Well, whilst I anticipate another eshot just before the festivities, it seems apt to wish everyone a very Happy Christmas season, celebrations and relaxing times. The new government will be looking forward to some rest and apt navel gazing over the break.
I am sure we shall all be wondering what might ensue from Syria – let us hope democratic peace and collaboration between all the factions which make-up Syria and especially so that millions of displaced people can return home without fear of persecution.
UK retail sales fell by 3.3% in November, another reflection upon the Budget and the general somewhat shattered confidence. The market reacted positively – I suppose meaning a greater likelihood of inflation being suppressed and another interest rate cut as a consequence. However, it’s not good for the Chancellor’s ’growth’ agenda. What did you think of the Prime minister’s reiteration of the ‘change’ agenda? I think there was some bemusement that ‘it’ was required so soon after the Election and initial euphoria.
At the same time, partly fuelled by French troubles but the EU economy is in difficulty generally – the Euro has been falling and is now lower against Sterling than it was after the Brexit vote in 2016. It seems no one was predicting that. Despite the incessant ‘poverty’ flagged in the media too, supermarkets are expecting a bumper Christmas so it’s hard not to be cynical about the stories we are fed.
Our latest newsletter is enroute to investing clients and within it, we are reminding them of the benefit of an ongoing relationship with a trusted adviser and one who is prepared to go well beyond what may be considered to be their job to help their clients – and without charging for that or everything either (are we just foolish…?)
I am reminded of two recent examples. One was for a 74-year-old client who had been working overseas all his life except for a short while after university. He had a wholly inadequate NI record for any State Pension and an early enquiry dismissed his opportunity. But – we kept pushing buttons, asking questions and now he receives £5,096pa, as well as a chunky back-dated lump sum.
On the same subject… another client not receiving State Pension yet and initial enquiries suggested she’d need to pay £8,000 for not much of an uplift on her incomplete NI record. She wanted me to drop it but like a terrier… I encouraged her to push buttons and as a result, an early time in Hong Kong with her RAF ex-husband should add three free years and she should only have to find under £800 to have a full State Pension record, a sum repaid to her by extra pension in mere months and then for the rest of her life, index-linked!
Yes, all of this takes us advisory time and sometimes it is quite significant because it is not straightforward but hey, they’re our participating clients so, well, we’re demonstrating our special extra value to them. I’m sure they’ll be spreading our name and reputation far and wide with their connections too!
NatWest
Remember when NatWest shares fell to £1.76 on 1 November last year on the debacle over Nigel Farage, politicising customers and the Chief’s data protection/confidentiality breaches? We had a holding before but escalated the buying priority for the stock when ‘no-one else’ was buying really – it all looked bad and for banks generally. Since, they have jumped to over £4. Of course, the UK Government’s sold most of its holding from the banking crisis and at prices way below that – cutting its 38% stake to a mere 11% now and Labour cancelling the proposed public offering the last government offered.
Whilst generally UK banks are very good value (we have just sold our holding in Standard Chartered Plc at a handsome profit) I am wary about their customer engagement generally which remains atrocious and with little understanding of business customer relationships like they used to have (and opening doors for alternative providers to take their business).
As with most businesses, we have some borrowing facilities over certain assets (and allowing us to invest our capital in better-producing investments etc!). We could repay them easily if we wished but that would be foolish. One such property loan came up for review and as we still have the property and its potential redevelopment is closer (but not ‘there’ yet), instead of a sensible roll-forwards, with all the usual review costs, the bank offers only a one year extension – as helpful as a chocolate teapot. We are hardly one of the biggest companies in the Country either but instead, it prioritises a message asking:-
• How is the Philip J Milton & Company PLC group assessing/managing the impact of financial and operational risks arising from Physical, Transition and Connected risks/potential risks associated with climate change?
• If you could please provide responses covering each related climate risk; Physical, Transition and Connected climate change impacts?
Please note your commentary is required as part of our Annual Review process of client accounts.
I have asked if our failing to provide this compromises our business banking relationship… after all, we do enough reports on myriad subjects and being environmentally friendly and innovative is part of what we are and do but what on earth is that to do with our bank?
Good news/bad news
One of our smaller stocks in the AIM strategies for IHT alleviation has just been bid – Brand Architeks Plc and the shares nigh double. This is on the back of Eckoh being taken out last month. This will continue happening as there is such excellent value in AIM. Longer-term investors will still be losing but nibbling-away buying more on the way down will have rewarded again.
Investing superstitiously
It is interesting how many invest their money superstitiously rather than based on any fundamentals such as ‘value’ for example. Understanding some of the psychology behind investing (and thus unhelpful traits which we may develop) can prove invaluable lessons.
Of course, there is the other side to this too – looking at funds or sectors which have done badly and buying them because they are likely to do well going forwards – and likewise selling the top performing funds and sectors because they are likely to do badly because today they are too dear. Too many investors believe that the ‘present’ in terms of conditions will endure for ever but of course they do not. However, complacency can mean that they fail to take action when they should and indeed, if on the positive side, often they become ever more confident of their wonderfully clever abilities and their strategies.
You may have seen charts before of sectors which show, say, that in 2021 ‘Growth Capital’ was one of the top performers but the next year it was the worst. On this basis, areas expecting a bounce of some magnitude now should include commercial property, renewable energy infrastructure and UK smaller companies after several years in the doldrums. That resonates with us on ‘value’ grounds regardless – some tremendous value abounds there and with great natural incomes too – but then we aren’t superstitious.
Bitcoin
I think what really sums-up the $100,000 level which was breached for this non-existent entity and its then apparent $2trillion value of all ‘coins’ in existence breached just afterwards, is the legal case brought against Newport City Council by a hapless person whose computer drive was inadvertently dumped and added to the Landfill. Without his pass code to his ‘wallet’ his alleged 8,000 ‘coins’ are worthless and the Council is facing an action to excavate to try to find this Drive, backed by an investing consortium which would share the spoils.
‘Where there’s muck there’s brass’ but really, is there almost $1trillion sitting in a landfill site? Oh dear… it epitomises the hype over what can never be what ‘it’ is intended to be – a stable ‘currency’ and neither can the ability of criminals to move funds around anonymously with ‘it’ be a detraction either. The FT published a most entertaining ‘apology’ for its Bitcoin coverage but has it changed its stance on this speculative craze? No.
Clearly Donald Trump’s election has something to say about it and Elon Musk’s presence on the scene but… we’re not buying it.
Report on the FCA
Many will have seen the national news and the scathing comments about the FCA, the financial industry’s regulator. For anyone wanting some bedtime reading, here is the link:- Report on the Call for Evidence about The Financial Conduct Authority
However, beware it is 358 pages long. If anything, the opening comments are harsher than many of the media headlines. The Regulator believes the report and the conclusions do not reflect the reality and thus that it is unfair. I am not making any comment.
St James’s Place – headlines again
I was frustrated – for its customers – to see that after two decades SJP is now closing its commercial property funds holding almost £2billion of property. It’s not the time to be selling most commercial property. However, investors in pensions, ISAs and portfolios (many of whom are already locked-in to suspended funds regardless) will also suffer the high costs of disposals as well as large management fees whilst in run-down and no doubt there will be some fire sales in there as well, further reducing the outcomes.
Yes, the constraints of commercial property are known but the firm should be keeping commercial property options as uncorrelated alternative assets to shares, etc. Commercial property (or preferably REITs) is a great asset when the price is right – real tangible assets, tenants paying rents, diversified exposures across the types of property and locations and a return where the tenants keep paying the rents regardless of the economic conditions (yes of course there will be difficult times too). Whether or not SJP distributes it to investors, those rents are then available to them as a dependable income, which can average over 5% presently (much more in many cases) from a mixed portfolio and yes, in time such asset prices do rise, even if just because of inflation – and rents go up too.
So, is this in the customers’ best interests? Probably not and with no viable alternatives being offered to them either, even alternative property funds on the market managed by others but then, SJP is not independent so it isn’t going to do that, is it. Sad.
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
