Indholdsfortegnelse for Issue 959 i MoneyWeek

It’s been a hectic week for markets, driven by the fallout from the latest Federal Reserve decision and Donald Trump’s reaction to it (see page 4). At times like these it’s easy to look at “big picture” distortions caused by central banks, or at divisive policy issues such as Brexit (see page 8), and shrug our shoulders in despair. “The distortions in our tax system have been created by one thing: a lack of political spine” But rather than get distracted by negative bond yields or political mudslinging, it would be more productive to pay attention to addressing the many damaging distortions and bad incentives lurking within our tax system. These are well within the ability of politicians and technocrats to resolve – mainly because they created them in the…

The “micromobility” market, encompassing electric bicycles, scooters and kick scooters, is starting to motor, says German business weekly Der Aktionär. McKinsey reckons it is expanding twice as fast as the car-sharing sector and could be worth $500bn worldwide by 2030. No wonder: a quarter of the world’s population live in cities with over one million inhabitants, and surveys suggest that 15% of this group could opt for a smaller, nimbler alternative to a car. This bodes well for China’s Nasdaq-listed Niu Technologies, which sells high-end scooters that can travel for up 100km without recharging. A partnership with Volkswagen has put a rocket under revenues – Niu should be in the black by next year.…

On Friday, the Royal Bank of Scotland (RBS) announced that it had made £2bn in net profit, its “best result for more than a decade”, reports Sean Farrell in The Guardian. As a result, it will pay a total of £1.7bn in dividends for the first half of its financial year, partly funded by the sale of a stake in a Saudi Arabian bank. It’s only the second time that shareholders have received money since the end of 2007. Naturally, the biggest winner will be the government, which will receive around £1bn, thanks to the fact that it still owns 62% of RBS. Ross McEwan, the chief executive, argues that the decision to pay a special dividend means the bank is finally “serving the real economy of the UK and…

A price/earnings-to-growth (PEG) ratio is used to try to spot shares that are undervalued relative to their growth prospects. Well-known investors Peter Lynch and Jim Slater both highlighted it in their writing as part of their stockpicking process. The ratio compares a company’s price/ earnings (p/e) ratio with the expected growth in its earnings per share (EPS). To calculate it, you first find the p/e ratio, which is simply the share price divided by EPS. This gives you an idea of how much investors are currently willing to pay per £1 of historic or future earnings. You then look at how quickly earnings are expected to grow in the future (by using analysts’ estimates, for example). To get the PEG ratio, you simply divide the p/e ratio by the expected…

• Priti Patel, the home secretary, was paid £1,000 an hour as a “strategic adviser” to US communications company Viasat, which supplies products and services to the Ministry of Defence. Her contract was for an expected commitment of five hours a month for three months, and ended on 31 July. Patel (pictured) is also a non-executive director of Accloud Plc, which provides accounting software to small businesses, for which she is paid £45,000 a year for working 20 hours a month, and has shares and share options in the company. Accloud made a pre-tax loss of £18.7m in the year to March 2018. • Jane Austen probably earned just £310 from sales of her third novel, Mansfield Park, the equivalent of £22,000 today, suggests the Bank of England, after research…

US hedge fund ValueAct “is scouring Japan for more investments as some of the country’s biggest companies come under pressure from shareholders to boost profitability”, says Lina Saigol in Barron’s. The fund scored a notable success in Japan earlier this year, when it won a seat on the board of Olympus, the camera and medical-device maker – the first time that an American activist investor has become a director of a Japanese firm. Toshiba, the industrial conglomerate, has also appointed a non-Japanese director, as part of a settlement with King Street Capital, another US hedge fund, while Third Point – run by high-profile activist Dan Loeb – is pushing electronics giant Sony to sell its stakes in other listed firms, including Olympus.…

“You’re looking at… $750,000 to $1m for one week. You have to make ‘screw-it money’. I don’t have my definition of screw-it money.” CBS News anchor Gayle King (pictured) explains why her new $11m contract isn’t enough to finance her dream of chartering a yacht to take a cruise, quoted in The Washington Post “I can spend a thousand quid by blinking. I bought two cashmere scarves in Paris: one for a friend who I was visiting here, and I thought, ‘I’ll have a second one for me.’ I love buying presents. I also buy a lot of shoes that I think are going to be nice, and I actually never wear them.” Singer and actress Jane Birkin, quoted in the Evening Standard “The salary is not fantastic in comparison…

collaborativefund.com/blog Truths figured out in one field of study often apply to others, says Morgan Housel. Here are a few laws that hold universal truths. 1. Expect miracles. In a world with seven billion people, the odds of a one-in-a-billion event are pretty good. In the course of a life, according to the mathematician who formulated the law, miracles happen at the rate of roughly one per month. 2. For every PhD, there is an equal and opposite PhD. Experts tell one side of a complicated story in an infinitely complex world. Expect differences of opinion. 3. When a measure becomes a target, it stops being a good  measure. Set a big sales target, for example, and your workers will focus on hitting the target at the expense of things…

UK-listed Pearson (LSE: PSON) has been trying to grow market share by digitising its academic materials and textbooks. It is also active across education more broadly, with e-learning, professional certifications and virtual schools. Adjusting to the changing nature of education has been a drawn-out process and there have been disappointments for investors. However, there are signs that a revival is finally gaining traction – while recent half-year sales were up just 2%, profits rose 35% to £144m, and the market responded positively. Pearson has still got progress to make and critics to disprove, but this could be a good opportunity to buy into a long-awaited turnaround. The shares trade on a price/ earnings (p/e) ratio of 14, with a dividend yield of 2.35%. An alternative in the textbook market is…

Anyone considering buying an annuity on retirement should get specialist support with the purchase. The recent scandal at Standard Life – the insurer was last month fined £30m for offering its staff big bonuses for selling annuities that may have disadvantaged customers – underlines the potential pitfalls. The golden rule is that pension savers should always investigate the open market option. You are not required to buy the annuity on offer from the provider that looks after your pension fund – and it is likely you’ll get a better deal elsewhere. The Money Advice Service’s online annuity comparison tool is a good place to start to familiarise yourself with the sort of choices you’ll need to make in picking an annuity contract. But specialist annuity advisers can help you narrow…

Up until four years ago, Valeant Pharmaceuticals – now Bausch Health Companies (NYSE: BHC) – was regarded as one of the world’s most dynamic drug companies. In 2008, J. Michael Pearson became CEO. He argued that returns from research and development (R&D) were too low and uncertain, and instead went on a buying spree, acquiring other drug and biotech firms that he considered to be particularly promising. He also instituted a more aggressive pricing policy, as well as restricting the firm’s operations so as to minimise its tax liability. In the short run this successfully boosted profits. The share price rose 15-fold from 2010 to 2015, and Pearson was hailed as a genius. The fall of Valeant and rise of BHC Then it all ended. The pricing policy, plus the…

The UK equity market offers one of the most attractive levels of income of all global equity markets. However, this income has traditionally been generated by a concentrated mix of large-cap stocks. I seek to create a diversified portfolio of income-generating companies with the potential to grow those payments ahead of inflation over time. The ability of investments to generate sustainable free cash flow and the attitude of company management towards shareholder distributions is crucial to success. Fortunately, within the UK market, there are some very interesting areas of opportunity. Domestic firms hit by Brexit Negative sentiment towards sterling and domestic companies since the EU referendum has resulted in a wide degree of polarisation within the market. Companies with substantial overseas revenues have benefited from the devaluation of sterling, but…

$1.3bn How much “influencers” who inflate their fanbase with fake followers on social media cost brands every year globally, according to Professor Roberto Cavazos, an economist at the University of Baltimore. At least 15% of all influencers’ followers on social media are not real. £20,000 How much Bristol University spent on consultations with students on changing the name of Senate House, an administrative building that is to become a hub for students to meet and work. The name the students eventually settled on was “Senate House”. 549m The number of single-use plastic bags sold by supermarkets in the past year, compared with one billion in 2017/2018, according to government figures. Sales of plastic bags have fallen by 90% since a 5p charge was introduced in 2015. 32 The percentage of…

A new children’s hospital in Edinburgh, built by private consortium IHSL under the “non-profit distributing system” – the Scottish government’s version of the Private Finance Initiative (PFI) – is still empty, despite the NHS taking possession in February. The new Royal Hospital for Children and Young People cost £150m to build, reports the BBC, but the full price over 25 years will be £432m, including maintenance and facilities management costs. NHS Lothian says it has been paying £1.4m a month to IHSL since taking over the building. The hospital was supposed to open in July, but it failed to do so due to safety concerns relating to its ventilation systems. NHS Lothian said it is not possible to estimate when it can be occupied. Good week for: Taxpayers will see…

With gold rallying 10% so far this year in dollar terms, some investors are starting to pay attention to “the yellow metal’s sidekick”, says Debbie Carlson for US News & World Report. Sometimes dubbed “poor man’s gold” – silver trades on about $16.50/oz, compared with $1,500/oz for gold – silver prices are up 4.5% so far this year. Demand from retail investors is a key catalyst for silver, adds Myra Saefong in Barron’s. The World Silver Survey shows that “global investment in silver bars and coins grew 20% last year”, yet supply is tight: 2018 also brought “a third consecutive annual decline in global production of the metal”. Yet unlike gold, which is used almost entirely as a store of wealth and in jewellery, the silver price is driven by…

Over the very long term, value stocks (those that trade at lower valuations than the wider market) have tended to beat growth stocks (those that trade at higher valuations). However, in the shorter term, growth stocks can do better than value stocks for sustained periods – and that’s been the trend for around a decade now. The outperformance of growth has been so great since the eve of the global financial crisis that the MSCI World Value index is trading at it’s lowest level relative to the MSCI World Growth index since the peak of the dotcom bubble, says Justina Lee on Bloomberg. That point marked the start of a boom in value stocks – they beat their growth peers by 50% over the next 12 months. Will it be…

Vodafone has revealed plans to spin off the business that operates its network of European mobile-phone transmission towers and list it on the stock exchange by 2020 in a bid to reduce its huge debt pile. The listed company would be Europe’s largest tower operator, with 61,700 masts in ten countries, and could generate annual revenue of €1.7bn and profits of €900m, reckons Barron’s. It should be operational by next May. Vodafone has spent big on 5G licences – almost €4bn in Germany and Italy and £317m in the UK, which contributed to the €7.6bn annual loss it posted in May. The sale could bring in as much as €20bn, says The Guardian.…

In an attempt to salvage the “fraying alliance” between Renault and Nissan, the two carmakers have opened talks on the idea of Renault reducing its 43% stake in its Japanese partner, says the Financial Times. The arrangement has been “a source of tension” for the two, especially as the latter “holds only a 15% non-voting stake in Renault”. The size of the cut is yet to be agreed – Nissan is thought to be aiming for 20%-25%, while the French carmaker is thinking 30%-35%. About time too, say Jacky Wong and Stephen Wilmot in The Wall Street Journal. While Renault has been “reluctant” to cut its stake, such a move could help “reboot” the relationship with Nissan, which in turn would allow it to restart deal talks with Fiat Chrysler,…

Prime Minister Boris Johnson’s senior adviser, Dominic Cummings, has sent a “defiant warning to MPs” that they have left it “too late” to block Britain leaving the EU without a deal on 31 October. “Politicians don’t get to choose which votes they respect,” he said, arguing that even if there were a “clear majority” against no-deal, there is nothing they can do to prevent it. He argues that even if MPs passed a vote of no confidence, Johnson “could simply call a general election in November, ensuring Parliament was not sitting” on the exit deadline. Parliament could, however, install an alternative government after a vote of no confidence, says Vernon Bogdanor in The Guardian. It could also legislate to delay Brexit, or revoke Article 50 entirely. However, MPs need to…

David Rosenberg, chief economist, Gluskin Sheff This is a “Potemkin market”, says David Rosenberg of Gluskin Sheff – it might look normal on the surface, but dig deeper and it’s anything but. Even “after ten years of free money” from central banks, “we are stuck in a deflationary debt trap”, the oft-bearish analyst argues. This unpromising, disinflationary backdrop has helped to prop up equities, but only because low interest rates have enabled companies “to buy back their stock in droves and mask a downturn in corporate profits”. You need only look at the global bond market to see that we are in unprecedented territory. Around “$15trn [£12.4trn] of global investment grade bonds” now trades with a negative coupon (in other words, investors holding until maturity are guaranteed to lose money,…

The new education secretary, Gavin Williamson, could end up being paid more for being sacked as defence secretary by Theresa May when she was prime minister than he would if he’d stayed on in the Cabinet, says The Independent. Williamson was sacked in May after he was accused of leaking details about Cabinet discussions about Huawei’s role in the UK’s telecoms infrastructure, and was entitled to three months’ pay – £16,870. But Boris Johnson appointed him as education secretary as soon as he became PM – just 84 days later. Meanwhile, Johnson’s Cabinet reshuffle could end up costing over £260,000 in severance payments to ministers who either resigned or were sacked, reports the Daily Mirror. Fourteen Cabinet ministers are entitled to £16,876 each, while three lower level ministers can claim…

■ Embattled fund manager Neil Woodford “suffered a new blow on Wednesday when one of his most successful investments, litigation funder Burford Capital, came under attack”, say Michael O’Dwyer and Harriet Russell in The Daily Telegraph. Shares in Burford plunged by 50% after Muddy Waters, a high-profile short-seller, “accused the company of ‘egregiously misrepresenting’ its returns”. The firm was a top ten holding in Woodford’s now-suspended Equity Income Fund when details of that fund’s portfolio were last provided and Woodford Investment Management held more than 7% of Burford’s shares according to the latest available data. In an initial response to Muddy Waters’ claims, Burford said that its “cash position and access to liquidity is strong”, its “returns are robust” and it “uses the same IFRS accounting that is used widely…

qz.com After “millennia of relying on anecdotes, instincts and old wives’ tales”, today we demand that arguments be backed by data, says Andrea Jones-Rooy. That’s all for the good. But it’s easy to forget that data collection and analysis is a human activity. “The data doesn’t say anything” – we do. It pays to be aware of the errors that can creep in to data. There may be random errors, for example – the data recorded is just wrong for some reason. There may be systematic errors – where some data consistently makes its way into your dataset at the expense of others. If you measure public opinion from Twitter posts, for example, you may forget that most people don’t tweet. Finally, there may be errors of choosing what to…

Since the payment protection insurance (PPI) scandal began in 2006 more than £35.7bn has been handed out in compensation. Claims-handling firms have grown rich and banks have seen their profits severely dented. But an era is soon coming to an end. You only have until 29 August to submit a new PPI claim. Any received after that will automatically be rejected. Almost a third of people owed money for mis-sold payment protection insurance have yet to make a claim, says Adam Williams in The Daily Telegraph. As many as 64 million PPI policies were sold in the UK, mainly in the 1990s and 2000s. They were sold alongside loans, credit cards and other borrowing with sales pitches telling people it would help them meet their repayments if they became ill…

If you receive an email promising a refund from HM Revenue & Customs, don’t get carried away, says Angelique Rezicka on This is Money – “it will be a scam rather than a surprise windfall”. Similarly, don’t rush to hand over money if the email tells you that you’re in trouble with HMRC and need to pay a penalty immediately. Tax-related frauds like these are very common. Over the past three years, people reported 2.6 million approaches from scammers, by email, phone, text and other methods (including in-person visits), according to figures obtained through a freedom of information request by Parliament Street, a think tank. The true figure will be higher since many people won’t report them – but if you want to do so, send emails to phishing@hmrc.gsi.gov.uk and…

When a company issues earnings figures, the market expects them to be accurate. However, occasionally a company issues amended figures. This can be for one of two reasons. In some cases, it has sold a revenue-generating asset and wishes to produce past figures that omit the contribution of this asset, to give investors a more realistic view of future profits. In other cases the previous figures were inaccurate, due to accounting error, improper valuing of assets, or even fraud. Investors, of course, don’t like to hear that a company’s profits are lower than they were led to believe. In 2008, research firm Audit Analytics analysed 674 restatements issued by US firms in 2006. The analysis found that they generally had a negative impact on the share price. A 2010 study…

When US federal prosecutors recently unsealed their indictment against Jeffrey Epstein – a New York financier with a jet-setting lifestyle and a host of famous friends in business and politics – it revealed “sordid details” of sex trafficking allegations dating back to 2002-2005, says The New York Times. Briefly put, Epstein and employees “brought dozens of vulnerable girls, some as young as 14, to his mansions in Manhattan and Florida” where he molested them for cash – and bribed them to recruit others to ensure “a steady supply”. Prosecutors said that “a vast trove of lewd photos” hidden in a safe showed that Epstein – who had dodged federal charges in 2008 after reaching a notably lenient plea deal with South Florida prosecutors – was “unrepentant”. His lawyers counter that…

Retro chic The tides are turning for the humble hotel bar, says Kaitlyn McInnis for Maxim. Hotel cocktail bars are now taking centre stage. Sparrow (sparrowbar.com) at The Dalmar hotel in Fort Lauderdale, Florida, is a case in point. It takes its inspiration from the clean lines, natural materials and open spaces of the American modernism of the 1950s. What’s more, it became the city’s highest rooftop bar, when it opened in May on The Dalmar’s 25th floor. “Expect a funky indoor-outdoor lounge with breathtaking views of the city and expertly crafted cocktails, including the ‘Sticks and Stones’, which is comprised of brandy, vermouth and champagne.” Urban cool The “eclectically-designed” Zetter Townhouse (thezettertownhouse.com) in Farringdon, London, “has recently undergone renovations, making the interiors all the more eye-catching”, says Ella Alexander…

Last week I featured the ultimate English aperitif white wine (if you missed it, you can look it up on my website or at moneyweek.com). This week, I have searched for an equally thirst-quenching style of white wine from the rest of the world. If you have yet to experience the palate-electrifying flavour of a Txakoli then you haven’t lived – or rather your palate is still in snooze mode. With only 11% alcohol and a water-white colour, this style of wine is the Basque country’s gift to the world. Traditionally, you would pour this wine, ice cold, from a great height (at least 50cm) into a glass and watch the microscopic bubbles, coming from the dissolved carbon dioxide, fizzle as it settles. Don’t waste a moment and then slake…

Everybody’s heard of the Mona Lisa. Far fewer have heard of its supposed older sister, dubbed the Isleworth Mona Lisa – and much less seen it. The painting (pictured) had been held in a Swiss bank vault since 1975 until it was exhibited this summer in Florence, says Philip Willan in The Times. Now Giovanni Battista Protti, a lawyer in Padua representing a minority shareholder in the painting, is pressing for it to be impounded. The dispute goes back to Hugh Blaker, a British art collector, who found the painting almost a century ago. He bought it and took it home to Isleworth, west London. Hence the  name. Blaker later sold it to Henry Pulitzer, an American, who sold a quarter share in the artwork to the Lisbon-based porcelain-maker Leland…

• You have to hand it to Simon Cowell (pictured), says Vanessa Feltz in the Daily Express. “His desire for conquest is as hot approaching 60 as it was in his 20s. He’s not ready to slip into ritzy retirement. There’s studios to woo, scripts to commission, actors to audition and a new avenue of experience to stroll. Doubt at your peril.” This is the man, after all, who launched TV talent contest Pop Idol, followed “in dazzling succession” by The X Factor, American Idol and X Factor USA – then “bombing back here in 2010 with the irrepressible Britain’s Got Talent”. The “only way to appear relevant is to strike out ahead of the curve, predict what people will want before they know they want it and serve it…

Donald Trump is “crazy like a fox”, says Niall Ferguson in The Sunday Times. The old American phrase well describes the president’s ingenious knack for getting what he wants. Last week his bullying campaign against Federal Reserve chairman Jerome Powell yielded the first interest-rate cut in a decade. Yet Trump wants more than the quarter-point reduction that Powell offered up. The solution? The president tweeted that he intends to impose fresh tariffs of 10% on $300bn of Chinese goods from the start of September. The resulting trade chaos only increases the pressure on the Fed for further easing to clear up the mess. The unexpected trade-war escalation roiled markets. Monday was the worst day of the year so far for US stocks, with the S&P 500 shedding 3%. That came…

“The Fed’s decision [to cut rates] was an error because lowering already negative real interest rates will further feed speculative and unproductive investments and exacerbate financial instability. While there are legitimate signs of an economic slowdown both domestically and abroad, lowering interest rates is the wrong cure. Growth is slowing partly because of trade tensions, but primarily because economic actors must devote increasing amounts of capital to servicing exploding debt burdens … US companies are more bloated with debt than before the Great Financial Crisis and they are increasingly forced to deal with their growing debt burdens. If business activity slips, they are in trouble … Many companies need to focus on keeping their lenders happy, which limits their ability to grow their businesses.”…

Three to buy Imperial Brands Motley Fool UK Demand for cigarettes has fallen in the UK, with average daily consumption now down to less than one third of its 1973 peak. Yet sales of traditional tobacco products at the West-to-Gauloises maker are holding up well and it is also making inroads into the burgeoning “next-generation” market through significant investments in Canadian cannabis operators. The shares trade on a “muted” price/ earnings ratio of 13.2, which is cheap compared with other FTSE 100 firms and a reasonable entry point into a good defensive stock. 2,136p Inditex Money Observer British investors looking to diversify their income should remember that dividends do not end at Dover. European companies have improved their willingness to hand over their profits in recent years. One of the…

• Investors in Goals Soccer Centres are about to learn the hard way that “dirty play gets you kicked out of UK markets, just as it gets you kicked out of football”, says the Lex column in the Financial Times. The chain, part-owned by retail tycoon Mike Ashley (see below), will leave the Aim exchange next month after its new auditor, BDO, accused the group of accounting fraud, with allegations of misconduct against former CEO Keith Rogers and ex-chief financial officer Bill Gow. The blow comes as the firm has been hit by “weak demand for kickabouts”, which have squeezed margins to 17%, half the level of five years ago. The scandal is also bad news for KPMG, which audited Goals between 2002 and 2018, as well as Aim itself,…

Boris Johnson’s victory in the Conservative leadership contest at the end of last month means that several of my most long-standing bets have been settled. I backed Johnson to become the next Tory leader (along with five other candidates) in July 2017, followed by a bet on him becoming the next PM in October 2017. I also correctly advised you to bet against Jacob Rees-Mogg becoming Tory leader in February 2018 and tipped Sajid Javid and others to become the next chancellor in March 2018. Not all of my bets paid off. Johnson got two-thirds of the vote in the final ballot of members, beating my prediction that he would only get between 40% and 60%. I also predicted back in April 2018 that Theresa May would go as Conservative…

A couple of years ago, a stockmarket study by Hendrik Bessembinder and a team of researchers from Arizona State University caused a bit of a splash in the financial world. The 2017 paper looked at the performance of more than 26,000 US stocks over the 90 years from 1926. In all, concluded the researchers, the entire gain in the stockmarket over that period was “attributable to the best-performing 4% of listed stocks”. Meanwhile, just under 60% of stocks returned less than the safest of safe assets (one-month US Treasuries, the equivalent of cash) over their entire lifetimes. In short, if you missed out on a handful of stocks, you were destined to make subpar returns, despite taking all the extra risk of owning stocks. “A handful of stocks account for…

John Flint had only served for 18 months as chief executive of HSBC, one of the world’s biggest banks, and had barely had enough time to make any changes to its strategy or operations, and then he was gone. On Monday morning, HSBC announced that he was stepping down and that an interim leader would be installed while it searched for a permanent replacement. “HSBC needs to decide whether to ditch branch networks completely” Flint’s ousting may appear harsh. A long time HSBC banker, he rose to the top and the results that were released at the same time as the news of his departure were hardly terrible. HSBC chalked up a 16% rise in profits, and announced a $1bn share buyback programme. There is no crisis and no hint…

One of the great virtues of the London stockmarket is that there’s a healthy number of funds to appeal to investors looking for the next frontier. One of the lower-profile examples is Georgia, a destination that probably isn’t on the radar for many people, but represents an interesting prospect for the brave investor. Solid fundamentals Georgia is a tiny state nestled on the western edge of the Caucasus mountain range. It has a population of just 3.7 million, yet boasts a number of advantages. Its government is trying to stay friendly with the West as well as with Russia – although every once in a while its overbearing northern neighbour throws a tantrum and threatens exports. National markets are steadily opening up to international competition (Turkey is one key trading…

Boris fritters away a Tory legacy Guto Bebb The Times When I was elected as a Conservative MP in 2010, the incoming government was bequeathed a “financial disaster of biblical proportions”, says Guto Bebb. Not for the first time, it fell to a Tory government to “clean up a mess” created while Labour was in charge, with the loose finances of the Labour government post-2001 being compounded by the impact of the great financial crash of 2008. The resulting period of austerity made for “difficult and challenging” decisions. Yet they were necessary to restore fiscal discipline, and by 2017-2018 the deficit was back down to 2% of GDP. But with government debt still at 86% of GDP, the job is not yet done. That is why it is so alarming…

aei.org Official data continues to underestimate the power of new technology, says Bret Swanson. I have estimated, for example, that to buy the basic building blocks of an iPhone XS in 1991 would have cost $28m. Yet such extraordinary progress is not captured in official statistics that measure growth. A report from Goldman Sachs, “Productivity Paradox v2.0”, attempts to sum up recent work on this. It estimates that “consumer surplus” – the difference between the price consumers actually pay for a product and the price they’d be willing to pay – adds around 0.2 percentage points to nominal GDP. This is the economic value of things we are essentially enjoying for “free” – cheap broadband, Google Maps, and so on. Products and services that replace older, more easily measured products…

Medical breakthroughs, new technology and the disruption of established industries have become part and parcel of daily business news. By comparison, education and training can seem much less exciting, despite being critical raw materials for innovation and advance. A dynamic, cutting-edge and productive global economy is a result of a highly skilled and educated workforce. And in the same way that businesses must become increasingly nimble and adaptable with products and services, so too must the process of training the workforce of the future. Global workers, often facing significant financial vulnerability and inequality, can see that their knowledge and skills are a passport to career progression, higher incomes, and better living and working conditions. At the same time, businesses can’t allow their employees’ skills to fall behind those of competitors…

Red Gate Farm is “a big piece of Kennedy history”, says Vanity Fair. This 340-acre estate in Massachusetts was bought by Jacqueline Kennedy Onassis, the widow of former president John F. Kennedy, in 1979 for $1m. Originally a sheep farm with a small hunting cabin, Red Gate Farm was redesigned by architect Hugh Newell Jacobsen to include an elegant Cape Cod-style home and guest house facing a mile of Atlantic beachfront. Rachel Lambert Mellon, who had redesigned the White House Rose Garden when Kennedy Onassis was First Lady, laid out the grounds. The estate is for sale for $65m via Christie’s International Real Estate.…

When George Osborne, the then-chancellor of the exchequer, announced that pension savers would no longer have to use their funds to buy an annuity on retirement, many people in the pensions industry thought that annuity sales would dry up. Most savers would jump at the chance to draw an income directly from their pension funds, or simply to cash the whole thing in, advisers reasoned. A product requiring savers to lock into a fixed rate of income for life at the time of their retirement could hardly compete. “The annuity market has become more bespoke” But while annuity sales slumped during 2016 and 2017, the market showed signs of recovery last year. And in 2019, providers such as Legal & General have reported increased sales. That’s partly because of pension…

Time is running out for thousands of people to avoid missing out on a top-up to their pension income following changes to the rules introduced in May. Those affected have until 13 August to apply for pension credit. Otherwise they will lose the money for good. The issue affects pensioner couples where one partner is eligible to claim pension credit – paid to poorer pensioners to ensure they have a guaranteed minimum income – but the other has not yet turned 65. Since May 15, couples have only been allowed to make their first claim for pension credit once both partners are aged over 65. However, those who were entitled to claim credit before the rules changed but hadn’t done so were given three months’ grace to make their application,…

To put it mildly, this was not a good fortnight for my tips. Given that the FTSE has taken a battering, it’s no surprise that five out of my six long tips went down. John Laing fell from 381p to 376p; JD Sports fell from 618p to 582p; Bellway fell from 2,895p to 2,868p; Superdry declined from 426p to 389p; and Safestore fell from 637p to 607p. The only long that didn’t decline was Hays, which stayed at 147p. While my long positions are still collectively in the black, the net profit on them has shrunk from £1,076 to just £388. However, if my long tips did badly, my short trades did even worse, with four out the six rising in price. Weis Markets rose from $35.61 to $38.68, and…

How did it begin? Marc Dreier was born in Long Island, New York, in 1950 and graduated with a law degree from Harvard Law School in 1975. After two decades working at various Wall Street law firms, he left to strike out on his own and by 2000 he was experiencing modest success as a senior partner in the medium-sized law firm Dreier, Baritz & Federman. Dreier’s restlessness drove the other partners away, leaving him in sole charge of the firm, which he renamed Dreier LLP. He then started to expand aggressively. What was the scam? To raise money for the expansion, as well as to fund a lavish lifestyle, Dreier began to borrow money from hedge funds, issuing fake bonds from a corporation, Solow Realty, run by one of…

Move over Jeff Koons and David Hockney. When it comes to making money from investing in art, it’s female artists who are in the frame. Is that overstating things a bit? Koons and Hockney are both big names, who continue to attract big prices. Just look at Koons’ Rabbit, which sold for $91.1m (£74.7m) in May – a smidgeon more than the $90.3m Hockney’s Portrait of an Artist fetched last November. Both of those sums set the record for the most paid for an artwork at auction by a living artist – and both Koons and Hockney are, of course, male. But on the whole, it’s works by post-war female artists that are appreciating at the fastest rate, according to Sotheby’s Mei Moses indices, which track the repeat-sale prices of…

Where’s the beef? Last week, Beyond Meat – a company that sells imitation meat products – got whacked with a 12% loss. That still left the shares nearly ten times above their initial offer price. The remarkable thing about Beyond Meat is not the fake meat – health nuts, animal lovers and Seventh-day Adventists have been eating mock meat for decades. The interesting thing is what the company reveals about the whole fandango. A few decades ago, we had the idea that maybe we would like to take our company public. So we called a friend – a partner at Alex Brown, Baltimore’s premier investment firm – to find out more. “Forget it,” was this old-timer’s advice. “In the first place, no reputable investment banker will take it on. You’re…