“Tell someone that everything is great and they’re likely to either shrug you off or offer a sceptical eye. Tell someone they’re in danger and you have their undivided attention. Hearing that the world is going to hell is more interesting than forecasting that things will gradually get better over time, even if the latter is accurate for most people most of the time”….. Morgan Housel
A few days ago our financial regulators the FCA released a 48 page report on the current state of investor protection and education some 30 years after the Financial Services Act came into force. Conveniently ignoring that they have been in charge of all rules and regulations since then, dictating what we say about risks and charges and how we say it, they’re not happy. No surprises there then.
Have a guess who they blame? As advisers, despite the fact we can do nothing about their stupid rules or their insistence that we use archaic language to our clients, apparently it’s all our fault. Apart from ignoring their own failings and the constant broken promises of successive governments, guess who else gets no mention? The media! Not a sausage about the effects of their continual pessimistic predictions, which as we know from “The Dalbar Reports” (over the same 30 years) is a key reason why investors make poor decisions.
I wonder if you watch “Have I Got News For You” which features Paul Merton and Ian Hislop? What I like about it is that they revisit recent “news” from a different perspective, with humour thrown in for good measure. What a wonderful change from all the dismal “bad news” chucked our way on telly and radio, social media and in far too many “personal finance” columns.
So to counteract the gloom-laden daily “narratives” purporting to be news I thought, as we enter the long dark evenings of winter, to pass on some positive and/or surprising facts and data from the real world. (Maybe the odd funny) Some reasons to be cheerful, given that Matt in the Daily Telegraph reminded us last week “there’s only forty-odd Government disasters left until Christmas”.
Remember the “Bad News and Good News” jokes? Such as the shop steward one. “I’ve got bad news and good news” he said to his union members. “The bad news is we have to accept a 10% cut in wages, but the good news is I’ve had it backdated to April”.
Now we’re safely in November, I bet those investors who panic-sold in April under the onslaught of articles quoting “experts” with their annual cry of “Sell in May” would love to backdate their decision. Remember the dire predictions for stockmarkets as May loomed? Umpteen new reasons wheeled out this year. Apart from the “Brexit” farce, we had “handbags” between Trump and Kim and 3 North Korean missile tests. I hear some investors moved into cash “in case a nuclear war started”. Though quite how deposits survive when all else is vaporised beats me.
Four years ago as May approached and other long-forgotten “problems” worried “experts” the main lead in the Daily Telegraph personal finance pages was that “an academic found the Sell in May tactic works for stock market investing as far back as 1694”. And it went on to explain that a Dr Jacobsen, an academic from Massey University had done “serious” research into the effect…also known as “the Halloween Indicator”…. (trick or treat I wonder?).
By the following paragraph Dr Jacobsen had morphed into a Dr Passey who announced “we find the Sell in May effect is present in 36 out of the 37 countries in our sample…evidence shows …it has been noticeable for a very long time and in the UK as far back as 1694”. No idea where he got this from. Go check, (Nullius In Verba) and have a squint at your portfolio values since.
Now let’s play “Have I Got News For You” ASAM style. First up… What “Black Edwardian Advice” in the news last month is best ignored? Aah…..this will be world champion investment pessimist Albert Edwards, who said that “the events of the Black Monday crash in 1987 could happen again tomorrow”.
And why should we ignore his warnings? Because Albert says much the same thing every year. Let’s remind ourselves of just a few…
August 2010, The Telegraph…. “Stockmarket Faces a Bloodbath”
January 2012, The Guardian….. “China’s Collapse Will Bring Economic Crisis to Climax in 2012”
April 2013, CNBC…………………”Warning, Stocks to Crash! Gold to Top $10,000”
October 2104, The Guardian……..”Albert Edwards Warns Again the Market May Have Peaked”
August 2015, ValueWalk………….” 99.7% Chance We Are In A Bear Market”
July 2015, CNBC ………………..”Get Ready to Relive The 2008 Crisis”
January 2016, Business Insider….” If I’m Right The US Stockmarket Will Fall 75%”
Thank you Mr Edwards, don’t call us, we’ll call you………..
Next up…. Four questions, what links three of them? No cheating please.
- Where are all the Mercedes sold in Beijing being assembled?
- Where’s the world’s biggest Michelin tyre-making factory based? (2 million sq ft)
- Which country’s Manufacturing output, if measured as GDP, would be the 7th biggest country in the world?
- Which country has 19% of the world’s population and 14.8% of its income (GDP)?
China is the odd one out (Q 4). The answer is the US. Alabama is where the Mercs are assembled, South Carolina is where the tyres are made, and US manufacturing is bigger than India’s GDP. Fact.
Here’s another one “what links three of these questions”?
- In an all-country analysis undertaken by Ned Davis Research published on November1st, which country, in $ terms and in local currency, is in first place over the last 12 months in respect of business earnings growth outperforming expectations?
- We hear a lot about world debt. In which country is mortgage debt only 22% of total valuations?
- In what country has there been a 26% increase since 2004 in mortgage-free households meaning almost half are now mortgage free?
- Which country has 2.8% of world GDP and 18% of world population?
India this time is the odd one out (Q 4)…… and the UK is the answer to the first three questions. So the next time you read that the US and the UK are overdebted and underproductive, make sure you have a salt cellar handy.
Finally, what’s the link between London and Puerto de la Cruz? I’m off to both this week. Hurrah.