Straight outta Trumpton

This is probably the single biggest issue in financial planning/investing today, how to keep generating sufficient growth to fund incomes in a zero interest rate environment

Is it me or are the worlds of finance and politics increasingly imitating a mixture of children’s cartoons?

BREXIT (Pinocchio)

I’m all for democracy and the right of the people to actually elect their governors (this has always been the criticism of the EU, it’s an unelected body), but to make an informed decision surely proper detailed information is needed.

The ‘Outers’ can’t (it seems) tell anyone what will happen if we leave; they can say what won’t happen anymore but they can’t say what will occur for trade, tariffs, multi-national businesses leaving the UK, the currency, defence costs, employment, travel restrictions etc etc etc.

It’s an awfully big leap of faith to bin the current system for ………? Well, please do tell us!

(Or is it enough to simply paint Europe as the “Hooded Claw” and themselves as the Ant Hill Mob?)

Trump (Dumb & Dumber)

For a long time, it appeared he could say anything without affecting his popularity, then he spouts some dumb stuff about women and abortion and suddenly he isn’t Teflon any more.

The puzzle is not that what he said this time isn’t odious, but that he’s said plenty of toxic things previously and no one reacted.

The current Republican choice of Trump or Cruz is really a decision between two unpleasant things you really don’t want (either Dick Dastardly or Mr Burns).

Stock markets (Wacky Races)

An investor looks at their portfolio value on 1st January and not again until the end of the first quarter and the performance is flat, and they reasonably conclude it was a quiet period! (Happily as of today they’re actually up for the year).

Well not really, during that time various indices went on a joyride of around 20%; first down 10% then back up 10%.

Is it possible with any semblance of systemic logic, or analysis, for this to happen?

The simple answer is No!

(I’ve seen a peanut stand, I’ve heard a rubber band, I’ve seen a needle that winked its eye.)

Dodgy Dave (The Aristocats)

Many are not lovers of the Eton mafia, especially when they do their “we’re just regular common people” routine but honestly DD really did nothing wrong with his investment offshore.

It’s not even a bit of a story, it may indeed sound to those who wouldn’t know better that it was somehow wrong, it just actually wasn’t and those commenting do know better.

(Those pesky kids.)

Panama Papers (American Dad)

So how exactly did X million documents get sent to the international press anonymously and why are there no major US citizens implicated?

Aren’t the US fighting a tax war on offshore havens at the moment; they’ve just severely slapped the Swiss banking system around, which nobody (who knows how they colluded with the worst of the Second WW German asset stripping) should be sad about.

Conspiracy theory anyone (CIA??) and how’s Dave feeling about that “special relationship” now?

(You’ve got a friend in me.)

Interest Rates (Catch the Pigeon)

Larry Fink of BlackRock is a very smart guy and he tells it pretty much as it is.

He said that the long term artificial reduction in interest rates (the temporary emergency measure that’s now 8 years old with no sign of change) has broken the contract with those who’ve diligently saved for retirement as they can no longer generate an income from their capital.

He is right.

The flip side of that coin is that house prices have boomed because of the low rates so overall wealth for homeowners has increased, but it will require either an equity release (borrowing) or the sale of the property to liquidate those funds.

This is probably the single biggest issue in financial planning/investing today, how to keep generating sufficient growth to fund incomes in a zero interest rate environment.

(And Clunk you invent me a thingymee Bob, that catches that Pigeon, or I’ll lose my job.)

Bunds (Fantasia)

To illustrating how out of whack (bizarre, cartoonish) the situation has become.

To buy a 3 year German Government bond (bund) recently was to guarantee a capital LOSS of 3% to maturity; investors were effectively paying a 3% insurance premium to feel safe that they’d get their money back.

Hi ho hi ho its (still) off to work we go!

 

Note: This is written in a personal capacity and reflects the view of the author. The post has been checked and approved to ensure that it is both accurate and not misleading. However, this is a blog and the reader should accept that by its very nature many of the points are subjective and opinions of the author. Individuals wishing to buy any product or service as a result of this blog must seek advice or carry out their own research before making any decision, the author will not be held liable for decisions made as a result of this blog (particularly where no advice has been sought). Investors should also note that past performance is not a guide to future performance and investments can fall as well as rise.

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