Indholdsfortegnelse for Issue 975 i MoneyWeek

“Political policies that can only be financed by huge tax hikes rarely begin (or end) well” You can now buy a digital dress. You send a picture of yourself to a designer. He dresses you virtually, “digitally rendering” the clothes onto your body, says The Times (see page 10). You can then stick pictures of the digitally-done you all over Instagram and Facebook. You’ll get lots of likes. You will also never wear or touch the dress. It will never actually leave social media. That makes it just like a modern political manifesto. The Lib Dems’ one is nothing but pointless showing off. The more Jo Swinson gets out and about, the less popular she appears to get – her policies aren’t ever leaving Twitter. The Labour one is obviously…

Thieves have stolen up to €1bn worth of art and jewels from a German museum in what was “probably the biggest art theft since World War Two”, reports the Daily Mirror. Dresden’s Green Vault houses around 4,000 precious objects in a collection founded in the 18th century by August the Strong. A glut of chateaux on the French property market is forcing sellers to slash prices by up to 50%, reports The Times. Around 1,500 of the stately homes are on the market, up from 800 eight years ago. Running a chateau costs an average of €30,000 a year in local taxes and insurance, with repair and maintenance costs on top.…

Jeremy Corbyn is still scaring investors, says Kate Palmer in The Sunday Times. “Billions of pounds have been pulled out of UK equity funds” in recent months as “investors panic” over a possible Labour government. Calm down, says Tom Stevenson in The Daily Telegraph. Currency, bond and equity markets barely moved on Labour’s publication of its hard-left manifesto last week. So“either the City is pinker than it seems” or, more plausibly, it thinks there is little chance of him becoming the next prime minister. “The markets are telling us to relax.” UK stocks have been trading at an average 20% “political risk” discount compared to other markets ever since the 2016 referendum, says Tineke Frikkee in the Financial Times, but we could be in line for a bounce if the…

American households were traumatised by the Great Recession, which was the worst for 70 years, says Fortune’s Geoff Colvin. They finally stopped shopping and paid some debt back after decades of borrowing and spending. The absolute level of consumer debt fell from the 2008 peak of $12.3trn and has ticked up gently since around 2013 to a new high of almost $14trn. But the days of “debt-crazed” shopping are over. In terms of GDP, debt has kept sliding from a pre-crisis 99% to around 76% as overall growth has eclipsed the pace of household borrowing increases. And households now save a “prudent” 8.1% of their income. The personal savings rate plummeted to zero in 2006 and 2007.…

South Korean drug company SK Biopharmaceuticals is expected to raise over $850m through its initial public offering (IPO), says Song Jung-a in the Financial Times. This would constitute the largest flotation in Korea since mobile-gaming company Netmarble’s $2.3bn listing in May 2017. The US Food and Drug Administration recently approved SK’s new anti-epilepsy drug, which “bodes well”, according to an investment banker close to the deal. Analysts expect the listing to breathe new life into the country’s IPO market, which has had a lacklustre 2019 – the total value of IPOs has dropped to $3bn so far this year, compared with $6.8bn in 2017.…

LVMH has clinched a deal to buy the jewellery group Tiffany & Co for $16.6bn, marking the largest takeover on record in the luxury sector. Not only is it $600m more than LVMH originally offered, but it also represents a premium of 37% to Tiffany’s pre-bid share price. While many experts think that Tiffany has “fallen off the list of top-tier brands”, says the Financial Times, it still has a “considerable” footprint in the US and remains “popular with Asian consumers”. It will join a portfolio of brands that include Bulgari, Louis Vuitton, Dior and Sephora. The high premium means that to make the deal worthwhile, LVMH will have to apply “slightly more polish to the Tiffany diamonds”, expanding the jeweller’s annual sales as well as increasing its margins, says…

With just a fortnight to go in the UK election campaign, several things are starting to become clear. Firstly, the Liberal Democrats are going nowhere. Next, Labour is slowly but surely closing the gap with the Conservatives, a process that may be speeded up by recent revelations regarding trade discussions with the US. Thirdly, the Scottish National Party (SNP) surge is likely to be modest, perhaps because Scottish voters are strongly opposed to another independence referendum. I therefore suggest that you bet on the SNP getting under 45.5 seats (45 seats or less) with Ladbrokes at 5/6 (54.5). I’d also take Ladbrokes’ bet on them getting either 30-39 seats at 5/1 (16.7%) and 40-48 seats at 4/7 (63.6%), for combined odds of 80.3%. In this case I’d put £2.08 on…

Standard deviation (SD) is still the most widely-used measure of “dispersion”, or in financial markets, “risk”. That may sound technical but it’s actually quite straightforward to understand. It is based on the idea that any population is “normally distributed” (it follows a “bell curve” pattern) – in other words, whether it contains the height of every UK adult male, or the annual return from the FTSE 100 over 100 years, most members of a normally-distributed group will bunch around the arithmetic average (the “mean”) for the whole. For the heights example, this would be the sum of every man’s height divided by the number of men in the UK. So a randomly chosen man in the UK will on average be close to, say, 5’10” – with only a few…

• Zillah Byng-Thorne, CEO of publisher Future, will pocket 1.24 million shares worth up to £18m after hitting her longterm performance targets, says The Times. The company’s share price has risen from 60p when she took over in April 2014 to around £14 now. Byng-Thorne (pictured) was paid £4.78m in the year to September 2018, including a £1.45m bonus. Athird of Future’s shareholders rebelled against the firm’s remuneration report at the AGM last February. • Partners at KPMG are bracing themselves for a 40% cut in their annual bonuses, says The Daily Telegraph. The accountancy giant is hoping to cut up to £100m in costs as it prepares for tougher regulation of its audit business sparked by scandals such as the collapse of government outsourcer Carillion, whose accounts had been…

“It’s been a wee bit more of a blessing than it has a curse.” Andrew Ridgeley (pictured) – former songwriter and member of pop band Wham! – on earning royalties of between £50,0000 and £100,000 a year since the 1980s, quoted in The Times “I had a great plan once. I said to my wife, ‘Let’s liquidate everything we own! We have a house on Long Island. We have our apartment in Greenwich Village. Let’s sell everything. Convert it into cash. And we’ll stay in the most beautiful hotels around the world. One year in each city, during the kids’ childhood. We’re in Vienna, we’re in Tokyo, we’re in Cape Town. Rome, Paris, London. Moscow! Madrid!’ And my wife, she found it amusing. But said she would like the kids…

Activist shareholders are going to court in an “extraordinary” attempt to block the £4.7bn takeover of British satellite telecommunications company Inmarsat by a private equity consortium, says the Daily Mail. Oaktree Capital and Kite Lake Capital Management hold stakes in the company of 2.8% and 3.8% respectively, and are urging a judge to withhold approval of the deal. The rebels want more money. Oaktree has argued that the offer for Inmarsat ignores the potential value of “spectrum assets” used by Inmarsat’s US partner Ligado.…

Price-comparison websites have undoubtedly made finding the best deal for car insurance easier. But they have also made our insurance “33% more expensive”, says Sam Barker in The Daily Telegraph. Up to a third of the price you pay covers “secret commissions charged by price-comparison websites, which can be as much as £160 per policy”, says Barker. Websites charge insurers to display their policies in their search results. These days insurance companies have little choice but to pay up as most of us buy through comparison sites. The flat fees range from £40 to £160 and insurers pass that cost straight on to the customer. With the average comprehensive car insurance costing £485 ayear, that means commission makes up 8% to 33% of a typical bill. To make matters worse,…

The simplest way to follow a value investing strategy is to buy an exchange-traded fund (ETF) that focuses on value shares. One ETF that offers broad exposure at a competitive price is the Vanguard Global Value Factor UCITS ETF (LSE: VVAL). This follows a quantitative strategy, selecting the cheapest 20% of stocks from around the developed world. At present they have an average price/ earnings (p/e)ratio of 10.3, compared with 18.3 for the global market as a whole. The companies in the ETF’s portfolio also trade at an average discount of 10% to book value (net assets). The ETF’s largest holdings include Marathon Petroleum Corp, Ford and General Motors. American stocks are at record valuations, so it’s relatively hard to find bargains, but one company that looks promising for value…

Consumer packaging isn’t one of the most glamorous industries, but you should still pay attention to it because it’s currently undergoing considerable change. In the past few years consumers have realised that plastic packaging can be bad for the environment because it is very difficult to recycle and usually ends up buried in a landfill or even dumped in the ocean. As a result, supermarkets and retailers are coming under increasing pressure to reduce the amount of plastic packaging they use and find a way to eliminate it entirely from their stores. This may be bad news for some retailers and manufacturers since it will cost significant sums of money to find alternative materials that are as effective as plastics. After promising to go plastics-free by 2023, Iceland recently had…

The most common equity investment-style categories are value and growth. Value is based on multiples such as the price/ earnings or price/book ratios rising from unjustifiably depressed levels. Growth stocks’ earnings grow faster and for longer than the market, so they often trade on high multiples. We believe these labels are simplistic and restrictive. Good stockpickers should buy both growth or value stocks based on the manager’s assessment of a stock’s fundamental appeal. We are capital cycle investors who can invest in both value and growth. We focus on understanding and quantifying the supply and demand balance in an industry. Supply-short industries are generally attractive ones to invest in. Most active fund managers and commentators apply their energies to demand only and are then caught out when supply increases, wrecking…

“Despite recent travails, Bacon delivered cumulative returns of 21,000%” “When Saddam Hussein’s tanks rolled into Kuwait in 1990, even the CIA was blindsided,” says the Financial Times. But one young trader made a fortune. Then 34, Louis Bacon had earlier founded a small hedge fund on the back of a $25,000 inheritance from his mother. “One of his first moves was a prescient bet on an Iraqi invasion” that would see oil prices soar and stocks tumble. “Nailing both sides of the bet” netted Bacon’s fledgling Moore Capital Management a “whopping 86% return in its first full year and helped catapult him into hedge-fund history”. Yet 29 years on, Bacon is in retreat – last week announcing the closure of his flagship funds after years of “underwhelming performance”. Bacon’s withdrawal…

A computer-painted artwork sold for a “staggering” $432,500 – 43 times its $10,000 high estimate – a little more than a year ago, says Caroline Goldstein on Artnet News. But judging by the latest sale of works created by artificial intelligence (AI), it would seem human artists can rest easy for now. Two works by Obvious, the Paris-based collective behind last year’s AI portrait, had a “decidedly lacklustre performance” at a contemporary art day sale with Sotheby’s in New York this month. La Baronne de Belamy (2018) only just met its  low estimate after 25 seconds of bidding to sell for $25,000 (with fees). “Within the minute”, Katsuwaka of the Dawn Lagoon (2019, pictured) nudged past its high estimate, selling for a total of $25,000. It would seem that the…

• We barely blink when we see the leading lady appear naked in films, says Karren Brady in The Sun. We don’t even consider the pressure those actresses might have been put under. So hearing Emilia Clarke, who plays Daenerys Targaryen (pictured) in TV drama Game of Thrones, explain how she was “persuaded” to appear nude, aged only 23, makes for uncomfortable listening. As she explained in a podcast, she was an unknown when she took the job. When she raised objections to the nudity, she was told she would “disappoint fans”. She ended up agreeing, but was in tears before shooting the “terrifying” scenes. Does that not sound like manipulation? Sure, nobody forced her to take the job and she was paid handsomely. But it’s a grim business. The…

1m The approximate number of 50p coins that were minted to mark Britain’s departure from the European Union on 31 October before an extension to the deadline was granted by the EU. The coins are now being melted down, with the cost borne by the taxpayer. £5,000 The face value of a unique, new five-kilo coin celebrating artists who have worked on British coinage. It is the largest coin ever made by the Royal Mint, which has already sold it to a collector for an undisclosed amount. Four smaller two-kilo coins cost £119,950 each. $34m The estimated spending by Democratic Party presidential candidate Michael Bloomberg on a week’s worth of advertisements in more than two dozen American states. It would be the most expensive one-week advertising blitz since Barack Obama’s…

Businesswoman and former glamour model Katie Price, previously known as Jordan, has been declared bankrupt at the High Court after “ploughing through her £45m fortune”, says the Daily Mirror. Price entered into an individual voluntary arrangement (IVA) a year ago, but has failed to repay her creditors the agreed £12,000 a month, reports The Sun. She is believed to have debts of around £800,000 in total. Price had a wide range of business interests, including a range of clothing for rider and horse; a line of jewellery with Argos; a lingerie collection; and a “self-titled loungewear boutique”, says The Daily Mirror. She has also put her name to several bestselling novels. Last year, in an episode of her TV series My Crazy Life, she said: “I will be out of…

A puzzle is “preoccupying the world’s currency dealing rooms”, says John Authers on Bloomberg. The global economy is beset by tariff wars and political instability, yet we are living through “unusually low foreign-exchange volatility”. The US dollar has not had a weekly swing of more than 2% against other developed-market currencies for two years. The last time this happened was in the mid-1970s. A market truism is that “financial stability generates instability”. This period of curious tranquillity might “portend a new long-term trend”: the arrival of a weaker US dollar. The end of the trend High-yielding American bonds and “modish technology stocks” have made dollar assets the “go-to place for global savers” in recent years, says Buttonwood in The Economist. The world’s reserve currency has been riding high relative to…

Three to buy Bank of Georgia Investors Chronicle Most European banks trade on steep discounts to the market thanks to low interest rates and low confidence. But UK-listed Bank of Georgia “does not fit the mould”. The former Soviet state boasts strong trade links with the EU and relatively low corruption levels, while annual GDP growth is running above 4.5%. The bank is well-capitalised and pays a 5% forward dividend yield. Investors looking for earnings growth and willing to stomach the geopolitical risks of investing in the Caucasus may find value here. 1,474p Bloomsbury Publishing Money Observer Best-known as the UK publisher of the Harry Potter series, the boy wizard remains “by far the firm’s biggest money-spinner”. Yet Bloomsbury has wisely invested that bounty in expanding abroad and acquiring imprints,…

• Banknote printer De La Rue’s stock plunged by a fifth this week after it scrapped its dividend and said there was a chance that banks could “pull the plug” on it, says Nir Kaissar on Bloomberg. But while its core business may seem an anachronism, global demand for banknotes “hasn’t yet fallen off a cliff”. Instead, the company has suffered from “a glut of currency printing capacity” that has depressed sales and prices. There have also been “homemade problems”, including the loss of a “lucrative” contract to produce Britain’s blue post-Brexit passports. New CEO Clive Vacher faces an uphill struggle. • It takes a special kind of cheek for 23 former AIG bankers working in the Financial Products division to sue the company over $100m of unpaid bonuses agreed…

US equity and bond markets have had a pretty good run this year, but 2020 is going to be a lot harder, reckons Bill Gross. The 75-year-old billionaire co-founder of asset manager Pimco was once known as the “bond king”, but saw his reputation tarnished in the latter years of his career. He was pushed out of his own company in 2014, and subsequently endured a period of poor investment performance at Janus Henderson group, before he retired earlier this year. US equities will be “flat to down 10%” by the end of next year, while there will be little change in the yield on the ten-year Treasury (the key US interest rate). Gross tells the Financial Times that policymakers – both central bankers and politicians – are running out…

José Mourinho, the new manager of Tottenham Hotspur, will be paid £15m a year, says The Sun, almost double the amount paid to his predecessor, Mauricio Pochettino, who was sacked last week after five years in charge of the north London club. It is the same amount he was getting at his previous job in charge of Manchester United, before he was let go in December last year. But £15m will make him only the second-best-paid manager in the Premier League. Topping the list is Manchester City’s Pep Guardiola, on up to £20m. Joint third are Jürgen Klopp of Liverpool, and Ole Gunnar Solskjaer of Manchester United, on £7.5m each. Chelsea’s Frank Lampard, in only his second managerial job after failing to get Derby County promoted from the second tier…

■ Absolute-return funds have become the worst-selling fund group in the UK, reporting net outflows of £15bn over the past year, says Owen Walker in the Financial Times. Absolute return funds, which use a range of assets and derivatives, have higher fees than standard equity funds, but promise a set level of returns above cash. Once thought of as an ideal product for those unnerved by the financial crisis, the sector has failed to deliver for years now and saw “an extended period of underperformance from late December last year to June 2019”, notes Charles Younes of FE Investments. Standard Life Aberdeen’s Global Absolute Return Strategies, or Gars, was once Europe’s largest investment vehicle, but the past year has seen its assets slashed from £13.7bn to £6.1bn. Invesco’s Global Targeted…

In this election all three of the main parties are promising a rethink of the business rates system that has caused many smaller firms so much pain – particularly in retail, but also in other sectors where small outfits with physical premises compete with online players exempt from this tax. Almost 10% of business-rate payers are in arrears. Still, there are no easy answers. Business rates raise £30bn a year for local authorities and the Treasury is unlikely to support changes that will require it to find money for councils elsewhere. Meanwhile, the current system is out of date. Business rates are calculated on the basis of the annual rent payable on a premises, but rateable values have not been assessed since 2017, since when rents have fallen in many…

Stocks usually rally the day after an election finishes. However, this doesn’t seem to apply to sterling. On the last 12 occasions it fell against the dollar the day after the vote seven times, barely budged three times and rose only twice. While the two increases took place after unexpected Conservative victories in 1992 and 2015, the falls occurred after hung parliaments (1974, 2010 and 2017), Tory landslides (1983 and 1987) as well as Labour victories (2001 and 2005). The good news for those considering backing sterling is that in the medium term the position is reversed. In nine out of the last 12 elections sterling has ended up higher against the dollar three months after election day, rising by as much as 9.1% between May and October 1979. Sadly…

ITM Power (LSE: ITM) produces hydrogen energy systems. These include the conversion of excess renewable energy into hydrogen for storage and injection into the natural gas network and the provision of fuelling stations for fuel-cell-based transport. ITM has yet to make a profit, but sales have risen by 25% in a year and it boasts a strong balance sheet. A recent deal with a US subsidiary of Japan’s Iwatani Corporation to provide energy systems in North America has excited investors: the stock has gained 160% in 12 months.…

Scott Rothstein was born in New York in 1962 and grew up in a town near Fort Lauderdale in Florida. After studying at the University of Florida, followed by the Shepard Broad College of Law, Rothstein became a lawyer in 1988, working at various small law firms. He grew dissatisfied with the money he was making and convinced Stuart Rosenfeldt, another ambitious lawyer, to join him in founding Rothstein & Rosenfeldt, P.A. (later known as Rothstein Rosenfeldt Adler) in 2002. By 2009 it had more than 170 staff, including former judges and prosecutors. What was the scam? Rothstein created a Ponzi scheme that involved investors buying stakes in fictitious lawsuits that he claimed his firm was involved in, directly or indirectly. The lawsuits, mostly purportedly to do with sexual harassment,…

England’s cathedrals have seen a record rise in attendances, reports the Daily Mail. The Church of England says almost ten million people visited its 43 cathedrals in 2018, 10% up on 2017. Westminster Abbey alone saw 1.2 million visitors. Most were tourists rather than worshippers, paying £23 a head to get inside. Champagne is once again Britain’s favourite fizz, after five years of being bested by its Italian rival, Prosecco. UK champagne sales rose by 34% this year, says The Daily Telegraph, helped by price cuts of up to 25%; sales of Prosecco, by contrast, fell by 6%.…

“The so-called ‘cashless society’ is just a Trojan horse for a system in which all financial wealth is electronic and represented digitally in the records of a small number of megabanks and asset managers. Once that is achieved, it will be easy for state power to seize and freeze the wealth, or subject it to constant surveillance, taxation and other forms of digital confiscation... The war on cash has two main thrusts. The first is to make it difficult to obtain cash in the first place. US banks will report anyone taking more than $3,000 in cash as engaging in a ‘suspicious activity’ using Treasury form SAR (Suspicious Activity Report). The second thrust is to eliminate large banknotes. The US got rid of its $500 note in 1969, and the…

The global construction industry looks set for a boost over the next few years as more and more governments attempt to bolster growth with infrastructure projects, says Wirtschaftswoche. That bodes well for Wienerberger. The 200-year-old Austrian company is the world’s largest brickmaker and amajor supplier of piping and concrete paving. It is heading for its best year on record, with sales rising by 6% to €2.7bn in the first nine months of 2019 and net income jumping by 64% to €206m. A cost-cutting programme targeting energy savings and more efficient delivery management has given earnings an additional fillip. The stock looks reasonably valued on 13 times 2019 earnings.…

Transport for London (TfL), which regulates traffic in the capital, has put a “roadblock” in front of Uber, says Bloomberg’s Nate Lanxon. It has denied the ride-hailing service a new licence to operate in the city, “citing concerns over rider safety and the security of the app”. It is especially concerned about a “vulnerability” that lets unauthorised users pick up passengers “under the guise of being a licensed driver”. While Uber will be allowed to keep operating while it appeals the verdict (a process “that could take years”), this is a setback in one of the company’s biggest markets outside the US. It’s true that Uber “only has itself to blame” for its failings, says Ben Marlow in The Daily Telegraph. Still, TfL could have found a way to police…

In an interview with the Sunday Express, Brexit Party leader Nigel Farage says that his party may be rebranded the “Reform Party” on the basis that his colleagues and British voters are “sick” of the political system. Unveiling what he called a “contract with the people” (as opposed to a manifesto) last Friday, Farage demanded an overhaul of the voting system, the abolition of the House of Lords and “political scrutiny” of judges on the Supreme Court. He accused the “political establishment” of conspiring to “frustrate democracy” over Brexit and said that his party was “committed to pursuing a programme of ‘fundamental political reform’”, says James Blitz in the Financial Times. He also wants civil servants to sign declarations of political neutrality and referendums whenever five million people back a…

The “topsy-turvy” world of US politics just got a little more colourful – media tycoon and former New York mayor Michael Bloomberg (pictured) has entered the race for the Democratic nomination for the presidency, says The Times. Bloomberg, who is worth $54bn, is evidently calculating that “money and nimble electioneering” will “wrongfoot” his rival candidates, who lean too far left for his liking, and President Trump, who he thinks is a disaster. Bloomberg is running as a “champion” of the vacated centre ground and is mounting a sophisticated campaign featuring data-based campaigning as well as television advertisements. Bloomberg is banking on his “biography as a business executive”, his record as the mayor of New York City”, and his perceived electability, says Alexander Burns in The New York Times. But while…

At the MoneyWeek Wealth Summit last week, gold was a hot topic amid concerns about government spending leading to inflation. It’s also an investment we often discuss in the magazine – we’ve regularly suggested that readers should have at least 5%–10% of their wealth in physical gold (that is, the metal, not the miners). But why? What role does gold play in a diversified portfolio? “Gold holds its value in the long run, but it’s very volatile” Gold is often described as a “safe haven”, but you shouldn’t let this give you the wrong impression – it’s easy to lose money in gold. In the very long term, it’s true that gold has held its value. There are lots of anecdotes in the gold market about how a given quantity…

We are used to having free apps on our phone, free delivery over the internet and free current accounts from our bank. Now it looks like there’s something else we won’t have to pay for any more: trading shares. Rewind 20 years and the buying and selling of shares was often very expensive. Banks and brokers typically charged a percentage of the value of the trade – indeed, before the “Big Bang” deregulation of 1986 there were fixed minimum commissions. If you were dealing in thousands or tens of thousands of pounds, that could add up to a hefty bill each time you bought or sold anything. Trading fees were one of the City’s most lucrative sources of income. As trading moved online, however, fees came down. Online brokers now…

Our silly snobbishness over accents Edward Lucas The Times “In America, accents are neutral,” says Edward Lucas. They may reveal where you are from, but they “say nothing about your brains, wealth or social status”. In Britain, by contrast, accent is used as a “selector for success or social admissibility”. This “crippling” and “extraordinarily silly” social peculiarity was on show in Washington last week, when Fiona Hill, star of the impeachment hearings, began by explaining in her “unapologetic Durham coalfield accent” that America had given her opportunities she would never have had in England, where her distinctive accent would have “impeded” her career. While I have no doubt that Hill would have risen to similar heights in British foreign policy, I “doubt that she would be speaking as she does…

Are the interests of the finance professionals managing your money properly aligned with your interests? The more skin you have in the game as a fund manager, the greater your interest in providing a positive outcome for the investor. That, at least, is the theory behind the regular research into investment trusts produced by Alan Brierley at Investec. Brierley (rightly, in my view) reckons that a manager heavily invested in their own fund will take a more direct interest in the outcome of that investment strategy. The same should apply to the non-executive directors, who are paid a fixed fee for looking out for investors’ interests. Skin in the game... The good news is that more and more managers and directors are putting their money into their own funds. Investec’s…

MoneyWeek has long been a big fan of value investing, the strategy of buying “bargain” companies trading at relatively low multiples of earnings, cash flow or book value (net assets). This is because historical evidence suggests that in the long run these types of shares tend to beat the wider market. For example, Elroy Dimson, Mike Staunton and Paul Marsh of the London Business School have done research for Credit Suisse showing that equities with low price/book value (p/b) ratios have beaten the market by an average of around 3% a year in the US between 1928 and 2018 and nearly 4% a year in the UK between 1955 and 2018. However, since the financial crisis in 2008 this relationship has broken down. Value has lagged growth, the other major…

In ancient Athens many taxes were voluntary. At the other extreme, in authoritarian or totalitarian societies, such as Soviet Russia or North Korea, people have virtually no ownership of their labour, their produce or their profit. Government takes it all. The developed world today sits somewhere in between. Excluding inflation, itself a form of tax, roughly 45% of everything the typical Briton earns is taken in taxes. In France, the figure is an eye-watering 57% –no wonder they’re rioting. In the US it’s 38%. These high levels of taxation are a recent development. At the turn of the 20th century, taxes played a much less prominent role in our lives and government spending was much lower. In western Europe, tax was around 10% of GDP in 1900, a figure that…

This has been a good fortnight for my seven long tips, with all but one of them rising. JD Sports went up from 751p to 794p, Safestore surged from 697p to 736p and Bellway increased from 3,253p to 3,414p. Bausch Health Companies rose from $26.21 to $27.70 and International Consolidated Airlines Group advanced from 541p to 569p. Taylor Wimpey also went up from 172p to 175p. The only long tip that declined was Volkswagen, which fell from €181 to €176. Not only is every long tip making a profit, but collectively they are also making £6,433, up from £5,078 two weeks ago. Most of my short tips moved against me, however, with four out of five of them appreciating. Netflix went up from $293 to $315, Uber from $26.71 to…

Metro Bank (LSE: MTRO) was once the high street’s biggest challenger to the UK’s established banks. Then accounting irregularities uncovered earlier this year dented the market’s confidence and the bank has continued to struggle, losing £2.2m in the third quarter. The turbulence has culminated in founder Vernon Hill quitting his role as chairman last month. The bank’s losses are widening, and there is now talk of a takeover by one of the established players it aimed to displace. The share price has shed almost 90% in the past year.…

2016 Chianti Classico, Casaloste, Tuscany, Italy £18.95, reduced to £14.95, Jeroboams, 020-7288 8888, jeroboams.co.uk About a month ago the Christmas wine samples started to flood in. Waves and waves of cases of wines, with around the usual percentage hope of finding bottles worth mentioning. Ifigure that of the tens of thousands of wines I taste every year, only 2% are of a sufficiently high standard to warrant a mention in any one of my regular columns. Jeroboams sent me just four bottles – they know me and they do not muck around. All four were delicious and these are the two that absolutely shone. Firstly, my featured Chianti, awine so succulent and profound I had to do a double-take when I saw the price! This is a textbook Tuscan beauty with…

Going… “Friends fans, could this be any more exciting?” Around 100 items and props from the hugely successful 1990s sitcom are heading to auction online with the Prop Store from Tuesday, says Rebecca Lewis in The Sun. The proceeds will go to The Trevor Project, a crisis intervention organisation for LGBTQ+ young people. Among the items included in the sale is the turkey adorned with a Fez and sunglasses that Monica, played by Courtney Cox, puts on her head. The iconic orange sofa from the Central Perk coffee house is valued at up to $8,000. Gone… Sooty, Sweep and Soo, the puppets from the children’s television show Sooty, have sold for £5,000 at Hansons Auctioneers in Derbyshire to a private collection in Yorkshire. The set had been a gift from…

We all know that, in comparison with the US, Europe is stodgy, lethargic, overtaxed and overregulated. Its workers take too many holidays and its businesses lack the dynamic spirit that makes American enterprises so successful. Heck, as George W. Bush reminded us, the French don’t even have a word for “entrepreneur”. Europe just can’t keep up, right? “The United States has abandoned the core values that made it great” When you live in Europe, as we do for parts of the year, you begin to wonder. The Europeans seem to be doing fairly well. Trucks roll on the highways. Shops are full. Consumers consume. Diners dine. You see less poverty and degenerate misery in Europe than in the US. People live longer and often better. Over the last 20 years,…