It seems this Government is being the most successful at raising the rates of tax yet collecting less cash as a result – and doing untold harm to the economy as well as consumer and business confidence the same time. No, this isn’t political comment; it’s simply financially factual.
Whatever one’s politics and no, it’s not a laughing matter at all but I had to smile at the wag who said ‘in one year this Labour Government has destroyed the economy, something which took the last one 14 years’.
The lesson which it is learning is best epitomised by the ‘Laffer Curve’ effect (some criticise that’s efficacy) Laffer Curve: History and Critique but if you are not careful, the higher the tax rate, the less you collect and primarily because people don’t want to pay it so they do more to avoid it legitimately. Capital Gains Tax receipts have just demonstrated this in spades. Core policies like the Winter Fuel Allowance (and its almost restoration) the non-dom rules’ escalation (a direction the Conservatives started so I’ll blame them too!) and also the higher National Insurance on businesses have all not helped.
Look at last month’s government borrowing – the second highest shortfall on record and despite record Inheritance Tax receipts (they haven’t raised the headline rate there but are now levying it on pensions from 2027 of course). It is also the sentiment you communicate, as much as what you actually do and that’s having a significant effect.
Sadly, the lack of government experience and also financial and business experience in the Cabinet are having their toll but again, I wasn’t happy with the excessive tax and spending regime of the last government either.
Fortieth celebration
Yes, soon the Firm will be commemorating its 40th anniversary. We plan a series of announcements and events including a big celebration for participating clients with funds with us, likely to be 20 September.
It was in August 1985 that I started the Business in my parents’ sitting room and the spare bedroom as our office, all those years ago. Many things have come and gone over that time and it is amazing to think how things have changed and indeed which firms are no longer with us, regardless of the fanfares which may have accompanied them at the respective times.
We shall be sharing a series of synopses and history and what we believe has helped us endure through thick and thin and why we hope our clients respect and appreciate what we try to do and as ever, all we guarantee is our best endeavours (we can’t provide perfection as much as we aim for that) and constant improvement in our service and results, regardless of what the world and regulation throws at us.
It is wonderful too to celebrate one of the longest-standing lead investment managers over the same funds; not many have endured in post for 40 years. As our anniversary nears, the funds we manage discretionarily on behalf of mainly smaller clients ‘like you and me’ but some thousands of them, have broached their highest ever levels at £275million and primarily on the great performance we have achieved, from the patience we and clients have invested in some great, value assets. No, we have not and are not chasing the same speculative dragons which it seems too many are too enthusiastic to do. We also remember at all times the onerous responsibility this places upon our shoulders as we look-after clients’ assets for them, though we are not fazed by that either; a rabbit in the headlamps or joining the other lemmings on the cliff edge do no one any good!
We continue to believe that ‘downside risk mitigation’ are the most crucial watchwords presently. The US majors do not give you that. Still, if you can hold assets which can double in value anyway but which are excruciatingly under-priced, they give far superior protection against a major upset in the future and frankly, there’s no point taking the speculative risks over there which so many are doing presently (and with your money if you are not with us).
Good news/bad news
JP Morgan Global Core jumps another 6% as a further chunky redemption is announced at the net asset value. Good news. We shall be running dry on these sorts of opportunities soon, at this rate! Remember, these are all extra ‘bonuses’ for investors unrelated to what happens to the underlying assets held within these collective investments.
Capita slips as Ofgem launches a probe into Smart DCC Ltd, killing a fantastic rally in the shares in the short-term. Meantime, BT rises to its highest level since May 2019 and more than double May 24’s levels, with good dividends on top. Close Bros also rises 10% on selling Winterflood’s – all excellent for performance for two of our core direct equities!
Schroders Global Innovations Trust repays tendered shares at 21.1p and our investors will receive that. Yes, some is simply loss cutting but we averaged-down where we could and chased all the way down to their March low of 8.72p! We continue to hold.
Rubbish banks
So this is not the first time it has arisen but I was conversing with someone last weekend and basically, why can wealthy individuals not borrow money easily and for whatever purpose they want, at sensible rates of interest, when they are prepared to put their total assets on the line for what is a tiny proportionate debt, so the risks to the lender are effectively non-existent?
Institutions have to also keep some cash funds on deposit as parts of their overall asset spreads and surely, earning say 5-7% interest on such ‘easy money’ as well as say a 1% fee to arrange (and security costs paid) is good business for them too, often lending to borrowers who really don’t need the money at all but who choose not to use all their own funds for their projects?
I have been exhausted personally by the ineptitude of some of the biggest banks in terms of lending to businesses and despite their excitement to have regular meetings to ‘get to know our customers’, they don’t really want to understand their needs and respond to them at all – ‘the computer says no’ is etched upon their brows it seems…
NFU Mutual
I was interested to read the recent publicity about this mutual insurer and the sentiment that ‘things have changed’ compared to old times. Certain farmers have been complaining about concerns with claims’ payouts and that the relationship is not the same as it was.
We have used NFU for many years but as time has passed, yes, we too, have found that underwriters have been losing connection with reality and often much to the chagrin of the local agents too. Our own premia have escalated and more of our property interests have had to be re-brokered with other companies, which is sad to some extent in that the Society still advertises the extent of renewals being completed with it.
We have also noted that the NFU Mutual Board salaries have been escalating over recent years and a reflection of the ‘businessification’ of the Society, but when it promotes mutuality and the fact its roots are for its members, excessive reward levels stick in the craw of those reading the statements. Nationwide Building Society is receiving similar signification criticisms on this same issue too.
Readers will know, too, that we are cynical of NFU’s life and pensions’ activities where the salesmen are still amongst the highest rewarded in the industry by selling expensive, restricted products and especially the continued widescale use of ‘with profit plans’ despite the industry’s significant move away from these opaque policies, products which can hide the ‘marketing costs’ within the structure and ‘before bonuses are declared’.
As with Equitable Life’s behaviour on this, these marketing costs include hefty bonuses to the sales staff etc. We don’t pay any commission or sales’ bonuses to any of our staff – and don’t sell ‘with profit’ plans presently either.
Fraud
At last, arrests for a pension sales’ fraud, where naïve but innocent investors were sold the tale that buying storage pods was a great idea for their pension. Six arrests have been made. I’d love if this is the pattern for many more such fraud cases, not only hoping for criminal prosecutions but also asset confiscations as ‘The proceeds of Crime’. Can we include proportionate hotel room ownership, hotel and other esoteric property development scams, duff ‘bonds’ with no substance, holiday lodges and caravans and well… I could go on – and on.
Please simply use a regulated adviser and sensible schemes. However, sadly now the regulatory regime has made it a nightmare trying to do the best and right thing in many cases too, with access to your pension money (and transferring from poor schemes to superior ones) so much more difficult and complicated – and in many instances costly too.
When will they realise the fraudulent pension transfer opportunity is now in the past, so these rules are no longer needed, as transfers have to go to properly regulated pension schemes approved by HMRC and the FCA…?
Cancer, family, friends and clients
Cancer affects all of us and our clients, family and friends are the same. Two of our ladies are joining the Breast cancer Now Afternoon Tea appeal to raise money. Are you free at 2pm on 15 August onwards to come to Barnstaple and to have a cup of tea?
They and other staff and family and friends will be baking cakes for donations from visitors! Well done Sarah and Viv for the initiative!
Maxims – being a better investor
After 40 years’ experience, whilst I can’t be the ‘Sage of Omaha’, maybe I can be ‘Basil of Barnstaple’ with reflections upon the good parts of Fawlty Towers… I thought it might be an idea to list 40 maxims which have helped us be successful for clients over this time. (The example above is not one of those, though it certainly isn’t bad advice!)
Maxim Number one: Patience is almost always the best investment anyone can ever make – when investing.
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
Risk Warning
Stock market investments offer income through the payment of dividends and interest and good opportunities for capital appreciation over the longer term. Generally this means periods over 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 when investing. We may also invest in funds holding overseas securities. The value of these will 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 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 of course and there’s no charge for emails. If simply you save or make 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 we could consider, please contact me. Our website is available too: www.miltonpj.net. We celebrate our 40th anniversary next year and have been publishing a well-respected independent column in the local Paper since not long after we started and free client newsletters as well.
Do not forget the usual caveats – this is not ‘advice’ and you are encouraged to seek that before embarking upon any financial route involving investments, etc. Philip J Milton & Company plc, its directors, officers, employees and shareholders may own shares personally in any company mentioned.
Data is sourced externally. Although we check to ensure it is as accurate as possible, we cannot be responsible for data from third parties. If you wish to buy any investment, product or service because of this update please seek advice or conduct your own research before doing so. We cannot be liable for decisions made as a result of our publication (and where no advice has been sought). Past performance does not guide future performance. Investments can fall and rise.
