Will The Next Crash Be Machine Made?

I'm lucky. I have some spare cash that I can invest. Where should it go? Conventional wisdom says that if I will not need to use it soon, or in a hurry, better returns are to be made in stocks and shares rather than relying on the miserably poor rates available from cash deposits.

The next question is "Do I stock pick myself, or rely on a number of funds?". Apart from a few stars the history of stock pickers is not great; and anyway, I really don't have the time to do the necessary research. So funds it is.

But should one pick active or passive funds? Index trackers are fine, and they're cheap (most of them!). However, I have a predilection for income over growth so may be active funds are the route to take.

It all sound logical, doesn't it? Unfortunately I've been reading about algorithmic trading and it's scary. Most index trackers are algorithmic - there's no need to do anything else except just react to the market; in other words, to what a few stock pickers and those active funds are doing. The first issue is that there is more and more invested in passive funds while active funds are shrinking. That means that markets are being driven by fewer and fewer funds.

That's not a problem, is it? After all, active funds have sensible, pragmatic people at the helm, don't they? Well, actually, no, they don't. Most active funds are also algorithm driven and although each individual algorithm may be understandable the way they interact with each other is totally opaque.

Can we trust these algorithms? Who knows? There certainly have been unexplained "blips" when markets have done really strange things. There are now siren voices calling for markets to be regulated back to a low complexity environment but is that really possible?

Meanwhile I'm just hanging in there and hoping. Since the 2008 crash markets have been steadily rising. Maybe the machines have got it right; or maybe it's yet another bubble. Fingers crossed!

Brexit and My MP: Part 25

Mrs Milton's email to me copied into part 24 of this sorry saga required a rapid response. Here it is:

Dear Ms Milton,

Thank you for your response to my email of 6 December 2017.

I am very well aware of the provisions of Article 50, including the contents of paragraph 3.

I am troubled that there appears to be no definition of the word "meaningful" in so far as it pertains to "a meaningful vote on the final deal". If it simply means that both Houses will debate whether to accept the proposed final deal, or to leave the EU with no deal, then it can hardly be termed meaningful. If it entails the possibility of sending the Government back to the negotiating table then the problems arising from paragraph 3 come into play. Could it, however, also include the option to withdraw the Article 50 notice? I would be very grateful for your clarification of this matter.

EC President Donald Tusk has stated that he believes the UK may withdraw its Article 50 notice prior to the 2 year deadline. Expert legal opinion supports this position. I refer you to the opinions of, among others,  Lord Kerr, Prof Stefan Enchelmaier, Prof Sir David Edward, Prof Kenneth Armstrong, and Dr Jan Komarek; all experts in matters of European Law.

When 37% of the electorate voted to leave the EU in 2016 the consequences were unclear, and there was, obviously, no understanding of the likely contents of any EU-UK deal. It is clearly possible that the UK public could consider remaining in the EU as preferable to both accepting the final deal and to exiting with no deal. This is why, assuming that withdrawal of the article 50 notification is, indeed, possible within the 2 year time limit, I believe that the people of the UK should be given a timely opportunity to voice their collective opinion.

I still look forward to your responses to all the issues I raised in my email of 8 October.

Yours sincerely

Richard Bawden

(See parts 1-24 earlier in my blog)

Brexit and My MP: Part 24

This is possibly the most depressing response I've had from my MP to date. For someone who voted "Remain" in the advisory referendum, and who is MP for a constituency where the majority vote was "Remain", to have so clearly now set her face against any reversal really beggars belief.

(Please look elsewhere in this Blog for the earlier 23 episodes in this sorry saga. Also I've now published Part 25 which is my reply.)

Dear Richard,

Thank you for contacting me about parliamentary approval of the final terms for leaving the EU.

The Government has announced that a new Bill will be introduced to implement the withdrawal agreement so that the deal that the UK reaches with the EU can be put directly into UK domestic law.  This includes the agreement reached on citizens' rights, any financial settlement and the implementation period.

This also means that Members of Parliament in the House of Commons and Members of the House of Lords will be able to debate, scrutinise and vote on the final agreement made with the EU.  Both Houses of Parliament will have a meaningful vote on the final deal.  This will take place as soon as the deal is agreed and before the European Parliament votes on it.  I am clear that Parliament will have a full opportunity to have its say on the final agreement.

This Bill is also important for the Committee Stage of the EU (Withdrawal) Bill.  This is currently being scrutinised by the House of Commons.  Powers in EU (Withdrawal) Bill will, if necessary, be used to make more technical changes that are appropriate for secondary legislation.  The exact details of the UK's withdrawal arrangements are still subject to negotiation with the EU, which is why it is important to press ahead with the EU (Withdrawal) Bill and make sure that the UK's exit is delivered in a smooth and orderly way.

The Government has listened and will continue to listen to suggestions from Members of Parliament to improve the legislation relating to the UK's exit from the EU.  Legislators should work together to ensure that the UK can pursue a smooth and stable exit from the EU. This is in everyone's interest.

Article 50 of the Lisbon Treaty has now been invoked and there is a two-year period in which to agree a withdrawal deal.  EU law is clear that if a withdrawal agreement is not reached by the end of this period, the withdrawing country will simply leave the EU without any deal.

It is also not within the power of the UK Government to unilaterally extend the negotiating period.  EU law states that this period can only be extended with the unanimous agreement of the remaining member states of the EU and it may well not be in the gift of the Government to fulfil it.

Thank you again for taking the time to contact me.

My best wishes,

Anne

The Rt Hon Anne Milton MP

Member of Parliament for Guildford

Minister of State for Apprenticeships and Skills, Minister for Women

Wine and Cheese - A Tasting

We belong to an informal wine tasting circle and are occasionally called upon to present an evening's tasting. Our latest session was pairings of inexpensive wines and cheeses. All the former were sourced from Majestic and the latter from the deli counter at J Sainsbury apart from the taleggio which came from Waitrose. As the festive season is upon us I thought I'd post our impressions.

Graham Beck NV Brut (£11.99) plus La Rustique Brie (£9.50/kg).
A combination that worked. The wine has a fresh, yeasty flavour and the brie a nice creamy texture and slightly oniony taste. I scored the wine 8/10.

Pouilly Fume "Les Griottes" 2016 Jean-Pierre Bailly (£13.99) plus Bride Valley Goat's Cheese (£15.00/kg).
Bright lime and green apples taste to the wine. Not much gooseberry. Good value - 9/10. Goat's cheese perhaps a little mild for the combination but it worked.

Montepulciano d'Abruzzo 2015 Masciarelli (£9.99) plus Arrigoni Taleggio (£17.00/kg).
Disappointing wine. Something of a non-entity. What one participant described as "spaghetti supper" wine. Little depth - 6/10. I'm a taleggio nut so biased. I enjoyed the tangy nutty flavour of this offering.

Rioja "Single Vinyard" 2015 Ramon Bilbao (£8.99) plus Manchego Gran Reserva (£19.50/kg).
These worked well together. The Rioja is reasonable value for money. We've purchased it previously as a party wine which to my mind is its forte. Nice fruit, reasonable length, easy drinking - 7.5/10. The cheese (served with membrillo) had a sharp, sightly peppery flavour - good.

Rustenberg John X Merriman 2015 Stellenbosch (£15.99) plus English Vintage Reserve Cheddar (£12.00/kg).
I've purchased several other vintages of the wine as I regard it as excellent value for a Bordeaux grape combination. This was the first time I've tasted the 2015 which is well up to standard. It has a typical cassis, sour cherry and tobacco and although ok to drink now I think it will improve with aging for a few years - 9/10. The cheese was firm and strong with just the occasional crystal crunch. An excellent combination!

Croft Reserve Tawny Port (£13.99) plus Cropwell Bishop Stilton (£15.00/kg).
The port reflects its price; pleasant without suggesting anything exceptional - 8/10. The stilton was good - a rich and tangy flavour with just a hint of a smooth texture.

It was an enjoyable evening.

Market Leadership In Green Banking? Perhaps Not

The UK Government has ambitions for UK to be a green finance leader post-Brexit and just a couple of month's ago launched its Green Finance Taskforce. Now Edie reports that analysis by ShareAction into the green credentials of Europe's 15 largest banks has three UK banks (RBS, Standard Chartered and Lloyds) in the bottom 5 with assessed "scores" of 54, 52.5 and 37 out of 162. To its credit HSBC comes 3rd with a score of 92.5.

The real worry for the Government, though, will be the performance of French banks with 3 of them in the top 5. It is argued that this is being driven by innovative French legislation.

So the UK is playing catch up, again. The Brexit vision becomes dimmer by the day!

If Waste Plastics Don't Go To China Where Will They Go?

Edie reports that UK recycling companies fear that the upcoming restrictions by the Chinese on waste plastics imports risks increasing pollution at home. Shipping our waste overseas has always seemed to me to be a somewhat dodgy policy. Now the odd chicken appears to be coming home to roost.

Unfortunately, there would seem to be no robust plan on how to cope with this change. Michael Gove is obviously not on the ball: "I don't know what impact it will have. It is ..... something to which - I will be completely honest - I have not given it sufficient thought". A few marks for honesty then but what we really want is minsters and their departments doing a proper job. A Defra spokesperson trotted out the usual mantra: "We are continuing to work with the waste industry blah blah blah". Such statements mean absolutely nothing.

At a time when Brexit is already hitting the pocket of Joe Public the last thing he wants is his rates to rise because the price of export waste falls and the cost of UK disposal increases.

Brexit and my MP - Part 23

December 11th approaches and with it the debate on "a Vote on the Deal" triggered by a heavily supported petition. Consequently I'm having another little dig at my MP >>>>

Dear Mrs Milton,

Thank you for your 30th October response to my email of 8th October concerning amendments to the EU Withdrawal Bill.

I am sure that by now you are aware of some my views on the various ramifications of Brexit. However, may I remind you that on Monday the 11th December, Members of Parliament will be debating a petition calling for the public to be given a vote on the final Brexit deal.

It is becoming increasingly clear that the team in charge of the negotiations is unable to deliver the Brexit that many believe was promised in last year's referendum campaign.

Whatever the outcome of the talks, there is no doubt that Britain will end up poorer. The Office of Budget Responsibility has already confirmed lower growth and productivity. That will lead to less money for investment in hospitals, training, roads and rail and will clearly hurt many, if not all, of your constituents.

That is why I believe that it is illogical, and morally indefensible, to deny the British people the final say on the deal.

Therefore, by this email, I am urging you to attend this debate and to support the petition - as well as similar amendments to the EU Withdrawal Bill.

I look forward to receiving confirmation that you will be attending the debate (or supporting it if you can't attend) or your explanation if you are unable to or unwilling to.

May I further point out that in my 8th October email I requested similar explanations of your approach to the four amendments I highlighted therein. Your response of 30th October failed to supply such explanations. Brexit threatens the greatest fundamental changes to the life in the United Kingdom for some 40 years and, if enacted, will have repercussions that will last for decades. In a representative democracy you, as my MP, speak and act on my behalf and for my fellow constituents. It seems to me only right that we should know what you are doing in our joint names, and why.

Thank you.

Yours sincerely,

 Richard Bawden


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