Indholdsfortegnelse for Issue 945 i MoneyWeek

You may never have heard of Yandex, says German business weekly Der Aktionär, but it’s worth a look. The Russian equivalent of Google, Amazon and Uber, it offers a search engine – with more than 50% of the Russian market – and earns its money from online advertising. It also has an e-commerce platform, an online marketplace and ride-hailing app Yandex.Taxi, which, unlike Uber, is almost profitable. It has just produced its first smartphone, which costs a quarter of the price of an iPhone and offers a Siriequivalent called Alice. Yandex has agreed a joint venture with Hyundai to develop autonomous car systems. As a whole it is worth just $11.5bn, an eighth of Google’s self-driving car division.…

Wall Street “took an axe to Google” this week, says Richard Waters in the Financial Times. The shares fell by 7% after Google’s parent company Alphabet revealed that despite growing by 17% year-on-year in the first quarter, revenue was $1bn less than analysts expected. Google’s advertising revenue (worth 85% of Alphabet’s sales) expanded by just 15%, its lowest rate of expansion in four years. Investors worried that this “might signal a turning point in Google’s core advertising business”, and their fears were hardly allayed by Alphabet’s “lack of detail”. It blamed several one-off factors, including the strength of the US dollar and a tough comparison with a strong quarter last year. Google claims that much of the slowdown in advertising growth was due to changes to YouTube, says Margi Murphy…

Jeremy Corbyn has faced down a challenge spearheaded by his deputy, Tom Watson, for Labour to “signal its unequivocal backing for a second Brexit referendum in the forthcoming European election campaign”, says Heather Stewart in The Guardian. On Tuesday, Labour’s ruling National Executive Committee announced that its manifesto would be in line with its longstanding policy. That means a “confirmatory referendum” only on what the Labour leader calls a damaging Tory Brexit, says Jim Pickard in the Financial Times, not on his preferred softer version of Brexit, which would involve a permanent customs union with the EU. Labour has “always been split” between loyalty to its pro-European roots and fear of alienating working-class Leave voters, says James Blitz, also in the FT. But this time there are also differences over…

An attempt to topple the regime led by Nicolás Maduro seems to have stalled, say John Paul Rathbone and Gideon Long in the Financial Times. The move began with a call to arms by Venezuela’s key opposition figures, Juan Guaidó and Leopoldo López, made from outside a military base near the capital. This raised hopes that the military and security forces would support Guaidó, who is backed by more than 50 countries. Shortly afterwards, López had to take refuge in the Spanish embassy; security forces blocked Guaidó from marching on the presidential palace. But it’s too early to write off Guaidó, says Nicholas Casey in The New York Times. Maduro is still in office for now, but “many rank-and-file soldiers appear willing to defy their commanders and come to the…

It’s taken a long time to get the message through, but most investors are now well aware of one of the financial world’s most embarrassing flaws: that most active fund managers are unable to beat the market consistently over time. That awareness has led to a huge rise in the volume of money being managed via so-called “passive” funds – cheap funds that merely aim to track an underlying market mechanically, rather than charge you handsomely for underperformance. “Understand exactly what you’re investing in before you buy” However, there’s a caveat. Most active equity managers (of open-ended funds such as unit trusts, at least) fail to beat their benchmarks. But that’s not the case for bond funds. As analyst Michael Mauboussin reports in Looking for Easy Games in Bonds, his…

• James Holzhauer, a 34-year-old “professional sports gambler”, has become only the second person to win more than $1m on the American television game show Jeopardy!, where contestants are given the answer and have to come up with the question. At the time of writing, Holzhauer (pictured) had racked up $1,329,604 in prize money after winning 18 episodes, second only to Ken Jennings, who won more than $2.5m back in 2004. The show’s average prize pot is $19,980 an episode, reports The Guardian. • Scottish train drivers are to get a 6.5% pay rise as part of operator ScotRail’s efforts to recruit more drivers and cut down on the number of cancelled trains caused by staff shortages. ScotRail has been losing drivers to rival employers offering higher salaries, reports The…

“Anna’s was a beautiful dream of NewYork, like one of those nights that never seems to end.And then the bill arrives.” Photojournalist Rachel DeLoache Williams on Anna Sorokin (pictured), who pretended to be a wealthy heiress in order to swindle rich NewYorkers, quoted on the BBC “I don’t trust anybody to run my money but me.” US investor Jeffrey Gundlach on why he has nearly all his money invested in his own funds, quoted in Kiplinger’s Personal Finance “Someone… made that look as if I was recommending adultery as a business booster, which I absolutely was not. But it’s true most other unmarried women my age would be going home to their family in the country at weekends, but… I stayed in London and worked.” Prue Leith, who set up…

collaborativefund.com/blog Our understanding of finance and economics was revolutionised when we began to understand the little mind tricks we play on ourselves, says Morgan Housel. Everyone now knows the big ones: confirmation bias, overconfidence, anchoring. But there are dozens of others. Here are three fascinating, but lesser-known, ones. 1. Pluralistic ignorance. This is assuming that you think differently from your peers, even if you actually think just like everyone else. Every investor thinks they’re a contrarian. 2. Illusory correlations. We believe things are related when that seems like common sense, even if there is actually no relationship. There is virtually no correlation, for example, between annual changes in GDP growth and market returns. 3. Rosy spectacles. We believe, in anticipation, and in memory, that we had or will have a…

Activist investors are urging Bed Bath & Beyond to oust its chief executive and sell “non-core” assets, says Scott Deveau in Bloomberg. In a 168-page report, Legion Partners, Macellum Capital Management and Ancora Advisors criticised the retailer’s stagnant sales and the chief executive’s “excessive” pay. Proposed solutions include a 100-day plan to improve performance and the replacement of boss Steven Temares, who has overseen underperformance relative to peers since his appointment in 2003. They also want the retailer to address an “archaic” supply chain and “bloated” cost structure. In response to pressure from investors last week, Bed Bath & Beyond has named an independent chairman and replaced five directors.…

If your business makes capital gains from selling certain types of asset, and uses some or all of the proceeds to replace these assets, it may be entitled to defer capital-gains tax, says the Tax Tips & Advice newsletter. Business asset rollover relief “shunts” the capital gain from the sale of one asset on to the purchase of its replacement. The upshot is that the capital gain isn’t actually taxed until the new asset is sold. If the replacement asset costs more than the proceeds from the sale of the old ones, the whole gain can be rolled over. But if the cost of the new asset is less than the sale proceeds, only part of the gain can be rolled over. Note that you must buy the new asset…

My last attempt to open a high-interest savings account was thwarted by my failure to go into the branch brandishing proof of identity within the allocated 90-day period. Thankfully, there are now services which promise to make it easier for “time-poor” people, or indeed serial procrastinators, to move money between saving accounts. Hargreaves Lansdown’s (HL) Active Savings service was launched last September. The fund supermarket is already the biggest investment platform in the UK, and it is clearly aiming to persuade people to manage their cash savings through them as well. The service acts as an account aggregator for people with spare cash who want to spread it across different fixed-term savings accounts, but who can’t face the hassle of setting up accounts at each bank. You get a centralised…

This property is one of five iconic Heidelberg Homes built in a “storybook” style in the 1930s by insurance-executive Jack Heidelberg. The four-bedroomed house has panoramic views of the San Francisco Marina, the Golden Gate Bridge, and Sausalito. Original features include exposed brickwork, rough hewn beams, and a double-height cathedral ceiling in the living room with a mezzanine landing. The house also has large picture windows and a corner copper-hooded fireplace. But can you guess the asking price? Answer on the side of the box.…

Many people on Wall Street are gleefully anticipating the initial public offering (IPO) of Uber. The flotation of the ride-hailing company’s shares is expected to raise enough cash to value the entire group at $90bn. However, Uber isn’t the only game in town, as several tech firms have already gone public, including Pinterest at the end of April. The best way to describe Pinterest is as a social network based around images. The idea is that you “pin” photos that you come across on the internet so you can share them with your friends. You might think that this sound like a rather flimsy premise for a company. There were also concerns that the poor performance of Lyft (one of Uber’s rivals) since its listing in March had dented investors’…

The rapid expansion of the emerging-market middle class is a key long-term growth theme. In China alone, the middle class is expected to more than double over the next ten years, while the segment defined as affluent is forecast to grow even faster. As a result, one area of interest over the coming decade and beyond is luxury goods. We expect growth in the emerging-market luxury sector, especially in China, to continue to outpace global growth and accelerate as price harmonisation, more sophisticated marketing and e-distribution democratise access. With global markets worried about a short-term slowdown, this may prove a good opportunity for longterm investors to consider this structural growth story. The following companies offer excellent exposure to the theme. Europe’s classic luxury brands “Investors have missed the compelling long-term…

Lei Jun, chairman of Chinese smartphone-maker Xiaomi (pictured), could be on the hook for a CN¥1bn (£115m) bet he made in December 2013 with Dong Mingzhu, chairwoman of air conditioner maker Gree, says Bloomberg. Lei bet live on TV that the revenue made by his firm, viewed at the time as an upstart by many more traditional firms, would outstrip Gree’s after just five years. But last week Gree reported revenue of ¥198bn for 2018 – ¥20bn more than Xiaomi made over the same time. “Let the entire nation be our witness,” said Lei, “if our revenues beat Gree’s in five years... please pay me one yuan.” Dong was more confident. “Let’s make that bet one billion,” she said, on agreeing to the bet. Good week for: Disney was celebrating…

The Argentine peso has been the worst-performing currency against the dollar this year, and more misery could be in store. Investors have been dumping the country’s “century bond”, whose launch in 2017 had seemingly heralded a new start under business-friendly president Mauricio Macri: the 100-year paper has fallen to 66 cents on the dollar, says Colby Smith for the Financial Times, implying a considerable risk of default. A poll putting leftist firebrand and former leader Cristina Fernández de Kirchner ahead of Macri has alerted markets to the risk that the president may lose his bid for re-election in October. With inflation still running at 55% in March and the economy shrinking, voters appear willing to give another chance to Kirchner, who is facing trial on corruption allegations, says The Wall…

There are happy days ahead for the world economy, if forecasts from the International Monetary Fund (IMF) are to be believed. This chart from Deutsche Bank suggests that the number of countries in recession, which soared to nearly 100 during the global financial crisis, is set to decline to record lows over the next few years. The world’s leading economy, the US, looks in solid shape now that data has improved and the central bank has opted to keep interest rates on hold, according to Deutsche Bank’s Torsten Slok. “We do not see a recession in the next three years.” Encouraging as this sounds, it is worth remembering that analysts en masse have a terrible forecasting record, with the global crisis of 2009 among their many misses.…

Global market jitters, the trade war and uncertainty over Brexit have undermined the initial public offerings (IPOs) market in Europe early this year. Only 32 companies listed in the first quarter of 2019, raising a collective €715m – the lowest quarterly IPO volume and value since 2009. London accounted for €557m of the total, while Brussels and Milan made up the top three. This month Zurich has been unusually busy, as Lisa Jucca notes on Breakingviews. Its political stability is a stark contrast to the chaos in the rest of Europe. Medical devices group Medacta and train manufacturer Stadler reached valuations of $1.9bn and $3.8bn respectively in their flotations.…

I haven’t covered Australian politics for a while so the forthcoming election provides a good opportunity to do so. On Saturday 18 May Australia goes to the polls in a federal election that will elect a new House of Representatives and more than half the Senate. Both the bookies and the betting exchanges expect Labor to form the next government, with Betfair offering 1.31 (76.3%) on Labor and 4.1 (24.1%) on the Coalition of centre-right parties. Bet365 is offering slightly better odds of 1/3 (75%) on Labor, though only 10/23 (30.3%) on the Coalition. Betfair is also offering a handicap market whereby the Coalition gets awarded 25.5 extra seats. In this case, Betfair has the Coalition at 1.11 (90.9%) to come out ahead and Labor at 5.7 (17.5%) to win…

Exchange-traded funds (ETF) are investment funds that are bought and sold on a stock exchange in the same way as you would trade normal shares. Unlike investment trusts, which are also traded on exchanges, ETFs are mostly passively managed. In other words, their aim is to track the performance of a particular underlying market, rather than to try to beat it, as an active fund does. ETFs are available on a wide range of indices, sectors, investment themes and commodities (and because of their huge and rapidly growing popularity, index providers are constantly launching new indices for them to track). Given their largely passive structure, ETFs tend to have lower fees than most traditional active funds, and rampant competition is driving the price ever lower. ETFs come in two types:…

How can businesses plan for currency fluctuations? The first step is to map out your exposure to exchange rate movements. Look at your budgets, including sales and costs, quantifying those elements that are affected by currency movements. Then start to think about how much movement you could cope with: how much would rates have to move by before you would begin to struggle with competitiveness? And at what stage would there be real damage to your bottom line? This exercise gives you better visibility of your business’s exposure to currency fluctuations, which in turn gives you a basis for deciding which risks are non-negotiable, and which you can afford to take. You can then take steps to manage exchange rate uncertainty (known as “hedging” your exposure). For example, you could…

Boris Johnson, MP for Uxbridge and South Ruislip, is supplementing his £79,468 parliamentary salary with some lucrative speaking engagements, reports The Guardian.The register of MPs’ interests shows that so far this year the former foreign secretary has been paid a total of £212,399 for giving three speeches. Johnson received £51,250 in January for two hours he spent on a speech he gave in Dublin; £38,250 from Citigroup Global Markets for two and a half hours in March; and £122,899.74 for a three-hour speech to India Today, also in March. Adding in two engagements at the tail end of last year brings his six-monthly speech earnings to just over £335,000. The register also reveals that Jacob Rees-Mogg received 12 bottles of champagne worth £323.52 as payment for a speech at a…

bloomberg.com/opinion We are facing an epidemic of “selfie deaths” – where people die trying to take a photograph of themselves doing risky and foolish things. At least, that’s according to Outside magazine, which reports that 259 people died in such a way between 2011 and 2017. The article brought to mind shark attacks, says Barry Ritholtz. We fear these inordinately, even though they are so rare that they amount to little more than statistical rounding errors. At the same time we pay almost no attention to mundane, but much more lethal, threats, such as heart disease and cancer, which claim many, many more lives than sharks, selfies, lightning strikes, terrorists, or any of the other freakish events that kill people. It’s important to put numbers into context. The “epidemic” of…

econlib.org When President Donald Trump announced tariffs on imported washing machines in January 2018, the prediction of economic theory was simple, says Pierre Lemieux: the price of all washing machines in the US, both imported and domestic, would rise in roughly the same proportion as the tariffs. Lemieux predicted a price rise of 25%. A new paper on the actual effects of the tariffs shows the expected result, but with a twist. The price of washing machines actually rose by nearly 12%; the price of dryers – not subject to tariffs – also increased by an equivalent amount. In other words, instead of increasing washer prices by 25%, domestic manufacturers raised them by 12% and hid another 12% rise on a good of about the same price that is usually…

■ Alternative and absolute-return funds run by JPMorgan Asset Management and Aviva Investors incurred high trading costs last year, says Siobhan Riding in the Financial Times. Although these costs are not included in the industry’s standard measure of running costs, the ongoing charge figure (OCF), new EU rules that came into effect last year require investment managers to provide a breakdown of hidden charges. For instance, the £1.2bn Aviva Investors Multi-Strategy Target Income reported transaction costs of 1.03%, higher than its 0.85% OCF, while JPMorgan’s £5.3bn Global Macro Opportunities fund (an alternatives strategy) reported transaction costs of 1.16%, again above its 0.65% fee. Meanwhile, the Aviva fund lost 7.6% last year, while the JPMorgan fund – which has the same flexible approach as an absolute-return fund, but takes more risk…

Wealthy couples who divorce hold more of their money in pension savings than any other asset, prompting concern that many people have little idea how splitting up could affect their retirement saving. Financial adviser Succession Wealth looked at couples with total wealth of more than £1m between them. The typical couple held 43% of this money in pension savings, against 31% in property wealth and only 20% in other financial assets. When working out how to split a couple’s assets, divorce courts are required to take pension assets into account, including both benefits already in payment and savings for the future. Funds can be split, or their value can be offset against other assets in the divorce settlement. However, many couples don’t fully understand their options. Insurer Scottish Widows warned…

If you own a bicycle, you need to acquire some simple technical knowledge, such as how to pump up or repair the tyres, adjust the height of the seat or handlebars, tighten the brakes or put the chain back on. Most cyclists can perform these undemanding tasks with their eyes closed. When it comes to making money from stockmarkets, however, most investors – even those paid to look after other people’s money – tend to react nervously to rigorous analysis of markets, sectors or stocks. Often unaware of how it actually works and afraid to appear foolish, investors resort either to bluffing or a general dismissal of analytical tools designed to establish whether equities or markets are good value at the current price – even though some of these measures…

Risk and opportunity are two sides of the same coin. There are risks for investors in the current geopolitical environment but these risks have also created investment opportunities. Risks include the potential impact of Brexit, the rise of anti-establishment movements across much of Europe, trade tensions between the USA and China, and a gradual tightening of monetary policy especially in the USA. Here in the UK, the economic outlook is uncertain. After a decade of expansion since the financial crisis, and considering the risks listed above, the rate of economic growth could slow, perhaps sharply, and there have been some recent signs of weaker activity. However, it is also noteworthy that the recovery since the last recession has been relatively muted, wages are only now starting to accelerate above the…

Marriott International, the world’s largest hotel operator, is launching a home-rental business in an effort to fight back against the growth of short-term letting sites such as Airbnb. As of next week, its Homes & Villas platform will allow customers to book stays in around 2,000 rental properties across 100 markets throughout the US, Europe and Latin America. It is the first hotel company of its scale to do such a thing. Before Marriott’s sidestep, “much of the effort of traditional hotel groups in countering online competition has been to improve customer loyalty programmes’’, says Alice Hancock in the Financial Times. Hotel chains Hyatt and Accor Hotels have also ventured into the property-rental market, but by acquiring other companies rather than by launching their own product. This move from Marriott…

Profit warnings are an announcement, usually in the form of a press release, stating that earnings are going to be lower than the market is expecting. While there is no explicit legal requirement to issue a profit warning, companies that fail to do so may be vulnerable to being sued for market manipulation, and may find themselves facing a lot of angry shareholders. It’s therefore no surprise that many companies tend to err on the side of caution, with 287 profit warnings issued by FTSE companies in 2018 alone, according to accountancy firm Ernst & Young. Profit warnings often have an immediate negative impact on share prices. However, there is evidence that shares that have experienced profit warnings continue to underperform in the weeks and months after the initial announcement.…

Despite the gloom settling over the motor manufacturing sector, with both new and used car sales declining, classified car ad business Auto Trader Group (LSE: AUTO) is bucking the trend. The company has successfully moved its business online to become the country’s biggest digital marketplace for car buyers. In the year to July 2018, revenue rose by 7% to £330m and operating profit was up by 10% to £220m; there was similar growth in the first half of this year. The share price has more than doubled since 2015. In the last year it has risen by more than 67%.…

Calisto Tanzi was born Collecchio, Italy, in 1938, and went on to found dairy company Parmalat in 1961 after dropping out of university to run the family business. During the next three decades Parmalat would expand into various food-related lines, such as bakeries and processing plants, eventually floating on the Milan Stock Exchange in 1990. Over the next decade it continued to grow strongly by expanding abroad and buying other firms, including television channels and the football club Parma FC. By 2002 the conglomerate was valued at €3.7bn, employed 30,000 people and claimed to have €7.5bn in annual revenue. What was the scam? To finance the merger spree, Parmalat borrowed huge sums of money. To ensure that creditors were willing to keep lending the company money, Tanzi began systematically falsifying…

“It’s not like a vintage watch is better than a new one,” says Alex Williams in The New York Times. “In fact, it’s worse in almost every way.” The technology has often moved on, and new watches are, naturally, new and shiny. So, why the appeal of vintage watches? Well, they are cool. Those mid-century Rolex Submariners, made famous by Sean Connery’s James Bond, have rocketed in value, notes Williams. “They have patina, provenance, soul. And for a generation of men… who value the analogue-chic of antique mechanical watches… that is key.” Collectors want watches that are unique, unusual, and with a provenance that is well documented, says Stephen Pulvirent on Hodinkee. Put those qualities all together in a single watch and “it’s a perfect storm”. Just such a watch…

The timing of the Sotheby’s sale (see main story) is no accident. This July will mark 50 years since the Apollo 11 moon landing, when astronaut Neil Armstrong hopped across the lunar surface. Inspired by that event, legendary British watchmaker George Daniels created the Space Traveller I in 1982. It was, he said, “the kind of watch you would need on your package tour to Mars”. Daniels regretted selling the watch to a collector, so he made another – the Space Traveller II. The original has been given an estimate of £700,000-£1m by Sotheby’s. But that may well turn out to be conservative, given that the Space Traveller II sold for £3.2m in 2017. Luxury watch brand Omega is also celebrating its golden anniversary with the release in July of…

• Madonna is apparently “over the hill”, says Lorraine Kelly in The Sun. Radio 1 bosses are refusing to play her new single, Medellin, “which is, frankly, their loss”. Then there’s Carol Harrison (pictured), the actress who claimed last week that she was “booted off” TV soap EastEnders 20 years ago “for the sin of growing older”. “She is now 62 — a sassy, sexy woman who has landed a role in stage show The Thunder Girls.” Anybody who wrote her off “has made a big mistake” and she should be “enjoying plum parts”. Personally, I’ve never experienced ageism in the workplace, says Kelly, and being an older woman “has, in fact, helped me in my job”. And with “more maturity and experience, we all become more tolerant and, hopefully,…

Would Abraham Lincoln have been a better president if he’d had a college degree? Would Cornelius Vanderbilt have done better in business? Or Jesus Christ at saving souls? In a recent survey, Americans favoured more education spending over all other categories of the federal budget. Spend enough of other people’s money on their little Jimmy, people must believe, and he’ll turn into Einstein, Erasmus, and Elvis, all rolled into one. But where’s the evidence? “One parent paid $6.5m to get their children into elite schools” Studies show that people with more education earn more money. But this is entirely misleading. People with private jets earn more money, too, but that doesn’t mean that you will get richer if you buy a Gulfstream. Still, a lot of people think school is…

Strong US GDP figures carried a “sting in the tail”, says The Economist. The world’s largest economy shrugged off a government shutdown to expand at an annualised pace of 3.2% in the first quarter, comfortably outstripping consensus forecasts. Yet “quiescent” inflation – running at an annual rate of 1.9% in March – suggests that underlying demand could be weak, so the Federal Reserve is unlikely to resume hiking rates for now. The most likely path for US interest rates is now downwards, reckons Komal Sri-Kumar on Bloomberg. Central bankers are happy to take a dovish stance because previous predictions that ultra-low rates and quantitative easing (QE) would trigger surging inflation did not materialise. Between 2008 and 2015 the Fed’s balance sheet of assets bought with printed money “more than quintupled”,…

Dow 2,400 anyone? No, that… isn’t a typo. It also didn’t come from one of those clickbait advertisements with a link to overpriced gold coins or even from a noted perma-bear. The notion comes from Stephen Moore, who President Donald Trump plans to nominate for the Federal Reserve Board, during a weekend radio interview.... He predicted “the biggest sell-off in the stockmarket in American history” if Democratic ideas “come into play and enter the White House”. If the Dow Jones Industrial Average merely matched its horrific performance between September 1929 and July 1932, the index would reach 2,400, a level first touched in the 1980s. Historically, the chance of an incumbent failing to keep the White House is only 30%. Unfortunately for those inclined to believe Mr. Moore’s prediction, bookmakers…

Three to buy President Energy The Mail on Sunday Rising oil prices mean brighter prospects for small energy firms. President Energy has struggled in recent years, but rising production in Latin America over the past 18 months has “transformed” the business into a profitable operation. It produces about 3,000 barrels of oil per day and that figure should rise to 10,000 by 2021. An Argentina-focused oil explorer will always be risky, but more adventurous investors may spy a bargain at the current price. 7p Learning Technologies Shares This Aim-listed training platform provider offers e-learning applications to 2,000 companies and government departments. Burgeoning regulation is driving rapid growth in the corporate e-learning market as firms adapt to new red tape. The company has ample scope to cross-sell more services to its…

• Ross McEwan has made a “well-timed” departure as chief executive of RBS, says James Moore in The Independent. The bank is not only “turning a profit again after the best part of a decade in the red”, but it also pays a dividend and “regulators no longer bite their fingernails at the mere mention of its name”. He has also settled most of the “legacy” issues after paying“thumping fines” for the bank’s involvement in scandals such as Libor and foreign-exchange fixing. Still, the shares remain far below the level required for taxpayers to see a profit on the money they spent keeping RBS afloat in 2008. • Sainsbury’s CEO Mike Coupe (pictured) will, “always be the man who attempted the supermarket merger they said couldn’t be done, and proved…

Warren Buffett, America’s best-known investor, has plenty of cash. But the 88-year-old is struggling to spend it. “It’s very, very, very hard to make deals in a world where you’ve got $1trn-plus of money, plus just the normal animal spirits of corporate leaders and everything else, and accessibility to extraordinarily cheap money.” Competition from profligate private-equity funds, rolling in cheap money, leaves fewer appealing opportunities for choosier investment vehicles, such as his own Berkshire Hathaway. But the good times will return, says Buffett. “People get smarter, but they don’t get wiser. They don’t get more emotionally stable. All the conditions for... extreme overvaluation or undervaluation... exist, the way they did 50 years ago. You can teach all you want to the people... but when they’re scared, they’re scared.” When they…

At its conference last week, the Scottish National Party accelerated plans for Scotland to launch its own currency. Last time around, it planned to keep the pound if it won the independence vote. There was, however, a slight problem with that proposal. The British government in Westminster quite rightly said it didn’t want to share a currency with an independent Scotland. The result? The currency policy was a complete mess, with the Scottish nationalists insisting they could hang on to sterling, and the British saying they couldn’t. How many votes that swung behind staying with the union it is impossible to say. But it must have swung some, and perhaps enough to make a difference. The SNP has now drawn a line under that, and decided that Scotland should have…

It’s time to put the fat cats on a diet Dominic Lawson The Sunday Times Abigail Disney, granddaughter of Roy, co-founder of the Walt Disney Company, has described the £50m pay award to Bob Iger, Disney CEO, as “naked indecency”. Bosses have been helping themselves for far too long. In the US, from 1978 to 2013, CEOs’ compensation rose 937%. Where is the balance between risk and reward, “the essence of a well-functioning market economy”? Roy and Walt Disney risked all when they set up their company. Iger is an employee whose capital was never at risk. This difference is “vividly displayed” by UK housebuilding firms Persimmon and Redrow. Thanks to the Help to Buy scheme, Persimmon’s executive share incentive programme produced a £110m “bonus” for boss Jeff Fairburn. This…

politico.eu Those looking for a solution to the wave of anger and distrust sweeping Western democracies should take a look at an experiment in democracy taking place in East Cantons, a small region in eastern Belgium, says David Van Reybrouck. Starting in September, the parliament representing the region will hand some of its powers to a citizen’s assembly drafted by lot, which will meet once a month to set the agenda and define questions. They will then organise broader citizen’s assemblies that will invite experts to advise and help them draft independent policy proposals. This is a historic move, and a courageous one – sending a signal to other politicians that they could learn to see their voters as a resource, not a threat. This experiment is happening on a…

The 40% jump in the oil price so far this year has been treated with indifference by global investors, but, at the other end of Europe, it is very good news. While Russia has been diversifying its economy away from a dependency on oil and gas and insulating it from price volatility, hydrocarbons (eg crude oil and natural gas) still account for 10% of GDP, 21% of 2017 government revenue, and 58% of export earnings, according to Alexey Krivoshapko, a director of Prosperity Capital. Under Russia’s tax system, 90% of the extra revenue from higher prices goes to the government, which accumulates the windfall in a stabilisation fund, mostly in foreign currency. This means that the benefit flows broadly into the Russian economy, rather than providing excess profits to energy…

Millions of people may be missing out on valuable income in retirement because they have no idea their health or lifestyle makes them eligible for extra pension. Almost three-quarters of people over the age of 55 have never heard of an “enhanced annuity”, according to a survey carried out by fund supermarket Hargreaves Lansdown (HL). Annuities enable savers to convert their pension funds into regular income, payable by an insurance company and guaranteed for the rest of their lives. The annuity rate you get is set at the moment you purchase the plan – and then fixed for life – so it is crucial to get the best possible deal. Standard annuity rates move up and down over time and are primarily linked to yields on government bonds and average…

Should we get rid of generous perks for pensioners to fund more support for cash-strapped young people? The House of Lords’ committee on intergenerational fairness says policies like the triple-lock guarantee on state pensions, free TV licences and bus passes for pensioners, and even the winter fuel allowance may have had their day. The argument is that as pensioners have seen their incomes rise more quickly than other groups over the past ten years, it now makes sense to prioritise younger generations. Savings could, for example, be ploughed into affordable housing. So what would pensioners be missing out on? Well, analysis from the House of Commons Library in the run-up to the 2017 General Election, when Theresa May floated the idea of dumping the triple lock, suggested it would cost…

As I have concentrated on Cape valuations in national markets I am recommending funds and exchange-traded funds (ETFs) to capture them rather than attempt to shoot out the lights with individual stocks. With the funds, I maintain a bias towards those investing in small to mid-cap companies; with the ETFs my criteria are that they have well capitalised managers, properly reflect the relevant index and charge low fees. My suggestions are in the same order as the recommended countries above. For Brazil the choices are slim but the JPMorgan Brazil Investment Trust (LSE: JPB) fits the bill. It has performed in line with the index over the last five years (in other words, it has moved sideways); the only real risk is its small size (£21m). This may in part…

Debenhams is rarely in the news for positive reasons. Last week, the department store named the 22 of its 50 stores that it will be closing next year, a move that will affect 1,200 staff. This is yet another sign that department stores may not be long for this world. But it’s also a reminder to look at whether this could affect your property investments. Investment bank UBS has examined 50 UK shopping centres owned by four real-estate investment trusts (Reits) – British Land, Landsec, Hammerson and Intu – and found that 20% of the total shopping-centre floorspace owned by these funds was let to retailers classed as in “CVA/admin”. This refers to stores with a company voluntary arrangement or in administration, or “shrinking”: those within the top-100 retailers by…

A Grade II-listed, four-bedroom Victorian church clock tower in Lambeth, south London, is on sale for £1.85m. The narrow structure, built in 1861, was conceived by architect John Giles, who also designed London’s Langham hotel. It was converted for residential use in 1998 and comes with a lift and a spiral staircase built in the clockwise direction to allow you to fight off marauders with your sword in your right hand, its owner told the Daily Mail in 2017. The original church clock is still in working order, and from the tower you can see as far as St Paul’s Cathedral and the Palace of Westminster. It is available for sale through the Unique Property Company.…

Over the past fortnight, five out of the eight long positions that I have tipped have increased. Greene King has gone up to 692p (from 664p), Cineworld has advanced to 321p (308p), Safestore has increased to 646p (627p), and Somero is now selling for 365p (360p). Superdry has passed through the 500p barrier, triggering the trade, and is now at 534p. However, the biggest increase comes from JD Sports, which rose to 617p (520p). The only positions to decline are John Laing Group, down to 387p (from 399p), Hays, down to 153p (159p), and Bellway at 3,157p (3,174). In total my long tips are making a profit of £4,028. My short tips have produced a much more mixed performance. Weis Markets has increased from $41.30 to $41.90. Rightmove has gone…

CMC Markets (LSE: CMCX) is a struggling online platform for spread betting and derivatives trading. UK and European financial regulators are tightening up the rules around trading risky contracts for difference, which allow unsophisticated traders to place highly leveraged bets on financial assets that can leave them exposed to heavy losses. The entire sector has been hit by the regulatory clampdown. A profit warning in September was followed by a second in early April, which warned of a 37% drop in annual revenue. The share price has fallen by 55% in the last year.…

This wine’s vintage is not a typo. At a recent tasting at The Wine Society there were three old albariños on show and the 2008 was head and shoulders above the other two. How on earth had these wines lasted this long? Albariño is my favourite Spanish white grape and I usually expect to drink these floral, summery whites in the year following their production. Pazo Señorans happens to be one of my favourite wineries and I drink gallons of the stuff on my summer holidays, but this Selección de Añada cuvée is a very different beast to the everyday drinking label. Clearly the finest grapes are used, but it is the extended lees ageing (30 months), which “nourishes” the wine with immense stability and development potential, coupled with the…

Going… A late-1950s Futurama guitar played by George Harrison during the Beatles’ Hamburg tours will be sold by Bonhams in its entertainment memorabilia sale in London on 12 June. Harrison bought the guitar (pictured) in November 1959 from Hessy’s music shop in Liverpool and he appears in photographs playing it during the band’s tour of Scotland in 1960. Harrison gave it to Beat Instrumental magazine in 1964 for a competition prize. However, the winner opted for cash instead, so the guitar remained with the magazine. It is now being offered for sale by a relative of the magazine’s then-editor. It has been valued at between £200,000 and £300,000. Gone… John Lennon’s “favourite piano” sold for $575,000 on US auction website Gotta Have Rock and Roll on 20 April, despite having…

£3m The value of seven cultural treasures that were “saved for the nation” last year, according to the reviewing committee on the Export of Works of Art and Objects of Cultural Interest. The objects included a lobster telephone made by Salvador Dalí, bought by the National Galleries of Scotland for £853,000 and a Mae West lips sofa, acquired by London’s V&A for £480,000. 80,000 The number of properties in London that are listed on San Francisco-based holiday rental website Airbnb – a fourfold rise since 2015. In Edinburgh, the number has doubled in three years to 12,000, while there are almost 200,000 properties listed across the whole of Britain, leading to criticism that communities are being “hollowed out”. 14 The percentage of jobs that could disappear within the next 15…