Short-term things

Dear Friend  

So yesterday was interesting in that shares globally were wobbly at the same time that bonds were, the theoretical safe haven. There seems to be a sneaking suspicion that inflation is on the rise (even the Bank of England quietly imagining that rates as high as 4% may stick for a while) but do we face the perfect storm? Have you been watching crude oil prices too – highest levels for eight years and little let-up on the ascent, especially as the World will need this to burn to create electricity and heat as well as we have been too zealous with our green alternatives and the negativity to our continued reliance on fossil fuels in the short-term.

Coal prices have also trebled in just over one year too and we are burning that – and so is Germany now it doesn’t have any nuclear option either. There is also a sense of global consensus that interest rates may be on the rise and what this will then do for house prices could be harrowing… just after we are told that the average UK house (aka a box inside which we live) has now broached £320,000… these are scary figures, especially when so many of them are financed by borrowed money of one form or another.  

And Tokyo has stuttered as it has gone from euphoria over a new regime to worrying about what the new regime may do and no doubt Germany will be the same with a new government too. It is curious how the sentiment can flip from plus to minus instantly and with little in-between… how is an investment manager meant to interpret these short-term things!  

Local History Invitation  

The Taw and Torridge Stamp Club has managed to entice me to make a presentation to display a few items again on Thursday 7 October at the Castle Rooms, in Barnstaple. If you are interested in local history and history generally, they are a friendly and knowledgeable bunch and you would be most welcome to attend as a guest, without charge, at 7.30pm. I shall be showing a wide range of different material with a philatelic bent but also items of old local letters back the centuries and including some Bideford and Barnstaple Ship Letters which are as scarce as hens’ teeth! If you would like more details, feel free to contact me!

Recent Progress  

I am pleased to report yet further takeover news, giving our participating clients extra boosts to results ‘for free’. Stagecoach Plc looks set to become part of National Express and the shares have jumped usefully and almost trebling since last October and yes, we were continuing to nibble down there. Whilst these are still lower than they had been, the big jump is a welcome addition. We also added Rolls Royce recently as it was so bombed-out and at the same time as announcing hopes for the first all-electric planes, the sale of a subsidiary has seen the shares rocket from silly low levels to nearer £1.50 for some exponential gains. We shall keep watching carefully!

One of our technical opportunities to which I have alluded previously continues to look very enticing too as the year-end vote fast approaches. Yes, the latest asset value of this small Trust shows that you can still buy the shares (if you can find them!) at some 25% discount to the value of the assets in the portfolio now. So because of the vote to close the Trust-down, this means that if nothing changes, our investors will see an uplift of a mere 33% gain. Greedily I shall do what I can to continue acquiring shares!  

Investment Value And Wisdom  

I say very often that investment is not about trying to pick the top or the bottom prices of an asset class but if you can acquire something which fundamentally is cheap, of low risk and low value compared to factors like the value of the underlying assets within a Trust or a company, then that is a better than picking-up pennies in front of a steamroller. For example, buying shares in multinational giants which trade in rather ‘boring’ sectors and products which we use every day and where the shares are cheap relative to a whole host of comparatives, the dividends (being parts of the profits returned to shareholders every year) are good and the knowledge these entities are going to be around a while yet, is much better than speculating on say that residential property investment where you envisage the exemplary increases over the last few decades will continue stratospherically and despite being so out of kilter with rental levels (themselves very high) and also other factors such as average earnings, etc. Indeed, this is even before considering page one of the investment textbook – spread your eggs around in different asset classes and then also use the tax incentives to optimise your returns and being prudent into the future like pension plans, Market ISAs and annual CGT allowances which you can’t do with houses. Indeed, even if you are still unswervingly optimistic, you can buy those too cheap companies which produce goods to fuel the building boom – eg miners and building products’ manufacturers, etc, hedging your bets!  

Crypto And The Regulator(Ions)  

Please be careful. It’s not a currency and it’s not an ‘investment’ either. It is a speculative concept, most unbacked by real assets and whereby the price is sustained by the simple faith of the supporters and nothing much else. They are used by fraudsters and those who want to skirt around the regulated routes but usually that means that law-abiders who participate end-up being the ones who pay. Beware though, the regulator is coming – not just here but internationally and appropriately so too. It is sheer gambling though I suppose in reality, you’d be better advised trading in casino chips as at least these have a face value in a currency backed by a government but frankly, you would be better served using Dollars, Euros or Pounds instead…  
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