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Financial Markets
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 […]
Bank multipliers
January 19th, 2017
US bank stocks are indicating that the new administration may scale back the regulatory onslaught that followed 2008. Could this make Bank capital requirements less restrictive? It could. Other countries would need to follow suit or be at a competitive disadvantage. Whether you think this is good news depends on your views. On balance some […]
Let’s be clear
December 15th, 2016
What do the following two examples have in common? Example 1: If a 25-year-old saves £1,000 for retirement in 40 years’ time how much will they have? That depends on the rate of return. Using a 5% rate (realistic in current conditions) the amount is £7,040. A fund manager who charges 1% reduces this to […]