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Financial Markets
Do less and make more
January 14th, 2021
If you run your own money this may save you ten years of work, (honestly). My investment journey started over thirty years ago. I didn’t think too much about it, returns were high, my money went into “funds” and who worried about costs? It was easy to do some simple maths, the message couldn’t be […]
Basis Risk Appetite
September 28th, 2020
For most Boards it matters when your basis risk exceeds that of your peer group because you are an “outlier” and therefore you attract regulatory attention. This means that from a regulatory “peace of mind” perspective keeping the basis risk down can be an important point in the psychology of risk appetite. But this raises […]
T – Charge
October 23rd, 2017
Drive in London and you can pay £21.50 for the privilege. That’s the effect of the new T-charge. The mayor tells us it will cost taxpayers £7m to implement. That makes no sense whatsoever. This isn’t an isolated incident. Over the last decade we have squandered a lot of benefits that should have arisen from […]
10,000 hours or (at best) a waste of time?
September 25th, 2017
In 2008 Malcolm Gladwell talked about 10,000 hours of practice in the sense that the more you do the better you become. This has a certain resonance. The more sportsmen train the better they are. So too in music, art and even the professions. Whilst Gladwell’s theory has its detractors Jim Slater discussed something similar […]
Events happen
August 22nd, 2017
During the summer regulators have been busy. Latest musings highlight the risks that threaten. A perennial theme seems to be the housing market. Others include Brexit, QE tapering, market liquidity, personal sector debt, PCP and so on. Is it that by highlighting everything you can’t be blamed when things happen? To be sure, cast wide […]
How much?
July 4th, 2017
How much should I invest in stocks? How much should we hold in liquidity? These similar questions arise from different sources. One personal the other corporate. The key ingredient is attitude to risk. For an individual who can’t tolerate losses stocks aren’t the thing. For those who want some diversity in their investment the question […]
Going North
May 14th, 2017
According the FT on 27/4/17 local councils are borrowing from the Treasury at about 2.5% to fund real estate yielding around 8%. The net interest income being used to fund spending. The balance sheet of some councils now being dominated by this carry trade. On 2/5/17 The Times reported an investigation into the motor industry. […]
Racing cert.
April 6th, 2017
Reinvestment of interest is the cornerstone of successful long term investment. Einstein recognised compounding as the eighth wonder of the world (“…he who understands it, earns it…he who doesn’t… pays it.”) The law of 72 shows that a return of 4.1% takes 18 years to double your money and a return of 1.60% takes 45 […]
Inconsistent appetite
March 13th, 2017
Last week I was discussing liquidity and market risk with two different banks. On reflection, it’s apparent that the way we set risk appetite is inconsistent. For liquidity risk one of the key measures is the liquidity coverage ratio. The survival period is measured on a stressed basis. This is relatively severe and is backed […]
We could do more
February 17th, 2017
In this low rate environment pension liabilities have ballooned and companies have opted to close final salary schemes. Many private sector workers are therefore reliant on money purchase schemes. This means they save a proportion of their salary in a tax-free account ready for the day they retire. Handing this responsibility to individuals is in […]