The Election

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Dear Friend

Included in this edition of our e-newsletter …




Well.  The extent of the outcome is a surprise but very welcome – I don’t say that ‘politically’ but to be grateful to secure some much-needed certainty for us all after so long in the political and economic doldrums.  It also banks the desire to deliver Brexit.  We shall have a ratification in Parliament and sure enough, the negotiations can then begin but they will be from the outside.

The result was significant for a number of reasons.  This is not only despite the quite shocking rhetoric from so many antagonists about rational people who in the end weighed things for themselves and then made a Conservative vote and their judgement needs to be respected.  The people have selected Boris, who has had perhaps the worst ever nasty, negative campaigns of insults hurled against him of any politician (though yes, some would add that Jeremy Corbyn also had much mud thrown at him).  44% of the electorate entrust Boris with the delivery of Brexit but also to tackle issues in the NHS, education, social welfare, homelessness, adult care and other matters and yes, the ‘majority’ (for this purpose that is the biggest part of the vote) has voted Conservative to do that.  Not because ‘it’ lost but the arrogant, insulated and not listening political elite has been delivered yet another bloodied nose and whilst it seems after the vote some in opposition still don’t want to listen and arrogantly shout that they remain the exclusive party to deliver ‘fairness’ ‘opportunity’ and ‘welfare’ as well as looking-after our great public services and somehow keeping us in the EU despite the Nation’s desire to leave, the people – and those millions who are retired from, have friends and relatives within and who work within the public sector too (one in four jobs are state sponsored, don’t forget) – didn’t believe them and not even in Labour’s traditional heartlands.  I do not say that to gloat but to reflect factually, that is all and if the Labour Party doesn’t reassess this, then it will not have learned anything from the worst General Election defeat since 1935 and worse than Michael Foot’s ‘longest suicide note in history’ in 1983.  To reassure anyone who remains concerned about Boris’ leadership, his warts and all which we now have and regardless of your prior wishes, I have met him on several occasions and regardless of one’s politics, I believe he will rise to the occasion and prove to be a remarkable and historic statesman for our great country and representing all parts of it so I hope that helps you at this moment!

But what are the consequences for the world of finance?  Brexit is yet to come but the direction is more assured.  To confound the pundits, the relief and thus the confidence that this decisive electoral majority has brought, with every Conservative MP having signed a pledge to support Boris’ ‘deal’, will enable investors, industry and the public to start to plan again.  No, we don’t know the precise terms of the deal.  It could be severe or soft but we know the direction of travel and it will not constrain the opportunity of deals with other nations and contrary to received wisdom, into perpetuity we shall be negotiating over things we don’t like even after we have a starting deal – it is the nature of international relations!

‘Project Fear’ so frequently used in advance of the Referendum but backfiring on that campaign big-time as it propelled more voters to be angry at how they were being treated, has so far not come true even though of course we have not ‘left’ yet.  The ‘remain’ parts of the United Kingdom in places like Scotland continue to push those fears on their citizens as facts as to why they should have independence but so far we have enjoyed economic growth since 2016, swollen employment and the lowest unemployment since 1974 and rising household incomes in real terms.  This has facilitated the biggest ever spend on welfare and public services and effectively a £1trillion overspend in nigh ten years as reflected in the awful rise in our national debt but so far, that has not been used against us.  We have also seen the biggest ever collections of income tax, corporation tax and even death duties on the wealthy’s estates too.  In fact, there are suggestions that he tax burden on our citizens is at the highest levels since just after WW2 so maybe we should be calling for cuts to stimulate more economic growth instead.

In the short-term, we shall have a period of renewed confidence.  Collars can be loosened and this will produce our own mini-boom as the next five years’ political administration is set for a confident and assured future, able to perform.  There will be rough parts and wobbles as parts of the EU deal after transition need to be smoothed but money will be subscribed to investment in growth and expansion and ordinary people will resume house moving, improvements, asset replacements and things as simple as that but which they have put on hold ‘till they know the outcome of…’.

But what are the investment consequences?  For a long time, you will know I had been saying Sterling was too low.  That was because regardless of the outcome of Brexit, the election or whatever, its equilibrium level was so out of sync and would recover regardless of conclusions and short-term gyrations.  I believe that as we move to the actual terms of a deal, that strengthening will continue.  Our clients will have benefited from that in that we had been repositioning our strategies to better reflect a UK-centric emphasis but yes, just like other investors, Sterling going up will mean the value of our overseas’ holdings will fall.  We have also been holding Sterling cash against the Euro and Dollar as defensive assets too – it has been uncomfortable sometimes but we believed it was an obvious action to take at the respective times even if we were in the smallest of  minorities to do that as ‘everyone else’ was pointing to the ‘inevitable collapse’ of the Pound they almost wanted to see and especially for those who wanted to see the pessimism they held for a vote contrary to their views, as schadenfreude.

Curiously, believers in Index Trackers will have lost-out in that so many multinationals swamp the FTSE100 (and thus the All Share Index which concentrates on the same components) and on the first Friday, the FTSE100 rose just over 1% whereas the FTSE250 and Smaller company indices rocketed – the former by 3.5%.  Often ‘cost’ of ownership or management is noted as a reason for ‘passives’ but just one day’s judgement ‘cost’ them 3.4% if they were unaware of the differences in the indices or indeed the need to have a balance.  Our active investment management knew about that and skewed things accordingly so what has paying us a management fee been worth, just for one day’s out-performance which can ‘last us’ for years?  Remember that 70% of earnings for FTSE100 companies come from overseas too so their earnings fall in Sterling terms as the Pound rises, the same reason they gained when the Pound fell and why we trimmed them as a consequence.  Certain smaller company Investment Trusts rose significantly on Friday and today too – including our largest holding which is now worth £4.6million having jumped 20% since the end of November but we have a plethora of such funds concentrating upon that part of the market as it has been so cheap.  Investment Trusts have done better again than other unitised funds (as most investors elsewhere hold) as they have gearing – and discounts have narrowed too.

What else?  A stronger Pound reduces input costs for heavy fuel users and big importers too.  So, this sees airlines and transport companies gain.  Companies relieved that Mr Corbyn’s nationalisation plans are dashed also breathed a sigh of relief – utilities and BT threatened by his actions.  Another beneficiary was the banking sector which smiled that the economic future remains set fair with sensible interest rates as State borrowing will be prudent and the conditions for economic growth continuing but not so many investors have big chunks of banks – we do, even if they have been testing our patience!  I had not expected a 10%+ gain on one day from some of these which still count for a large chunk of the main indices in the UK.  Not many investors hold those now – we do.  Fund management companies and specialist insurers have also bounced in relief but are still far too cheap; remember, we have been buying these ‘because they were cheap in the first place’ – it is not rocket science but remember, we have always said that sometimes the best investment of all is patience and not every investor has that.  Outsourcers like Capita also bounced and of course, house builders enjoyed a good gain on the expectation of further accelerated programmes of new homes and accelerated commercial building.  A higher Pound will also attract tradesmen from overseas both to stay and to come to work, where our new migration policies will allow what we need.

Are you too late?  No.  Your money on deposit is going to continue to earn ‘nothing’ now too.  Fundamental underlying value in other investments is still there but be aware of what can affect your return.  Remember too that sentiment drives short-term prices and if the coin has just flipped-over from pessimism to optimism, then buyers who feel confident to invest again are not going to be met with many sellers keen to let them in at any price – all those fearing the future had already sold some time ago, only the optimistic and contrarian were still there and they aren’t selling!  I realise that is simplistic but it is the new backdrop and gains could be significant and quite rapid as parts of the future ‘deal’ begin to be cemented.  Keep a wary eye on Sterling too depending on what you buy – let’s say a ‘fair deal’ is concluded then Sterling could be 15-20% higher still than present levels against the Euro and Dollar.  You can’t avoid overseas exposure for balance but there really are so many neglected, attractive UK-centric opportunities that you can hold too.  Commercial Property Funds in the UK are also most attractive especially as panic-sellers have been afoot in some unitised holdings!  We are adding to our exposures.

Well, as you will know, this is our job – taking the decisions for clients with the monies we place and manage for them – it is not perfect, we make ‘mistakes’ but we try our hardest and we spread money very, very widely indeed – we don’t know any manager or investor anywhere who has such a long range of components and covering so many asset classes and it doesn’t cost the investor a penny more in management charges.  An investor’s biggest mistake is in doing ‘nothing’ through inertia, deciding to see how the land lies before even doing a little something.  It reduces risk significantly and increases returns by widening the opportunities we can pursue.  We have courage to follow our convictions but based on a sophisticated (but easy to understand!) investment platform model structure of stability and a ‘skeleton’ upon which we place the individual meat and look after that all the time.   If your funds are managed elsewhere and managed only with hindsight (so reacting after and not pre-empting) or only enjoying a review even more erratically, maybe it is time you thought about letting us see what we can do for you and remember that if your thought is to ‘how much it costs’ – remember to think about how much it costs if you miss some of the greatest opportunities for generations – as they do indeed come around.  We also provide risk mitigation and diversification of course and a great and tidy, bespoke administrative system as well – the opposite sides of the equation for everyone to consider and then it is a case of ‘how much will you pay for that insurance which is what you need when things go against you’?

So, with a conclusive outcome on 12 December and some great improvements in many of our key holdings, I can wish you a very Happy Christmas and a great and dare I say prosperous New Year – not said politically but where we have reason to be optimistic for what the future now holds for us, our country and its society.  And if having a look at your finances is a job you do over the New Year, if we are not helping you already, you know where we are!


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 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