Indholdsfortegnelse for Issue 984 i MoneyWeek

January’s statistics on new car sales for the UK were pretty dire. New registrations fell by more than 7% on last year. There are lots of reasons for that – shifting rules on emissions, plus fewer people falling out of financing deals (and thus upgrading to new models), saw diesel sales fall by more than a third, while petrol car sales fell by near-10%. But there was one bright spot. Demand for partly or entirely electric vehicles soared. The number of new battery-powered electric vehicles hitting the roads trebled (from a low base), while sales of various hybrid types were up sharply too. Over in the US, shares in Tesla –king of the electric-car makers (for now) – went on an extraordinary run (see page 12). The share price has…

Britain’s financial regulator has been fined by the pensions watchdog after Financial Conduct Authority (FCA) chairwoman Zahida Manzoor failed to provide enough information to the FCA’s pension scheme’s members in her annual letter, says Ben Martin in The Times. The Pensions Regulator issued the maximum £2,000 penalty. Investors betting against Tesla suffered record losses of $5.8bn in January after the stock hit anew high, says Richard Henderson in the FT. Investors who buy up short positions profit when a stock’s value falls. But the value of those positions has plunged after the recent winning streak of Elon Musk’s (pictured) firm.…

“Earnings season is fast being forgotten” amid “cascading fear” of the coronavirus, write Elena Popina and Lu Wang for Bloomberg. Investors would usually spend the end of January scouring the latest quarterly earnings reports. Instead the market is “ruled by anxiety”. Even “surprisingly strong earnings” from market stalwarts Apple and Amazon have failed to cheer people up. It is worth keeping an eye on US corporate earnings all the same. As Maggie Fitzgerald notes on CNBC, at over 200%, “the size of the stockmarket relative to the size of the economy isat an all-time high”. On another measure, the cyclically adjusted price/ earnings ratio, US stock have not been this expensive since the 2000 dotcom bubble. Unless corporate profitability picks up then those heady valuations risk crashing back down to…

Before the coronavirus emerged, analysts were pencilling in a rise in copper prices in 2020 owing to a pick-up in global demand and a fall in inventories. Instead, the red metal has embarked on a record losing streak, with prices slipping for 12 days in a row to a six-month low. Since 20 January, when the severity of the virus became clear, prices have fallen by over a tenth, the worst performance among all the key commodities. China accounts for just over half of the world’s copper demand, up from a fifth in the early 2000s. Concern over a downturn in manufacturing and construction has triggered the sell-off. Some analysts think we may now be at the stage where any signs that the outbreak is being brought under control could…

The Indian government has surprised investors by proposing a “mammoth” initial public offering (IPO) of state-run behemoth Life Insurance Corp (LIC) to meet its asset-sale target, says Anirban Nag on Bloomberg. The proposal has been compared to the flotation of Saudi Aramco, which became the world’s biggest IPO on record in December, raising $25bn. With tax revenue dwindling for a third year in a row, Finance minister Nirmala Sitharaman sorely needs the 2.1trn rupees ($29bn) she intends to raise by selling state-owned assets. LIC boasts assets of 31trn rupees ($435bn). The flotation is being pencilled in for next spring.…

Is this the end of a rally that has seen Alphabet shares rise by 17% in the last three months? The stock of Google’s parent company slipped by 4% this week after its latest quarterly figures, says Richard Waters for the Financial Times. Sales grew by only 18% year-on-year, lower than the growth the market had anticipated. This “was caused almost entirely by a shortfall in Google’s non-advertising businesses”, which now comprise a fifth of the group total. Investors will be “disappointed” by the results, says Gina Chon on Breakingviews. Still, they should welcome the “increased transparency” that comes with Alphabet’s decision to break down revenue and profits by its various divisions. It shows that some parts of Alphabet are still growing extremely quickly, with revenue from YouTube advertisements and…

Keeping it simple is usually a good principle in investing – and that’s definitely true when it comes to deciding what should make up the core of your portfolio. There are only a handful of establish d, transparent and proven asset classes that have distinctive properties. Striking the right balance between them is the first decision in any investment strategy. Investing for growth Equities have historically been the best choice for growing your wealth: shares have outperformed bonds and cash in all major markets over the long run. If you’re young and saving for a distant retirement, you might have almost all your portfolio in the stockmarket. But shares are volatile, so an older investor who wants their wealth to be more stable might choose to keep just half (or…

We don’t yet know what Britain’s trade deal with the EU will look like once the transitional arrangement runs out at the end of this year. One thing is starting to become clear, however. Boris Johnson’s government, with a secure majority in Parliament, will refuse alignment with future EU rules and stick to that position, even if it means that a deal is not possible and we have to trade under WTO rules instead. Big business groups are not going to be happy about that, but it doesn’t make much sense for an economy the size of Britain’s to allow its regulations to be set permanently by an organisation it is not a member of. This creates an opportunity for investors. The losers The hit will be taken by any…

It is more than 15 years since the split-capital trust scandal broke. Up to 50,000 investors lost money after investing in the late 1990s in trusts that were described as low-risk, but turned out to be anything but. These trusts had share capital divided between zero-dividend preference shares (“ZDPs” – see box below), whose value accumulated year by year in fixed steps during a limited life, and ordinary share capital, sometimes further divided into income and capital shares. In the 1990s, all sets of shareholders prospered. But the 2000-2003 bear market often wiped out not only the ordinary shareholders, but also the preferred shareholders. The aftermath of the crash Losses to investors were estimated at £620m, with up to 40 trusts going bust and 21 investment firms being censored. The…

“Human capitalism” needs legs Ed Conway The Times Britain “might have voted for a Tory government”, but many of the policies due to be enacted are “straight from the Labour manifesto”, says Ed Conway. Labour wanted to ensure public investment wasn’t skewed towards London, to nationalise rail franchises, and to revamp capital-gains tax and abolish entrepreneurs’ relief to prevent the rich paying less tax than the lowest paid. Yet the “nature of what might eventually be called” the economic model of Chancellor Sajid Javid, “left-leaning” though it is, relates more to what Javid calls “human capitalism”. This concept questions the traditional favouring of investment in physical capital rather than people – a trend that explains the UK’s lamentable levels of skills and qualifications and persistently low productivity – and may…

bloomberg.com/opinion In economics it’s often assumed that “the market always finds a way”, says Noah Smith. Sometimes, though, the trials of doing business – transaction costs – make productive trade impossible. A world-beating investment strategy may end up making no profit once trading costs are factored in, for example. People don’t bother to move house or change jobs because of the hassle. As economies grow and get more complex, such hassles multiply. Indeed, that’s why companies exist in the first place – to organise production internally without the bother of trade – and why a lot of business is managed through long-term informal relationships, such as with suppliers. Increasingly, these economic truths are forgotten when lawmakers, regulators and companies make ordinary folk endure an ever-growing variety of “headaches”. Claiming working…

British investors traditionally treated Asia solely as a place to invest for growth. That attitude has firmly changed over the last few years, as the rising number of Asian income funds shows (see page 26). Investment firms don’t launch products unless they see a market for them and years of low interest rates and shrinking bond yields have created an appetite for anything that pays a higher income. However, unlike some of the fashionable income themes that are likely to backfire next time markets turn down, there’s a very solid case for Asian companies being part of a global income portfolio for the long term. Dividend payouts have grown strongly in the region since the global financial crisis: between 2009 and 2019 total dividends in Asia rose by 220%, compared…

Britain’s equity-release market is expected to be worth more than £5bn this year: the number of people unlocking some of the value of their home in retirement continues to grow at rates of more than 20% a year. But while this growth is understandable, with many people owning valuable properties by the time they retire but finding themselves short of disposable wealth, is equity release really the answer? Downsizing may be a better option. The allure of equity release is obvious. If you own an expensive property outright but need more money for everyday living expenses or home improvements, travel or helping out children, an equity-release plan offers real benefits. You borrow money against the value of your house or, with some plans, sell a chunk of it. There are…

It’s been a lousy year for Boeing’s (NYSE: BA) shareholders. After the Ethiopian Airlines disaster last March, which came shortly after a Lion Air plane of the same model, the 737 Max, had crashed in Asia, regulators around the world quickly moved to ground the plane. Boeing was forced to suspend the delivery of orders, which hit revenue. A recent release of internal emails revealing a lack of confidence in the troubled aircraft and an apparent attempt to mislead regulators has only thrown fuel on the fire. So it’s not surprising that shares have fallen by a third this year. However, it’s possible that there could be worse to come. Boeing has three main problems. In the short term the return of the 737 Max may take a lot longer…

In August 2013 a rule change enabled investors to hold shares listed on Aim, the London Stock Exchange’s market for smaller, fast-growing companies, in their Individual Savings Accounts (Isas) for the first time. Since many Aim stocks also qualify for inheritance tax (IHT) relief, the new rule gave investors the opportunity to construct an IHT-free Aim Isa. Building an Aim portfolio is not for everyone. Aside from having to monitor your investments, you also need to ensure they continue to qualify for IHT relief and keep meticulous records of when you bought them. A popular no-hassle solution is to choose a ready-made, professionally managed Aim Isa. We like those run by Octopus, Blankstone Sington and Puma. But some investors will be inclined to do their own research and stock-picking. Here…

2018 Gewürztraminer, Domaine Weinbach, Alsace, France £25.08, sold in cases of six, Justerini & Brooks, justerinis.com, 020-7484 6430, email: justbrooksorders@ justerinis.com My favourite winery in the whole of Alsace is Domaine Weinbach. The old vintages look exquisite, the elite cuvées are spectacular and every wine I have tasted from there has been memorable. But there is one category of wine from this amazing producer that I rarely mention and this is remiss of me. The so-called “straightforward” or “entry-level” wines (I prefer the term “estate” wines) are simply spectacular – not just in terms of value for money, given that they come from the greatest producer in the region, but in terms of pure expression of their individual grape varieties. My featured gewürz is the quintessential definition of this grape…

Watches are some of the most personal objects we ever own. We set our lives by them. Every watch has a story and that story is as important as who made it, when and how. Collectors want to know who wore it, when and why. No two watches are ever the same. That’s what makes them so appealing to collectors. The market in vintage timepieces, which mostly consists of “mechanical”, as opposed to quartz or digital watches, has soared by 73% over the past decade, according to the latest Knight Frank Wealth Report. And it shows no sign of stopping. Perhaps the market is driven by a sense of longing for a more hands-on, more authentic past in our age of digital domination. The love of all those minuscule cogs,…

Inflating isn’t always as easy as it looks. A determined government can always do it. But not necessarily when and how it wants. Even the best-planned robbery sometimes spins out of control. The victim fights back. The getaway car makes a wrong turn. The cops show up… Rudolf von Havenstein had been president of the Prussian State Bank. History hath no record of a public servant more strict with himself or the nation’s money. Yet, faced with the threat of the Bolshevik Revolution, and with no way to refinance Germany’s government debt, he made his choice. By 1923, Germany had marks coming out of their ears. “For all the new money, Germans were destitute. The economy caved” Germany’s inflation rate in 1914 was under 2%. But, in the emergency of…

Former stockmarket trader Navinder Sarao – nicknamed the “Hound of Hounslow” in an ironic reference to the infamous “Wolf of Wall Street” – has been sentenced to a year of home detention for triggering a brief $1trn stockmarket crash in the US in 2010, say Andy Verity and Eleanor Lawrie in the BBC. Sarao, 42, who has autism, helped to cause the “flash crash” from a bedroom in his parents’ house in west London. In 2015, he was arrested and extradited to the US to face charges. In 2016, he admitted to “spoofing” – using software to manipulate the US stockmarket by rapidly placing, then cancelling orders and profiting from the slower reactions of other algorithms. He also paid back $12.8m in profits from his trading to the US government.…

China’s stockmarket has recorded its biggest daily fall in more than four years. The CSI 300 plunged by 7.9% on Monday, its first day of trading since the coronavirus (2019-nCoV ) outbreak came to dominate international headlines. Hong Kong’s Hang Seng index is down by 6.5% so far this year. The FTSE 100 has fallen 3.5% since the start of January. Gauging the damage to growth The market retreat came as more countries tightened restrictions on travel to China. The US and Australia have banned foreign nationals who have recently visited China, while Russia has closed its border. British Airways was one of several airlines to suspend direct flights to the Middle Kingdom, with some carriers cancelling routes until March. A national holiday has been extended and activity in provinces…

“Here are some ... questions for those who believe buy-and-hold is all you need... We just ended the first decade in US history without a recession, and thus no significant bear market. Do you think that is likely to continue through the 2020s? What if we have two recessions in the 2020s?... We are now clearly in the top 10% of historical [US] p/e valuations, when ten-year long-term returns historically have been the lowest on record. On an inflation-adjusted basis, you can actually have negative returns for 20 years. It took 26 years to get back to break-even from the bear market that began in 1966... We don’t know the future. I get that. But I also know that every time somebody like Greenspan or Bernanke says we are in…

Three to buy Bakkavor The Mail on Sunday The UK is a world leader in chilled food and Bakkavor is the top player. The group produces more than 12 million products every week for supermarkets, including “tons of garlic bread, hummus and every variety of pizza”. Consumer sentiment is improving and there are compelling overseas opportunities in markets such as the US, where the chilled food sector remains underdeveloped. On 4.4% the dividend yield provides a “tidy income”. 136p Renew Holdings Shares The government is poised to start spending more on the UK’s infrastructure, which badly needs an upgrade. That spells opportunity for this engineer. Renew works on the essential maintenance of rail, water, telecoms and nuclear decommissioning. Such work is often required by regulations, so business tends to be…

• Leslie Wexner, CEO of L Brands, is a “retail legend”, says Lex in the Financial Times. He turned Abercrombie & Fitch, The Limited and Express into “big national chains”. But he’s also the longest-serving boss of an S&P 500 company, having run L Brands since 1963. This can lead to some “strange views”: he is convinced that “shopping malls will bounce back”, while smartphones are “just a fad”. The news that Wexner is set to step down is thus “welcome”. His exit will facilitate the sale of the Victoria’s Secret chain, where sales and margins have collapsed. • Sports Direct’s investment in Debenhams was “wiped out” when the department store chain collapsed, says Andrea Felsted on Bloomberg. But CEO Mike Ashley’s purchase of a 12.5% stake in Mulberry “has…

The Iowa caucus of the Democratic Party, which marks the start of the presidential primary season, has been “mired in confusion and recriminations” after a technical mishap snarled the vote count, causing the results to be delayed by more than a day, says The Wall Street Journal. With some votes still to be reported as MoneyWeek went to press, the provisional results showed former South Bend mayor Pete Buttigieg and Senator Bernie Sanders “at the top of the Democratic pack”. It looked like there could be a “split verdict”, with Sanders slightly ahead in the popular vote, but behind in the race for the most delegates, with the latter determining the official winner. The results represent a triumph for Buttigieg, says Ross Douthat in The New York Times. He outperformed…

A real estate investment trust (Reit) is a company that owns and leases out property. The exact rules governing how Reits work vary in different countries, but they must usually pay out most of their property income to shareholders each year (a minimum of 90% is typical). They may be allowed to develop properties as well as owning and leasing them, but rent must make up the majority of their income. They may also be subject to other restrictions, such as caps on leverage (the amount they can borrow against their assets). The compensation for these restrictions is that Reits pay no corporation tax on eligible income and capital gains – unlike traditional property companies, which must pay corporation tax. Instead, shareholders will pay income tax at the relevant rate…

• David Cameron has earned £1.6m since stepping down as prime minister following the Brexit referendum in 2016, says The Guardian. The accounts for the Office of David Cameron show that he made £836,168 in the year to 30 April 2019, up from £790,274 the previous year. While earnings are not broken down, Cameron (pictured) makes money from speaking engagements and media deals. The accounts also show that an investment property, valued at £128,190, was bought last April. • The CEO of the Submarine Delivery Agency, Ian Booth, has been handed a £185,000 bonus. Together with his £280,000 salary, his total pay package comes to £465,000. The agency was set up in 2018 to oversee the replacement for the Trident nuclear deterrent, aswell as maintain Britain’s existing submarine fleet, says…

The Woodford Income Focus fund will reopen on 13 February, says Harry Robertson in City AM. The fund is set to resume trading the day before, according to Aberdeen Standard Investments (ASI), which took over the fund in December. The £268m fund was frozen by administrator Link Fund Solutions after Woodford’s business imploded following a crisis at his flagship Equity Income fund. Ryan Hughes, head of active portfolios at stockbroker AJ Bell, said the news will bring “welcome relief” to investors who have been left in the dark since October. However, ASI has said it will operate a “more concentrated investment portfolio”: the fund will reopen with a different portfolio from when it was suspended.…

“I don’t want to come off as if I’ve done everything on my own, because I haven’t. I wouldn’t have been able to proceed with the investment without my parents. Of course that investment turned into millions and millions...” Actor Patrick Schwarzenegger (pictured), son of Arnold, on his successful investment in Blaze Pizza, a restaurant chain with 350 outlets, quoted in The Times “I did not know anything about investing or how to manage money and I used to hide my money in a sock in my wardrobe. Then I forgot about it […] I wish I had learnt about finances earlier. If you just put money in a sock, it will not grow.” Alina Cojocaru, the lead principal dancer with the English National Ballet on being bad with money,…

bbc.com As the clock ticks towards the deadline on some important work project, do you find yourself whiling away the hours watching cat videos on YouTube? You’re not alone, says Christian Jarrett. But the advice usually given to “chronic procrastinators” is not good. Its generally treated as a time-management problem, as if we somehow weren’t aware of how much time we’re wasting. Better scheduling is not going to help. Procrastination is really about managing our emotions. The task we’re putting off is making us feel bad –perhaps it’s boring, or difficult, or we’re worried about failing. To make ourselves feel better, we start doing something else. Except it doesn’t really make us feel better – research has shown that chronic procrastination is associated with anxiety and depression, and even colds,…

There are four investment trusts in the Association of Investment Companies’ Asia Pacific Income sector. Aberdeen Asian Income (LSE: AAIF), Henderson Far East Income (LSE: HFEL), JP Morgan Asian (LSE: JAI) and Schroder Oriental Income (LSE: SOI). Only Aberdeen Asian Income trades on a meaningful discount to net asset value (NAV) at present (7.5%); the others are around zero – or even a modest premium in the case of Henderson Far East Income, probably because its 6.5% yield looks so tempting compared with the 4% or so yields that the others offer. Aberdeen Asian Income has the weakest performance in recent years, but I’d expect it to be more defensive if markets turn down. The stocks in its portfolio appear to be higher-quality, more stable names than in the Henderson…

Almost one million people – 958,296, to be exact – missed last Friday’s deadline for handing in a self-assessment tax return for 2018/2019 online. Last year just over one million people missed the cut-off. People who are self-employed or have more than one source of income are typically obliged to fill in this form. Around 11.1 million did get it in on time, with 700,000 filing on 31 January and 26,562 doing so less than ten minutes before midnight. Those who miss the deadline are immediately fined £100; after three months, they owe £10 a day. If they still haven’t filed after six months then they owe either 5% of the tax due or £300, whichever is the greater. “Genuine excuses” for late submission will be considered, HMRC’s Angela MacDonald…

An initial public offering (IPO) occurs when a privately owned company is floated on the stock exchange for the first time (as opposed to a secondary offering, where an already listed company sells additional shares to raise money). One theory holds that the number of IPOs on the market is a contrarian indicator; a high figure suggests that insiders are rushing to cash in on an overvalued market. Conversely, a low number of IPOs is an indication that insiders think that the market is undervalued, and they can get a better price in the future if they hold off. There is some anecdotal evidence that the number of IPOs tends to increase during bull markets and fall during bear markets. For example, according to Jay Ritter of the University of…

Team17 (Aim: TM17) is a video-game producer based in Wakefield that has been developing games since the days of the Commodore Amiga in the 1990s. It listed on Aim in May 2018. Its Worms series of games has sold over 70 million copies and this year it aims to launch more game titles than ever before. It also has revenue-sharing agreements with independent developers and recently acquired rival Yippee Entertainment in a $1.4m deal. A recent trading update raised profit estimates for the third time in seven months. The stock has risen by 118% in the last year.…

Peter Clowes was born in 1942 near Manchester. He started work in his parents’ hardware store, followed by a stint selling turf, before becoming a salesman for International Life Insurance Company, a subsidiary of the ill-fated Investors Overseas Services. When IOS collapsed, Clowes set up Barlow Clowes. The firm was originally an advisory service focusing on guaranteed income bonds; it quickly moved into investment management, promising that it could deliver a large guaranteed tax-free return through a combination of active management and “bondwashing” (buying and selling government bonds before the interest was paid in order to minimise tax). What was the scam? Although bond-washing was legitimate, exploiting it for profit was difficult and costly due to high trading fees. Barlow Clowes then started diverting investors’ money to pay for an…

Going… Three neo-Impressionist “masterpieces” that were looted from Gaston Lévy, a successful Paris-based businessman and art collector, during World War II, were auctioned in London this week, says Kim Willsher in The Observer. Lévy, who was Jewish, fled to Tunisia with his English-born wife, Liliane, and daughter, where they survived the war. The “jewel of the group”, Gelée blanche, jeune paysanne faisant du feu (1888), by Camille Pissarro, was valued at up to £12m. It, and Paul Signac’s La Corne d’Or (1907), were both eventually returned to France and hung in the Musée d’Orsay in Paris. The third painting, Quai de Clichy (1887), also by Signac, had been found in the collection of German dealer Hildebrand Gurlitt. It was returned to the Lévy family last year. Gone… A painting by…

$344m The cost of the Inouye telescope in Hawaii that has produced the most detailed images yet of the surface of the sun. 150bn How much in yuan (£16.4bn) China pumped into its economy this week in order to create extra liquidity for its banking sector, which has been struggling in the aftermath of the coronavirus epidemic. $5.6m The average cost for a 30-second television advertisement during the Super Bowl last Sunday, up from $5.2m last year, according to The Hollywood Reporter. The climax to the American football season was won by the Kansas City Chiefs. £15,000 The estimated value of a silver coin from 826 AD, featuring the face of Saxon king Ludica of Mercia and the place name “Lundenwic”. Historians had thought Ludica had lost control of London…

A week after being refused a mortgage, Samantha McKay won £250,000 playing online bingo — and bought the house outright, says Katie Pearson in the Daily Mirror. McKay, 32, and her partner had been saving for 11 years, but had recently been refused by the bank. “Gobsmacked”, the couple bought a three-bed in Porthcawl, Wales, for £191,000 and a caravan for McKay’s mother for £3,000. Poems rarely pay a poet’s bills, says Elizabeth Blair in NPR. So it’s good news that a $4.5m grant – believed to be the largest-ever donation from a philanthropic institution – has made its way to the Academy of American Poets. The donation from the Andrew W. Mellon Foundation is enough to fund the Academy’s Poets Laureate Fellowship programme for three years. The Foundation was…

The flotation of Brazil’s digital broker XP on the Nasdaq in December was vastly oversubscribed, notes Wirtschaftswoche. And you can see why. It is shaking up the Brazilian asset management sector, acossetted industry hitherto dominated by the five big banks’ expensive offerings. XP is an open platform providing access to an array of financial products and money managers; its fees are also lower. Business is booming: sales have almost tripled in three years and while XP has a 4% share of the market it now accounts for a quarter of the sector’s overall growth. And unlike other digital disrupters, such as Uber, it actually makes money and has a solid balance sheet.…

The outgoing BP chief executive, Bob Dudley, about to retire after nearly a decade in charge of the oil giant, has delivered a “parting gift” to shareholders by unexpectedly increasing the company’s dividend, says Jillian Ambrose in The Guardian. The decline in the oil price has reduced BP’s profits to $2.6bn in the fourth quarter of 2019 from $3.5bn in the same period of 2018. But the energy giant still did better than most people had been expecting. As a result, BP’s shares immediately surged by 3.5% on the news. BP’s latest results may be “better than expected”, but the dividend increase is still surprising, says Emily Gosden in The Times. In October Brian Gilvary, BP’s chief financial officer, had said that a hike was “unlikely” before the new CEO…

Nissan has drawn up plans to “pull out of mainland Europe” and “double down on the UK” in the event that a hard Brexit leads to tariffs on car exports, reports the Financial Times. If imported cars become more expensive, Nissan’s UK-made models would have a “competitive edge”. Insiders think the firm could increase its market share from 4% to as much as 20%.“For the moment, this is only a scenario, and one which Nissan officially denies”, despite the apparent confidence of the FT’s reporting, says Ross Clark in The Spectator. However, it makes sense, and it’s a“reminder that the boot is not on the EU’s foot when it comes to trade negotiations”. Nissan not only denied the story, it said that the kind of Brexit Boris Johnson was “flirting…

At the time of writing, the overall winner of the Iowa caucus (see bottom story, left) was still undecided, but punters on Betfair have decided that, in terms of the contest for the overall nomination, former vice-president Joe Biden (pictured) is the big loser. Bernie Sanders is the favourite on Betfair at 2.92 (34.2%), with Michael Bloomberg in second place at 5.5 (18%). Biden, who was at one point favourite, is now in third at 6.2 (16.1%). Breathing down his neck in fourth place isPete Buttigieg at 7 (14.2%). Elizabeth Warren is a long way behind the rest of the pack at 17.5 (5.7%). Donald Trump is now firmly odds-on to be re-elected in November, with Betfair putting his chances at 1.77 (56.5%). Sanders isin second place at 15.1%, while…

“Today’s trend-following environment has left Baupost looking flat-footed,” says Seth Klarman, the co-founder of the $29bn hedge fund, in his latest letter to investors. Baupost returned less than 10% in 2019, compared to a gain of 30% for the S&P 500 index. The shortfall was largely due to its focus on value stocks, which are out of favour to an extent that is exceptional by historical standards. “The relative underperfomance of small cap value has been only more extreme twice in history – in 1929, right before the Great Depression, and in 1999, at the height of the tech bubble.” Klarman blames this in part on the growing influence of passive investing and index funds, and the way that they draw money into a narrow set of companies. “Stocks not…

Asset managers received bigger pay rises than investment bankers last year as rising stockmarkets boosted the returns of fund houses, according to data from Emolument, a salary-comparison company. The global median pay for asset management staff, including bonuses, rose by 16.4% compared with 2018 to $167,000. Investment banking staff, on the other hand, received a pay rise of 12.4%, but at $218,000 a year, were still better paid. Rising stockmarkets translated into higher returns for fund houses last year, but “stockpickers… continue to see investors flee their funds, raising questions about the outlook for pay in 2020”, says Attracta Mooney in the Financial Times. “I wouldn’t be optimistic over the coming bonus round [for asset managers],” Carl Sjöström, founder of business consultancy Viti Solutions, tells the paper. “Bonuses last year…

A zero-dividend preference share (also known asa “zero” or “ZDP”) is a type of preference share issued by investment trusts. Like ordinary shares, they are bought and sold on the stockmarket. But unlike ordinary shares, azero has a limited life span. A zero aims to pay investors a fixed amount when the investment trust winds up – this is known as the “redemption value”. The “promised yield” on a zero is the effective annual yield paid out to those who hold the shares until maturity. As with other preference shares, zeroes are typically higher up the queue than ordinary shareholders when it comes to being paid (although they still rank behind debt). So while zero holders won’t share in any upside if the trust does better than expected, they are…

stumblingandmumbling. typepad.com Former chancellor Philip Hammond claimed that no one votes to become poorer. But he was wrong, says Chris Dillow. The party of austerity won a majority in 2015; the public voted for Brexit in 2016; they supported Boris Johnson’s hardline Brexit deal in the most recent election. It seems the public does not want growth. This should not be that surprising. Studies have shown that incomes do not increase happiness. “If growth doesn’t make us happier, the lack of it shouldn’t trouble us too much.” What matters for well-being is not absolute income, but how well we are doing relative to our peers. If the economy is stagnant, we still have as much chance at doing well on this score. Finally, growth goes along with things that many…

The days of bumper cashback offers or fantastic rewards with your credit card are long gone. But there are still several good reasons to pay with plastic. One is the protection you receive thanks to Section 75 of the Consumer Credit Act. Pay for something costing between £100 and £30,000 on a credit card and the card provider is as liable as the seller if something goes wrong. Credit-card firms are currently swamped with Section 75 claims, thanks to Thomas Cook. “The 178-year-old travel agent went into administration in September, prompting thousands of customers who had booked trips on credit cards to submit refund claims,” notes Sam Barker in The Daily Telegraph. You can put a claim in with your credit-card provider if the thing you purchased never arrives or…

Official data suggests almost one in ten people entitled to draw their state pension do not do so immediately, while 14,000 pensioners have suspended their payouts. In return, they receive a higher pension when they do make a claim for the first time or go back to claiming. Pension experts had expected the number of people deferring their state pension to fall sharply after a change in the rules in 2016 made it less attractive to do so. Before April 2016, you got a 10.4% increase in your pension for every year you delayed taking it, but this has now come down to 5.8%. The change means you need to live for 17 years once you start taking the money to get more overall than you would have done by…

My long positions have generally been hit by the fall in the stockmarket triggered by the coronavirus outbreak. Five of the eight have declined. Bausch Health Companies slipped from $30.45 to $27.91; Volkswagen from €182 to €163. International Consolidated Airlines Group dropped from 657p to 633p, while DS Smith went down from 380p to 357p. National Express slipped from 473p to 441p. The only bright spots were Safestore, which went up from 777p to 801p, Taylor Wimpey advancing from 214p to 219p and Bellway rising from 4,055p to 4,077p. The overall profit fell from £6,254 to £5,204. The good news, however, is that three out of my five short positions fell. Retailer Wayfair dropped from $107 to $99, social network Twitter went down from $34.22 to $32.85, and tobacco giant…

Fevertree Drinks (Aim: FEVR) makes mixers for alcoholic drinks. For a long time it was a darling of the stockmarket. It listed in 2014 and embarked on a meteoric rise, climbing by over 2,000% to a peak in late 2018. Since then, however, it’s all been downhill. The UK market is getting crowded so it is pinning its hopes on overseas sales. But its expansion into the US has not proved as lucrative as it hoped. And poor sales in the UK over Christmas have led to a profit warning, giving investors the jitters and driving the share price down by over 40% in the last 12 months.…

The 1980s are cool again and that means eye-catching all-in-one snow suits are back in fashion. But the 1980s feel only goes as deep as the nostalgia. The latest technologies in “fit, function and fabrication” have been used to make modern snow suits “water-repellent, breathable and moisture-wicking”, says Ellie Davis in the Evening Standard (that is, they draw moisture away from the skin). The JC De Castelbajac Women’s Wari Ski Suit from Rossignol has been designed with well-known French fashion designer Jean-Charles de Castelbajac. “Playful pops of colour” combine “high-performance with high-fashion”. £1,,000, rossignol.com “Function and performance meet superior style in this premium head and eyewear combo,” says Al Morgan in The Daily Telegraph. The metallic and carbon detailing gives the Bollé V-Line Carbon helmet a “high-end look”. The tint…

Britain has left the European Union and the in/out war is over (at least for now). But the question remains of what to do with all those placards left over from the pro- and anti-Brexit protest marches. Anonymous street-artist Banksy (who else?) has come up with his answer – turn it into art and flog it through Sotheby’s. Using a found Vote Leave placard, Banksy has added a balloon to turn “Leave” into “Love”. Vote To Love, as the piece is called, has been given an upper estimate of £600,000 ahead of its sale on Tuesday. Before that, it had hung as part of the Royal Academy’s Summer Exhibition 2018, having originally been turned down for the show when Banksy submitted the work under the pseudonym  Bryan S. Gaakman –…

• “Grab the smelling salts,” says Annunziata Rees-Mogg in The Mail on Sunday. “I agree with Gary Lineker.” Despite the Match of the Day host (pictured) being the BBC’s highest-paid presenter (he earns £1,754,999 a year, plus “a big fee” for similar work on BT Sport), Lineker’s controversial suggestion was that the television licence fee should be made voluntary. He termed the fee the BBC’s “fundamental problem”, in an interview with The Guardian. “You’re forced to pay it if you want a TV, and therefore it’s a tax,” he said. “The public pay our salaries, so everyone is a target.” He’s right. Having what is, in effect, a poll tax to provide money for a national broadcaster seems antiquated and indefensible. Making the £154.50-a-year fee voluntary would, on the other…