Indholdsfortegnelse for Issue 1286 i MoneyWeek

“Around 4% of stocks account for most of stockmarkets’ long-term gains” Youth is wasted on the young. If I had understood 25 years ago what I know now, I might be reading this edition’s editor’s letter on a beach in Cape Town rather than writing it. At our Wealth Summit last week founding editor Merryn Somerset Webb made a speech about the key lessons from a quarter-century of MoneyWeek. She based her remarks on a dummy edition of MoneyWeek that had been produced in February 2000. It was a dotcom-era time capsule showcasing the magazine’s callow early years. One memorable snippet was a quote arguing that the market looked overvalued but it didn’t matter, because technology had caused a step change in companies’ profitability. Warren Buffett’s valuation technique, incidentally, was…

Since the end of 2019, British GDP per capita has risen by less than 1% in real dollar terms, says Tom Calver in The Sunday Times. Poland’s has jumped almost 18%. The former communist state is already 81% as rich as Britain, and fast closing the gap:12 of the country’s 17 regions are wealthier than west Wales; the southwestern region of Dolnoslaskie is “better off than Greater Manchester”. No wonder. Flexible planning laws mean Poles enjoy “faster mobile internet, cheaper electricity and more high-speed rail” than Britons do. Higher wages are tempting workers home. A third of the million who were here at the time of the 2016 Brexit referendum had left by 2021. The Wig-20 share index has soared 35% this year. Stocks are worth a collective $287bn, more…

Although dubbed “digital gold”, cryptocurrencies don’t behave like safe havens, says Richard Bernstein of Richard Bernstein Advisors. Over the past five years there has been zero correlation between bitcoin and gold, with the former instead much more tightly linked to the performance of the tech-dominated Nasdaq index. Bitcoin is speculative and closely correlated to high-volatility stocks (see chart). It seems to be a leading indicator for riskier assets, say Charlie Morris and Shehriyar Ali of ByteTree Research. Bitcoin “led the bull market in equities in the last two years and rolled over in February this year, ahead of the tariff crash in April”. It has slid 16% since 1 October and is warning investors to sell their racy AI stocks.…

Drinks giant Diageo has appointed Dave Lewis, the executive credited with “steering Tesco out of the worst financial crisis in its history”, as its new CEO, says Maxine Kelly in the Financial Times. The decision to give the top job to Lewis marks a “significant coup” for the group, which owns more than 200 brands, including Johnnie Walker whisky and Guinness. Lewis hopes to help Diageo recover from Debra Crew’s, “rocky two-year tenure”, which has helped send the share price to a ten-year low. Lewis’s history at Tesco, in which he got out of markets such as South Korea and doubled the operating margin between 2015 and 2020, suggests that he is “a good choice for the role”, says Yawen Chen on Breakingviews. However, in addition to cost-cutting, his biggest…

The M&S boss Stuart Machin has already called it. Presenting his company’s results last week, he warned that his affluent, but hardly mega-rich, customers were already worrying about the tax rises chancellor Rachel Reeves has made clear will have to be imposed in the Budget later this month and are already cutting back on spending. We don’t know how much the rise will be yet. But it seems clear that Reeves is going to break her manifesto pledge and raise income tax in the Budget late this month. In a very odd address from Downing Street last week she prepared the ground for that by blaming the mess she inherited for the deteriorating state of the public finances. Leaks from the Treasury suggest the decision has already been made. Reeves…

A put option gives the holder the right (but not the obligation) to sell an asset, such as a share, for an agreed price, on or before a certain date. When you buy a put option, you pay a fee (known as a premium) to the seller of the option (also known as the writer of the option). If you exercise the option, the seller must buy the underlying asset from you at the agreed price. Otherwise the option expires worthless and the seller has no further liabilities. Let’s assume that Acme Widgets is trading at 100p per share and a put option to sell at 90p costs 5p. You buy a block of 1,000 options at a cost of £50 (5p × 1,000). If the shares fall to 70p,…

China leads the cleantech race EditorialThe Economist The scale of the renewables revolution in China is world-changing, says The Economist. By the end of 2024, China had installed around double the solar-power capacity of Europe and the US combined. It can now produce almost a terawatt of renewable energy annually, more than 300 big nuclear-power plants. As a result, China is not only on course to exceed its climate commitments, but also provide the world with ever greater amounts of clean energy at prices lower than any alternative. Although the US and Europe are losing interest in renewables, it is in developing countries where the “fight against climate change will be won or lost”. China is already making more money from exporting green tech than the US makes from exporting…

chrisdillow.substack.com Everybody knows of good ways to raise economic growth, says Chris Dillow. Rejoin the EU single market. Shift tax from incomes to property. Don’t hit our most successful industries with taxes. But everybody also knows that such proposals are “Not Serious” as they clash with ideology. What we need, therefore, are measures which are compatible. Here are some “modest proposals”. First, build upon a model of proven success to create good, skilled jobs. Bet365 has created 6,000 mostly well-paid jobs in previously run-down Stoke, which now has a larger tech sector than Cambridge. So encourage the gambling industry, perhaps with tax breaks. Second, make the tax system more complicated. This will raise demand for accountants and lawyers. We can also raise demand for fund managers by giving tax incentives…

This year marks the 30th anniversary of the launch of two competing investment trusts specialising in smaller Asian companies: Aberdeen Asia Focus (LSE: AAS) and Scottish Oriental Smaller Companies (LSE: SST). Fidelity Asian Values (LSE: FAS) was launched a year later. The long-term performance of all three has been excellent, but leadership has switched a number of times over the years. In 2024, SST, with £380m of net assets, led the trio and seemed set to continue its run. It had benefited from a very high allocation to India and a low one to China, but had started to shift in favour of China and Taiwan on the basis of relative valuation. However, this shift stalled, leaving SST still with a 38% exposure to India – 10% over the MSCI…

The cost of registering a lasting power of attorney (LPA) will rise from £82 to £92 on 17 November 2025. An LPA gives named family members or friends, known as attorneys, the ability to manage your affairs. There are two types: one for health and welfare, to help with medical issues, and another for your property and financial affairs. These legal documents mean you can secure help with making decisions on your health and finances, if you have dementia, say, or become unable to manage your own money. Having an LPA in place with someone you trust could be a good idea, regardless of your age or health. Otherwise, if you lose mental capacity, your loved ones could be unable to access your money and may even have to apply…

The Reform Party came second to Plaid Cymru in the Caerphilly by-election. But the betting markets still rate Reform’s chances of becoming the main force in British politics highly. With £846,183 matched on Betfair over who will get the most seats at the next general election, Reform is the favourite at 1.88 (53.2%), ahead of Labour at 3.8 (26.3%), the Conservatives at 7.2 (13.9%), the Greens at 21 (4.8%) and the Liberal Democrats at 25 (4%). I think the markets are substantially overestimating Reform’s chances of getting the most seats. It is likely that immigration, their main issue, will be much less important by 2029. And even if the government is still unpopular by then, there’s a good chance the Tories will have recovered. There’s also a strong possibility that…

High US stock valuations show investors expect strong growth in corporate profits in the coming years. Wall Street’s latest performance is giving them every reason for optimism. More than 90% of S&P 500 firms have now reported third-quarter earnings. Results have been generally excellent, with average year-on-year growth of 12%, far ahead of more sluggish performance in other markets (see page 5). “Profits are strong, margins are stabilising, and growth – while still concentrated in AI-heavy tech – is beginning to spread,” says Allie Canal for Yahoo Finance. The last point is crucial. This US bull market has been criticised for its heavy concentration in a handful of Silicon Valley firms. More broad-based growth should prove more resilient. Earnings growth is indeed spreading, agrees Jonathan Levin on Bloomberg. Even stripping…

● The reaction to Rightmove’s plans to spend £18m on investing in AI seems “bizarre” and “counterintuitive”, says Katie Prescott in The Times. Shares in the property portal slumped by as much as 27%. Investors didn’t buy its “vision of jam tomorrow” and were upset by potentially lower margins, “banal buzzwords”, and “the lack of concrete numbers” on potential AI returns. Yet Rightmove’s plans aren’t “wacky”: it’s using its own data to build AI models, upgrade its systems, and add tools to boost efficiency. True, many AI projects have missed the mark, but Rightmove has made the right call. “It is the share-holders who risk looking short-sighted and short-termist.” ● Marks & Spencer is clearly recovering from its cyberattack at Easter, because CEO Stuart Machin has found the time to…

Hyperscalers – the large firms that are building cloud and AI infrastructure – are artificially boosting their short-term profits amid the AI boom, says Michael Burry, the investor known for bets against subprime mortgages before the 2008 crisis. US hyperscalers are set to invest nearly $3trn by 2029 in AI infrastructure such as data centres. However, much of this investment is into semiconductor chips that have a short lifespan, and this is not being reflected accurately in earnings, Burry claims. “Understating depreciation by extending useful life of assets artificially boosts earnings – one of the more common frauds of the modern era,” says Burry. “Massively ramping capex through purchase of Nvidia chips/servers on a two-three year product cycle should not result in the extension of useful lives of computer equipment.…

“Wealth, leisure, sex and false eyelashes have gradually been brought within reach of us all. This seems to me a good thing.” Writer and actor Quentin Crisp (pictured), quoted on Facebook “The unfortunate need people who will be kind to them; the prosperous need people to be kind to.” Aristotle, quoted in Forbes “Since becoming a central banker, I have learnt to mumble with great incoherence.” Alan Greenspan, former chairman of the US Federal Reserve, quoted in ETF Trends “I consider myself a nepo daddy. I get so much goodwill and maybe jobs because of them.” Actor Stellan Skarsgård on six of his eight children becoming actors, quoted in New York Magazine “Now I can turn the heating up full blast.” Betty Brown, 92, the oldest surviving victim of the…

capx.co “You’ve got to take your hat off” to newly elected New York mayor Zohran Mamdani, says Joseph Dinnage. The country that produced Joseph McCarthy, Ronald Reagan and Barry Goldwater now has an “outright socialist” running its largest city. His policies included a rent freeze (history shows these never work) and a “prevention-first, communitybased approach to lowering crime (“I bet you’re feeling safer already”). But Mamdani didn’t win the election because he had a “credible plan”, but for offering easy but wrong answers to real problems. The result will be a complete disaster. It’s too late for New York, but not for us. All the conditions are in place for a Mamdani-style figure to thrive in Britain. Zack Polanski of the Greens and Zarah Sultana of the Corbynite Your Party…

Asset Value Investors (AVI) is again attacking Symphony, the Londonlisted Asian private-equity trust, four years after it failed to oust the board. AVI has accused Symphony of being “simply content to continue receiving its ~$10m annuity of annual management fees while disregarding the interests of its long-suffering shareholders”. The activist investor – Symphony’s largest shareholder with a 16% stake – says there has been a “lack of progress and poor transparency” on disposals since the trust announced a managed wind-down in September 2023. Symphony, whose shares trade at 60% below NAV, called this “inaccurate and misleading” and said the sale was “well under way”, though one transaction has been delayed by US tariffs.…

At the heart of the global financial markets are the exchanges, such as the London Stock Exchange, the New York Stock Exchange, and the Nasdaq. The function they fulfil in the market is straightforward, yet vital. Exchanges match buyers and sellers and publish the data on the trades. They’re also responsible for bringing assets to market, which can range from shares in public companies to contracts on commodities and interest rates. Most exchanges don’t own the companies that are listed – they only facilitate buying and selling by market participants and take a cut for the privilege. The CME Group (Nasdaq: CME) is a little different. It is the largest futures and options exchange in the world and, unlike other exchanges, it owns the futures contracts traded on its platforms.…

● Frozen tax thresholds mean the number of people paying the highest rate of income tax topped one million for the first time in 2024-2025, says Emma Agyemang in the Financial Times. “If the top 45% tax rate had moved in line with inflation it would be worth £211,562 today and would exclude two-thirds of people currently paying it”. Research by Bowmore Financial Planning has found that 720,000 people have been dragged into paying the additional tax rate in the 2024-2025 year alone. ● The amount of money that is protected if a bank or building society goes bust is set to increase for the first time in eight years, says Patrick Tooher in The Mail on Sunday. The Bank of England is expected to increase the Financial Services Compensation…

It has been a positive month for my six long tips. While three of them declined, the gains on the three that rose vastly outweighed the losses. Vending-machine company ME Group fell from 189p to 170p, which automatically triggered the stop-loss. Food-distribution group Sysco went down from $78.27 to $74.03 and bitcoin dropped from $114,639 to $105,374. However, home-furnishings retailer Dunelm Group advanced from 1,126p to 1,133p, and renewable-energy group First Solar leapt from $226 to $272. Telecoms firm Airtel Africa also shot up, from 230p to 299p. Overall, my net profits jumped from £802 four weeks ago to £1,180. My short tips also did well, with all three moving in my favour. Electric-car company Faraday Future Intelligent Electric went down from $1.48 to $1.16. Trucking company Aurora Innovation,dropped from…

“In the stockmarket, timing is everything,” says The New York Times. No one knows that better than Frank Bisignano (pictured), the former chief executive of the global payments and financial-technology company Fiserv. He was forced to sell his stake in the company earlier this year so that he could join the Trump administration as head of the Social Security Administration and Internal Revenue Service, netting roughly $500m in the process. In doing so, he avoided the “dizzying decline” in the company’s growth trajectory and its profits since. The stock fell nearly 50% when the firm’s results were reported, erasing around $35bn in market value. Those results were “impossible to sugarcoat”, and Fitserv’s “fall from grace” raises a “host of uncomfortable questions”, says Bloomberg – both for the company’s executives and…

NV Diatomists, Fino Las Ánimas, Single Pago, Andalucia, Spain £16.99, half bottle, cockburnsofleith.co.uk, diatomists.co.uk I am a lifelong fan of fino sherry. It is Spain’s most sophisticated wine style, and it must be said that the biggest brand of all, Tio Pepe, is a pretty good drop, all things considered. But if you would like to know what a truly cosmic, Earth-shatteringly delicious fino tastes like, you do not have to break the bank; only be quick off the mark today. When the Diatomists released their first array of elite sherries back in 2022, I went nuts. As the years have ticked by, the Diatomists – three friends: Antonio from Jerez, George from Oxford, and Tommy from Barcelona – have refined their art further. When Tommy bought an 18-hectare pago…

Going… A solid-gold toilet (pictured), called America (2016), is heading for auction with Sotheby’s in New York. The starting bid will be the value of metal on the day of the sale on Tuesday. At 101.2kg of 18-carat gold, that is expected to be around $10m. The functioning toilet, created by Maurizio Cattelan – the Italian artist behind the famous banana duct-taped to a wall – had been installed in the restroom at the Solomon R. Guggenheim Museum in New York in 2016, where visitors had been encouraged to use it. Some 100,000 people availed themselves of the opportunity. Another version of the artwork was stolen from Blenheim Palace in 2019. It was never recovered. Gone… The Crown Coin, which has a face value of £10,000 and is roughly the…

“The market is saying the ‘Trump shock’ is over: the trade war is ‘solved’; fiscal policy is on autopilot… the Middle East (ie, energy prices) is more stable and US-China risks are on ice for at least a year. What else is there for president Donald Trump to do to shock the market? We are struggling to come up with an answer ourselves… The global monetary/fiscal environment looks very benign. Every major [emerging market] and G10 central bank except [the Bank of Japan] has been cutting rates this year and fiscal policy everywhere is easing bar a few exceptions (UK and France)… Dollar exceptionalism [isn’t] coming back… Just as US growth numbers have been upgraded in recent months so have the European ones, leaving relative growth expectations significantly narrower than…

Pfizer has finally won its battle against rival drugmaker Novo Nordisk to take over Metsera, the maker of a “promising weight-loss drug”, for $10bn, says Sujeet Indap in the Financial Times. The battle, which involved “multiple lawsuits and mud-slinging”, came after Denmark’s Novo attempted to “gatecrash” the Pfizer-Metesera tie up with its own offer in October. Metesara’s initial acceptance of the Novo bid succeeded in getting Pfizer to up its price by $2bn from its initial offer. But Metesara was forced to go with Pfizer after a phone call from the US Federal Trade Commission (FTC) made it clear that Novo’s offer presented “unacceptably high legal and regulatory risks”, sending the biotech’s shares plunging from their highs. Both Pfizer and Novo Nordisk had “much at stake” in the battle for…

An end to the longest US government shutdown in history is imminent after seven Senate Democrats broke ranks and voted with Republicans on Monday, allowing a crucial funding bill to pass 60-40, reaching the critical 60-vote threshold, says Sky News. Once the bill has been approved by the House of Representatives, Donald Trump will sign it off and the shutdown will end. Funding for federal agencies will resume, and it will prevent further lay-offs until 30 January 2026. Healthcare was at the heart of the dispute that led to the shutdown, and the failure to secure key concessions from Republicans over extending tax credits under the Obama-era Affordable Care Act has left the Democratic Party bruised, divided and struggling to explain their capitulation to a “furious base”, says Hannah…

Bond and equity investors are fundamentally in opposition. A bondholder cares only about receiving their interest and capital; anything that puts that in danger is bad. The ideal borrower might be one that takes your cash, parks it in ultra-safe assets to protect the principal and makes paying the coupons the only priority for its cash flow. There is no upside if the borrower takes risks. In fact, there is not even much value in long-term survival: the borrower can fail due to a lack of investment and the bondholder is still happy if they have been repaid in full. On the other hand, equity – “the fine sliver of hope between assets and liabilities”, as Russell Napier calls it – hopes to profit from growth in earnings or assets.…

The twice-yearly Mello conferences in London have become one of the staples of the investing calendar, with several hundred investors attending over two days to hear pitches and make connections. The latest edition will take place on Tuesday 18 and Wednesday 19 November in West London, with more than 30 speakers and exhibitors. Mello is offering MoneyWeek’s readers a 25% discount on tickets – to book, go to melloevents.com/mellolondon2025 and use the code MLMW25. Some of MoneyWeek’s contributors will be in the audience – say hello if you see us!…

project-syndicate.org With the 250th anniversary of the publication of The Wealth of Nations approaching, we should honour its author, Adam Smith, says Antara Haldar. But which Smith should be recognised? The “hard-nosed” founding father of economics who built a case for free markets on the back of human selfishness, or the philosopher who based his Theory of Moral Sentiments on an understanding of human compassion and sympathy? There’s no choice to make – both Smith’s great books “share a philosophical spine”. Far from renouncing his earlier moral philosophy, the later Smith merely extended it to the economic sphere. The “invisible hand” was not an “ode to greed”, but a metaphor for the way “social benefits can arise from individual human motives and passions, provided that institutions channel them appropriately”. Markets,…

● Shares in UK renewable-energy trusts fell by 5%-10% last week after the government launched a consultation on changes to how subsidies are linked to inflation. The proposal outlined two options for switching inflation indexing on the renewables obligation and feed-in-tariff incentive schemes away from the retail price index (RPI) to the consumer price index (CPI). The first option is to simply move from RPI to CPI next March. This would reduce the present value of future payments – and thus the NAV of the trusts – by about 1%-2% for most of the major wind and solar trusts, according to analysts. The impact depends on how much of each trust’s revenues are provided by these subsidies. However, the second option would backdate the switch to CPI to 2002, which…

Simon Wolfson is widely regarded as the most able CEO of any FTSE-100 company. He joined Next, of which his father was then chairman, in 1991, was appointed to the board in 1997 at the age of 30 and took the top job in 2001. Next had been founded as a mid-market fashion retailer in 1981, but over-expanded and nearly went bust in 1988. Under Wolfson, it has expanded internationally, acquired other brands and gained a market value of £18bn. He is well worth listening to. When asked which business book he’d recommend, he replies “just one. Bill Slim’s Defeat into Victory”. This is the book, first published in 1956, by Field-Marshal William Slim about how he led the British 14th army in the retreat through Burma in 1942; in…

The British banking sector is in rude health. Perhaps the most symbolic moment this year, in the late spring, was the return of NatWest to full private-sector ownership. The government, which at one stage owned 84% of the troubled lender, sold a final tranche of shares. However, while NatWest’s shares have continued to do well, it isn’t the most interesting UK bank on the stockmarket at present. I think you should consider a punt on its rival, Barclays (LSE: BARC), instead. Despite being one of the few UK banks that wasn’t directly bailed out by the government in 2008, Barclays has faced criticism for the poor performance of its investment-banking division. In recent years there has even been pressure from activist investors to sell, spin out, or otherwise separate the…

The strategy employed by Temple Bar is known as value investing. This is the process of buying a company’s stock for less than its true worth, or intrinsic value. By buying at a discount, this strategy builds in a “margin of safety”: while in the short term an undervalued company’s share price might fall further, in the long run the built-in value should ultimately be recognised by other investors, prompting the share price to rise to reflect the stock’s intrinsic value. There is much empirical evidence to show that value strategies have outperformed stockmarkets over the longer term. Of course, some companies are cheap for a good reason, but we believe investments in good-quality yet undervalued companies with strong cash flows and robust balance sheets offer the best potential for…

Has the market in Labubu peaked? These small, furry monsters (pictured) grew their creator’s sales growth by 245% in the third quarter from a year earlier. Hong Kong-listed Pop Mart, which makes Labubu, is now the world’s most valuable listed toymaker, at $38bn – three times that of Japanese Hello Kitty company Sanrio. Pop Mart has already opened a theme park, Pop Land, in Beijing and, in June, the company set up its own film studio. However, “a growing number of investors worry that Pop Mart’s extraordinary ascent will soon come to an end”, says The Economist. Pop Mart sells Labubu according to the “blind box” model, which means customers never know which specific monster they are going to get. So, Labubuwatchers look to the resale market, and here worries…