Well, a nice Christmas Present of buoyant markets and some grand increases for several of our core holdings. Indeed, even today at the time of writing, of the FTSE350, of the major movers upwards to greet the morning, we have 11 of the strongest 12 – that must be a record for us… there is no correlation between them either unless suddenly the ‘market’ can see the obvious value we do!
However, what is this new-found confidence after all the negativity and why? The answer, to which I alluded in the depths of early November’s low, was a simple one – the coin has flipped over from ‘everything’s negative’ to ‘everything’s positive’. Neither stance is wisdom nor prudent but there it is.
So now the consensus economic view is not only to expect lower inflation but also for interest rates to be cut next year and sooner and more aggressively than expected. I do not believe the influential central bankers have been doing an especially grand job of stabilising markets and expectations – either on the way up or down for interest rates and neither by actions they took or just as importantly, what they have been saying. I suspect the worry now is for recession – ‘negative growth’ – but that is what ‘they’ wanted, to stifle consumer demand and thus stop inflation racing away. (Germany has it and its market has just hit a new peak…). However, really the best thing in the face of negativity is to remember – if the values are so compelling just buy, certainly don’t sell and hold tight regardless as that is the right thing to do. That is what our pressed encouragement in our special client newsletter of early November stated very, very clearly.
It would be interesting to wonder how many other advisory and investment management firms put their necks on the line as we did in early November, with such a positive encouragement to its clients at that time of heightened despair (and no, of course we don’t call everything ‘right’ – what does that mean anyway?). I didn’t see much with those tones.
Anyway, no complacency with your investing and financial planning, please and remember to avoid the seriously over-priced things but – a toast to what is a very encouraging end for patient investors to a difficult and volatile 2023. Enjoy the festive time – have a lovely Christmas and remember those less fortunate than ourselves, with our generosity in their time of need too. Count on our families and friends at this time. God bless to you all.
More good news
Regardless of the markets and their volatility, we have had a bevy of solid news on our closed-ended funds and their plans and hopes for ways of reducing the discounts at which their shares trade. Our 14th this year is GCP Asset-backed Income (mentioned once before I should add) but undertaking a strategic review which is likely to include the wind-down of the Company and return of all funds to investors. That would represent a sizeable premium for us. The shares rise 3.4% on the news. The shares are still 64p (up today on news of an early loan repayment) and we hope for a final sum nearer 95p.
Our 15th is Abrdn Diversified Income & Growth (again, a second mention) which will seek an approved wind down at the 27/2/24 AGM. The shares jump 9% on the news. Cash will start to be returned in the first half of 2024. The shares are 82p and the latest net asset value £1.12. Then, IP Group announces a £20million share buy-back as it believes the markets are seriously undervaluing its portfolio (we agree). The shares jump 7%.
These are all quoted companies which simply hold ‘investments’. The market prices at which their shares trade have been way below the value of all the assets they hold. Some are exceedingly ‘boring’, like secure loans, so not ‘affected’ by the daily vagaries of market movements in ordinary trading companies. We see them too as a safer form of investment at the moment against excessively high US shares’ valuations and come any rout… if the ‘magnificent seven’ biggest US companies’ share prices fell by half, a secure loan fund’s mortgages don’t change in value and neither do their customers’ liabilities to pay interest and to repay them in due time – remember that. Investing is as much about security for what you have in the face of unexpected difficulty as it is chasing extra returns, especially if they are based on too much thin air.
Rowanmoor in Default
Perhaps the last of the pension administrators which allowed ‘investments’ in The Resort Group’s specious hotel projects in Cape Verde Islands has now been declared in default by the FSCS (Financial Services Compensation Scheme) so compensation claims can be considered. These things could not happen now as rules have been so sharply tightened – after the horse has bolted and honest, law-abiding advisers are paying the price for all the compensation and the extra rules. We have helped the best part of 1,600 ex-Organic investors secure their compensation for the frauds linked ultimately to the same scam with Resort Group and its cohorts.
However, there does need to be a seed-change led by the Regulator – taking market risks by investing in proper, regulated, market-based holdings is not dangerous and in fact is imperative for savers to ensure their capital can work as hard as possible for them and in a balanced way, helping them achieve their long-term goals, not fretting about short-term movements reported on the news every day. Chasing some ‘dream’ asset sold by a slick salesman is not wise investment, whether that is some cryptocurrency scam, a residential property, buy-to-let get-rich-quick scheme, rare wines, whiskies or watches and other collectibles acquired for ‘investment’ and not enjoyment first.
Sadly, listening yesterday to Baroness Mone and her offshore-based husband Doug Barrowman (why isn’t the husband of a sitting member of the Lords a UK Resident for tax purposes anyway…) reminded me that not everyone seems to operate with a moral compass which doesn’t put themselves after their clients and customers, let alone general ethics in business. I don’t care what political party may have been involved with either of them before but to attest publicly that they and their families aren’t the beneficiaries of the £60million of profit they banked but Trusts over which their families have the controls and they are named as prospective beneficiaries… please just be wary with whatever and whomsoever you do invest and measure the calibre, the integrity of the people with whom you entrust your money – do they really have your best interests at heart or their own?
If you have an adviser, an investment manager, whom you know you can trust (and no-one’s perfect but are their honest endeavours their best, for you), then cherish them dearly and hold onto them. They are rarer than you might think. I wish the authorities all success in the pursuit of their claims against Medpro.
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
