Indholdsfortegnelse for Issue 1024 i MoneyWeek

“Our optimism is based on our conviction in the long-term success of democratic capitalism” MoneyWeek was launched 20 years ago this week. It’s been quite a ride. Our first month was dominated by the disputed election in the US. Everyone expected Al Gore to beat George Bush. He didn’t – but that was only clear after a nasty row over vote counts in Florida and a month of legal battles (Gore sued). Since then we’ve covered the second part of the dotcom crash (at one point in 2000 the Nasdaq looked like it was stabilising – it wasn’t); the entry of China into the World Trade Organisation and the wave of globalisation and disinflation that followed; the ongoing collapse in bond yields (see page 4); the arrival of negative interest…

Two men conned a doctor in northern India into purchasing “Aladdin’s lamp” for more than £70,000, going as far as conjuring a fake genie, says The Guardian. Laeek Khan went to the police after he tested the lamp and found it to have no magical powers, despite being promised health, wealth and good fortune. Two men have been arrested, but one man’s wife, also involved in the scam, is still on the run. An Egyptian man living in Kuwait has been forced to search a landfill site after he mistakenly threw away a bin bag filled with £20,000-worth of currency, says David Rose in The Times The man cashed in a cheque at the bank, shoved the cash into a bin bag, and took it home. Unfortunately, he then threw…

Three to buy McCarthy & Stone Interactive Investor A private-equity bid for this retirement-home builder and manager presents a speculative buying opportunity. Lone Star’s 115p per-share bid is clearly a “low-ball”, but it has been backed by the board. If shareholders manage to block the deal, then the long-term outlook is positive. The number of elderly people will double by 2050 and the market for retirees keen to downsize is “red-hot”. A better offer might yet emerge, and even if it doesn’t, the firm’s net asset value limits the downside. 115p Shaftesbury Investors Chronicle In a normal year, 200 million people visit London’s West End, but in 2020 the capital’s streets are far quieter. That has hit business at this real-estate investment trust, which has seen rent collections fall as…

• The world’s biggest initial public offering (IPO) is off. In a surprise move, Chinese regulators announced early this week that they were halting online-payments firm Ant Group’s $35bn listing in Hong Kong and Shanghai, say James Cook and Matthew Field in The Daily Telegraph. The news came after regulators told Ant Group’s founder Jack Ma (pictured) that his company will face “increased scrutiny” and be “given restrictions on capital similar to the limits placed on banks”. Ma has also faced criticism from the Chinese media after he attacked regulators “for stifling innovation and [neglecting] opportunities for the young”. Ma’s criticism of financial regulations made him a “lot of enemies”, says the Financial Times. Still, his decision to speak “truth to power” isn’t the only reason for the move. Banks…

At the time of writing, the outcome of the US presidential election remained in the balance. What did seem clear was that hopes that a “blue wave” of “decisive” Democratic victories at both the presidential and Senate level would spark another round of stimulus for the “pandemic-stricken” US economy have been dashed, says the Financial Times. A US ruled by a “divided government” seemed more likely, with one party controlling the White House and the other the Senate. Even if Biden pulls off a victory in the end, and the Democrats capture the Senate, the best they can hope for is a “one-seat majority” in the Senate, as Paul Ashworth of Capital Economics point out. This leaves Biden’s plans “at the mercy” of the most moderate Democrats, including Senator Joe…

So-called social-media influencers with big fan bases make money from deals with firms, who pay them to promote their products online. Now these arrangements are evolving. TikTok influencers are moving into luxury, all-expenses-paid mansions to create content for their platforms, says Katharine Gemmell on Bloomberg. Advertising agencies are organising all-expenses paid pads full of branded goods, food and drink, cameras, and even helicopters and snakes “on request”. This “creator mansion” trend originated in the US, but quickly migrated to the UK as marketing agencies sought to cash in on the success of their American peers. The short-form video-sharing app, where users create videos that are between three seconds and a minute long, has helped many creators turn themselves into major influencers. The influencer-advertising market could be worth up to $10bn…

• Former foreign secretary David Miliband (pictured) pocketed a salary of just over $1m last year as president of the International Rescue Committee, $107,840 more than for 2018. The charity, which aims to alleviate poverty around the world, receives around £50m a year from British taxpayers. Miliband has previously “fulminated against ‘immoral’ fat cats” when he ran for the Labour party leadership in 2010, as The Mail on Sunday points out. • Not to be outdone, former prime minister Theresa May earned £136,000 in September for delivering a speech on global responses to the pandemic in Seoul, South Korea. “It takes her total for after-dinner talks so far this year to more than £1m… and means that the MP for Maidenhead appears to have surpassed Boris Johnson for after-dinner earning…

In 2012, in response to requests for ideas for a low-maintenance portfolio of funds that might be suitable for long-term investors, we put together a model portfolio of six investment trusts, with the help of a few experts – Simon Elliott from Winterflood Investment Trusts, Alan Brierley from Canaccord Genuity, and the team from Rossie House, an Edinburgh-based private client manager (where, for the sake of transparency, we should tell you Merryn’s husband works). Why investment trusts? Because they have a record of beating unit trusts and tend to be cheaper; and because their closed-end structure means they can more easily make longterm value investments (there is no pressure to sell underlying assets if investors withdraw their money, as there is with open-ended funds). We have made the occasional change…

adamsmith.org/blog The lockdown in Wales, imposed just before the whole nation was locked up again, shows once again the “folly of a planned economy”, says Tim Worstall. Supermarkets were told by the authorities only to sell essential items. And what is “essential”, according to the planners? Not clothes it turned out. “In late autumn. In Wales.” You can see what they were thinking: limit the ”swilling of a virus through crowds of shoppers” by limiting which shops may open. We get it. “But to then say that a shop which is open, which people can visit, may not sell what is there, on the shelves, is ludicrous.” Planning only ever provides what the planners think the people might want or, in this case what the planners insist the people shouldn’t…

Budget airline easyJet (EZJ) is still struggling after raising £398.6m, says Nigel Firth on Ask Traders. It has been “forced” to sell nine aircraft as travel restrictions continue to “create havoc” in the sector. EasyJet grounded its whole fleet at the end of March, with flights restarting in mid-June, but demand remains “well below traditional levels”, says Joshua Warner on IG. The company reported sales of only £7m in the most recent quarter, with a pre-tax loss of £324.5m. The loss for the first nine months of its financial year (which ends in October) was £517.5m. The stock has slipped by 59.8% in 12 months.…

Unknown Market Wizards The Best Traders You’ve Never Heard Of Jack D. Schwager Harriman House, £30 Jack Schwager is well known for his series of Market Wizards books, in which he interviews famous traders about their careers and trading strategies. The original 1989 Market Wizards is now regarded as an investment classic and he has written three sequels: The New Market Wizards (1992), Stock Market Wizards (2001) and Hedge Fund Market Wizards (2012). His latest, showcasing “the best traders you’ve never heard of”, contains lengthy interviews with 11 private traders who have made money for themselves, or run money for small private funds. Six of the traders profiled specialise in buying and selling futures (an agreement to buy or sell a commodity or financial asset in the future at a…

• “It wasn’t so long ago that football fans and the rich young players they idolised were deemed by wider society to be lower than street muggers or City bankers,” says Brian Reade in the Daily Mirror. The first group were seen as “aggressive yobs” and the other as “self-obsessed worshippers of bling”. How things have changed. “With action against child food poverty and exploitative pay-per-view (PPV), [both groups] have exposed those in charge as lacking emotional intelligence and are forcing them into embarrassing U-turns.” Manchester United’s Marcus Rashford (pictured) has been “simply sensational” in his drive to get the government to feed our poorest children. Leeds United players have donated £25,000 to his charity, while Manchester City’s Raheem Sterling has announced a foundation to push kids from deprived backgrounds…

Johnny Depp (pictured) lost his libel case against The Sun this week after the judge ruled there was enough evidence to support the newspaper’s claim that Depp had physically assaulted ex-wife Amber Heard, says Ed Potton in The Times. Despite spending around £5m on the case so far, he is likely to appeal against the verdict. Depp claimed he had suffered “significant reputational damage” from The Sun’s claim, and his lawyers had said “only a very substantial award” would “compensate and vindicate” him, adds Sky News. He is pursuing a separate $50m defamation case in the US against Heard over an opinion piece she wrote for The Washington Post in 2018.…

These days vitamins and additives are rarely made with chemicals, says Wirtschaftswoche. Micro-organisms are used instead as they are cheaper and don’t require oil to be added to the mix. Enter Novozymes, a Danish biotechnology group and the world’s biggest producer of industrial enzymes used in sectors such as cosmetics, food and drink, and pharmaceuticals. Novozymes accounts for half the global market. Most of its customers are in defensive industries; and sales and profits in the first nine months reached the same level as last year. The market is gradually expanding as the global population grows and enzymes are increasingly used in food production.…

In April Shell slashed its dividend for the first time since World War II. Now, however, even though third-quarter profits were down by 80% year-on-year, it has decided to reverse course to some extent, say Simon Foy and Rachel Millard in The Daily Telegraph. Shell has raised its quarterly dividend, although it is still two-thirds lower than its pre-crisis level. The group has justified the move by arguing that the “lower operating expenses, well write-offs, depreciation and strong marketing margins” mean that it now has enough cash flow to “expand while also raising shareholder payouts”. The decision to restore the dividend partially suggests that Shell’s management is aware that the huge cut in the spring, in order to enable “significant investment” in clean-energy resources, may have “upset existing shareholders”, says…

The number of furloughed workers in the UK is expected to rise to 5.5 million with the second national lockdown. Although the lockdown won’t be as stringent as the first, with sectors including education, manufacturing and construction remaining open, the figures represents “more than double” the two million jobs still furloughed across the UK in October, says Richard Partington in The Guardian. As many as 8.9 million were furloughed at the height of the scheme in May, but some parts of the workforce were hit harder than others, with employees in the lowest pay decile – disproportionately young service-sector workers – five times less likely to have their wages topped up by their employer, says the FT. Although Boris Johnson has announced a “boost” to help the self-employed, increasing grants…

The American election has not only generated huge excitement and a record turnout over there, but it has also led to a record amount of money being wagered on the outcome in the betting market. Indeed, by Wednesday afternoon, £450m had been matched on Befair’s market on the main contest between Biden and Trump, with punters swinging from Biden to Trump, and then back again, in the course of several hours over election night. Overall, GVC estimates that a total of $1bn was wagered on the contest around the world. With votes across America still being counted at the time of writing, for both the presidency and several key Senate races, I’ll wait until the next column to give you a full rundown of how my tips performed. And there’s…

“Thirty council officials received ‘golden goodbyes’ of more than £250,000 each in a ‘stampede’ before laws to curb hefty payoffs took effect,” says Jon Ungoed-Thomas in The Mail on Sunday. The new £95,000 cap on exit payments came into force on Wednesday. Before that, around 300 council officials were given payments in excess of £100,000 in the year to the end of March, while councils in England spent £220m on thousands of departing staff. Dorset council, which was created in April of last year with the merger of six councils, paid out £13.3m in exit payments, with one official collecting almost £1m. Payments were even paid to bosses who just swapped councils. Helen Fisher, adirector at Haringey Council, was paid £425,513 in 2019/2020, including a payoff of £373,803, only to…

Crackdown on dirty money fails Ruth Paley CityAM In 2016, the National Crime Agency estimated that £90bn was laundered via London each year, says Ruth Paley. The government issued a prompt commitment to “block dirty money” and unveiled “radical plans” to tackle economic crime, including a determination to pursue a handful of “rogue” financial institutions which tacitly – or otherwise – enable the movement of illegal funds. One measure of the government’s success is to look at the number of regulated banks and businesses held to account under the criminal law. The latest figures from the Financial Conduct Authority (FCA) reveal that it dropped 50% of its criminal probes into breaches of the Money Laundering Regulations (MLR) last year, leaving a current caseload of just one criminal and six “dual…

iea.org.uk Of all the barriers to accessing essential medicines, the one most often overlooked is those the government itself imposes: unnecessary prescription requirements, say Michael Cannon and Jeffrey Singer. You might think that restrictions protect consumers. Actually, the evidence in aggregate suggests that mandatory prescription requirements have either zero effect or a harmful effect on health. During public health crises such as that presented by Covid-19, the rules jeopardise access to medicines even more than usual as patients struggle to access healthcare that is tied up in government restrictions. The reason prescriptions cause harm is that governments routinely use the power to block access to medicines that are safe for patients to use themselves. More than 100 countries allow women to purchase oral contraceptives without prescription, for example; the US…

The real value of families becomes apparent in a crisis. The same applies to family-owned and run businesses. Our analysis shows that while they do well over the long term – between 2007 and June 2020 they outperformed the MSCI All Country World index by 56% – they really come into their own after sharp sell-offs, such as the one triggered by Covid-19 this spring. Research shows that family firms are not only more profitable, but also outperform non-family owned companies. The source of this resilience is an emphasis on quality, growth and profitability. These firms tend to have lower leverage and consequently stronger balance sheets, something investors welcome during turbulent times. A leader in luxury goods These strengths reflect family owners’ priorities. First-generation companies tend to retain the founder’s…

“He settled into life as a collector – of companies, art, yachts and marriages” After coming to prominence as one of the original “barbarians” of the 1980s junk-bond-fuelled takeover boom, Ronald Perelman settled into life as acollector. As well as a profusion of companies, avast art collection and the usual stack of properties and yachts, “the pugnacious dealmaker” accumulated five marriages, eight children, a $12bn-$14bn fortune and “countless legal bills from run-ins with family members, business associates and regulators”, says the Financial Times. His biggest bauble is a controlling stake in cosmetics giant Revlon. A complicated man But something seems to be up, says Town & Country. Perelman has been unloading assets. “A lot of them. Rapidly.” In July he sold a Matisse and a Miro at Sotheby’s for a…

Boris Johnson The Gambler Tom Bower WH Allen, £20 Boris Johnson is a “perpetual paradox for admirers and opponents alike”, says Robert Shrimsley in the Financial Times. He is a “loner who cannot bear to be by himself”; a “low-tax, big-state interventionist”; a“man determined to be marked in posterity but reluctant to put in the hard yards to ensure that he is remembered kindly”. In Boris Johnson: The Gambler, investigative journalist Tom Bower, who has previously written the lives of Robert Maxwell, Richard Branson and Jeremy Corbyn, attempts to resolve these apparent contradictions and “find the last Russian doll inside the British prime minister”. In contrast to the “thinly disguised contempt” infusing the biography of Corbyn, Bower clearly has “genuine respect” for Johnson, says Madeline Grant in The Daily Telegraph.…

“Celebrity power couple” David and Victoria Beckham have allegedly signed a £16m deal for a Netflix series set to focus on David’s career and family life, says Lewis Knight in the Daily Mirror. Victoria and the couple’s four children will “feature prominently” and the series will apparently show a new side to the retired footballer (pictured) that “the public very rarely get to see”. The England Rugby team will receive £700,000 in bonus payments after landing the Six Nations title last weekend, says Chris Foy in the Daily Mail. It will be the Rugby Football Union’s final financial boost to the “triumphant squad” before pay cuts kick in as the coronavirus pandemic continues to squeeze the union’s income.…

The BinDawood family became even richer late last month. Shares in their Saudi Arabian grocery chain jumped by 10% when they began trading on the local stockmarket, says Bloomberg. BinDawood is one of Saudi Arabia’s biggest supermarkets, with more than 70 shops. The family owns a 67% stake worth $2.2bn in BinDawood Holding Co., and they raised $500m from the initial public offering (IPO). The group is one of the few in Saudi Arabia to have invested in its website and delivery in preparation for the coronavirus outbreak. Online sales are expected to drive growth as e-commerce booms, allowing more bricks-and-mortar outlets to open across the country.…

South Korean conglomerate Samsung could be “shaken up” after the death of chairman Lee Kun-hee (pictured) last week, says the BBC. Shares in several Samsung businesses have jumped amid reports that his heirs could be “forced into asset sales or dividend payments” in order to pay a “massive” inheritance tax bill. A large tax bill isn’t the only problem that Samsung faces, says Elizabeth Koh and Jonathan Cheng in The Wall Street Journal. While Lee transformed a “second-tier electronic-parts maker into the world’s biggest manufacturer of smartphones and televisions”, the company has faced a “string of scandals and business challenges” in recent years. In particular, Lee’s attempt to pass his empire to his son, vice chairman Lee Jae-yong, who is widely expected to succeed his father as chairman, sparked continuing…

1. IBM buys Google and Facebook In the 2020s, Google and Facebook were two of the most successful companies in the world with a combined market value of $1.8trn. IBM was a dull old conglomerate that blew its lead in computing a lifetime ago and was worth only $100bn. And yet there is a reason why the story of the tortoise and the hare is such an enduring fable. Competitors began chipping away at Google’s dominance; Facebook lost traction with younger customers. IBM had already piloted its way through 100 years of technology, from tabulating machines, to mainframes, to software services, and somehow managed to keep reinventing itself. In the 2030s it decided that a much shrunken Google and Facebook still had some useful software and snapped both of them…

Thank goodness for the Scottish Mortgage Investment Trust. Most of us at MoneyWeek are natural value investors. We have long been worried about the valuations in the growth and tech-orientated trust. But we are also well aware that the trust’s managers have a stunning record of stock-picking and performance. So we have long hedged our value-investing bets by holding Scottish Mortgage too. Look at MoneyWeek’s model investment trust portfolio and you will see the results. From 1 April this year up to 24 September, the six trusts – Caledonia Investments (LSE: CLDN), Law Debenture (LSE: LWDB), Mid Wynd (LSE: MWY), Personal Assets (LSE: PNL), RIT Capital Partners (LSE: RCP) and Scottish Mortgage (LSE: SMT) – returned an average of 45.2% against the Morningstar IT Flexible index return of 26.63%. Without…

“She, who wasn’t a theologian, would tell us children the devil found his way in through people’s pockets. She was right.” The Pope enlists his grandmother in the fight against Vatican corruption, quoted in The Times “Fame doesn’t change who you are. It changes others. It is a sweet poison you drink of first in eager gulps. Then you come to loathe it.” Richard Burton, quoted on Dailymail.co.uk “It’s the one thing you’re not allowed to say in an interview — that you’re there for money. Which is the primary reason why anyone is there.” Former bank analyst Mickey Down, quoted in The Sunday Times “I needed to construct a network of influential and affluent people to be successful. But I wasn’t a member of a social club. I had…

unherd.com Ever since a judgment in 1838, lawyers have been tied up in perplexing questions about what constitutes musical originality, says Dorian Lynskey. Last month the US Supreme Court finally dismissed a long-running claim that Led Zeppelin’s Stairway to Heaven had plagiarised Spirit’s Taurus. High-stakes lawsuits against Katy Perry, Ed Sheeran and Taylor Swift (pictured) continue to move through the courts. It is ludicrous that judges and juries are assessing claims that divide musicologists. But the whole thing has become a “lucrative business”. In 2015, a jury found that Robin Thicke and Pharrell Williams’ hit Blurred Lines had stolen from Marvin Gaye’s Got To Give It Up, even though the two songs had little in common but a certain vibe. The jury decided that that was enough, and $7.4m changed…

“Behavioural economists will be able to ‘nudge’ us as much as they like” If you asked me how many pounds, dollars or euros there’ll be in 2040, I couldn’t tell you. I could guess. That guess might be educated or informed, but it would still be a guess. That’s because the rate at which national currencies are created is arbitrary. It’s entirely at the whims of central bankers and the politicians they serve (see page 4). For example, at the start of this year – a few Chinese virologists with a keen interest in monetary policy aside – barely a soul could have predicted the sheer scale of money creation in 2020. Roughly 22% of all the US dollars in existence have been created this year alone, with the goal…

Things are ticking along nicely at Watches of Switzerland (LSE: WOSG), a British retailer of Swiss watches with 16 stores across the country. The FTSE-250 firm’s shares rallied by 20% earlier this month – they have risen by 41% in a year – after it increased its full-year outlook owing to “surprisingly strong demand”, says Jamie Gordon on UK Investor Magazine. Sales jumped by 20% year-on-year in the first ten weeks of its second quarter (which ended on 25 October). It now expects full-year sales of between £880m and £910m. Its previous estimate was between £840m and £860m.…

This week I am sharing a wine with you that is not only insanely inexpensive, but is also obscenely easy to get hold of. It is, that is to say, quite the opposite of most of the bottles that appear in this column. I adore rare, unique and delicious bottles asmuch as the next hedonist, but once in a while, I feel the need to shock, and this shock is exclusively available in 547 branches of the Co-op. Every year, I organise an event called the Daily Mail Wine Awards, which involves an enormous amount of tasting to determine the finest 60 wines available on the high street. This very wine made the grade, but I have a rule, arather silly rule, but a rule nevertheless – and that is…

200,000 The reported value of banknotes in Chinese yuan (£23,000) that a man in Chongqing, south-western China, rained down on pedestrians from his 30th-storey balcony, causing chaos below, MailOnline reports. Police say the man was high on methamphetamine. £174 How much worse off the lowest-earning 20% of households in Britain have been on average per month during the pandemic, equivalent to 14% of their pre-Covid-19 incomes, says the Institute for Fiscal Studies. By contrast, families in every other income bracket have built up savings thanks to steady incomes and lower outgoings, on travel, for example. 12.1 The net sales of gold in tonnes made by central banks in the third quarter of this year, compared with purchases of 141.9 tonnes a year earlier, according to the World Gold Council. It…