November 2022 – Musing on… The death of the NHS, long live the NHS.

Delayed by the miserable flu-like illness going round.

This post has been a long time coming, hence the old ‘musing on’ title. It’s sat in my drafts as I’ve watched things gradually crumble across the NHS. Things are now so bad I see open discussion in doctor’s forums about futures in private healthcare, and no denial that the NHS has already collapsed (1). Therefore I guess this post will lead into some musing on how the death of the NHS will affect FIRE plans, and what you should do, if anything, about it.

But let’s take it back a bit first. I wrote the first collation of links, draft ideas and title for this post back in 2018. At that time I must have believed the NHS cold be saved, hence the “… long live the NHS” ending. I don’t think that any more. Not in it’s current form, or anything approaching the best treatments for everyone free at point of care. It’s dead wood now. Don’t believe me? Here’s an article and further evidence saying similar (2, 3):

I stood on the picket lines in 2016, arguing for a better contract, as we recognised that we were the first domino to fall before the conservative agenda. Since then below inflation increases to funding have not just impoverished but actively harmed as the populations gets older, fatter and sicker. The British public have been fed an expectation that they can live their life how they want and the NHS will patch them up. Not all have swallowed it, and the sensible continue to take responsibility for their health and quality of life, but for many we are expected to fix the problems of a lifetime of neglect, in a system itself neglected for a generation (4). This is “the national conversation”, that c-suite healthcare managers and politicians are starting to talk about. The NHS and social care system will not be able to support the needs of the coming elderly. It’s going to be a seriously hard lesson for some folks. A bitter pill.

Public Sector Fixed Investment in Healthcare as % of GDP, adapted version pinched from Twitter, originally from this article (5)

Back in 2016 it probably was saveable. Do you remember in 2017 when the Conservative Party were talking about the “dementia tax” in the run up to the election (6, 7). It was a big thing at the time, caused lots of pushback and was canned because the public didn’t like it. It was exactly the sort of hard thing that needed to happen, which the public wouldn’t like but which would save the system. The issues with the social care system were known then, and the issue was kicked down the road, snowballing as it went. It’s not just the Tories, it should have been reformed in the 90s, but Blair dodged it (6).

The under-funding, under-resourcing and under-supply of social care, particularly for the elderly in the community, backs up the systems into hospitals. Hospitals then have fewer beds available. Since 2020 some of those beds are also taken up with COVID patients (8). Per this IFS report, “the number of beds available for non-COVID activity in the third quarter of 2022 was still lower than pre-pandemic” (8). Additional funds from the government cover only half the increase on costs of inflation. Flow is slower, with people taking longer to discharge, with fewer admissions (they’re just discharging people at the front door who are more unwell) and fewer procedures (8).

The number of staff working for the NHS has gone up by between 8-15% since 2020 (8, 9). Accounting for increased staff sickness that still means more FTE bodies on the shop floor. It’s unlikely to last, as COVID stopped the fairly common practice of junior doctors post foundation year but pre-registrar training jetting off to the antipodes for a few years working R&R. Everyone stayed put as they couldn’t travel, those who were abroad came home to be near family during the pandemix, and doctors just got on with the business of the next stage of training whilst accumulating PTSD from COVID. Now 45% of junior doctors want to leave the NHS (10). Many are planning to leave medicine altogether. The Daily Mail comments (in fact the whole article) on that story is a shitshow: “Nurses and doctors should get free education but contracted to NHS for 10 years or pay for education”; “We need to be recruiting our own people to be doctors and nurses, using health professionals from abroad is not the answer(11). On the former, most of the money from the government to universities that goes towards our clinical training (by being paid to the NHS for placements) actually just serves to subsidise healthcare. I went to plenty of placements in med school where the clinic time was part funded by my education and I got little learning except as a ward dogsbody. Which is a kind of learning I guess. Some of that payment is still being recouped as my student loan.

On the latter Daily Mail point, finding the people to recruit isn’t always the problem. The gov has increased university medical school places (nice earner for the unis) without increasing the corresponding first year junior doctor posts. Consequently people are graduating medical degrees without a job to go into (12). If you’re lucky enough to get a job, which might be hundreds of miles from family and friends (it was for me), then you can be stuck essentially providing service provision with minimal support for onward training. If you grind through training, paid £12-20/hour to make life or death decisions, then maybe you get to be a consultant. Or you step off the grind, and use the free market economy of locum work to discover your real >£100/hour value (doctors and nurses here) (13). And the NHS wonders why it has a staffing problem (14).

The FIRE bit

Ok, so why does this matter for FIRE. Well if you’re planning for FIRE that should probably include the bit where you get older. That means including old age care, and the chance that you might have chronic illnesses. Something people consistently underestimate, as I wrote about back in 2018. Monevator did an excellent series over the course of 2022 trying to fill in the blanks of how old age social care funding works (15). It’s a big black box of future financial risk that people ignore because it’s scary and complicated. Helpfully the Monevator post does offer a route through, but it’s a messy job.

What happens if the NHS does morph into a different form. It can’t stay as it is, and to make it free for everything everyone wants all the time is going to cost a lot of tax. I suspect we will shift towards the NHS covering urgent/ emergency work, and all elective work being done privately (the lucrative bit anyway). National insurance shifting to covering social care, and an expectation that each individual pays for a hybrid health insurance, like France and Germany. Could or would you cover private insurance in your FI number? TEA and the Mad Fientist kind of discussed this in their chat back in 2021 (16). A sort of self-insurance. If you don’t want to do that, and are as equally pessimistic about the extent to which the NHS will be able to save your bum in the future as I am, then factoring in a degree of flex for private insurance might be an option. In France it seems to be about 40 euro a month, and covers medication and extra services on top of their semi-national health care (17). In Germany it’s 14.6% (+0.9% charge) of your income, though it’s a lot more complicated (18, 19). We don’t want to go the route of the USA, where health insurance is a persistent barrier to FIRE (20). Over there getting sick means debt, financial toxicity (21). I can’t see the UK public stomaching that, although it may insidiously spread.

Ultimately, things can’t stay the same as they are (22):

That means either more tax, or some form of private healthcare. Impossible to predict the future on it, but expect a bigger budget line in the future, and factor in some inflation in FIRE modelling.

Other interesting stuff (usually from Twitter):

Fairly awe-inspiring application of the GPT3 chat AI by Danny Richman on Twitter, which shows what could be done (23).

Graphic from r/dataisbeautiful user u/jcceagle which shows how UK housing is at it’s most unaffordable since the Victorian era (24):

Thread from @CarDealershipGuy on Twitter discussing looming issues in their car market caused by price inflation (and now deflation) and knock on effects (25).

A window into what happens when you go from no COVID to all the COVID, provided by a threat from a Doctor with access to China’s healthcare system (26).

Nils Pratley in the Guardian on Curry’s (27).

November 2022 Finances

Here’s the numbers:

These are taken, as always, from my Beast Budget spreadsheet. I saved an anomalous 60% of my income in November. This figure is actually a bit skewed, as a got a large wodge of expenses paid back, which immediately went into paying off the associated credit card bill (and basically balancing out). I also got backpaid for a bit of private work, so that topped up the regular saver (emergency fund). Some will also get invested in passive trackers naughtiness. My net worth finally bounced back up thanks to paying back that credit card, up 3% this month.

Budgets:

As compared to my four year back-calculated mean monthly spend:

  • Groceries: October £330, November £155, budget £220 – Being much more sensible pays off
  • Eating out & Takeaway: Oct £105, Nov £160, budget £50 – But also this…
  • Transport: Oct £280, Nov £270, budget £330
  • Holiday: Oct £10, Nov £0, budget £40
  • Personal: Oct £465, Nov £100, budget £120
  • Health: Oct £52, Nov £52, budget £150
  • Misc: Oct £699, Nov £620, budget £215 – Nursery – a continuous new line on the budget
  • Work fees: Oct £394, Nov £135, budget £265 – A reminder this is what I pay each month to be allowed to be a doctor in the UK. I can claim it back via self-assessment tax, but that’s it, big NHS says suck it up.

In the garden:

Digging over compost and general tidying only.

Cheers,

The Shrink

References:

  1. https://www.reddit.com/r/JuniorDoctorsUK/comments/zaufaq/at_what_point_do_we_conclude_that_the_nhs_has/
  2. https://twitter.com/KHoulgate/status/1604979026199576576?s=20&t=Hdg5t5XvjkI2iseBXZLtOQ
  3. https://www.theguardian.com/society/2022/nov/27/stress-exhaustion-1000-patients-a-day-english-gp-nhs-collapse
  4. https://www.reddit.com/r/JuniorDoctorsUK/comments/zbdcvi/frustrated_with_being_a_sticking_plaster_on_our/
  5. https://www.ft.com/content/2f1d62ee-bc1b-4eae-bebd-f4e32076bcd5
  6. https://www.bbc.co.uk/news/health-45750384
  7. https://www.bbc.co.uk/news/election-2017-40001221
  8. https://ifs.org.uk/news/nhs-2022-more-funding-more-staff-treating-fewer-patients-covid-impacts-linger
  9. https://www.gov.uk/government/news/record-numbers-of-staff-working-in-the-nhs
  10. https://www.businesswire.com/news/home/20220808005334/en/Nearly-1-in-2-Junior-Doctors-Are-Considering-Leaving-Their-Profession-Medscape-UK-Report-Finds
  11. https://www.dailymail.co.uk/health/article-11579113/Four-10-junior-doctors-plan-quit-NHS-soon-possible.html
  12. https://www.theguardian.com/society/2022/mar/15/791-medical-graduates-could-miss-out-on-nhs-junior-doctor-training
  13. https://www.bbc.co.uk/news/health-63588959
  14. https://www.ft.com/content/3f8c35ed-e7b6-4f96-b965-a2b97bee45cc
  15. https://monevator.com/social-care/
  16. https://www.madfientist.com/escape-artist-interview/
  17. https://www.internations.org/france-expats/guide/healthcare#:~:text=In%20France%2C%20the%20average%20cost,types%20of%20health%20insurance%20plans.
  18. https://www.academics.com/guide/health-insurance-germany
  19. https://www.howtogermany.com/pages/healthinsurance.html#brexit
  20. https://www.reddit.com/r/financialindependence/comments/8zx7iq/health_insurance_as_a_barrier_to_fire_in_the_usa/
  21. https://www.amjmed.com/article/S0002-9343(18)30509-6/fulltext
  22. https://twitter.com/ShaunLintern/status/1609895676153925632?s=20&t=QL0jTgTMJFjlHkR2oakn3g
  23. https://twitter.com/DannyRichman/status/1598254671591723008?s=20&t=RmBfIA8Hg3iFCkEj8D6cug
  24. https://www.reddit.com/r/dataisbeautiful/comments/zktc6r/oc_uk_housing_most_unaffordable_since_victorian/
  25. https://twitter.com/GuyDealership/status/1603794722140688384
  26. https://twitter.com/DrEricDing/status/1604748747640119296?s=20&t=jQjVmvTlJu_8Hfj823eWRw
  27. https://www.theguardian.com/business/nils-pratley-on-finance/2022/dec/15/currys-no-longer-flavour-of-the-month-in-the-scando-countries
Advertisement

Quarterly Returns – Q3 2022

Quarterly return posts supplement my monthly Financial Dashboard, covering investments in detail and looking at my yearly targets. Here I track purchases and sales, document progress against my (in progress) investment strategy, and discuss re-balancing and changes over time.

TL:DR Flatline of minimal savings, uptick thanks to property value increase.

Net Worth tracked over 2022

Q3 Returns:

  • Cash Accounts £11,100 (+£700)
  • Investments £12,050 (+£250)
  • Property £70,600 (+£11,100)
  • Cars £8000 (-)

My net worth at the end of Q3 2022 has jumped around £10k. This is purely down to our quarterly review of what Zoopla and Rightmove reckons out house is worth. As previously mentioned, some bonkers person bought (a very extended and tarted up) house on our perpendicular street of the same age and type as ours for £100k over the previous local ceiling price. This, plus a 7 bed HMO up for half a million, has pushed the local valuations up about 25%. I don’t completely believe it (more on that in my October 2022 Financial Dashboard), but it’s what the paper valuation says. Our location is also potentially a bit insulated from any property price fluctuations as it remains in high demand for first-time buying young families/ professionals (maybe wishful thinking). Otherwise my investments are flat, while my savings have gone up a bit offset by work costs on a credit card (which are pending expense acceptance).

Investments:

Core/ Satellite Passive/ Active Split

My 2022 Financial Year ISA is in Vanguard. Still not paid anything in. No spare cash while I build back up my emergency fund. £5k of outstanding invoices for private work may solve that. In my Freetrade ISA account from last year I reinvested some dividends. As I’m overweight active investments I bought a bit of iShares EM ETF (promptly down 5%), and then threw my best-laid plans out the window by also opening a new position in Scottish Mortgage Trust. They have been on my watch list for years, as I sat on the sideline as they went stratospheric to a November 2021 high of around £15.40. Since then they’ve fallen around 50%. I bought at ~£7.80, and they’re now around £7.50 (another 5% loss), and priced more fairly. Some sources seem to have around a 15% discount to NAV, but who knows given the amount of early stage stuff they hold. I like pretty much all of their top holdings, their ethos and approach, and will probably expand this position gradually balancing against my passive holdings.

My general equity holdings are down over the quarter, alongside everything else in the market. That has pushed me further into imbalance, as my crowdfunded holdings have also increased. Freetrade did an 8th (!) round of crowdfunding, but I didn’t partake as I’m a bit dubious as to their plan for growth, burn rate, and general direction vs competitors. It did give me a new approximate price per share, so updating that puts me at about a 250% return. More boring investing needs to be done in Q4, but I’ll likely still be restricted to sticking cash in savings accounts.

Passive to active split of the portfolio
Holding class

Goals

In terms of goals for 2022:

  • Save 35% of my income – 40% prediction

This looks basically impossible now. Kids cost money.

  • Save £8k towards a new car – 40% prediction

Completed in Q2.

  • Finish the house renovations – 75% prediction

Very little progress on this this quarter, as we were variously ill, then away on holiday, then seeing family/ friends. I’ve booked a few days annual leave to finish some brickwork and rendering (weather permitting), and hopefully will find time to build a new log shed. The final pieces of the puzzle after that are a new patio and repainting the hallway. All takes time, and that’s in short supply. It may be that it gets finished over the Christmas period, but we’ll see.

Happy autumn,

The Shrink

September 2022 – A solution to the productivity crisis

WARNING: Musing on macro-trends ahead.

Hat-tip /u/Snkssmb on /r/CasualUK

Dry wit emerges and casts into light an uncomfortable truth.

The UK is economically bollocksed.

It would seem we’re currently at an awkward crossroads, 30 years in the making, and leaders in the next five years will decide decades of future. How and why? In the (rose-tinted) view of the Industrial Revolution the UK built it’s economy on empire (slaves, colonies, stealing stuff), technology and cheap labour (workhouses). The lead was so striking that it took the first world war to knock us off our perch, and the following 50 years were one of loss of a century of economic lead punctuated by the second world war. (There’s an argument we’re still winning at global Civ via culture victory). Come the ’80s, Thatcher yanks the handbrake and powerslides us out of industrial-focus to financial-focus. Vis-a-vis the rise of London finance as the engine room of the British economy. If you’re outside of a 50 mile radius of London then you’re irrelevant, and your contribution to a productive economy was essentially on attentional tick-over. Just enough funds and support to keep going and maintain an attempt at a standard of living.

I was reading an Atlantic article that was arguing that Britain’s current nadir is resultant from the 2008 financial crisis, fear amongst the banks, the subsequent austerity policies, and the xenophobia which added fuel to the Brexit fire (1). I half agree, but I don’t think you can blame it all on that. I think it’s more about the people left behind outside of the M25. Without a positive vision for their future, those people looked to a past where their wages bought more and their (childhood) quality of life was better. Here’s a great cost-of-living post from r/CasualUK (2):

So that household is supported by a single individual’s pay. There’s a reasonable standard of living, even if some things are a stretch. How much of current consumerism improvements to people’s existence is masked by decreased prices on items around the home?

We’re not the only ones facing this economic change. The rest of Europe has it too, but it never quite de-industrialised/ centralised to the extent of post-Thatcher Britain, and never became so reliant on their own equivalents of London financial cash, so they don’t have so far to fall (3). The pivot to the World Bank of London has left millions of people in the provinces with less incentive for productivity, creating a generational attitude. I think that’s what Truss, Kwarteng et al are tapping into in their “Britain Unchained” booklet (4). Unfortunately they lay the fault at the foot of the individual, not the collective culture:

“The British are among the worst idlers in the world,” they wrote. “We work among the lowest hours, we retire early and our productivity is poor. Whereas Indian children aspire to be doctors or businessmen, the British are more interested in football and pop music.” (4)

Alright, complain about laziness, idleness, sloth and lack of productivity, but God forbid they actually explore the reasons why.

The engine room

We come back to productivity. The UK is no more productive now than it was 10 years ago (5, 6). COVID hasn’t helped, but it’s not like we were on a parabolic trajectory. Output per hour is increasing by factions of a percent (6):

Prior to 2008 productivity rose about 2% a year, and since then it’s stalled (7):

Productivity since 2000, from October 2022 Productivity House of Commons Research Briefing (7)

We’re living in a political culture of finger-pointing blame. Truss, Kwarteng et al seem to reckon it’s lazy people, not working long enough hours or hard enough (at what job I wonder?!), whilst the movement that fuelled Brexit pointed at foreigners either taking jobs or making political decisions. They’re all keen to say the problem is x or y’s fault, and therefore the solution is to target x or y. Hence Brexit. Hence Truss-onomics. In my work with people in therapy often a solution is not to focus on why or who is to blame, but where we are now and how we get out of it.

Truss’ idea about growth wasn’t necessarily wrong, but the methods via unfunded tax breaks and what essentially amounted to trickle-down economics were those of an idealistic undergraduate’s. They lacked a knowledge of the world outside of insulated belief. We’re probably in a recession, and a “doom-loop” of low-growth, low productivity, low investment (8).

Hat-tip /u/what_am_i_not via r/dataisbeautiful

A solution

Part of the proposed ongoing solution is to get more skilled people into work. Rich, skilled workers are retiring early, leaving a skills gap in the economy (9). That means you, FIRE advocate and believer. The government wants your skills back in work. Business leaders want your skills back in work (10).

Underlying this lots of people over 50 have left work since 2020, reversing a trend that held since the 1970s of people working longer (11). Those people can afford to. Skilled workers are richer (9). They have Defined Contribution pensions that have sat in the market for long periods, and now due to pension freedoms (short-term gain) they can do with that money as they wish. What they wish is retiring early. FIRE are the early achievers. 40 years ago a Defined Benefit pension usually meant working to a set age (or taking a trade off to retire early). You had to work, you had no choice. Now the choice is yours.

I actually lay part of the blame for this productivity issue at the feet of passive investments. I tried to read up on links between passive investment strategies and decreased productivity, but could find nothing macro. It all focused on dilution of company management and loss of productivity in individual companies, e.g. Forbes and the Atlantic (12, 13). My opinion is that the rise of passive investing has meant self-management of investments is easier, so more people do it, so more people are aware of how much they have and how they could retire. As the markets go up, so do people’s passive investments, providing them with the financial resources to retire. I can’t find anything on what happens when your baby boomer population bulge all retires early thanks to passive investments dependent on these decreasingly productive companies. Maybe that’s a bit too Burry/ Cassandra.

Back to the UK and our relaxed, retired, educated workers. Living their best lives now they’ve FIRE’d. How do you get them back in work?

A large stick

You remove the thing that enables them not to work. You strip out the economic insulation protecting your older workers. A cynic would argue you could do this by:

  • Tanking the bond market that supports many retirement funds
  • Tanking the property market that supports buy-to-let property prices and the ‘capital return’ on investment properties
  • Pushing up interest rates such that mortgages on said buy-to-let or owned properties become difficult to pay without further gainful employment, whilst simultaneously removing tax and pro-BTL/property tax mechanisms.

I would argue that said cynic is attributing to strategy what could be attributed to stupidity and blind-luck. The result is the same. You force people back into work. That means you FIRE person.

A carrot

You don’t have to do the above, it’s just the alternative means doing quite a bit of tearing down of current institutions. If you’re buddied up with those institutions and people that’s not palatable. It’s massive reform, switching from finance and old industrial manufacturing to tech/ green industries. It’s what the EU are doing via their COVID Recovery Fund (3). But it means ignoring the existing big manufacturing companies, and not focusing on the Bank of London. It’s not what the Tories are currently doing. It would mean ignoring a lot of their historic voter base. They seem to be doing a halfway house by encouraging and promoting productivity via technology without diverting the economy away from it’s previous path. I wonder how much of that is down to being wedded to the idea of the City of London being the engine of growth, and how much is down to being friends with people in the City of London. Individual company improvement in productivity through technology is wonderful; you get huge net margins from your software profits without huge overheads of staff/ space (14). It doesn’t solve the wider issue at a population level. There’s a quote in that original Atlantic article about how the UK now has 50% more hand car washes and 50% fewer automatic machine car washes than it did in 2003 (1). Low skilled workers are cheaper than robots.

The strongest expert voices seem to suggest investment in human capital and infrastructure (5). Train people to do more skilled work, and invest (privately or publicly) in the facilities and environment to do that. Not just the workplace, but transport, internet services, healthcare, the lot. The people can be imported, or trained locally through university/ training centre expansion (5). We are well-placed to do this in some sectors; the UK is a world leader in biotech, and was in renewable energy infrastructure. It’s just not a quick fix. These are long-term policies, with few short-term gains, and lots of cost. If you’ve got two years until an election is it something you would want to do?

September 2022 Finances

Checking the assets and liabilities:

These are taken, as always, from my Beast Budget spreadsheet. I saved 39% of my salary in September. Its turns out that my pay had been miscalculated for the past 7 months, meaning juicy backpay. MrsShrink is back full-time in work now, and splitting house bills plus childcare between two full-time salaries is easier. My net worth is still stumbling around the £100k mark, and all saving this month was into boring monthly savers to recoup our emergency fund. That’s now sitting around the £5.5k mark and inching up.

Budgets:

As compared to my four year back-calculated mean monthly spend:

  • Groceries: August £317, September £234, budget £220 – Closer, and proving hard given current economic climates
  • Eating out & Takeaway: Aug £129, Sept £93, budget £50
  • Transport: Aug £170, Sept £220, budget £330
  • Holiday: Aug £0, Sept £330, budget £40 – We had a trip away, and blew the saved holiday pot on nice food and fun activities. I use a Starling pot to put aside £25-50/month and this seems to work well psychologically
  • Personal: Aug £62, Sept £75, budget £120
  • Health: Aug £52, Sept £52, budget £150
  • Misc: Aug £767, Sept £515, budget £215 – Nursery
  • Work fees: Aug £160, Sept £130, budget £265

In the garden:

Harvested tomatoes, squash, some salad crops, and started tidying ahead of autumn.

Cheers,

The Shrink

References:

  1. https://www.theatlantic.com/newsletters/archive/2022/10/uk-economy-disaster-degrowth-brexit/671847/
  2. https://www.reddit.com/r/CasualUK/comments/xhs119/i_found_my_greatgranddads_bills_from_the_1950s/
  3. https://hbr.org/2022/10/the-uk-economic-crisis-might-not-be-a-one-off
  4. https://www.npr.org/sections/money/2022/10/25/1130633196/britains-productivity-problem
  5. https://blogs.lse.ac.uk/businessreview/2020/03/07/if-the-uk-is-high-tech-why-is-productivity-growth-slow-economists-weigh-in/
  6. https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/labourproductivity/articles/ukproductivityintroduction/2022-10-07
  7. https://commonslibrary.parliament.uk/research-briefings/sn02791/
  8. https://edition.cnn.com/2022/10/25/economy/rishi-sunak-uk-economy-crisis-choices/index.html
  9. https://www.thetimes.co.uk/article/skilled-workers-ability-to-retire-early-is-creating-unhealthy-social-division-dhfh50263
  10. https://www.smeweb.com/2022/10/19/businesses-need-to-invest-in-older-workers-to-unlock-economic-growth/
  11. https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/articles/movementsoutofworkforthoseagedover50yearssincethestartofthecoronaviruspandemic/2022-03-14
  12. https://www.forbes.com/sites/greatspeculations/2020/06/01/the-hidden-dangers-of-passive-investing/?sh=36e4ce6a4d96
  13. https://www.theatlantic.com/ideas/archive/2021/04/the-autopilot-economy/618497/
  14. https://www.forbes.com/sites/adigaskell/2022/10/20/why-is-technology-not-producing-productivity-improvements/?sh=1cebe7a170e8

August 2022 – Things I wish I could invest in (part I)

I sometimes work in a University in a department with a tech-heavy focus, and am fortunate to have friends in the tech/ engineering industry. One of my school friends runs an engineering firm which they founded a decade ago (straight out of uni) and now employs 100 people and is going through Series C. Another friend runs an IT security start-up (which could be insanely disruptive), going through Series B. Various others work in interesting high-flying places. This is a long way round to say I hear about things socially which sound very interesting, and then I frequently get pissed off I can’t invest in them (along with questioning my career choices). So here are three:

Reaction Engines Limited

Start with the biggest, oldest, and possibly most well known, Reaction Engines Limited (1). A literal moonshot investment. They were founded in 1989 by three engineers who were ex-employees of Rolls Royce and BAe. Back in the day one worked on Project Daedalus (a UK design for a fusion-powered starship), and then together on the 1980s Horizontal Take-Off and Landing (HOTOL) spaceplace – particularly it’s rocket motor which could switch from air to vacuum (2). They developed an engine and associated pre-cooler, however details were covered by the Official Secrets Act (no shit). There were a lot of technical issues, the European Space Agency weren’t interested, and without them BAe, RR and the UK Gov pulled the plug (3). The main issues were around the heat exchangers, pre-cooling the air going into the engine. After BAe and RR canned the project, the lead engineers set up RE to continue development around the patents and OSA. They have spent the last 30 years developing the heat exchanger tech, including some massive technological and materials achievements, to a point where it is now doing static test firing in hypersonic conditions (4). They have investment from the British Gov, DARPA, and quite a bit from BAe. Given this, and the limited nature of the firm, I suspect what they’re telling the press is a bit off what is actually possible (5). Are they profitable? No. Are they likely to be any time soon? No. Could they produce a dramatic change in my lifetime? Yes.

TL:DR – UK company developing world-leading heat exchange and rocket engine technology to develop spaceplanes with US and UK gov interest.

Yasa Motors

These were founded in 2008, as a spin-out from Oxford University to develop electric motors (6). They developed a different form of electric motor (revisiting very early designs), Axial Flux over Radial Flux, which has 4x the power of standard electric motors used in EVs for half the weight and size (7). Essentially most electric motors in the world have the same basic principle; the coils are wound around the shaft (so radially) with a gap, and apply electromagnetic force in a turning direction to that shaft along the field lines, as per GCSE physics (I found myself pulling out the Right Hand Rule here). Yasa flip this, where the axis of flux is parallel to the desired rotation (8). They recently (July/Aug 2022) got bought out by Mercedes-Benz (9). Think this is probably a win for MB, as they will be able to licence the tech to people like Tesla (based on patents), or take a huge lead in power-to-weight and torque in electric vehicles.

TL:DR – UK company developing world-leading electric motor technology, now bought out by Mercedes-Benz.

Riverside.fm

Founded in 2019, this is an Isreali software developer who have a recording/ podcasting/ streaming service that works regardless of internet connection quality (10). I’ve come across a couple of media types using this for remote interview/ streaming recording, as it saves and records the content locally at higher quality. It’s also used by an enormous list of household name media outlets for their recording work. A work-around for the shit-quality of Zoom/ MS Teams calls, with a great UI. They finished a Series B round in April 2022 for $35 million and are growing like a weed (11). I remember a colleague using Zoom for a video call about five years ago, and this feels like that. I guess their main issue is how big can their market be (given they seem to have mostly cornered the business-side), and competition from Streamlabs (just streaming) and open-source stuff like OBS (more hobbyist than business) (12).

TL:DR – Israeli software dev for streaming and remote recording in high quality for broadcast.

Other Nonsense

I’m deliberately not discussing the shambolic government/ financial mess, because everyone else is. Here are some bits from social media I enjoyed:

Can’t remember where I found this. Somewhere on reddit. Apologies to the creator for not properly crediting.

August 2022 Finances

Behind as always. Checking the assets and liabilities:

These are taken, as always, from my Beast Budget spreadsheet. I saved just over 26% of my salary in August. Some of this was a one-off bonus for some locum work, which got swiftly shifted into the emergency fund. Keen eyes will notice further churn. I sold my old daily driver for £1000 locally, not bad considering I paid £2000 for it in 2014. I’ve kept accurate spreadsheets of all the costs, which I’ll share at some point. We also updated our estimated valuation for our house, and hence equity (valuation minus outstanding mortgage). Some absolute nutjob recently paid £100k more than the previous ceiling price for a, albeit seriously extended and tarted up, house a road over from us. This has pushed up the ceiling price, and hence what estate agents are asking. How long can this last? Difficult to know. We’re not in one of the really overblown areas, and we haven’t seen the insane price rises of the south east. Maybe we don’t have as far to fall.

Budgets:

As compared to my four year back-calculated mean monthly spend:

  • Groceries: July £186, August £153, budget £220
  • Eating out & Takeaway: July £60, Aug £129, budget £50 – I thought this looked wrong, but no, we actually just socialised a lot. Whoops
  • Transport: July £210, Aug £170, budget £330 – The new daily merely sips the crushed dinos
  • Holiday: July £0, Aug £0, budget £40
  • Personal: July £0, Aug £62, budget £120
  • Health: July £52, Aug £52, budget £150
  • Misc: July £67, Aug £767, budget £215 – This is the start of a new big spending line, nursery fees
  • Work fees: July £323, Aug £160, budget £265

In the garden:

Harvested potatoes and tomatoes, everything else ignored. Boo.

Cheers,

The Shrink

References:

  1. https://www.crunchbase.com/organization/reaction-engines-ltd
  2. https://en.wikipedia.org/wiki/Reaction_Engines
  3. https://en.wikipedia.org/wiki/British_Aerospace_HOTOL
  4. https://reactionengines.co.uk/high-mach-propulsion-technology-testing-begins/
  5. https://reactionengines.co.uk/delivering-the-future-of-uk-hypersonic-capabilities/
  6. https://www.crunchbase.com/organization/yasa-motors
  7. https://www.yasa.com/technology/
  8. https://en.wikipedia.org/wiki/Axial_flux_motor
  9. https://pitchbook.com/profiles/company/61050-34#overview
  10. https://riverside.fm/
  11. https://pitchbook.com/profiles/company/442463-59#overview
  12. https://en.wikipedia.org/wiki/OBS_Studio

Quarterly Returns – Q2 2022

Quarterly return posts supplement my monthly Financial Dashboard, covering investments in detail and looking at my yearly targets. Here I track purchases and sales, document progress against my (in progress) investment strategy, and discuss re-balancing and changes over time.

TL:DR Another quarter on tickover whilst we function as a household on just one income.

Q2 2022 Net Worth

Q2 Returns:

  • Cash Accounts £10,400 (-£6,200)
  • Investments £11,800 (-£900)
  • Property £59,500 (+£3,400)
  • Cars £8000 (+£4,000)

My net worth at the end of Q2 2022 has nudged up about £1,500, having wobbled all over the place. Most of the increase is down to mortgage repayments, as everywhere else I’ve been in the negative. I also replaced my trusty, crusty, rusty old daily with something more executive and suitable for ferrying the infantShrink. #Lifestyleinflation. Cash reserves were raided, and have not been topped up as we run the household on just my income while MrsShrink is off work on maternity leave. The markets have been bearish, with some moderate impact on me.

Investments:

Core/ Satellite Passive/ Active Split

My 2022 Financial Year ISA is in Vanguard, however I again didn’t pay in anything this quarter.  There was also no activity in my Freetrade account, as that slowly accrues dividends. I have further separated out my investment portfolio tracking to identify funds/ETFs and stocks/equities as individual sections of the pies. I’m heavily overweight active funds and stock at the moment, a combination hangover of putting some money into crowdfunding rounds and then a couple of companies massively outperforming the rest of the market. Time to be boring for a while in Q3/4.

Ratio of satellite active holdings to core passive trackers
Asset allocation ratios

Goals

In terms of goals for 2022:

  • Save 35% of my income – 40% prediction

Q2 continues Q1s poor run, as life events get in the way of a decent savings rate. I’m still hovering around the 20% mark, and it’s going to need some extra income (possible) or a fall in outgoings (in this economy?) to pull me up to the 35%.

  • Save £8k towards a new car – 40% prediction

Completed it mate.

  • Finish the house renovations – 75% prediction

Further progress, though not as quickly as I would like. Finished painting the exterior of the house on a hot week of annual leave, but there remains some flashing/ pointing/ rendering to be repaired. I have half an idea to book another week and lay a patio/ build a logshed to fill ahead of the winter. MrsShrink is busy painting the inside of the house in her time off, and the list of to-do jobs is gradually diminishing. We’re 90% sure we’re going to try and move at the tail end of 2023. The aim would be to get more space, but timing will depend on what’s for sale and the wider market. Our friend is still making noises about buying our house from us, which aids in flexibility – they’re a first time buyer with a deposit ready living in rented accommodation. Going with the flow a bit on that one, but getting damn itchy feet.

Happy, autumn all,

The Shrink

Quarterly Returns – Q1 2022

Quarterly return posts supplement my monthly Financial Dashboard, covering investments in detail and looking at my yearly targets. Here I track purchases and sales, document progress against my (in progress) investment strategy, and discuss re-balancing and changes over time.

Permanently chasing my tail on these, but it’s partly because I don’t have much interesting to share at the moment…

Q1 Returns:

  • Cash Accounts £17,600 (+£1,850)
  • Investments £12,700 (-£580)
  • Property £56,150 (+£1,100)
  • Cars £2000 (no changes)

My net worth has essentially tracked sideways, as money squirreled away in cash savings accounts gets offset by losses on the markets. The fact I can maintain my net worth at time when we’re running mortgage, nursery fees and all household bills on just my income is satisfying. I won’t say we’re lucky, hard work and budgeting have equal shares, but it was intentional that we could ‘manage’ in this sort of situation. Q2 will likely continue this vein, as MrsShrink doesn’t go back to work until Q3, and the baby is gradually upping her hours at nursery.

Investments:

Core/ Satellite Passive/ Active Split

My 2021 Financial Year ISA is in Vanguard, however I again didn’t pay in anything this quarter.  Activity in my Freetrade account was just topping up an existing holding in Unilever. (fancy a free share? Sign up to Freetrade using this link, and we both get one). I’ve got round to adding my crowdfunding account to my investment portfolio spreadsheet. This, combined with some good returns on my active stock selections and a fall on the trackers, means I’m now overweight on my active UK satellite portfolio. Any spare cash I do have hanging around once I’ve topped off emergency funds is therefore likely to go into dull ole trackers.

Ratio of satellite active holdings to core passive trackers
Asset allocation ratios

Goals

In terms of goals for 2022:

  • Save 35% of my income – 40% prediction

I will be amazed if I achieve this to be honest. Q1 saw a savings rate of 25%, all in cash. Given what my financial year is looking at I’m going to aim to keep it at that, and hope that a big return to saving can be achieved towards the end of the year.

  • Save £8k towards a new car – 40% prediction

This steadily ticks upward, with my cash accounts at their healthiest level ever. Should be ready to pull the trigger soon.

  • Finish the house renovations – 75% prediction

Some good progress made here, doing the sort of jobs that add little value but make a big difference to the state of the property. I painted a load of the stone and woodwork on the outside of the house, so it’s got a bit of kerb appeal, and we’ve started on re-rendering some other sections, along with painting the last few rooms. A friend recently commented that she would be willing to buy the house from us when we move, which would save a lot of hassle and fees, so we’ll see how that pans out.

Happy, wait is this supposed to be summer?

The Shrink

Q4 and 2021 Review

Quarterly return posts supplement my monthly Financial Dashboard, covering investments in detail and looking at my yearly targets. Here I track purchases and sales, document progress against my (in progress) investment strategy, and discuss re-balancing and changes over time.

It has taken me many weeks to properly unpack 2021. A year in which a lot happened, and also a lot of nothing. I remain in the same job, earning slightly more as I increase in seniority, watching the NHS continue to fall to a death by a thousand cuts. We live in the same house, with only minor repainting and renovations undertaken this year. We had no proper holidays away, and made no major (four figure) purchases. We started 2021 with the roll-out of a vaccine for COVID and we end with the Omicron variant seemingly left to run it’s milder course through the population.

Our year was punctuated by the arrival of our baby. We have gone from a DINK household to a one income and kid (so an OIK?) household. We are a happy family, but by god nothing prepares you for it. I thought I was prepared – I’ve worked abysmal rotas in my time, I’m a friend to sleep deprivation, how hard can it be? Seven 13 hour night shifts in a row at 60% staffing… done it. Living a life reminiscent of the scenes from ‘This is Going to Hurt’. Compared to that?

It was a totally different beast. The snatched sleep, the emotionally draining, energy sapping, unrelating nature of it, the quiet resignation to endurance. Yet, somehow, the positives of a tiny, happy, giggling face outweighs it. Evolution’s a hell of a drug.

In my 2020 review I set some goals for 2021, alongside a prediction of whether I could achieve them. These were:

  • Finalise emergency fund structure and pay off credit card – 80%Success
  • Save 35% of my income – 40%Failure
  • Make goalless time every month for hobbies – 60%Success

I made the final payment to my credit card on the 23rd of December, meaning over the course of the year I cleared a balance of £3,680. I also sorted out my emergency fund and the cascading system I use for immediate/<24 hours/ 24-72 hour financial requirements. I’ve a couple of legacy accounts yet to close, but we’re otherwise now at fighting weight. I missed my 35% savings goal by 0.86%, managing to somehow save 34% of my salary over the year (that’s not including the credit card). This will roll over to next year. I did organise my time to be able to spend an afternoon a fortnight on my hobbies. Past tense here, as infants are sleep and time thieves, and some hobbies have had to be sacrificed.

In an effort to test my forecasting abilities, I also began running a new SSC/ Astral Codex Ten-esque prediction experiment with conviction, where incorrect predictions will be struck through:

  1. UK vaccination will be completed before the July – 75% – A difficult one to assess, but based vaccination delivery rates for first jabs plateaued after July, and for second jabs after September. I did not account for vaccine hesitancy or government logistics nonsense. Stats taken from wiki (1).
  2. Greater than 200,000 UK COVID deaths – 30% – Happy to see that the cumulative death figure at the end of December was 148,624. Still staggering.
  3. UK has worst death rate as percentage of the population in the world – 60% – This was very flippant and pessimistic, as various countries in Eastern Europe and South America have been absolutely battered.
  4. Under-reporting in developing nations hides significant pandemic effects – 90% – I’m going to call this as correct, because from what I’ve read and heard it is, but the actual chances of proving it are very slim. An error of prediction writing.
  5. The UK tier system is still in use in December 2021 – 60% – I underestimated just how driven by political and economic pressure BoJo would be (2). I also assumed that he was aiming for clear messaging. I was wrong.
  6. The UK experiences another ‘lockdown’ in winter 2021/2 – 75% – This was mostly wrong. England’s Plan B rules were definitely not a lockdown, and while Wales’ and Scotland’s rules were stricter, I don’t think they can be called a lockdown.
  7. COVID-19 mutates into a form immune to the current vaccine – 40% – My estimate was <50%, therefore I thought this unlikely. It hasn’t and I hope it doesn’t.
  8. I am personally working in office >80% of the time again at some point in 2021 – 10% – Also never happened.
  9. Someone I am close to will die of COVID-19 – 25% – Didn’t happen, though that is dependent on the close clause.
  10. Endemic COVID-19 circulates in the population with lockdown easing and shops re-opening – 80% – I think this is pretty much where we’re at now. Government continues to publish figures, but we’re not far off back to ‘normal’, and I can see people using vaccine passports, testing and masks for years to come.
  11. … and self-isolation becomes normalised – 80% – Yes? Again error of writing predictions I think. I know the government has shortened the self-isolation rules, but I don’t know anyone not treating it as standard practice.
  12. … and higher death rates tolerated among the over 50s with consistent effect on life expectancy by end 2021 – 75% – I think we’re heading this way, but too early to call. Certainly life expectancy in the UK is falling slightly (3), but I’ve not read anything suggesting or attributing this to COVID. It seems more linked to poverty.
  13. Boris resigns – 60% – Wishful thinking, he’s a stubborn old gibbon.
  14. Keir Starmer above BoJo in the opinion polls – 80% – As per Britain Elect’s weight average tracker, BoJo had a 32.9% voting choice compared to Starmer’s 32.1% on the 3rd of Jan 2022 (4). They actually crossed over at the end of Jan 2022, but that doesn’t count. Again evidence I am not in tune with Joe Public.
  15. Inflation above 2% – 75% – CPI at a stunning 5+% (5).
  16. … due to Brexit-resultant shipping and food cost rises – 60% – Eh, I’m going to call this correct. Food, fuel, household bills and tech have all pushed it up, but you look at the reported cost of living crisis and it seems that way.
  17. There are resultant food shortages – 10% – So there are and have been some food shortages, but not to the point of seriously empty shelves, so I think this is correct.
  18. Homeless rate rises – 95% – Actually down 4% from 2020 (data for September to September) (6).
  19. Foodbank usage rises – 95% – Interestingly, though up from 2019, looking at the Trussell Trust figures for Apr-Sept it appears to be down from 2020 (7).
  20. House prices continue to increase – 75% – Yes (8).
  21. FTSE100 above 7,000 – 60% – Yes…
  22. FTSE100 remains above 6,500 – 80% – Yes…
  23. FTSE100 hits 7,500 – 20% – Yes… Closing at 7,358 on the 31st of December 2021. Ticked over to 7,500 the next day though. More positive than I expected.
  24. FTSE250 hits 22,000 – 60% – Yes, actually closing at 23,480 at the end of the year. Again more positive than I expected.
  25. S&P500 hits 4,000 – 75% – Yes, storming to 4,766.
  26. S&P500 hits 2,500 – 30% – Yes
  27. £ hits $1.40 – 50% – Nope. $1.35. I think the US did better than I expected.
  28. We have £100k in equity – 95% – We do.
  29. We start to overpay our mortgage – 30% – We didn’t. Baby swallowed spare cash (not literally).
  30. I have £15k invested – 30% – I do not.
  31. I am saving £1k/month – 30% – Quite unbelievably to me, my mean average monthly savings over the year were £1.3k.
  32. We have [redacted] – 90% – We did.
  33. MrsShrink [redacted] – 75% – She is.
  34. We replace one of our cars – 50% – Went to look at a few. Still looking.
  35. The project car gets repainted – 25% – I did not get time.
  36. The project car gets sold – 10% – I wavered, and then put it on axle stands.
  37. We have a holiday – 80% – I was pretty shocked when I sat down and worked out we hadn’t had a holiday away at all in 2021. Staycations yes, but nowhere actually away. A few coming in 2022.
  38. Outside of the UK – 20% – We didn’t.
  39. I learn another language – 30% – I didn’t.
  40. I continue to exercise at least three times/ week for the whole year – 75% – I did.
  41. I can do a pull-up again – 40% – I can’t.
  42. I can do a hand-stand press up again – 20% – I can’t.
  43. I return to [redacted] – 10% – I didn’t.
  44. I complete [redacted] – 25% – I didn’t.
  45. My ongoing work has not conformed to anticipated plans – 90% – It did not.
  46. I publish [redacted] – 90% – I did.
  47. I publish [redacted] – 25% – I did not, although it is under review.
  48. I publish on average four posts/ month – 40% – I did not.
  49. Most page views ever this year – 30% – My page views halved with my decreased posting frequency. I’m ok with that.
  50. This blog gets abandoned – 10% – Still here.

Calculations

In my predictions 50% is equivalent to sitting on the fence. Greater than 50% is a positive prediction, less than 50% is a prediction of negative likelihood; i.e. I do (former) or don’t (latter) think the predicted thing will happen. The variance from 50% is then summed, with correct predictions positive, incorrect predictions negative, before dividing by the total to produce a mean. The result was +0.141, suggesting that within a range of -0.5 to +0.5, my predictions are slightly positively predictive. I have predictions for 2022 in a little black book, and I’ll post them here in the weeks to come.

Goals

In terms of goals for 2022:

  • Save 35% of my income – 40% – Rolling over from 2021.
  • Save £8k towards a new car – 40% – My current car is… fine… but it is increasingly decrepit, and we could do with something safer and more comfortable for long journeys as a family. Maybe this counts as lifestyle inflation. Car prices are absolutely nuts at the moment, as you may have heard, with things I was looking at in 2019 for £3k now more like £5k. What I’m after sits around the £7-9k mark, so I’m aiming to save across the year so that I don’t need credit to purchase. At the moment, on one salary and with nursery fees looming this seems impossible, but it’s about what I put away across regular cash savers and paying off credit cards last year, so we will see.
  • Finish the house renovations – 75% – We have put a lot of time and effort into making our current house the way we want it. We have one room left to redo, plus some external maintenance and beautifying. Once this is done we can sit back a little, relax, and then inevitably sell and move as itchy feet and my Rightmove habit kick in.

Q4 Returns:

  • Cash Accounts £15,750 (+£2,230)
  • Investments £13,280 11,920 (+£1,360)
  • Property £58,960 52,900 (+£6,060)
  • Cars £2000 (no changes)

Bit of a bumper quarter. I was paid a fairly decent lump for some locum work, most of which went into cash savings accounts to prepare for potential future tax bills – hence the big bump there. Continued to add a bit to my regular savings account as well. On the investment front the growth this quarter came from the markets. As our household income has fallen my salary has been paying more of the bills, and I prioritised reducing debt over further ISA investments. The property jump comes from principal repayment (smaller proportion) and a revaluation of our property worth. A house on our street sold off the market at £290k in the summer, and another of a similar finish to ours recently sold (in less than a week) for £300k, so we have estimated that as it’s worth.

Investments:

Core/ Satellite Passive/ Active Split

My 2021 ISA is in Vanguard, however I didn’t pay in anything this quarter. All activity in my Freetrade has been active attempts at stock picking by selling holdings to buy new (fancy a free share? Sign up to Freetrade using this link, and we both get one). So what did I actually do?

Ratio of satellite active holdings to core passive trackers

In mid-October, while still trying to decide what to do proper, I bought Lucid (NASDAQ:LCID) as a conviction play after seeing a series of excellent reviews of their upcoming car. I bought at ~$25/share, and held as it jumped over the following weeks. After it crossed the $35/share mark I sold out, only to then watch it hit $55/share over the following month. I’m happy I took my gains, as it’s now back down to the $22 mark. Then when GME hit about what I paid for it, I sold out of that too.

I used that released cash to purchase Cornish Metals at 14p/share. Cornish Metals holds the mining rights to South Crofty, a very old, very big, tin, zinc, tungsten and copper mine that closed up in 1998 following the collapse of the global tin price (9). Since it started up in the 16th century it has absorbed a vast number of surrounding mines, to extend 2 and a half miles and 900m down. After closure the site was considered for redevelopment (as the surface mine workings sit in the middle of the town of Pool, between Camborne and Redruth), before going through a series of owners. I started following it in 2011 when Celeste Copper Corp assessed there to be £1.5 billion of tin left in the ground, before UNESCO got involved and it went into administration in 2013. Strongbow Exploration bought it out of administration, and since then have gradually been working through permits to restart the mine, along with changing their name to Cornish Metals (10). They’ve done further exploration which has extended the mineral resource estimate at South Crofty. The South Crofty rights also came bundled with a load of other mineral rights across Cornwall, including United Downs, last mined by Rio Tinto Zinc in 1991 (11). This whole area has been historically mined, and Cornish Metals went looking between some of the old mines. In 2020 they found virgin high-grade copper-tin, which they’re now applying for further permits to assess. As a final kicker, Cornish Metals have a tie-in with Cornish Lithium, who I have some shares in through crowdfunding. The share price of Cornish Metals rose in Nov/Dec, and has been bouncing in a range between 20p and 28p/share since. I’m planning to hold them long, as I think they have the potential for decent profitability based on future tin price estimates. To be nice and boring I then balanced my active purchase with some more Vanguard FTSE All World, just in time for the 2022 correction.

Happy winter everyone,

The Shrink

References:

  1. https://en.wikipedia.org/wiki/Timeline_of_the_COVID-19_pandemic_in_the_United_Kingdom_(July%E2%80%93December_2021)
  2. https://www.instituteforgovernment.org.uk/charts/uk-government-coronavirus-lockdowns
  3. https://www.onhttps://www.britainelects.com/s.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/lifeexpectancies/bulletins/nationallifetablesunitedkingdom/2018to2020
  4. https://www.britainelects.com/
  5. https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/december2021
  6. https://www.gov.uk/government/statistics/statutory-homelessness-in-england-july-to-september-2021
  7. https://www.trusselltrust.org/news-and-blog/latest-stats/mid-year-stats/
  8. https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/housepriceindex/november
  9. https://en.wikipedia.org/wiki/South_Crofty
  10. https://www.cornishmetals.com/projects/uk/south-crofty/
  11. https://www.cornishmetals.com/projects/uk/united-downs/

October 2021 – Mining

I have a confession to make. I really love mining. I don’t know if it’s something in my blood, as my ancestors made money from coal and iron, or just formative years spent amongst decrepit mine shafts in former industrial heartlands. I absolutely love it. I probably should have gone and done it as a degree. Pulling wealth out of the ground!

It’s not really pulling wealth out of the ground though. Gone are the days, and the mineral resources, where you could just rock up and pull money from crevices in the rock (except maybe if you’re a forest freeminer). These days mining has crazy overheads, economies of scale, and you need proper cash to be a player.

I’ve followed the fates of various UK mining concerns over the last decade. I’ve invested in some, and not really lost money. Let’s talk about a few.

Sirius Minerals

If you’re interested in investing, particularly with a UK focus, I think you’d be hard pressed not to have heard of Sirius Minerals (1, 2). They were a company building a mine to extract polyhalite , a type of potash used as a fertiliser compound, in North Yorkshire. It was/is a vast project, with a 22 mile underground conveyor to comply with North York Moors planning requirements, and the potential for £2.5 billion annually in exports. There was also a focus on local jobs, and a lot of local people stumped up cash, alongside institutional investment hype. Repeated rounds of junk bond sales were needed to raise the funds to build such a monster mine, and gradually investment dried up (at the time allegedly linked to Brexit) (3) . Without continued investment the project withered, and where it had previously been the ‘darling’ of the FTSE, it suddenly left a lot of small investors holding big losses (4, 5). People lost pensions and life savings, as ultimately Anglo-American bought out the company at a bargain price (6, 7, 8).

I didn’t invest in Sirius Minerals. By the time I heard about it it was making lots of new in the mainstream press, and I considered that too late to jump aboard. It also looked a bit like a giant white elephant in a deep hole. It remains to be seen whether Anglo-American can turn it around.

Wolf Minerals/ Tungsten West

I did stick some money through the AIM listing in Wolf Minerals (9). Wolf developed and ran a tungsten and tin mine outside Plymouth, on the edge of Dartmoor. The mine itself has been there for decades (centuries?), with the enormous deposit of high grade tungsten being used during WW2. It lay essentially dormant until rising tungsten prices prompted a relook, with a feasibility study suggesting low-cost, high-grade ore was available. At least £170 million was ploughed in, developing an open cast pit and low environmental impact ore recovery plant on site. Once producing, it never met volume expectations, tungsten prices fell and it ran at a huge loss before falling into administration in 2018 (10, 11).

The Drakelands mine may potentially live on; it’s still a high-grade resource with the world’s 3rd-largest deposit, planning and infrastructure. It has gone through various hands, ending up as Tungsten West who bought it out of receivership in 2019 (12, 13). Tungsten West is also market-listed, and I may well buy in (on sentiment) after I’ve read some more about them. Their plan is to re-open the mine, and with increasing tungsten prices and general onshoring/ mineral security concerns they are certainly interesting (14, 15).

There’s a theme here… (Image from http://www.lyngham.co.uk/cornishlads/lads2.html)

Strongbow exploration/ Cornish Metals

I’ve been following the mineral resource held by Strongbow Exploration, now renamed Cornish Metals, for at least a decade (16). They hold the rights to South Crofty mine, an enormous tin (and previously copper, arsenic and tungsten) mine under Camborne/ Redruth/ a lot of Cornwall, that has been producing ore since 1592 (17). It went into decline in the 1980s into the 90s with the collapse in the global price of tin, shutting down in 1997. Since then, as the price of tin has increased, there have been periodic attempts to restart the mine, but with progress slowed by planning problems (it sits underneath the towns of Camborne and Redruth, with old surface mine sites prime for redevelopment) and the involvement of UNESCO (it’s within a world heritage site). Through gradual purchases it now covers an area of 34 former mines, and after Strongbow bought the site out of administration they have been drilling, re-assessing, permitting, and are now de-watering the old South Crofty site (16).

It’s a common story across the Devon, Cornwall and rest of the UK. These mines did not shut due to exhaustion of the resource. The cost of recovery was too high versus the price of the ore. South Crofty’s previous owners, the Celeste Copper Corp reckoned there was >£1.5 billion in ore left in South Crofty. Cornish Metals has now listed on the AIM, and I’ve seen quite a nice profit from them (18). I think their recent rally has come because of new results from a separate site. South Crofty came packaged up with a lot of other rights, permits and sites, including the old United Downs near Gwennap. It had the richest copper reserves in the world in the 18th and 19th century, but shut down due to global competition and low prices (19). Wheal Jane, a mine in the area covered by United Downs, was run by Rio Tinto Zinc into the mid 90s (20). Cornish Metals have an agreement with Cornish Lithium (below) whereby Cornish Lithium can look for lithium in areas covered by Cornish Metals rights. Cornish Lithium were busy drilling for lithium in 2020 when they struck a potentially massive unknown copper/tin lode in the United Downs area (19). Since then Cornish Metals have been getting permits and test-drilling the site (21). These have come back positively, and I’m fairly bullish on this company (22, 23, 24).

Cornish Lithium

Lithium, so hot right now. The market loves it for it’s potential in batteries. This has been going on since 2017, with the potential for small cap growth (25, 26). So when Cornish Lithium popped up on a crowdfunding site in 2019, I dipped my toe (27, 28). There’s hard rock lithium scattered throughout Cornwall, and Cornish Lithium’s spin is that they have both access from a maiden hard rock mine and from brine in mine water from sites like South Crofty (27). There’s been further industry investment and crowdfunding rounds, so it will be interesting to see how it pans out (29, 30). Cornish Lithium have a rival, British Lithium, who are also busy developing a hard rock mine in Cornwall to produce battery-grade lithium, backed by UKRI funding (31, 32). They’re not publicly listed, but I’ll be following their progress to see what happens, as there seems to be a lot of competition and interest in bringing lithium production to the UK – this WIRED article is excellent (33).

Gold

There’s a couple of UK gold resources being explored/ mined, and what better way of finding portfolio diversity. Sod the gold ETFs, buy the miner. I’m watching Galantas, who are developing a mine in Omagh, and Scotgold, who have the Cononish mine in Scotland (34, 35, 36). I’ve also got half an eye on Alba Mineral Resources, who hold a few rights and are doing exploration in the old Clogau welsh gold sites (37). I’ve not invested in these yet, but dependent on what happens with the broader markets I may open positions, and develop myself a little mining portfolio. Would welcome comments and thoughts from readers.

October Finances

Yes, I’m very behind here. Baby’s are time consuming. Hoping to catch up over the Christmas period…

Checking the assets and liabilities:

These are taken, as always, from my Beast Budget spreadsheet. I saved a paltry 14% of my salary, as household bills on one salary have started to bite. This was almost all saved as cash or in my pension, as items for the baby meant I didn’t have any spare cash (even paying myself before) to invest. If you fancy a free share, sign up to Freetrade with this link (I also get one).

Budgets:

  • Groceries – Budget £200, spent £196.58, last month £396.02 – More on track this month, but still need to rein this in ahead of the decrease in household income
  • Entertainment – Budget £100, spent £113.55, last month £133.45 – Making the most of the few warm days with babysitters
  • Transport – Budget £250, spent £163.98, last month £384.92
  • Holiday – £150, spent £0, last month £0
  • Personal – £100/ £73.85/ £78.71
  • Loans/ Credit – £50/ £159/ £960
  • Misc – £50/ £69/ £145.83
  • Fees – £300 /£149.57/ £421.85

In the garden:

Winding down in the cold and wet, I harvested the last of my kale, pumpkins, squashes and spring onions. A few other bits plod on, but it’s mostly down to the greenhouse now, and my intention is to let everything run wild while occupied with other activities.

References:

  1. https://en.wikipedia.org/wiki/Sirius_Minerals
  2. https://siriusminerals.com/investors/
  3. https://www.ft.com/content/c35b094e-7d89-3609-973b-8af441c4f01a
  4. https://www.ft.com/content/e99f113e-b1b3-11e8-99ca-68cf89602132
  5. https://www.proactiveinvestors.co.uk/companies/news/902964/losers-and-winners-of-the-sirius-minerals-saga-902964.html
  6. https://www.thisismoney.co.uk/money/markets/article-8583999/Sirius-Minerals-boss-pocketed-1-3m-investors-lost-fortune.html
  7. https://www.bbc.co.uk/news/uk-england-york-north-yorkshire-51736395
  8. https://www.thisismoney.co.uk/money/markets/article-7472389/Sirius-Minerals-shares-crash-fails-secure-funding-mine.html
  9. https://en.wikipedia.org/wiki/Wolf_Minerals
  10. https://miningglobal.com/smart-mining/wolf-minerals-and-drakelands-tungsten-mine
  11. https://www.proactiveinvestors.co.uk/companies/news/206786/wolf-minerals-ceases-trading-in-london-after-uk-subsidiary-enters-voluntary-administration-206786.html
  12. https://www.business-live.co.uk/economic-development/tungsten-mine-owner-explores-options-20565271
  13. https://www.tungstenwest.com/overview-and-strategy
  14. https://www.thetimes.co.uk/article/king-of-mining-ian-hannam-plots-devon-tungsten-float-lbppjmj0f
  15. https://im-mining.com/2021/10/12/tungsten-west-set-to-bring-hemerdon-tungsten-tin-mine-back-into-production/
  16. https://www.strongbowexploration.com/projects/uk/south-crofty/
  17. https://en.wikipedia.org/wiki/South_Crofty
  18. https://miningglobal.com/automation-and-ai/strongbow-exploration-list-london-stock-exchange
  19. https://www.cornishmetals.com/projects/uk/united-downs/
  20. https://en.wikipedia.org/wiki/Wheal_Jane
  21. https://www.mining.com/cornish-metals-granted-key-permit-for-united-downs/
  22. https://www.insidermedia.com/news/south-west/cornish-metals-makes-progress-on-sw-venture
  23. https://www.business-live.co.uk/economic-development/high-grade-tin-discovered-cornish-22054497
  24. https://www.proactiveinvestors.co.uk/companies/news/968381/cornish-metals-reports-high-grade-copper-from-united-downs-copper-tin-project-968381.html
  25. https://www.proactiveinvestors.co.uk/companies/news/173004/small-cap-movers-lithium-miners-start-to-shine-173004.html
  26. https://www.businessgreen.com/news-analysis/3025238/cornish-batteries-scientists-embark-on-satellite-search-for-lithium-below-cornwall
  27. https://cornishlithium.com/
  28. https://www.telegraph.co.uk/business/2019/07/12/cornish-lithium-miner-goes-digging-crowdfunding/amp/?__twitter_impression=true
  29. https://www.mining-technology.com/dashboards/deals-dashboards/cornish-lithium-funding-techmet/
  30. https://www.crowdcube.com/companies/cornish-lithium-ltd/pitches/qYERNq
  31. https://www.businessgreen.com/news/4019146/boost-british-lithium-cornish-mining-firm-wins-gbp500-backing
  32. https://britishlithium.co.uk/
  33. https://www.wired.co.uk/article/cornwall-lithium
  34. https://www.proactiveinvestors.co.uk/companies/news/224283/galantas-gold-advancing-omagh-mine-after-placing-sees-high-demand-224283.html
  35. https://www.scotgoldresources.com/
  36. https://www.theguardian.com/uk-news/2020/jan/02/gold-highlands-mine-scottish-jewellery
  37. https://www.albamineralresources.com/

The Fire Blog Cemetery (August 2021 Edition)

Here lies a list of blogs now deceased, moved on to fairer lands…

On life support (>6 months since last post)

  • Big Blue Money – Formerly Big Blue Money, now renamed to Coffee Money, posting intermittently.
  • Rockstar Finance – Was back under new management, but with a very barren site. Doesn’t seem to have added any posts for some time.
  • Left FI – Blogged from May to August 2019, with a bit of a hiatus before a further flurry back in May 2020, then another in February 2021.
  • 3652 Days – Fairly infrequently updated, but going since December 2015, so often dips into the three-six month warning zone. Last post Feb 2nd 2021.
  • Cashflow Cop – A fairly big name, who started blogging on the 5th of April 2019. Last post Feb 20th 2021. I’m aware they’re still around the FIRE bloggosphere.
  • FatFire – First post was on the 17th of December 2020, with the last 27th Jan 2021, so about six weeks total.
  • Money for the Modern Girl – First post in last was on the 22nd of February 2018, pretty active up until the 18th January 2021.
  • Middle Class Hustlers – Holy smokes! Blogged for about a month in 2018/9, then back with three posts in two days in January 2021.
  • My Money Tree – Only a few posts here, between December 2020 and the 1st of February 2021.
  • The FI Fox – A regular contributor from around the time I started (August 30th 2018), their last blog was January 30th 2021.
  • Zero To Freedom – Georgi started on the 13th of Jan 2019, last post 6th September 2020.

On the slab (dormant for >1 year)

  • Finance Your Fire – Marc participated in lots of the FIRE blogging scenes Thought Experiments etc, but last posted in August 2019.
  • Fire in London – First post in Nov 2016, last in December 2018.
  • Sex Health Money Death – Jim first posted in August 2015, and the last post was August 2018. At that point he was close to retiring, so he may well have blogged his last.
  • Under The Money Tree – One of the original few, now dormant since December 2017
  • UK Girl on Fire – First post April 14th 2019, last on July 31st 2019. A fair amount of indeedably inspired work on their site.
  • The Finance Zombie – Last post in February 2019, infrequent prior but had been going since the 25th of September 2014.
  • Bangkok 2 Blighty – Another big name, they started posting in April 2018, last post in October 2019.
  • Your Freedom Pot – Started blogging in Feb 2018, with monthly updates to July 2018, then nada.
  • Girl vs Money – Another short blog, with a few personal finance posts from July to September 2018.
  • Fire Fans – Posted seven times, five in Dec 2019, one in Jan 2020, and a final one in Feb 2020.
  • Financial Anvil – Also started in Dec 2019, lasted one month longer, March 2020.
  • Money By Choice – First post on 17th of April 2020, with last post 10th July 2020, a four month survival.
  • The English Investor – Last post in July 2020 titled “The English Investor is back”.
  • Psyfitec – A potential competitor, blogging on psychology and finance. They started in Feb 2009, and have had a few short hiatuses along the way, so I suspect their March 2020 post won’t be the last.
  • The Saving Journey – Starting in October 2017, with frequent monthly updates, their blogging peters out up to May 2020.
  • Want Less – Started blogging way back in June 2015, but blogging has slowed in the last two years, with the last post in July 2020.
  • The Canny Contractor – Started posting about their dividend growth portfolio in Q3 2016, with their most recent post in April 2020 covering Q4 2019. Now shoes security warnings.
  • Baldrick’s Early Retirement UK – First post 5th March 2020, last post 23rd April 2020.
  • Frugal Student – Posting from August 2016 to March 2020, mainly about investing.
  • Prudent Programmer – Pages comes up with safety warnings, but is accessible. First post September 2019, last post August 2020.

Dead and buried

  • Mr Squirrel – Another titan, sorely missed
  • The Fire Engine – About a month of posting
  • Some Things Don’t Change – Been gone some time sadly
  • Financially Free by 40 – the latest addition, Huw’s last post was in mid-2018. The domain is now up for grabs.
  • Grizgal on Fire – Last posted on the 8th of October 2019, their website is now dead.
  • Liberate Life – Last posted on 11th September 2019, before deleting their website
  • Chuffed 2 bits – Last posted in November 2019, the disappeared from this plane of existence. Now redirects to a completely unassociated blog.
  • Next Chapter FI – My records show they last posted on the 2nd of January 2020, before puffing into void.
  • MsZiYou – Feminist FIRE fan, who at one point was podcasting as well as blogging. Close to FIRE and changes in life circumstances led her to close her blog.
  • Mess and Marigolds – Last posted on October the 15th 2019, their blog (mainly about cleaning with a bit of saving) started in September 2016. Domain now dead.
  • Ready Steady Retire – Posted for about two months, from November 7th 2019 to December 21st 2019. Another dead domain.
  • FIDdom – Bec started posting way back in November 2017, with her last post on the 17th of November 2019. 18 months to two years seems to be about average for survival time.
  • Fretful Finance – Blogged from December 2nd 2018, with the most recent update on January 25th 2020. Also now deceased.
  • Formerly Skint – Weekly money diaries started in January 2018 and dried up in January 2019. Now ‘parked’.
  • Make Save Invest Money – Leon was posting from December 2017 to January 2019, and then appears to run out of steam. Now another dead link.
  • Money Doesn’t Talk – Wasn’t blogging long, from 7th November 2019 to 13th November 2019.
  • Liberate Life – Blogging for about a year, now dropped off my radar and with a dead site. Last post September 2019
  • Adotium – First posted on October 19th 2019, now showing as a dead domain. The waybackmachine reckons they were posting until the 30th December 2020.
  • Finumus – A great blog which began in December 2019. As of April 2021 the author now writes for Monevator.
  • Plan on Fire – Started posting 15th June 2020, last post 28th July 2020. Domain now dead.
  • Financing Freedom – First post 4th April 2020, last post 25th July 2020. Site now comes up for sale from Go Daddy.
  • The All Round Investor – Ran from May 2020 to September 2020. Now barren.

Crossed the finishing line:

These bloggers finished their FIRE journey or completed goals, and signed off with distinction:

  • Young FI Guy – One of my favourites, a titan, gone but not forgotten
  • Fire the 9 to 5 – A fairly big poster, first post February 28th 2018. They had retired early, and posted a sign off blog entry in November 2020. Hope they’re enjoying their time.
  • Pursue Fire – Dan started in July 2018, last post in January 2020 winding up the blog.

The Lazarus circuit

These are bloggers who have returned from the edge, touched the void, etc:

  • Sparklebee – After a six month hiatus returned to posting with the news they quit their job and were truly on countdown to FIRE!
  • Early Retirement Guy – Now redirects to MatchedBettingGuy, where he continues to blog.
  • Little Miss Fire – LMF changed sites in 2019 and blogging was patchy after the swap. First post sometime in 2018 I think. As of October to December 2020 is back posting regularly.
  • Deliberate Living UK – First post 2017, then a big hiatus between 2019 and the end of February this year.

If you can think of any more please leave a comment below, and I’ll periodically return to update.

I am indebted to /u/reckless-saving over on /r/FIREUK, along with friend of the site Indeedably via the magnificent Sovereign Quest, who make this post so much easier by curating blog posts.

Quarterly Returns – Q2 2021

Quarterly return posts supplement my monthly Financial Dashboard, covering investments in detail and looking at my yearly targets. Here I track purchases and sales, document progress against my (in progress) investment strategy, and discuss re-balancing and changes over time.

A bit late with this update, as during the past quarter we’ve had a new arrival in the FireShrink household and we’re pretty tight for time these days. I write this while the rest of the household nap, sterilisers and washing machines whirr, and test match special plays softly in the background. We had cash-flowed the possible expenses over the next year and we’ve received a huge number of kind gifts from friends and family, but nothing had quite prepared us for events of the last couple of months. Exciting times that mean investment plans may get put on hold, and plans changed.

Q2 Returns:

  • Cash Accounts £13,860 (+£1,760)
  • Investments £11,600 (+£1,950)
  • Property £52,100 (+£3,100)
  • Cars £2000 (no changes)

Continued steady growth, well on track for my 2021 targets with an average 40% savings rate. I’ve been really targeting reducing my credit card debt amongst the routine investment, paying off between £200-500/month, with a plan to clear it in the next few months – I have a few invoices for locum work which will cover this. I’ve continued to put away £250 in cash/month, building the emergency fund further in the Principality Thank You Saver, which is a 1.4% regular saving offering for NHS workers in South Wales (1).

Investments:

Deployed cash ratio in investment accounts
Active/ Passive investment split

Core/ Satellite Passive/ Active Split

I’m not paying in to Freetrade for this years ISA, so all activity in that account has been churn on the active side (fancy a free share? Sign up to Freetrade using this link, and we both get one). I sold out of GME with a return on investment of ~160%. Those funds went through a succession of memes stocks (I was browsing WSB a lot at the time), with a slight loss on NEE (-6.5%) and gain on INO (+38%). It’s now in Coinbase (COIN), bought at £164/share (currently +14%), and UWMC, bought at £6.87/share (currently -20%). My lessons from this quarter are in the madness and profit of crowds, and that I really do not have any particular skill in the markets.

For the 2021 ISA I have returned to Vanguard, adding £400/month to my old friends their Dev World ex-UK and Emerging Markets accumulation funds. I need to look further at how I’m calculating my global allocation split, as I think my current system is over-weighting me to emerging markets even with my aggressive tilt. I’ve also been persuaded by Monevator’s recent series on emerging market bonds (2), however the most recent article points out now might not be the best time to open that investment avenue (3).

While I’m continuing to invest and act passively I feel generally concerned about the state of the market. US and UK housing markets seem peaky, with marked rises in house prices in the UK which don’t seem entirely sustainable. I expect them to flatline rather than fall, which isn’t really an issue for me. Equities markets also seem frothy – those all time high P/E ratios haven’t gone away. The NASDAQ and S&P500 have been on an absolute tear since the lows of March 2020. How long can this remain? If/when we see a fall, I am concerned about what ammo central banks and governments have in their locker, given they’re yet to unwind 2020s financial stimulus. Bonds remain at all time lows, with crappy returns. What are long term options?

A gamble play is crypto, so I have bought some Ethereum. My logic is that gold and silver are long-term stores of value, but have been on bull runs for years as bearish investors load up. I am not convinced that gold or silver would negatively correlate in the face of a sustained combined equity/bond recession, and I wonder if crypto might. I don’t think cryptocurrencies are going away. I’ve been following Bitcoin since 2010, but never had deployable cash or a use case for it. Ethereum seems to be a much more functional coin, and I feel we have crossed the threshold where it is only likely to get more widely used. It’s therefore partly a 20-year play on growth, and partly a hedge against a BIG crash. It’s beer money, and will test the correlation theory in event of future recessions.

Happy summer everyone,

The Shrink

References:

  1. https://www.principality.co.uk/savings-accounts/everyday-savings-accounts/thank-you-online-saver
  2. https://monevator.com/emerging-market-bonds/
  3. https://monevator.com/bond-credit-risk-valuation-rule-of-thumb/