Just In Case....
What a start to the year!
Scientists have proved that time is elastic and can stretch as predicted by Einstein in his theory of Relativity. This was not news to me, or fans of Scottish football, as we have seen referees turn seconds into minutes for years.
The new findings also proved we are still experiencing the effects of events in the solar system that happened billions of years ago and that the gravitational waves from these pull us, and the planet, imperceptibly. It proves there are forces we cannot see and that they do have an effect on us.
I am glad that this research came to light as maybe they have more of an effect than we know and could help explain some of the bizarre things that are happening just now. For example I have to pinch myself when it comes to the US presidential nominations. As a comedy it would be hilarious but this is reality and it is scary!
In sport we have the possibility of Leicester City winning the Premiership, which would be the biggest shock in the history of sport. At the start of the season they were quoted at 5000/1 by the bookies and they certainly know all about probability. To put this into perspective, Bono is 1000/1 to be next Pope as is Father Dougal Maguire from Father Ted. In fact the odds of Elvis being found with The Loch Ness Monster as his pet are probably less. Yet, whilst I write, Leicester are two points clear.
As for the stockmarket? Where would I start?
There is no doubt that we like to believe we know how things will turn out and become uncomfortable when our perceived logic is overturned. In football we expect a club with a squad worth £500m will finish above one worth £20m, and for the vast bulk of the time this will be true. Investing is no different and in an attempt to try and bring some science to the matter there are multiple theories expounded as to how markets perform.
These wonderful works have names such as “efficient market hypothesis,” “rational pricing theory,” and even “greater fool theory,” which believe it or not expounds that it is ok to buy something that is overpriced as long as there are people out there that will buy it from you at an even higher price.
As I have said before no one can accurately predict markets as they are moved by emotion and are not “efficient” or “rational” particularly in the short term. There will be times when values will fall sometimes dramatically and for no real reason and these falls can be prolonged. This is why most successful investors ensure they have sufficient amounts in cash alongside their investments – just in case.
Nothing in life is certain other than death and taxes as Benjamin Franklin famously said and no doubt we will receive further confirmation of that in the Budget coming up in a couple of weeks.
It has been heavily hinted that there will be a change made to the way tax relief is granted on pension contributions with the likely abolition of relief being granted at the highest rate. It has been suggested this may be replaced by a new flat rate of tax relief that may be more than 20% but definitely less than the 40% or 45% relief that high earners can receive just now.
Now it may be difficult to bring in such a change on the day of the Budget and it is more likely that it would come into effect from the new tax year, but any higher rate tax payers who are in a position to make a contribution would be advised to do so before the 16th - just in case.