BREXIT UPDATE – ANYTHING NEW AFFECTING YOUR MONEY & INVESTMENTS?
I daren’t really endeavour to say anything; Sterling has rallied well as some ‘decisiveness’ on certain aspects has arisen (or, as far as the markets are concerned, what appears to be decisiveness). However, I stand by what I have said all along – as soon as some certainty replaces the uncertainty there is likely to be a sustainable rally in the UK stock market and the Pound. That is not ‘wishful thinking’ but simply the collective human emotion which has affected capital movements and a relief rally if you like – which could become self-perpetuating too. The bizarre thing (to most spectators too) would be that it doesn’t really ‘matter’ either which result arises… it’s simply allowing people to feel they can plan with clearer views of the rules which apply.
According to a report by Janus Henderson, global dividends for companies broached the highest ever level last year at £1.1trillion, up 8.5% on the previous year. We welcome this. What we think the global investment industry must do however, is much more to dispel the perceived fear of capital risk to investors without acknowledging the benefits of having at least some of your money in shares and which do produce income. I suppose you could say that companies themselves enjoy this fact that too many have all or most of their money on deposit earning a paltry sum and often lower than inflation as it whittles-away after inflation because that way, they can borrow it and make more money on it as a result!
And remember, there is no such thing as ‘no risk’ with anything. Investors from the 70s and 80s will remember how their deposits at the bank and buildings society were ravaged by inflation for example. You must recognise what the risks are and then manage them and the only real way of doing that is by spreading your eggs across many different baskets. Indeed, some are suggesting there is a ‘Brexit Discount’ at the moment and discounts are worth exploiting! Artemis Managers have done further research into the same phenomenon and it is certainly worth having a read –
What with year-end planning for ISAs and Pension contributions due too, are you taking full advantage of this discount which won’t stand around for too much longer – whatever the outcome?
ARE UK SHARES THE CHEAPEST SINCE WW1?
Hands-up if you can remember World War 1. There won’t be any readers from that time but I am sure a few ‘old dogs’ may recall a few investment textbooks referring to values and comparatives. However, after the 10% drop in the UK market in the last quarter, the dividend yield from UK shares is now so much higher than the interest on British Government Stock that the gap between the two returns has not been this large since that war! The gap between 10-year Gilt Yields (a mere 1.2% interest!) and the FTSE All-Share Index is now over 3% – a remarkable situation driven by procrastination and fear of the unknown driving investor sentiment towards the UK and at home. Remember too, that the dividend yield is something which should rise as the participants pay more for each year their profits grow whereas the Gilt interest is fixed. Inflation is also eating away at that all the time too whereas dividends should rise to reflect increasing prices. All I’d repeat is ‘don’t wait till the news is certain as you are likely to miss what could be one of the best opportunities for generations’. Only Russia and Australia’s markets yield more than we do and they are natural resource top-heavy. Are things at home really as bad as they were during WW1? No. Remember too, no one rings a bell at the top of the market – or the bottom but you can look for indicators. As a ‘value investor’ seeking fundamental underlying value, the advantage at the ‘bottom’ is that you are buying ‘real things’ at ‘cheap prices’ whereas at the frothy top, you are speculating against speculators who all assume they know better than the next man – and the ‘greater fool’ theory applies of course. Remember, this is after the worst calendar year for the market since 2008/9, the worst December since the Great Depression for US stocks and then the best January since 1987.
WHY DON’T YOU DO SOMETHING BETTER WITH YOUR MONEY?
A very prescient and interesting article hits the nail on the head! It touches upon some surveys which have been undertaken. Is it as simple as ‘do you trust an adviser or manager to look after your money for you?’
Congratulations are in order for the appointment of Mrs Nikki Baker as a Director of the Firm! Nikki started as a receptionist, so it does show that there are no holds barred on progression! She is our second receptionist to have progressed to those lofty heights! Nikki’s primary role is in leading the Administration and Dealing Team. Mrs Elizabeth Webb and Mr Felix Milton have also been appointed as Assistant Directors as well so well-done to these two advisers on their progression over the years!
Whilst our lifetimes have seen some of the most benevolent billionaires the world has ever seen and fantastic explosion of charitable works aided by private individuals, corporations and governments alike, only 2/5ths of those earning over £250,000 noted a charitable donation on their tax forms in 2016/7 according to HMRC reports. That is just mean. Of all of these, the median was then only £1,000 in fact. Mr Bill Gates has become the biggest ever donor to charity in real terms ever and that excludes the ‘value’ of his fantastic technological revolution available to all people of the Globe too, something which dwarfs the value of his charitable dollar in benefit to everyone.
So what can be done about this? Something is simple and that is that charities do not engage appropriately with people to encourage donations and their support and there is a cynicism too about some of the high salary and personal reward levels in too many of these ‘big charity businesses’ as well and that being enough to deter people from having the confidence their donation will find its way to the actual causes promoted.
There are charities out there which do what they should and deserve our support. However, for the very wealthy too, they can create their own charitable foundations and whilst some work is required to that end, it would allow them to channel their support in the ways they want and with the support they believe the organisation would deserve.
We have created a couple of charities as financial advisers and tax consultants and it can be a laborious job and there can be other ways to skin the proverbial cat too – and no need to reinvent the wheel if it already exists. There is also the need to ensure more giving today is done tax efficiently as well. Indeed, we are pleased to announce that the Philip J Milton and Company Plc Charitable Foundation has just been launched too and it will be receiving a large endowment fund to kick-start its activities very shortly.
We’ve been discovering some pretty horrendous shenanigans with the Organic Investment Management debacle I can tell you. Clearly there was no whistle-blowing anywhere on the ‘mischief’ (being polite) that we see has happened at different stages of the client investment process. We hope that any people found guilty of fraudulent and compromised activity will be brought to justice.
However, Emily Scott, a trainee solicitor who reported her law firm (which was over-charging by up to 2000%) has herself been struck-off as a solicitor and made to pay £2,000 costs! The tribunal found that whilst she had been ‘deceived, pressurised, bullied and manipulated’ as she had participated in falsifying documents and failed to report the fraud as soon as she discovered it, she became partly responsible for it. I should like to see more people investigated for failing to report such fraud. I remember when locally Solicitor Jolyon Huxtable and his firm Pitts Tuckers was closed and apparently it became the biggest compensation case the Law Society had ever had to fund at some £2million. However, the other lawyers and employees all left, going to new jobs and taking their client files with them – and the new firms having a great bonanza and charging the Compensation Scheme for the ’necessary’ review work to bring matters up to scratch. These staff were not even ‘forced’ to continue working there to sort the mess so the practice could instead have been sold for a considerable sum of goodwill. What happened to those who must have ‘known’ what was going-on, the accountant, those working in the Accounts’ department, colleagues who must have suspected or even been aware of misdemeanours as you can’t hide fraud that became that blatant at the end? We have found with the Organic affair that staff and directors involved seem to have had no difficulty in finding different jobs across the industry sometimes regardless of past curious backgrounds too, as if they leave their problems behind and pop-up somewhere else so easily. The industry deserves better and the professionalism of those of us who adhere to the rules and ethics and really put their clients’ interests before their own deserve to not have the unethical still amongst us.
Stock market investments can offer income through the payment of dividends and interest and good opportunities for capital appreciation over the longer term. By this, generally we mean periods in excess of five years, preferably much longer. However, we can never promise you particular returns, especially in the short-term. At any point in time but especially in the short term, your capital could be worth less than the original amount invested as some of the selected holdings may fall in value, regardless of expectations at the time of acquisition. We may also invest in funds that hold overseas securities. The value of these investments may increase or decrease as a result of changes in currency exchange rates. Returns achieved in the past cannot be relied upon to be repeated.
To remind you, why do I send out occasional emails? Because everyone can save money. We have no connection with any companies mentioned and you have to make your own contacts and satisfy your own enquiries. What is in it for us? If we can prove that we are knowledgeable and that our service and advice have good value, then you might contact us for professional financial planning and investment help. You don’t have to do that though and there’s no charge for emails. If simply they save you money, then accept them with our compliments! However, you’ll know where we are!
If you have any queries of any form or indeed any subjects you think I could include, please contact me. I also refer you to our website www.miltonpj.net. We celebrated our thirtieth anniversary in 2015 and have been publishing a well-respected independent column in the local Paper for most of that time and free client newsletters as well.
Do not forget however the usual caveats – this is not ‘advice’ and you are encouraged to seek that before embarking upon any financial route involving investments, etc.
My best wishes
Philip J Milton DipFS CFPCM Chartered MCSI FPFS FCIB
Chartered Wealth Manager
Fellow Of The Personal Finance Society, Fellow Of The Chartered Institute Of Bankers