the realities of being super rich, financially independent from birth. What’s it like to have a trust fund(1). COVID-19 has brought this to the fore of my mind. It has indiscriminately affected us all, so how have different people managed?

One of the core tenets of the FIRE movement is minimising lifestyle inflation. Happiness does not need to be bought. The overlap with the stoic philosophy of acceptance. Seeing and appreciating small pleasures.

Plenty of blog posts have been written on this balance. How much do you limit your spending, does deprivation become part of the journey (2). More ascetic than stoic. Stingy or frugal (3). The overlaps with minimalism.

Some university friends had the UK-equivalent of trust funds, or came from families where money was not a problem. We have family friends who are 1%-ers. Not billionaires, but enough for their family to never need to work as long as money was managed diligently. There were able to explore passions and hobbies; pottery, classic cars, travel, sailing. Money was never spent on displays of wealth. Why should it be? The pressure to display wealth, emulate the Kardashians, didn’t effect this brand of old-money (4). Their passions, experiences and opportunities to share them brought them happiness, not flashing cash (5, 6).

We are all humans. Social creatures. Our friends in some way define us, and what we think is important, so we can share things we enjoy. COVID-19 has stopped those social interactions. Zoom/ Skype/ WhatsApp/ Facebook calls are great, but they’re not the shared lived experience.

The billionaire in their lockdown bunker is still isolated from their friends (7). Unable to have their social interaction.

The body conscious duck-pouters can’t get their fillers/ extensions/ acrylics (8). Unable to have their social interaction, which doubles as their internal validation.

Even TI isn’t able to have cup of really good coffee with a friend (9).

My wife recounted a conversation with a production line worker at her company discussing how different people on her street were coping, including the line “it must be really difficult for the ones on the game”.

We’re still working full time. We’re eating nice food and doing house renovations. The biggest change to our day-to-day life in lockdown has been a lack of shared experiences with friends. It’s made me realise how important that social interaction is. It’s the thing I really miss, and the absence of it has made life less enjoyable. I don’t think I would enjoy FIRE if I had no-one to enjoy it with.

I hope you’re all coping well.

Have a great week,

The Shrink

COVID:

News:

Comment:

References:

  1. https://www.thecut.com/2018/04/what-its-really-like-to-have-a-trust-fund.html
  2. http://www.thefrugalcottage.com/deprivation-is-not-part-of-the-journey/
  3. https://fourpillarfreedom.com/living-stingy-vs-living-frugally/
  4. https://www.thecut.com/2018/06/how-do-celebrities-spend-their-money.html
  5. https://theescapeartist.me/2014/08/08/optimising-for-happiness/
  6. https://monevator.com/how-to-enjoy-life-like-a-billionaire/
  7. https://www.bbc.co.uk/news/av/stories-52669638/how-the-super-rich-spent-lockdown
  8. https://www.bbc.co.uk/news/newsbeat-52728957
  9. https://monevator.com/the-latte-factor/
  10. https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(20)31180-6/fulltext
  11. https://www.bbc.co.uk/news/health-52737169
  12. https://www.bmj.com/content/369/bmj.m2066
  13. https://www.cnbc.com/2020/05/20/highly-indebted-zombie-companies-control-more-than-2-million-us-jobs.html
  14. https://www.theguardian.com/business/2020/may/20/uk-sells-government-bond-with-negative-yield-for-first-time-coronavirus
  15. https://www.thisismoney.co.uk/money/saving/article-8336629/Savers-opt-old-favourite-NS-offering-best-deals.html
  16. https://www.bbc.co.uk/news/business-52735240
  17. https://www.bbc.co.uk/news/in-pictures-45046023
  18. https://www.visualcapitalist.com/zoom-boom-biggest-airlines/
  19. https://www.telegraph.co.uk/business/2020/05/22/britain-sliding-deflationary-death-spiral/
  20. https://www.bbc.co.uk/news/business-52691369
  21. https://www.thetimes.co.uk/article/james-dyson-interview-electric-car-tesla-tzls09t5m
  22. https://www.businessinsider.com/perfect-storm-of-stupid-in-stock-market-right-now-2020-5?r=US&IR=T
  23. https://www.theguardian.com/environment/2020/may/20/coronavirus-fallout-to-slow-global-growth-in-renewable-energy
  24. https://monevator.com/salary-sacrifice/
  25. https://indeedably.com/dichotomy/
  26. http://quietlysaving.co.uk/2020/05/24/information-overload/
  27. https://medfiblog.wordpress.com/2020/05/24/johari-rumsfeld-and-overpaying-mortgages/
  28. https://medfiblog.wordpress.com/2020/05/16/the-nhs-pension-allowances/
  29. https://simplelivingsomerset.wordpress.com/2020/05/22/what-will-we-do-with-our-world-when-this-is-over/
  30. https://awaytoless.com/remaining-positive/
  31. https://eaglesfeartoperch.blogspot.com/2020/05/relocating-fig-tree-six-on-saturday.html
  32. https://theescapeartist.me/2020/05/22/back-to-basics-why-you-must-get-out-of-debt/
  33. https://gentlemansfamilyfinances.wordpress.com/2020/05/22/were-all-going-on-a-mortgage-holiday/
  34. https://firelifestyle.co.uk/2020/05/22/reached-100000-in-index-funds/
  35. https://thefifox.wordpress.com/2020/05/22/an-analysis-how-to-optimise-the-traditional-emergency-fund/
  36. https://drfire.co.uk/lifestrategy-100-vs-ftse-global-all-cap/
  37. http://bankeronfire.com/losing-the-plot
  38. http://bankeronfire.com/demystifying-stock-market-returns
  39. https://zerotofreedom.org/how-to-invest-on-minimum-wage/
  40. https://lifeafterthedailygrind.com/will-the-gold-standard-return/
  41. https://www.itinvestor.co.uk/2020/05/scottish-mortgage-the-biggest-and-the-best/
  42. https://playingwithfire.uk/what-to-do-if-you-lose-your-job-6-steps-from-a-recently-unemployed-fire-enthusiast/
  43. https://pathtolife2.com/2020/05/21/which-fi-dinosaur-are-you/
  44. http://diyinvestoruk.blogspot.com/2020/05/troy-trojan-ethical-portfolio-addition.html

The Full English – Elon Musk, lifestyle design, cults of personality and F=MA

I bloody hate ‘Lifestyle Design’ (1). Thankfully, I’m not the only one (2).

It’s so glib. Why in God’s name do I need someone to tell me routes to follow my dreams but blatantly ignore that most goals are achieved through hard graft and determination.

Yeah, so Tim Ferriss made a killing off the 4-hour work week, but that doesn’t mean you will (3). He grafted for it.

People seem to focus on the outcome, and that self-belief alone will get them there. Along with an online course and a self-published book…

Sod off.

The people who do consistently well have a combination of self-belief (A), confidence to achieve it (B), intelligence (C) and grit (D).

It’s all well and good singing your self-belief and confidence, but if you haven’t got the smarts to see the end-goal, and the kajones to graft it out, you’re just another dreamer.

Plenty of (A) and (B) on Instagram, selling a life/ie.

Plenty of billionaires grinding out (C) and (D), quietly supported by (A) and (B).

Those making noise about all four gather admirers, those who wish they could be the same. Steve Jobs, Branson, Jay-Z, Trump. Maybe not the C or D for Trump.

Which is where Elon Musk is interesting.

He’s on Instagram, selling the life, building a cult following, leveraging that to support his business. He’s not just a man with a long-term goal, he’s a master of public performance. He courts intrigue and amusement, despair from the stuffy stiff suits. He’s a man of the people… he projects.

He also seems to have spent too long getting high on his own Instagram feed. A good marker for Tesla’s stock price would be Musk’s order to his dealer.

Self-belief is great, but at some point it conflicts with reality (4). Don’t get me started on when he tried to tell Anaesthetists how to run a ventilator on a COVID-19 patient.

Image Credit: Reddit

But lets not forget he got where he is by working 100-hour weeks. As someone living that life, I can tell you they’re pretty shit. Musk is selling his homes (his instagram life?) to achieve his Mars dream (5).

Your life is the product of your decisions. Those decisions and choices determine the direction of your life. Graft then takes you there.

Applying a formula

Turn to our old friend Newton (6).

F=MA

Force = (mass) x (acceleration)

If you want your life to go a certain way, you need to exert your will to accelerate it in that direction. Your existing lifestyle ties is the inertia, your mass.

Sometimes one big push will be enough to produce force in the required direction. One burst of acceleration.

Most of the time slow sustained acceleration will achieve the force in the direction required.

Steady graft.

Not a Youtube tutorial and a £1500(+) drop-shipping course.

Have a great week,

The Shrink

COVID – I advise the use of the BMJs information hub for evidence-based updates:

News – I have been deliberately avoiding news outlets recently. I don’t have the headspace for the hysteria:

Opinion:

References:

  1. https://fizzle.co/sparkline/what-is-lifestyle-design
  2. https://medium.com/swlh/lifestyle-design-please-shut-the-fuck-up-a16dc38cd306
  3. http://www.timferriss.com/#
  4. https://www.bbc.co.uk/news/technology-52627744
  5. https://www.bbc.co.uk/news/business-52530316
  6. https://en.wikipedia.org/wiki/Newton%27s_laws_of_motion
  7. https://www.bmj.com/content/369/bmj.m1844
  8. https://www.bmj.com/content/369/bmj.m1849
  9. https://www.bmj.com/content/369/bmj.m1835
  10. https://www.bbc.co.uk/news/business-52663523
  11. https://www.telegraph.co.uk/business/2020/05/16/investors-bet-750m-plunge-sterling/
  12. https://www.bbc.co.uk/news/business-52673727
  13. https://www.thisismoney.co.uk/money/saving/article-8313027/Saving-deals-plunge-Goldman-Sachs-cuts-rate-Marcus-account.html
  14. https://www.thisismoney.co.uk/money/mortgageshome/article-8307873/Mortgage-rates-lowest-level-fail-pace-BoE-cut.html
  15. https://www.autocar.co.uk/car-news/industry/insight-four-lessons-aprils-car-sales
  16. https://www.ft.com/content/78108d3a-d046-4916-858a-a5df090ce8c3
  17. https://www.theguardian.com/business/nils-pratley-on-finance/2020/may/14/investors-can-return-to-obsessing-over-relations-between-us-and-china
  18. https://www.telegraph.co.uk/business/2020/05/16/britain-heading-eighties-style-unemployment-crisis/
  19. https://www.bbc.co.uk/news/business-52578720
  20. https://awealthofcommonsense.com/2020/05/nothing-fails-quite-like-success-in-the-stock-market/
  21. https://www.ukvalueinvestor.com/2020/05/tips-for-investing-in-a-coronavirus-world.html/
  22. https://earlyretirementnow.com/2020/05/11/another-bull-market/
  23. https://medfiblog.wordpress.com/2020/05/16/the-nhs-pension-allowances/
  24. http://eaglesfeartoperch.blogspot.com/2020/05/building-new-greenhouse-part-3-six-on.html
  25. https://gentlemansfamilyfinances.wordpress.com/2020/05/15/the-merits-of-a-paid-off-mortgage/
  26. https://southwalesfi.co.uk/2020/05/15/my-progress-to-f-i-r-e/
  27. https://asimplelifewithsam.com/2020/05/10/april-review/
  28. https://averagemoneymanagement.wordpress.com/2020/05/15/5-reasons-why-investing-isnt-gambling/
  29. https://theescapeartist.me/2020/05/15/predictions-are-a-mugs-game-but-lets-play-anyway/
  30. http://thefirestarter.co.uk/2020-re-budget-lockdown-impulse-purchases-exciting-announcement/
  31. https://gettingminted.com/short-term-thinking/
  32. https://www.itinvestor.co.uk/2020/05/herald-investment-trust-home-grown-tech/
  33. https://leftfi.home.blog/2020/05/17/personal-finance-update/
  34. https://monevator.com/would-you-lend-yourself-money-in-an-emergency/
  35. https://monevator.com/get-out-of-debt-to-unleash-your-inner-money-maker/
  36. https://monevator.com/the-stock-market-is-wilder-than-you-think/
  37. https://pathtolife2.com/2020/05/16/do-you-need-as-much-as-you-think-to-be-financially-independent/
  38. https://www.iretiredyoung.net/post/early-retirement-small-things-make-a-difference
  39. https://indeedably.com/doppelganger/

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