The Full English – Envirobubble

What’s piqued my interest this week?

I’m returning to a couple of last weeks news ‘events’, because they’re rant worthy. First, there was this piece from the Beeb, “Why you have (probably) already bought your last car(1). What a piece of London-centric horse tripe.

The author accepts our incredulity, but goes on to state (1):
“A growing number of tech analysts are predicting that in less than 20 years we’ll all have stopped owning cars, and, what’s more, the internal combustion engine will have been consigned to the dustbin of history.”
So a group of industry-focused early adopters, who likely live in major urban centres, are suggesting that we should all do away with our regular transport. There are some valid points in the article. Electric cars are being widely adopted, are more efficient, simpler mechanically and will change the way people travel. Autonomous self-driving cars are also a great move, they’re safer in theory (watch out insurance services) and the idea of being able to work (or sleep, read etc) while commuting is amazing. I look forward to writing blogpieces at 60/mph on the M5.
The article falls down because it demonstrates a spectacular lack of understanding of anyone who lives outside a place with regular public transport, or who doesn’t work in one place. If you drive for work are you going to use a taxi everywhere? What about couriers, farmers, electricians, plumbers, gas line workers, etc. All of whom are going to multiple sites every day and rely on a vehicle to get them to where they need to be.
The following line grates:
Don’t worry that rural areas will be left out. A vehicle could be parked in every village waiting for your order to come.
Oh, so in my village of 300 people we’re going to only be able to have three or four people travelling at a time? I grew up in a village that size. We had four bus services a day, a 20 minute ride to the nearest town of a few thousand people. How are autonomous taxi services going to be cost-effective in that scenario? If I need to get somewhere I don’t want to wait 20 minutes for the next available taxi to travel over from the nearest town before starting my journey. Uber and public transport may be ubiquitous in the urban centres, but for rural areas the community-minibus remains a lifeline where market forces run out.
The second article I’m returning to is also environmentally focused. Quite a few outlets picked up the story about meat’s huge climate impact (2). Undoubtedly climate change is the biggest global threat currently, outweighing even Trump’s ego. The effect of meat is something we’ve known about for a while, but is rarely brought to the surface or acknowledged by politicians (3). The scare numbers in this story are simple, western meat consumption needs to fall massively, 90% for beef, to prevent a ‘climate breakdown’ (2). The meat produced to fill western diets is resource intensive, wasteful, and with intensive farming is hugely damaging to the environment.
Most of the articles point people towards becoming vegetarian the majority of the time, with meat reserved for special occasions. This is much more the diet that has been eaten historically up to the C19th, when greater wealth and the growth of middle class along with cheap transported or imported meat meant that the treat could become everyday. Since then the ‘meat and two veg’ has become ingrained in western culture. A culture we are exporting worldwide. Just look at how John on GBBO struggled with vegan food to see how deep that culture runs. Practically therefore changing our culture so everyone only eats meat once a week is going to be bloody hard. Try being the politician selling that song to your community hall.
Thankfully, I think market forces will come into play. Meat is expensive to produce. We recently started getting monthly boxes from a butcher, where they track all of our meat from their farm to my fridge. They upload monthly video updates from the farms on the animals. I pay for this premium. I know I’m getting meat from well-cared for animals, produced in a sustainable(ish) manner. The meat going into your McNuggets is not going to be grown to that standard. As the demand for a western diet rich in meat spreads, and supply struggles to meet (groan) demand, prices will go up.
Companies working to exploit this rise in price are already positioning themselves. Lab-grown meat is coming. Many of the start-ups have big backers, and are positioning themselves for high end consumers (4). It is effective proof-of-concept to those who will set trends (5). Theoretically lab-grown meat should have lower overheads and be cheaper to produce. It will lack the subtlety of the 28-day hung Aberdeen Angus, but it’ll do for your 99p McNuggets. I look forward to my ChickieNobs and conversations with MaddAddam.
Have a great weekend,
The Shrink
N.B. I’m off grid and on holiday for the next three weeks, so no more updates until Mid-November. Happy Halloween all!
Side Orders

Other News

Opinion/ blogs:

The kitchen garden:

What I’m reading:

The Book of Dust – Philip Pullman

Religio Medici by Sir Thomas Browne – the theological and psychological reflections of a C17th doctor.

Enchiridion by Epictetus – Bedside reading for a bad day

References:

  1. https://www.bbc.co.uk/news/business-45786690
  2. https://www.theguardian.com/environment/2018/oct/10/huge-reduction-in-meat-eating-essential-to-avoid-climate-breakdown
  3. https://www.bbc.co.uk/news/science-environment-45838997
  4. https://www.wsj.com/articles/is-lab-grown-meat-ready-for-dinner-1539701100
  5. https://www.scientificamerican.com/article/lab-grown-meat/
  6. http://www.bbc.co.uk/news/business-45859722
  7. http://www.bbc.co.uk/news/business-45860769
  8. http://www.bbc.co.uk/news/business-45858107
  9. https://edition.cnn.com/2018/10/11/tech/facebook-stock-dip/index.html
  10. https://www.bbc.co.uk/news/business-45875599
  11. https://www.bbc.co.uk/news/business-45886791
  12. https://www.theguardian.com/technology/2018/oct/14/dont-believe-world-bank-robots-inequality-growth
  13. http://www.thefrugalcottage.com/dividend-income-september-2018/
  14. https://tuppennysfireplace.com/living-a-simple-life-inspiration/
  15. https://tuppennysfireplace.com/things-we-cut-food-shopping-list/
  16. https://simplelivingsomerset.wordpress.com/2018/10/16/what-colour-is-your-parachute/
  17. https://drfire.co.uk/million-pound-question/
  18. https://inspiringlifedesign.com/posts/what-would-you-do-if-you-were-given-1-million.html
  19. https://earlyretirementplanning.wordpress.com/2018/10/12/what-would-you-do-if-you-got-given-1-million/
  20. https://mydebtdiary.info/2018/10/17/my-goals-update-for-october-2018/
  21. http://www.msziyou.com/my-anti-monetisation-manifesto/
  22. http://www.msziyou.com/quietly-saving/
  23. http://quietlysaving.co.uk/2018/10/19/i-just-got-paid/
  24. https://indeedably.com/asset-allocation/
  25. https://indeedably.com/cashless-payments-disrupted-busking/
  26. https://indeedably.com/emergency/
  27. https://gentlemansfamilyfinances.wordpress.com/2018/10/11/pay-less-into-your-pension-to-retire-early/
  28. https://www.theguardian.com/business/nils-pratley-on-finance/2018/oct/18/the-fed-is-ignoring-trump-it-knows-this-is-a-fight-he-cannot-win
  29. https://youngfiguy.com/mr-yfgs-backstory/
  30. http://diyinvestoruk.blogspot.com/2018/10/inflation-and-state-pension-increase.html
  31. http://diyinvestoruk.blogspot.com/2018/10/impax-environmental-markets-new-purchase.html
  32. http://monevator.com/an-ethical-quandary/
  33. http://monevator.com/what-did-low-us-treasury-yields-ever-do-for-us-anyway/
  34. https://ofdollarsanddata.com/what-is-your-financial-tipping-point/
  35. https://www.ukvalueinvestor.com/2018/10/portfolio-review-2018-q3.html/
  36. https://agentsoffield.com/2018/10/14/jobs-to-do-this-month/
  37. https://twothirstygardeners.co.uk/2018/10/how-to-make-beetroot-chutney/

 

 

 

 

 

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The Full English – Are we nearly there yet?

What’s piqued my interest this week?
Caution, monster link-fest ahead. 
Well this has been a busy old week in the markets, eh? The FTSE sunk off the back of US losses, due in part to rising Federal Reserve interest rates (fuelling a drop in bond returns, therefore loss in confidence, therefore sell-off), and losses on tech stocks, particularly the FANG lot (1).
Lots of our compatriots have seen a slide… Monevator  FirevLondon, RIT (2, 3). This is all excellent fodder for the press, who have called it everything from a correction, turbulence, to a “global market MELTDOWN, the beginning of the next CRASH” (4, 5). Hyperbole so ballistic SpaceX will be after the patents. And to be fair, lots of people have been voicing that we’re in the late stages of a bull market and we should be expecting a recession imminently. It only takes one person to yell fire to start a stampede.
Look past the press, noise and short-term numbers and see that actually, big down days aren’t that uncommon. The US blogs A Wealth of Common Sense and the Irrelevant Investor both had some excellent posts on this (6, 7, 8). Shamelessly stealing their graphs and tables, this was the 20th -3% day on the S&P 500 since the end of the 2008 bear, however 80% of 3+% down days were in a sell-off/ recession.
What does this tell us? You can’t predict the future, especially looking at just one measure, and if you’re well diversified and holding long term it shouldn’t matter. And will we even see a ‘great crash’? People are jumping on index investing in ever greater numbers, spurred on by pieces like this weekends NYT article (9).  This is supported by the Morningstar Barometer continuing to show passive beating active returns over the past 10 years (10, 11). Ten years of passive investors watching an incoming tide lifting all boats has had people warning of the end of active investing (12). Passive ETFs had grown to an estimated 35% market share by 2017 (13). I couldn’t unearth more recent figures, but it seems reasonable that this will have grown in the last year. Even the great Bogle was warning of danger. But if 35%+ of the market is in trackers which move with the market, what effect will this have on when the market moves? If all the trackers are holding, or at least slow in their re-balancing, theoretically it should create an undercurrent of stability within the market, mitigating investor psychological panic moves. Additionally, for us Brits, Brexit has introduced such a level of uncertainty into the UK economy that perhaps people have been holding off while across the pond they’ve continued to make hay. I bloody love YFG’s post this week on this very topic (14).
It’s also worth remembering many young investors (me, etc) have no experience of big down days and drops. I was doing my best to get horizontal at pound-a-pint student nights during the last recession. Woohoo, cheap beer! And as someone with a lifetime of saving ahead, I should be praying for a recession (15). I’m sitting tight at the moment. In my Q2 goals it was a target, but this was naive. Had I stuck all my money in Wolf Minerals as I planned when I was first starting out, I’d be buggered (16). Instead I’m going to continue building my emergency fund in cash, set a solid plan and keep a finger in the air to see which way the wind is blowing. To mix metaphors, I’m going to get myself fully shipshape before bracing any storm.
If there is a storm. Howdy Callum!
Have a great weekend,
The Shrink
Side Orders

Other News

Opinion/ blogs:

The kitchen garden:

What I’m reading:

Smashed through The Windup Girl in a week, fantastic atmosphere but a bit of a damp squib in the end. On to… The Book of Dust – Philip Pullman

Religio Medici by Sir Thomas Browne – the theological and psychological reflections of a C17th doctor.

Enchiridion by Epictetus – Bedside reading for a bad day

References:

  1. https://www.theguardian.com/business/2018/oct/11/why-are-stock-markets-falling-and-how-far-will-they-go
  2. http://monevator.com/weekend-reading-looking-down-when-the-tide-goes-out/
  3. http://www.retirementinvestingtoday.com/2018/10/2018-quarter-3-review-readying-for-fire.html
  4. https://www.theguardian.com/business/2018/oct/12/ftse-100-falls-to-six-month-low-amid-fears-over-us-interest-rates
  5. https://www.express.co.uk/finance/city/1030145/global-markets-meltdown-equity-financial-crash-why-global-markets-are-down-today
  6. https://awealthofcommonsense.com/2018/10/big-down-days/
  7. https://theirrelevantinvestor.com/2018/10/10/u-g-l-y/
  8. https://theirrelevantinvestor.com/2018/10/09/a-bullish-washout/
  9. https://www.nytimes.com/2018/10/12/business/index-fund-investors-simpler-approach-may-enrich-returns.html
  10. https://www.fnlondon.com/articles/passive-beat-active-over-the-past-decade-finds-morningstar-20181001
  11. https://www.moneyobserver.com/news/active-funds-have-underperformed-passive-all-two-sectors
  12. https://bit.ly/2CJjgNY
  13. https://www.forbes.com/sites/greatspeculations/2018/09/19/are-we-headed-for-a-passive-index-meltdown/#137fbde4413e
  14. https://youngfiguy.com/brexit-and-finance/
  15. https://awealthofcommonsense.com/2018/10/who-benefits-from-a-market-correction/
  16. https://www.bbc.co.uk/news/uk-england-devon-45812974
  17. https://www.bbc.co.uk/news/business-45854817
  18. https://www.bbc.co.uk/news/uk-england-bristol-45770028
  19. https://www.theguardian.com/environment/2018/oct/10/huge-reduction-in-meat-eating-essential-to-avoid-climate-breakdown
  20. https://on.ft.com/2PrHbnT
  21. https://metro.co.uk/2018/10/11/wh-smith-to-start-closing-stores-as-it-struggles-on-the-high-street-8027099/
  22. https://www.bbc.co.uk/news/business-45822650
  23. https://www.independent.co.uk/news/business/news/rbs-savings-account-best-interest-rate-goldman-sachs-a8578996.html
  24. https://www.theguardian.com/business/2018/oct/11/brexit-uncertainty-taking-toll-property-market-rics-research
  25. https://www.theguardian.com/business/2018/oct/11/profits-slide-at-big-six-energy-firms-as-14m-customers-switch
  26. https://www.moneywise.co.uk/news/2018-10-08/chancellor-philip-hammond-planning-to-cut-pension-tax-relief-the-autumn-budget
  27. https://www.theguardian.com/money/2018/oct/13/uk-millennials-costs-eu-pay-rent-transport-grocery-revolut
  28. https://www.bbc.co.uk/news/health-45750384
  29. https://www.bbc.co.uk/news/business-45786690
  30. http://thefirestarter.co.uk/september-income-expenses-report-up-and-running/
  31. https://deliberatelivinguk.wordpress.com/2018/10/05/september-2018-review/
  32. http://www.mrmoneymustache.com/2018/10/05/the-fire-movement/
  33. http://monevator.com/preparing-to-take-a-retirement-income/
  34. http://monevator.com/ratesetter-high-interest-offer/
  35. https://youngfiguy.com/financial-independence-and-dieting/
  36. https://thesavingninja.com/what-would-you-do-if-you-got-given-1-million/
  37. http://www.msziyou.com/if-i-won-1m-tomorrow/
  38. http://thefirestarter.co.uk/the-million-pound-question/
  39. https://indeedably.com/million-pound-question/
  40. https://theirrelevantinvestor.com/2018/10/08/built-to-break/
  41. https://awealthofcommonsense.com/2018/10/the-case-for-bonds/
  42. http://diyinvestoruk.blogspot.com/2018/10/climate-changebe-change.html
  43. https://www.morningstar.com/blog/2018/10/01/low-carbon-economy.html
  44. https://indeedably.com/accountability-cant-be-outsourced/
  45. https://theescapeartist.me/2018/10/09/get-rich-with-hobbies/
  46. http://ukfipod.space/004/
  47. https://www.theguardian.com/money/2018/oct/13/because-of-my-upbringing-ive-always-been-careful-with-money
  48. https://www.ukvalueinvestor.com/2018/10/hargreaves-lansdown-dividend-yield.html/
  49. https://www.jackwallington.com/allotment-month-34-happy-herbal-apple-disaster-persistent-prairie/
  50. https://sharpenyourspades.com/2018/10/11/love-garlic-then-you-have-to-grow-your-own/
  51. https://lifeatno27.com/2018/10/01/spuds-gluts-and-deliciousness/

The Full English – The Decline of the Middle-Class Brand

I referenced a Nil’s Pratley opinion piece in the Guardian on Tesco’s new budget store, Jack’s, last weekend. I’m returning to it as the comments are worth a look on their own. In amongst them is this pearl of wisdom.

What Aldi/Lidl are doing well is taping into the change in incomes and what “middle class” means now and that, basically, people aren’t really middle class.

We have a much smaller genuine middle class (2 holidays a year, 1 skiing, then 2 weeks in the sun over seas, new cars that they own, large house with minimal debts…) than we used to have and now there’s really just a much larger upper working/lower middle class who like to think that they can live the life but know that they really cant so actually need shops like Aldi and Lidl so that they can buy wine (as they can’t afford to from Majestic or whomever where it’s bought by the case, as a real middle class person would) and meat that they can claim is fancy still (not from a proper butcher, like real middle class would) to pretend that they are living well, but at a cheap price. (1)

Spelling errors aside, this observation is interesting. Is the middle class ‘brand’ sliding down as a consequence of aspirational executive types? I’ve noticed this amongst car manufacturers in my little hobby. The old executive companies; Mercedes, Audi, BMW etc, now produce small bland euro-boxes starting at very reasonable prices on solid finance deals. One argument is that this is a consequence of EU directives dictating all manufacturers reach a certain efficiency target. Others would say it’s good business sense, as the aspirational lower middle classes want ‘the brand’ and therefore will pay slightly more for a comparative bland euroboxcar with a three-pointed star than one from a Korean microwave manufacturer. That’ll be the (demise of) Daewoo (2, 3)?

Extend this line of logic out to supermarkets, and Aldi/ Lidl allows people to feel they lead a middle-class lifestyle; the food is more affordable so a bottle of wine, halloumi, olives and smashed avocado on toast dahling is less of a luxury item. The treats associated with middle class life can be every day. And to be fair, I’ve seen Bentleys being filled up with the weekly shop at Aldi, because you don’t stay rich buying Waitrose essential vermicelli nests (4, 5).

So if the lower middle-class have decided that Lidl and Aldi’s budget kale smoothies are a taste of the good life, where are the upper middle-class off to? The trendy local deli and the Riverford food box, or the organic inner-city farming co-operative (I regret nothing)? The hotly anticipated pop-up keralan-fusion van? Some other half-cooked, over-spiced ‘superfood’ containing slop cooked by an unwashed fake-prison-tattoo-sporting manbun-topped ‘entrepreneur’?

It seems they’re actually off to buy something of quality. Because that’s what they’ve always done. That’s what brands used to mean. There’s an excellent anecdote about the demise of Rover from when they were owned by BMW in the 90s. When BMW built seriously well-engineered cars (the same ones that can now be found drifting round empty retail car parks at night). The story goes that engineers were discussing a part at a meeting in Germany, and the question around the table was “How can we make this better?”. Those same engineers came back to Rover in Birmingham and were asked “How can we make this cheaper?”.

And now everyone is asking, “How can we make this cheaper?”, to squeeze every inch of profit from the ‘Brand’. But that’s not sustainable, because cheaper quite often means poorer quality, and engineered obsolescence and throwaway white-goods don’t fit with the fashionable sustainable movement. See the rise in repair cafe’s as an example (6). Miele may not be in every home on the rabbit-hutch new estates with financed-Mercs on the drive and 0%-interest Samsung american fridge-freezer in the kitchen, but it maintains it’s market share because it sells solid products. And you can buy spare parts and have them repaired. And they last 10 years.

How the hell does this relate to Jack’s? Lidl and Aldi buck the trend. They’re not focused on brand, they’re focused on reasonable quality for a value price. Tesco bosses also have to learn that lesson, and not sell Jack’s as a budget brand. Brands are dead. Long-live quality without a badge.

Have a great weekend,

The Shrink

Side Orders
Other News

Opinion/ blogs:

The kitchen garden:

What I’m reading:

The Windup Girl by Paolo Bacigalupi – Fantastic world building in this dystopian Hugo & Nebula award winner.

Religio Medici by Sir Thomas Browne – the theological and psychological reflections of a C17th doctor.

Enchiridion by Epictetus – Bedside reading for a bad day

References:

  1. https://www.theguardian.com/business/nils-pratley-on-finance/2018/sep/19/aldi-and-lidl-wont-be-scared-by-tescos-new-discount-jacks#comment-120594908
  2. https://worldview.stratfor.com/article/daewoo-motors-demise
  3. https://www.economist.com/business/1999/08/19/the-death-of-daewoo
  4. https://www.buzzfeed.com/floperry/sesame-and-poppy-seed-thins
  5. https://thetab.com/uk/2017/08/10/a-definitive-list-of-the-most-un-essential-items-from-the-waitrose-essential-range-45294
  6. https://www.theguardian.com/world/2018/mar/15/can-we-fix-it-the-repair-cafes-waging-war-on-throwaway-culture
  7. https://www.bbc.co.uk/news/business-45714224
  8. https://www.theguardian.com/technology/2018/oct/04/elon-musk-sec-twitter
  9. https://www.bbc.co.uk/news/business-45744552
  10. https://www.bbc.co.uk/news/business-45757437
  11. https://www.theguardian.com/business/2018/oct/05/uk-house-prices-fell-sharply-in-september-amid-brexit-wariness
  12. https://www.theguardian.com/business/2018/oct/05/man-who-got-swagger-back-for-aston-martin-is-ready-for-long-game-stock-market
  13. https://www.theguardian.com/business/2018/oct/05/unilever-scraps-plan-move-london-rotterdam-uk-netherlands
  14. https://www.youtube.com/watch?v=GxLw_wHOMGY
  15. http://quietlysaving.co.uk/2018/09/30/september-2018-plus-other-update/
  16. https://simplelivingsomerset.wordpress.com/2018/09/27/fire-in-the-news-liar-liar-pants-on-fire/
  17. https://theescapeartist.me/2018/10/02/wired-for-financial-independence-an-immigrants-story/
  18. http://monevator.com/weekend-reading-financial-independence-against-the-odds/
  19. http://monevator.com/the-slow-and-steady-passive-portfolio-update-q3-2018/
  20. https://www.ukvalueinvestor.com/2018/09/are-investors-overpaying-for-diageo.html/
  21. https://awealthofcommonsense.com/2018/09/what-if-stocks-dont-crash/
  22. https://www.morningstar.com/articles/883860/so-much-for-the-bond-bubble.html
  23. https://youngfiguy.com/mrs-yfg-anxiety-and-working-in-law/
  24. https://youngfiguy.com/unknowable/
  25. https://youngfiguy.com/mrs-yfg-7-things-ive-stopped-caring-about/
  26. http://www.msziyou.com/budgeting-by-values/
  27. http://www.msziyou.com/why-i-give-a-fck-about-the-news/
  28. http://www.msziyou.com/net-worth-updates-september-2018/
  29. http://www.realmensow.co.uk/?p=4707

The Full English – Saving Money vs Saving Misery

What’s piqued my interest this week?
Hey look, FIRE made the mainstream last week as TEA got interviewed in the The Times (as screengrabbed by Firevlondon), prompting The Guardian to fire some shots and a Daily Mail banshee wail (1, 2, 3). A flurry of activity followed from Monevator Inc and TEA, and wonderment that worst kept best secret was out (4, 5). There was particular derision from the Daily Mail readers…
But collectively we shrugged it off. We were in the know, right? In TEA’s words:

Over the years, I’ve noticed that in life there are 2 types of people: the talkers and the doers.  Talkers talk and doers do.

You don’t get into FI club by talking about FI club.  Nor by arguing on the internet. You get into FI club by working hard, saving hard and investing wisely.   Its a marathon not a sprint and so getting to financial independence is temperamentally suited to people who get their head down and grind out the reps. Talk is cheap and actions speak louder than words. (4)

But amidst the derision in the comments there is a note, a chord, of caution. People wasting their “peak energy years” twiddling their thumbs. As the prize-winning laureate Nickw862003 says in the Mail comments:
“And who the hell, unless you are on a fair bit can save half a salary a year? I mean i done it while saving for a mortgage, but i was living like a hermit to cater for this!” (3)
Do we consider our appearance from the outside? Switch back to /r/UKPersonalFinance or /r/Financialindependence and see people with savings rates of 50-60%, countdown to FI of 4 years, lamenting boredom as they live their frugal lives. They’ve given up the consumerist forms of pleasure, but have not replaced them. At times the Financial Independence community has echoes of the Ancient Greek asceticism, austere minimalism, giving consumerist culture the cynical evil eye (6). In those halcyon days pleasure was derived from the act of abstinence and self-disciple. But we can’t all be Diogenes, living in our ceramic jars, pissing on those that irritate and telling Alexander the Great to bugger off (7).
What’s the point here? Eating basics beans on basics bread in the dark is not a recipe for a happy or healthy life (increasingly found to be interlinked). Ascetism died out in western culture because people are social creatures who seek fulfillment and enjoyment. The FI community helps with the former. The latter requires either moving the goalposts and finding enjoyment in sitting in the dark, or finding cheap interests compatible with the lifestyle. Light a candle, don’t shout in the dark.
Have a great weekend,
The Shrink
N.B. In keeping with the growth of my own gardening hobby, I’ll be adding a little section below once a month keeping an eye on gardening blogs.
Side Orders

Other News

Opinion/ blogs:

The kitchen garden:

What I’m reading:

Smarter Investing by Tim Hale – essential reading

Religio Medici by Sir Thomas Browne – the theological and psychological reflections of a C17th doctor.

Enchiridion by Epictetus – Bedside reading for a bad day

 

References:

  1. https://www.thetimes.co.uk/article/modest-earners-find-formula-to-retire-in-their-40s-fbk3p63bk
  2. https://www.theguardian.com/money/shortcuts/2018/sep/17/retire-early-fire-movement-never-work-again
  3. https://www.dailymail.co.uk/news/article-6175445/How-retire-FORTIES-without-earning-fortune.html
  4. https://theescapeartist.me/2018/09/24/hold-everything-someone-is-wrong-on-the-internet/
  5. http://monevator.com/weekend-reading-fire-and-forget/
  6. https://en.wikipedia.org/wiki/Asceticism
  7. https://en.wikipedia.org/wiki/Diogenes
  8. https://www.moneysavingexpert.com/news/2018/09/economy-energy–to-honour–fixed-tariff-after-price-hike-blunder/
  9. https://www.thisismoney.co.uk/money/investing/article-6142957/How-check-performance-robo-adviser.html
  10. https://www.theguardian.com/lifeandstyle/2018/sep/18/your-fathers-not-your-father-when-dna-tests-reveal-more-than-you-bargained-for
  11. https://www.telegraph.co.uk/money/consumer-affairs/new-blow-landlords-177000-homes-face-new-test/#
  12. https://www.bbc.co.uk/news/business-45561908
  13. https://www.bbc.co.uk/news/uk-45520517
  14. https://www.bbc.co.uk/news/business-45634362
  15. https://www.thisismoney.co.uk/money/mortgageshome/article-6185301/The-20-fastest-growing-areas-new-housing-UK-past-7-years-counted-down.html
  16. https://www.thisismoney.co.uk/money/saving/article-6207595/How-Goldman-Sachs-banker-American-giant-launches-UK-account-paying-1-5.html
  17. https://theescapeartist.me/2018/09/19/eliminating-fear-with-bio-hacking/
  18. https://www.theguardian.com/business/nils-pratley-on-finance/2018/sep/19/aldi-and-lidl-wont-be-scared-by-tescos-new-discount-jacks
  19. http://thefirestarter.co.uk/liquid-superfood-huel-challenge-its-like-soylent-the-throwdown/
  20. http://thefirestarter.co.uk/august-income-expenses-report-a-bit-of-an-odd-one/
  21. http://monevator.com/its-an-emergency-fund/
  22. https://firevlondon.com/2018/09/24/complexity-costs/
  23. https://firethe9to5.com/2018/09/18/finding-the-fun-in-fire/
  24. https://firethe9to5.com/2018/09/22/the-do-i-have-enough-toolkit/
  25. http://www.msziyou.com/comfortable-being-the-product/
  26. http://diyinvestoruk.blogspot.com/2018/09/turn-back-clock.html
  27. http://diyinvestoruk.blogspot.com/2018/09/city-of-london-final-results.html
  28. http://diyinvestoruk.blogspot.com/2018/09/woodford-patient-capital-new-purchase.html
  29. http://www.realmensow.co.uk/?p=4702
  30. http://twothirstygardeners.co.uk/2018/09/how-do-i-tell-know-when-my-hops-are-ready-to-pick/
  31. https://clairesallotment.com/2018/09/06/harvesting-the-first-of-the-brassicas/
  32. https://urbanvegpatch.blogspot.com/2018/09/in-septembers-sweet-spot.html

 

 

 

 

 

 

 

 

 

 

 

 

 

The Full English Accompaniment – Switching energy suppliers

What’s piqued my interest this week?
The Shrink household is currently switching energy suppliers. If you’re here, then you’re probably smart enough to already be doing the same on a regular basis. I’m not going to go into how much you can save, MoneySavingExpert does it much better (1). On moving into casa-del-Shrink we had a number of problems with the existing supplier, particularly surrounding pre-existing debt on the pre-payment meters. We switched to British Gas. Big mistake, as we continued to have problems paying off the previous tenants debts, and found out how bad British Gas complaints procedure is. Cue hours of interminable hold music, patronising ‘we’re listening letters’ and complaints being closed unresolved (2, 3). The actual staff we spoke to were helpful, but appeared constrained by a draconian “computer says no” system. We weren’t the only ones having problems with British Gas this year, who’ve been fined £2.65m for overcharging customers (4). When they put their prices up in August we voted with our feet and left to avoid exit fees (5).
We’ve gone back to Bulb, one of the smaller energy companies outside of the ‘Big Six’ who buy from entirely renewable energy sources and who we’ve had excellent service from before. We considered using the MSE Credit Club, but I get a little tin-foil-hat about giving out my personal info willy-nilly (6). In the same way we avoided Flipper, an app touted on Moneybox which automatically switches you onto your cheapest supplier (7). Sadly we’ve been told we’ll also be having an immediate price rise (8, 9), which takes Bulb out of the MoneySavingExpert’s cheapest list. The government via Ofgen recently implemented a cap on energy prices to protect vulnerable customers (10, 11). But despite this it looks like most peoples energy prices will go up, with suppliers citing increased wholesale prices (12, 13, 14). Time to break out the coal braziers and pile up the logs, we’ve got a long winter ahead!
Have a great week,
The Shrink
Side Orders

Other News

Opinion/ blogs:

What I’m reading:

Smarter Investing by Tim Hale – essential reading

Religio Medici by Sir Thomas Browne – the theological and psychological reflections of a C17th doctor. This is turning out to be real heavy-going so has been ignored a bit.

Enchiridion by Epictetus – Bedside reading for a bad day

 

References:

  1. https://www.moneysavingexpert.com/utilities/you-switch-gas-electricity/
  2. https://www.telegraph.co.uk/bills-and-utilities/gas-electric/british-gas-make-customer-services-listen-complaint/
  3. https://www.thesun.co.uk/money/7154739/british-gas-customers-waiting-38-minutes/
  4. https://www.theguardian.com/business/2018/aug/29/british-gas-pays-out-265m-pounds-for-overcharging
  5. https://www.bbc.co.uk/news/business-45111743
  6. https://www.moneysavingexpert.com/cheapenergyclub
  7. https://flipper.community/
  8. https://www.moneysavingexpert.com/news/2018/09/bulb-price-rise/
  9. https://www.thisismoney.co.uk/money/bills/article-6155853/Bulb-customers-hit-price-hike-energy-providers-raise-prices-time-year.html
  10. https://www.theguardian.com/business/2018/aug/20/rise-in-power-bills-expected-despite-government-cap
  11. https://www.telegraph.co.uk/bills-and-utilities/gas-electric/does-ofgems-price-cap-mean-dont-need-switch-energy-supplier/
  12. https://www.bbc.co.uk/news/business-45095030
  13. https://www.bbc.co.uk/news/business-45297336
  14. https://www.independent.co.uk/news/business/news/sse-energy-price-cap-ofgem-gas-electricity-bills-share-price-profit-warning-a8533856.html
  15. https://www.theguardian.com/business/2018/sep/14/archbishop-of-canterbury-to-lead-wonga-rescue-effort-payday-loans
  16. https://www.bbc.co.uk/news/business-45516678
  17. https://www.theguardian.com/business/2018/sep/15/low-prices-no-frills-can-tesco-defeat-lidl-and-aldi
  18. https://www.bbc.co.uk/news/business-45371502
  19. https://www.hl.co.uk/investment-services/active-savings?clickid=27kUVE08pSocXyqW5fRnFzyIUkg2h0UQPV2z1s0&iradid=82616&theSource=AFSKI&utm_campaign=AFSKI_IMPR1&ir=1
  20. https://www.thisismoney.co.uk/money/saving/article-6159671/Barclays-launch-new-fixed-rate-savings-account-aimed-retirees.html
  21. https://www.thisismoney.co.uk/money/diyinvesting/article-6155463/Dont-invest-cheap-trackers-Hold-mix-active-passive-funds.html
  22. https://theescapeartist.me/2018/09/05/this-is-an-emergency-part-2-dealing-with-time-wasters
  23. https://theescapeartist.me/2018/09/12/live-local-think-global/
  24. https://youngfiguy.com/social-media-is-poison/
  25. http://monevator.com/commercial-property-what-can-we-expect-from-this-asset-class/
  26. http://monevator.com/weekend-reading-download-a-free-e-version-of-ray-dalios-new-big-debt-crisis-survival-handbook/
  27. http://www.msziyou.com/patriarchy-ever-pervasive/
  28. http://www.retirementinvestingtoday.com/2018/09/the-wealthsimple-experiment.html
  29. https://www.ukvalueinvestor.com/2018/09/guide-to-dividend-investing-for-beginners.html/
  30. http://diyinvestoruk.blogspot.com/2018/09/help-to-save-scheme-launched.html
  31. http://diyinvestoruk.blogspot.com/2018/09/uk-v-global-investment-returns.html
  32. http://diyinvestoruk.blogspot.com/2018/09/mid-wynd-full-year-results.html
  33. https://gentlemansfamilyfinances.wordpress.com/2018/09/11/help-to-save/
  34. https://gentlemansfamilyfinances.wordpress.com/2018/09/10/airbnb-and-me-part-1/
  35. https://gentlemansfamilyfinances.wordpress.com/2018/09/11/house-hacking-airbnb-part2/
  36. https://abnormalreturns.com/2018/09/13/you-do-you-passive-investing-edition/
  37. https://quittingteachingblog.wordpress.com/2018/08/21/in-defence-of-private-landlords/

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Full English Accompaniment – On Brexit, social psychology and market timing

What’s piqued my interest this week?
I’ve been reading Tim Hales Smarter Investing over the last couple of weeks, which appears considered essential reading by most FI/ passive investment sources (1). It has prompted me to write down a philosophy and a draft set of goals for my investment plans. One of the cautions is against market timing, because it’s very statistically difficult to be good at it, incorporating not a small amount of luck. Much better to go Bogle, and buy then hold a low cost tracker (2). So far, so sold.
There’s another section of the book which documents how one of the most important, most overlooked parts to a portfolio decision is target country allocation. This is where I’m currently stuck, as Brexit presents a big hit of unknown outcomes, and is turning my market timing milk sour. Oh look, another r/UKPersonalFinance post triggered me (I’ll cut out all the Reddit relevant-only bits)…

Everyone, put on your tin-foil hats and join me on a journey considering a Brexit scenario…

I’ve personally suspected that Brexit is being pushed along despite it outwardly, appearing to be in no-one’s interests perhaps as a textbook example of Naomi Klein’s ‘Disaster Capitalism’ but maybe just as a way for massive money to be made from the lurches in exchange rate and FTSE etc.

So one outcome I suspect is that the pound will stay relatively weak to the EUR/USD etc, keeping the FTSE reasonably high, until we suddenly hit a point where it gets revealed we’ll basically stay in the EU (or EEA), perhaps after a 2nd referendum, so…

If the timeline of this is the next 6 months, how will the politicians and their chums be looking to maximise the person financial benefit to themselves? Assuming a, say, 15% increase in the value of the pound, and 10% drop in the FTSE 100, would they be looking to sell most investments, have cash and then be ready to re-invest after the correction?

What would you do in this scenario if you had this inside information? (3)

This is a little tinfoil hat brigade, although the murmuring the Nigel Farage shorted the value of the £ when he found out the result of Brexit before it was officially released could provide some evidence (4). An ex-investment banker wouldn’t call up his mates still in the industry with privy information would he? The main issue I have with the above is that it appears to go against the political wind and public opinion polls. The Conservatives and Labour are both loath to go back on the stated plan to exit (would be seen as weak?), and YouGov’s last poll in July found that a fraction greater percentage thought Brexit was the wrong decision than didn’t (5). Opinion polls may be a pretty poor judge, but they’re not so bad as to miss half the nation suddenly decided they do want to stay in the EU, after all (6).
Brexit therefore represents a challenge to the efficient market hypothesis (7). Pre-Brexit vote, a commentator in Forbes discussed how the referendum would represent an excellent testbed for efficient markets (8). It truly did, as the unexpected (to the city) voter decision was integrated into share prices in a number of hours. The fact that the referendum result was unexpected and therefore prompted such a dramatic shift in the markets challenges the efficient market hypothesis, and specifically what makes it efficient. The efficiency relies upon the sum of all the traders individual access to information. To bring it round to psychological terms, it is a form of social Gestalt theory, where the individual chaotic pieces of information/ action contributes to a total pattern (9, 10). Market traders were unaware of the depth of feeling in favour of Brexit prior to the vote (those pesky polls again), and were suddenly exposed to it and integrated it into the markets on referendum day.
But why were market traders so unaware? I wonder that the possibility of a Leave vote did not comply with the collective conscience of market traders and ‘the city’ and therefore was not appropriately considered by the markets (11). To go back to Durkheim’s original use of collective consciousness (very separate from Jungian collective unconsciousness), it is the ‘general feeling’ towards a position, experienced and perceived by the individuals in the collective (11). A shared unconscious understanding of social norms. In the city, it was a social norm to be pro-EU. In the general populace, not so much. Therefore the true risk of a Leave vote to the markets was a Rumsfeldian ‘unknown unknown’. To be pro-Leave in London pre-Brexit went against social norms, it didn’t fit with the social reality constructed in that environment, even if it did fit with the social norms and social reality of the wider UK (12).
Which brings me to my market timing and allocation conundrum. The market is efficient when it is integrating information which makes sense within it’s system; IPOs, sales data, quarterly returns etc. It appears less efficient at integrating popular opinion and behaviour. The market is vulnerable to collective psychological effects (herd behaviour etc), and changes in the market are made by people. The people who change the market (traders etc) operate in a different social world (‘social reality’) to the general populace, by nature of their social interactions. Yours is visible in day-to-day life in your twitter or social media sphere, which may differ from general public opinion. The markets will therefore be generally running on the market traders social reality, whilst the rest of us live in a slightly different social reality. Politicians span the divide, but take their lauded mandate from the general populace’s social reality. The difference comes to the fore when the market has to integrate decisions which are made by the wider populace that didn’t fit with it’s reality, e.g. Brexit. The reddit comment quoted above appears to sit well within the market reality bubble; we’ll stay in the EU in the end, it’s all a sideshow. My concern is that the general populace appears fairly relaxed about a ‘No-deal’ Brexit. Knowing that we’re a few short months out of formal Brexit, do I choose allocations based on that worry which insulate against this outcome. Does even thinking about this represent market-timing, and I should just bung my cash ‘somewhere’ and sit it out. Your opinion welcome here…
Have a great week,

 

The Shrink

 

Side Orders

Other News

Opinion/ blogs:

What I’m reading:

Smarter Investing by Tim Hale – essential reading

Religio Medici by Sir Thomas Browne – the theological and psychological reflections of a C17th doctor. This is turning out to be real heavy-going.

Enchiridion by Epictetus – Bedside reading for a bad day

 

References:

  1. https://www.amazon.co.uk/Smarter-Investing-Simpler-Decisions-Financial/dp/0273785370/
  2. https://www.bogleheads.org/wiki/Getting_started
  3. http://www.reddit.com/r/UKPersonalFinance/comments/9cnsqj/the_potential_effect_of_a_massive_shift_in
  4. https://www.theguardian.com/politics/2018/jun/25/nigel-farage-denies-shorting-value-of-sterling-on-night-of-brexit-vote
  5. https://yougov.co.uk/news/2018/06/23/eu-referendum-two-years/
  6. https://www.nature.com/articles/s41562-018-0330-7
  7. https://www.investopedia.com/terms/e/efficientmarkethypothesis.asp
  8. https://www.forbes.com/sites/timworstall/2016/02/22/brexit-uk-financial-markets-and-the-efficient-markets-hypothesis/#31ab82161667
  9. https://www.britannica.com/science/Gestalt-psychology
  10. https://en.wikipedia.org/wiki/Gestalt_psychology
  11. https://en.wikipedia.org/wiki/Collective_consciousness
  12. https://en.wikipedia.org/wiki/Social_reality
  13. https://www.thisismoney.co.uk/money/pensions/article-6130445/Will-council-force-sell-house-cover-dads-care-bills.html
  14. https://www.thisismoney.co.uk/money/cars/article-6138267/A-1979-Lada-Niva-estimated-sell-75-000-goes-just-4K.html
  15. https://www.theguardian.com/money/2018/sep/07/house-prices-rose-at-fastest-rate-in-almost-year-says-halifax-august-north-south
  16. https://www.theguardian.com/uk-news/2018/sep/05/thinktank-calls-for-major-overhaul-of-britains-economy
  17. https://www.thisismoney.co.uk/property/article-6106049/A-downstairs-family-bathroom-lowers-property-value-6.html
  18. https://www.thisismoney.co.uk/money/news/article-6080099/Are-Monzo-Revolut-Starling-Transferwise-safe-bank-with.html
  19. http://monevator.com/10-things-you-can-do-today-to-reset-your-life/
  20. http://monevator.com/weekend-reading-what-is-your-reason-for-being/
  21. http://thefirestarter.co.uk/my-5-years-are-up-how-did-i-do/
  22. http://thefirestarter.co.uk/august-income-expenses-report-a-bit-of-an-odd-one/
  23. https://thefireeng.com/net-worth-update-august-2018/
  24. http://www.msziyou.com/yes-i-am-rich-now/
  25. http://www.msziyou.com/net-worth-updates-august-2018/
  26. http://www.mrmoneymustache.com/2018/09/05/what-really-goes-on-at-mmm-headquarters/
  27. http://theirrelevantinvestor.com/2018/09/04/gold-what-is-it-good-for/
  28. https://www.ukvalueinvestor.com/2018/09/sold-senior-plc-after-recent-share-price-gains.html/

The Full English Accompaniment – Diversification is sustainability stupid

Dear Readers,

A bit of a late Full English Accompaniment this week, as I’m working so typing away at posts in between seeing patients. MrsShrink and I have been for a holiday, a break from IT and a pause for reflection. I’ve finally been reading Tim Hale’s Smarter Investing (1), and this has prompted me to make some changes to my blogging process. One of the key points in the early chapters of the book is to turn down the volume; that most media reports, opinions and news about the market are confusing senseless noise and to make smarter investments you need to tune out the static. In a conscious effort to decrease my own contribution to that noise I’m going to reduce the quantity of my posts, and aim to  maintain a high quality. This means that the Full English will become an as-and-when type affair, for thoughts that aren’t significant enough to warrant a full Musing on… post. I’ll still aggregate other posts I’m reading each time, and other categories will continue at their current frequency. For now…

What’s piqued my interest this week?

Part of our recent holiday was spent in an AirBnB on a rural farm. Coming from a country background I was to be found discussing the owners business strategy and farming approach. Their (relatively) small acreage struggled under intensive farming methods to produce a profitable crop; the soil would need continuous improvement for arable, the setting meant high winds were common with minimal cover and they lacked the scale required to make cattle or similar sustainable. To make ends meet they had diversified. The farm now had a small sheep herd, a deer herd and a small number of hardy cattle. The owners had also converted farm buildings to cottages and flats for AirBnB, and worked a part time job for the local government. For many small farmers this is the only way to survive. Big farms in areas of poor fertility also struggle to find profits, as this fantastic comment piece in the Guardian outlines (2). As consumers, diversification of our food intake is healthier too. In agriculture, just as in finance, diversification brings sustainable profits.
Have a great week,

 

The Shrink

 

Side OrdersOther News

Opinion/ blogs:

What I’m reading:

Smarter Investing by Tim Hale – essential reading

Religio Medici by Sir Thomas Browne – the theological and psychological reflections of a C17th doctor. This is turning out to be real heavy-going.

Enchiridion by Epictetus – Bedside reading for a bad day

 

References:

  1. https://www.amazon.co.uk/Smarter-Investing-Simpler-Decisions-Financial/dp/0273785370/
  2. https://www.theguardian.com/commentisfree/2018/aug/25/veganism-intensively-farmed-meat-dairy-soya-maize
  3. https://www.telegraph.co.uk/business/2018/08/18/interest-rise-leaves-first-time-buyers-facing-extra-mortgage/
  4. https://www.theguardian.com/money/2018/aug/20/no-deal-brexit-personal-finance-what-does-it-mean
  5. https://www.newsweek.com/donald-trump-says-windmills-are-bird-killers-he-tries-revive-coal-industry-1079910
  6. https://www.bbc.co.uk/news/business-45244761
  7. https://www.theguardian.com/environment/2018/aug/23/europe-to-ban-halogen-lightbulbs
  8. https://www.independent.co.uk/environment/scotland-floating-turbine-tidal-power-record-sr2000-scotrenewables-ofgem-a8503221.html
  9. https://www.theguardian.com/society/2018/aug/19/governments-care-isa-plan-dismissed-by-sarah-wollaston-tory-health-committee-chair
  10. https://www.bbc.co.uk/news/health-45354846
  11. https://www.fool.co.uk/investing/2018/08/20/a-ftse-100-dividend-stock-that-should-pay-you-for-the-rest-of-your-life/
  12. https://www.physicianonfire.com/early-retirement-doesnt-suck/
  13. http://awealthofcommonsense.com/2018/08/a-short-history-of-emerging-market-corrections-bear-markets/
  14. http://awealthofcommonsense.com/2018/08/buying-emerging-markets-after-a-disaster/
  15. http://www.thisismoney.co.uk/money/investing/article-6078749/Top-income-investments-trusts-revealed-British-American-tops-table.html
  16. http://www.thisismoney.co.uk/news/article-6092439/Half-Britains-bank-branches-closed-five-years.html
  17. https://theescapeartist.me/2015/03/02/the-aggregation-of-marginal-gains/
  18. https://theescapeartist.me/2018/08/28/to-defeat-your-enemy-you-must-first-know-your-enemy-part-2/
  19. https://www.ukvalueinvestor.com/2018/08/ted-baker-dividend-growth-stock.html/
  20. https://www.ukvalueinvestor.com/2018/08/sage-dividend-growth-stock.html/
  21. https://deliberatelivinguk.wordpress.com/2018/08/29/why-you-should-calculate-imputed-rent/
  22. https://youngfiguy.com/when-cash-was-king/
  23. https://youngfiguy.com/insolvency-and-carillion/
  24. https://youngfiguy.com/was-carillion-like-a-ponzi-scheme/
  25. http://quietlysaving.co.uk/2018/09/02/august-2018-plus-other-updates/
  26. http://monevator.com/weekend-reading-automatic-for-the-people/
  27. https://firevlondon.com/2018/08/20/overdiversity/
  28. https://firevlondon.com/2018/08/13/recalibrating-my-portfolio/