Indholdsfortegnelse for Issue 986 i MoneyWeek

“You might think that ‘green’ investing is trendy nonsense – but that’s irrelevant” MoneyWeek has a bit of a hippy feel to it this issue. We’ve got veganism on the cover (see page 24) and houseboats in the property spread (see page 36). We’re not the only ones. A week after Boris Johnson decided that new petrol and diesel cars will be banned in Britain from 2035 (see page 14), this week transport secretary Grant Shapps suggested it might even start in 2032. The dismayed reaction from car manufacturers tells you all you need to know about why investors need to pay attention to this stuff. Change is afoot. You might be on board with every “green” sentiment going, or you might think that a lot of it is trendy…

France’s consumer watchdog served Apple with a £21m fine for intentionally slowing down old iPhone models, says Jeff Parsons in Metro. The US tech giant was accused of launching a software update in 2017 that could “slow down the functioning of the iPhone 6, SE, and 7”. Unable to revert to the previous version of the operating system, many felt forced to buy a new phone. In 2017, Apple acknowledged that it did slow down some ageing models, but only to improve battery performance. A seafood salesman was found guilty on six counts after smuggling more than £53m worth of endangered eels out of the UK, says Jemma Carr in the Daily Mail. Gilbert Khoo, 66, transported more than five million critically endangered elvers from London to Hong Kong hidden…

Is the eurozone at a turning point? The bloc’s GDP grew by just 0.1% in the fourth quarter of 2019, the slowest pace in almost seven years, says Elliot Smith for CNBC. Weak German manufacturing has weighed on wider performance and the coronavirus is more bad news for an economy where exports account for roughly 45% of GDP. Yet better survey data and sentiment indicators since the new year suggest that the slump could be bottoming out. Fabio Balboni of HSBC points out that German wage growth has hit a 20-year high and unemployment is falling across the eurozone, so consumption could be in for a pick-up. That mildly positive outlook is buttressed by extremely loose monetary policy from the European Central Bank, which has cut interest rates and started…

The way the US measures consumer price inflation (CPI) has changed over the years. For instance, the government’s so-called hedonic adjustment adjusts prices of some goods downwards in the inflation basket to reflect improvements in their quality, the idea being that we get more for our money. But in the real world the price does not fall in this way. Then there’s the owner’s equivalent rent, which measures housing costs not from a house price index, but from what a homeowner would get if someone rented their house from them. Such tweaks mean inflation is understated. This chart compares CPI based on the methodologies the authorities used themselves in the 1990s with the official figure.…

Thai conglomerate Central Group is set to launch the country’s largest initial public offering (IPO) on record, says John Reed in the Financial Times. The firm isowned by Thailand’s billionaire Chirathivat family and operates shopping centres, hotels and e-commerce sites. It is expected to raise $2.5bn by listing its retail arm later this month. The shares were priced at 42 baht ($1.35) each last week and the deal was oversubscribed despite the anxiety across Asian markets owing to the coronavirus outbreak. The company’s extensive foreign operations have been a key selling point for the IPO. It is the largest foreign-owned retailer in Vietnam and has department stores in Germany and Italy too.…

Credit Suisse Group has ousted CEO Tidjane Thiam (pictured) in an attempt to “fix its reputation after adamaging spying scandal”, says Bloomberg. While an internal probe absolved Thiam of responsibility for spying on an ex-employee, further spying incidents have now come to light, rattling Swiss regulators. Thiam’s replacement is Thomas Gottstein, a two-decade Credit Suisse veteran. The board had little choice but to fire Thiam, says Liam Proud on Breakingviews. His position was “untenable”, given the role of his “long-time associate and chief operating officer” in the scandal. Thiam’s claims that he knew nothing were “not reassuring. At worst, [they] were unconvincing”. Nevertheless, the board now needs to explain its choice of Gottstein. His CV “is light in some of Credit Suisse’s most important growth areas, like US investment banking…

If you have no strong views on where to invest, a cheap passive fund that tracks the whole market is a sensible place to begin. So to build aglobal portfolio of equities, the obvious starting point is an index such as the MSCI World and the FTSE World. But when you look at the details of these indices, you might wonder if they accurately reflect where you want to invest. Take the enormous weighting in US stocks, for example (64% of the MSCI World). Or the absence of any emerging markets (EM) – nothing at all in the MSCI World, which is developed markets (DM) only, and only a small part of the MSCI AC World (China, the largest, is just 4%). You may feel that neither of these are…

“The BBC must take a lesson from Netflix and Amazon Prime to attract subscribers” Almost a century after the BBC licence fee was first introduced in the 1920s, it is looking way past its sell-by date. The end seems nigh. But that needn’t be a disaster for the BBC. If its leadership were really bold, it would give up its fight to defend the status quo and come up with a five-year plan for switching to a subscription model instead. If Disney-Plus can get to 29 million subscribers in the US in just a few weeks, and Netflix can attract 9.5 million in the UK alone, so could the BBC. Here are five steps it should take to start with. 1. Drop the news Ending the news service would be…

For all the doom and gloom over the coronavirus, mortality rates are low. And in the next few weeks we should hit the peak infection rate and the public health experts will then start to get a handle on it. The bad news, however, is that in my opinion the impact on the economy of China and Asia has been hugely underestimated – and the share prices of regional funds have yet to factor this in. Many analysts have downgraded their forecasts for Chinese growth to reflect the shock from the outbreak. Barclays has cut its 2020 GDP growth estimate by 0.4% to 5.4%; for the first quarter it expects growth of 4% year-on-year, a 1.8% reduction from its previous estimate. It also thinks that the outbreak “poses significant risks…

The huge profits in thin air Ed Conway The Times Working out the value of a company used to be straightforward, says Ed Conway. Not any more. Take airlines. In the 1970s most owned their aircraft. Today, 40% of planes are leased. Efficient maybe, but it raises questions about “what the business actually is”. The recently rescued Flybe had a “predictably threadbare” balance sheet, but owns a “handful” of Heathrow landing slots “worth tens of millions of pounds a pop”. McDonald’s, meanwhile, makes more money from property than hamburgers. Coca Cola’s prime business is selling rights to other firms which make, bottle and sell its drink. Owning few physical assets has become increasingly “fashionable”. Apple doesn’t manufacture a single phone. Why does this matter? First, brands or software services are…

medium.com/@russroberts Many leftist and liberal thinkers lay the blame for present-day ills at the feet of Milton Friedman and the “neoliberalism” his ideas allegedly gave rise to, says Russ Roberts. Somehow I must have “missed the moment when free-market orthodoxy achieved broad acceptance”. Did the size of the state shrink in these glory days, for example? Far from it. Total government spending in the US is 33% of GDP. It was 30% in 1980. When Friedman published his manifesto, Capitalism and Freedom, it was 25%. Have regulations been slashed? The number of pages in the register of rules administered by the government’s regulatory agencies has gone from something like 10,000 in 1950 to more like 180,000 today. Government spending on healthcare has risen steadily. The number of tax dollars spent…

When it comes to planning for later life most of us focus on our pensions and whether we have saved enough for luxury holidays. But what happens if you become incapable of making or communicating your decisions? More and more of us are making plans for what happens if we lose our mental faculties in later life. A lasting power of attorney (LPA) gives a friend or loved one the power to manage our affairs when we no longer can. In 2018 over 800,000 LPAs were set up in England and Wales, triple the figure for 2013. Every three minutes somebody in the UK develops dementia, so getting an LPA in place should be on everyone’s to-do list. (This feature deals with England and Wales – the rules in Scotland…

Look out for rogue “energy brokers” seeking to sell small businesses poor-value gas and electricity contracts. That’s the message from Ofgem, the energy industry regulator, which has just launched an investigation into mis-selling to small businesses. Ofgem’s probe reflects mounting concern about brokers claiming to offer free consultancy services to small businesses looking for a better deal on gas and electricity. In some cases, these brokers choose products and services from a small panel of suppliers that pay them the most generous commissions; very often the deals recommended are poor value, carrying high charges and often locking in small businesses for extended periods. The scale of the scandal is potentially enormous. Ofgem estimates that of the £25bn spent on energy bills each year by small businesses, charities and public bodies,…

Semiconductor investing offers big potential returns, but volatility can be high. Diversification and patience are key. Specific sector funds aren’t available in the UK, so here are five individual stock ideas. Nvidia (Nasdaq: NVDA) is well placed to profit from the trends identified in AI and cloud computing. The group is well known for its highly regarded graphics boards and processors that support popular software, such as programmes for video games, and its products also work well in fast data processing, giving the company aleading position in the chip sector. On the face of it the shares aren’t cheap, having been driven up by enthusiastic supporters. But expectations are rising and growth forecasts are impressive: near-term revenue growth forecasts are 30%-plus. It might be tempting to wait for a pullback,…

Cohort (LSE: CHRT) is an Aim-listed parent company to subsidiaries that provide equipment and services in the defence and security sectors. Its most recent acquisition was ELAC, a German naval sonar business. With global defence budgets rising and procurement trending towards more high-tech solutions, Cohort is well placed to cash in. Orders rose by 90% to £207m in the six months to November 2019, while sales and profits climbed too. Management predicts a stronger second-half performance. The share price has gained 80% in the last year.…

John G. Bennett Jr was born in Olney, Philadelphia, in 1937, and worked for brief stints as an airline clerk, a chemistry teacher and a medical school student before becoming a successful drug counsellor. Within a couple of years he had set up seven drug treatment programmes and was appointed to a board advising the governor of Pennsylvania on drug policy. He then decided to use his contacts within Philadelphia’s non-profit community to become a consultant offering fundraising advice, setting up the Center for New Era Philanthropy in 1982, followed by the Foundation for New Era Philanthropy seven years later. What was the scam? Bennett was a poor businessman and the Foundation for New Era Philanthropy quickly ran into cash-flow problems. He fraudulently shuffled money between various bank accounts in…

A Very Stable Genius Donald J. Trump’s Testing of America By Philip Rucker and Carol Leonnig Bloomsbury Publishing, £20 You might well wonder whether we need “yet another behind-the-scenes account of Donald Trump’s White House”, says Peter Spiegel in the Financial Times. We’ve already had exposés from Bob  Woodward, Michael Wolff and others, and “much of what happens behind the scenes in Washington these days moves to the front of the scenes in nearly real time anyway, accompanied by a running commentary from the president’s Twitter account”. Still, Washington Post reporters Philip Rucker and Carol Leonnig “have given it a shot” with this new book, which is essentially a recounting of Trump’s handling of the investigation into alleged Russian interference in US elections and the Trump administration’s links with Russian…

£2.1bn The revenue that would be generated if the same percentage of British households subscribed to the BBC as American households subscribe to Netflix under a subscription model, says The Times – much less than the £3.7bn the BBC raised from TV licences last year. £500m The cost of delaying the rollout of universal credit by another nine months. The government’s central welfare reform, which bundles together six benefits into one, is running seven years late. £700,000 How much the Bank of England is planning to spend on environmentally friendly taxis over the next three years, says The Daily Telegraph. The Bank has put out to tender a contract to ferry its staff around from May, requiring that at least 60% of the winning firms’ cars be hybrid or fully…

“Embattled Indian tycoon” Anil Ambani has pleaded poverty after he was ordered to pay $100m as a deposit amid a dispute with a consortium of creditors, says Jonathan Browning on Bloomberg. Ambani said the value of his investments had “collapsed”, and that his “net worth [was] zero”. The lawsuit was filed by three Chinese banks looking to reclaim loans worth $925m made to Ambani’s telecoms company Reliance Communications in 2012, which they say he personally guaranteed. Ambani, whose brother Mukesh Ambani is Asia’s wealthiest man (worth $56.5bn), says he never gave such a guarantee, and that he had seen his personal fortune “dwindle” after Reliance Communications filed for bankruptcy last year. Yet the judge said that Ambani has “clearly got more assets and income than he’s letting on” and said…

“It’s still far from business as usual in the world’s second-largest economy,” says Michelle Toh on CNN. Three weeks after the coronavirus outbreak prompted the closure of factories, offices and schools in China, emergency public holiday extensions are coming to an end. Some factories have reopened with strict screening precautions and many businesses are encouraging employees to work from home. Yet others have extended leave for another week and in Hubei, the province at the centre of the outbreak, “life remains mostly at a standstill”. A global growth hit Investors have shrugged off the ongoing disruption caused by the virus. Global equities rose by 3.1% last week and have regained the bulk of coronavirus losses, notes Rupert Thompson of wealth manager Kingswood. American stocks enjoyed their best weekly gain since…

“We very likely have just witnessed peak China (as an export powerhouse). In the third quarter of last year 14% of all global goods exports came from China… that share may still be beaten in the fourth quarter of 2019… But it certainly won’t be repeated in the first quarter of 2020… because the coronavirus crisis... put a huge dent in Chinese exports this quarter. [And this] is just the latest blow… China’s export power was already under assault from President Donald Trump’s trade wars. Companies in the US and Europe have been increasingly facing pressure to shift supply chains for geopolitical reasons. Worries over everything from espionage to human rights in Xinjiang have piled on more pressure to boot… Add coronavirus and questions over the government’s response and… It’s…

Three to buy Rentokil Investors Chronicle Rentokil has shed non-core divisions to return to its pest-control roots in recent years. This is a defensive business in a structurally growing market: populations worldwide are urbanising, meaning more rat infestations, while workplace hygiene regulations are getting ever stricter. There are big opportunities in both emerging economies and the group’s key North American market, which is ripe for consolidation. On 31 times forecast earnings the shares are not cheap, but still trade on a discount to peers. 471p Idox The Mail on Sunday This Aim-listed business provides public-sector software that makes interactions with government run more smoothly. It works with over 90% of UK local authorities and also tracks 11.5 million patient records for the NHS. The shares rose as high as 77p…

• Car tycoon Li Shufu’s decision to return Volvo to the stockmarket by merging the Swedish car marker with Hong Kong-listed Geely Automobile Holdings doesn’t make much sense, say Pete Sweeney and Christopher Thompson on Breakingviews. Merging the two firms could cut costs and create a bigger company with “potentially more liquid stock”. However, any benefits are likely to be limited since he plans to “keep the different brands operating... separately, limiting synergies”. What’s more, the timing is odd given that the Chinese car market “had just barely started to recover from a slowdown” before the coronavirus, set to lower sales further, emerged. • The Competition and Markets Authority (CMA) has ordered JD Sports to sell sportswear company Footasylum, which it bought last April, says Jim Armitage in the Evening…

China’s government faces “a national uproar” over its initial response to the coronavirus crisis, which has left 45,000 people infected and 1,100 dead, says Con Coughlin in The Daily Telegraph. Many are comparing the outbreak to the Chernobyl disaster. People are particularly furious that the authorities dismissed early warnings by Li Wenliang (pictured), a doctor in Wuhan, who has now died, as “scaremongering”, and threatened him with jail. President Xi Jinping has been lampooned for “going into hiding”, leaving it to more junior members of the party to be the public face of the state response. The power of the Chinese state and its ability to mobilise resources overnight –be it to build a hospital in “barely a week”, as happened in Wuhan, or to enforce a cordon sanitaire containing…

Equities, shares and stocks are all names for the individual units that give you a financial interest in a company. The terms are often used in slightly different ways: investors sometimes refer to shares when discussing a single company, shares or stocks when they talk about a small or loose group of companies, and equities when they mean more formally defined groups (or when they just want to sound more professional). But those distinctions are not absolute and all three words will often be used interchangeably. An equity investor in a company is known as a shareholder – the terms equity holder and stockholder are less common. The name for a market on which shares trade is the stockmarket (or share market in a handful of countries such as Australia).…

• Bank of America’s chief executive Brian Moynihan is to receive $26.5m in pay for 2019 – the same amount as for the previous year. That figure breaks down as $1.5m in base salary, and $25m in vested shares. While his pay package is high, it is slightly below JPMorgan Chase’s Jamie Dimon, who made $31.5m, and Morgan Stanley’s James Gorman, on $27m, says The Wall Street Journal. Bank of America’s shares rose by around 40% in 2019, its biggest annual rise since 2012, and it returned a record $34bn to shareholders. • Lloyds Bank is expected to replace its controversial long-term incentive plan (LTIP) for its top executives with a scheme that instead pays out a set number of shares. Under these plans, executives will typically forego a larger…

Hedge fund Elliott Management has amassed a $2.5bn stake in SoftBank and is pressing for a $20bn share buyback and governance changes at the Japanese conglomerate, say Arash Massoudi and Ortenca Aliaj in the Financial Times. The $38bn US activist fund wants SoftBank to narrow the discount between its share price and the value of its holdings, which include majority stakes in US telecoms group Sprint and UK chip designer Arm. The push is being led by Gordon Singer, the son of the hedge fund’s founder, Paul Singer (pictured). Elliott Management is renowned for “aggressive public campaigns” against chief executives, companies and the government of Argentina. News of Elliott’s involvement boosted SoftBank’s stock by 7%.…

“In the 1980s, the sheer amount of money flowing along [Fleet Street] was mind-blowing. Not only was I paid more than the prime minister but if I managed to burn through my huge salary before pay-day, as I invariably did, there was a thing called ‘an advance on expenses’ where you went down to the vault below the newspaper office and came away with £500 in cash.” Journalist Julie Burchill (pictured) in The Sunday Telegraph on moving from the New Musical Express to national newspapers in her 20s “We’ve been offered £100m for a tour – still not enough for the greedy soul.” Liam Gallagher’s tweet on his brother Noel turning down a reunion of their 1990s Britpop band Oasis “Not to feel too guilty about enjoying it, and to…

thehustle.co “Few things epitomise America more than the all-you-can-eat buffet,” says Zachary Crockett. But have you ever wondered how that can possibly work as a business model? It turns out that it’s harder to “beat the buffet” than you might think. Buffets operate on extremely thin margins. But because self-service buffets need fewer waiting staff, they save on labour. They also rely on high footfall and minimising waste by making soups with leftovers. “By their nature, buffets attract the very customers they wish to avoid – big eaters with insatiable appetites.” So buffets have a few more tricks up their sleeves. They put the cheap, filling stuff at the front of the queue. They use smaller plates and give you a large spoon for the potatoes and fiddly tongs for…

In 2014 the government set a target of £1trn of exports by 2020. But in 2018, the last year for which data are available, exports reached just £535bn. One major problem is that many small and medium-sized enterprises (SMEs), where the potential for export growth is highest, are keen to sell overseas but say they don’t know how to get started. British businesses can and do succeed in markets all around the world – but the right strategy for your firm will depend on its individual characteristics and ambitions. The key is to make detailed preparations, taking specialist advice wherever it is needed in order to develop a plan. Exporting for the first time then becomes less of a leap into the unknown and more a question of executing a…

SolGold (LSE: SOLG) is a gold and copper explorer with interests in Australia, the Solomon Islands and Latin America. Protests by indigenous groups against the government in Ecuador, while not directly affecting the company’s operations, have hit the share price; SolGold’s Cascabel copper, gold and silver prospect in the country is a key project. Meanwhile, mining giant BHP invested $22m in the company in November, raising its stake to 14.7%. But that has not buoyed investors’ confidence: the stock has slid by 50% in a year.…

2018 Spätburgunder ‘S’ Weingut Meyer-Näkel, Ahr, Germany £38.10, thewinebarn.co.uk Iris Ellmann runs The Wine Barn and she is a German wine dynamo. Her website features a collection of estates from all over the country, covering all styles and grape varieties, and I can highly recommend looking at it if you are curious to discover more about top-flight German wines. I attended a portfolio tasting of Iris’s wines the other day and came across this utter stunner. It is a beautiful pinot noir that won a mighty score in my notes. It manages to balance resplendent mid-palate fruit density with a sonorous aroma and cool, long finish. Germany is slowly becoming a force to reckon with in pinot noir and there are a good few world-class wines made there, but they…

• Actor Kirk Douglas, who died last week at the age of 103, had “balls of steel”, says Lorraine Kelly in The Sun. During the 1950s, when anyone “to the left of Genghis Khan” was suspected of being a Soviet sympathiser, Douglas “dug in his heels” to hire the blacklisted writer Dalton Trumbo to work on the 1960s blockbuster, Spartacus (Douglas is pictured in the role). Douglas was awarded the Presidential Medal of Freedom, America’s highest civilian award, in 1981. Douglas’s life was “a real rags-to-riches tale”. His Jewish parents escaped persecution in Russia and Douglas was raised in a poor area of New York. His father worked as a rag-and-bone man. Douglas “never forgot where he came from, which is perhaps why he became a champion for justice and…

Having made history by becoming the first foreign-language film to take the best film prize at the Oscars, Parasite’s revenue is set to skyrocket, says Travis Clark in Business Insider. The South Korean film made $35m in the US, but industry estimates expect that to rise to $45m following the Academy Awards. Worldwide revenue stands at $160m, adds Kelly Kasulis in Al Jazeera. Director Bong Joon-ho (pictured) made the film on an $11m budget. Not all isbleak on the high street as homeware chain Dunelm has upgraded its expectations for annual profits after reporting strong first-half results, says Martin Strydom in The Times. Full-year pre-tax profits are set to come in at between £135m and £137m, said chief executive Nick Wilkinson, a little above “the top of the latest range…

Roche is one of Europe’s “dividend aristocrats”, says business weekly Der Aktionär. The Swiss pharma giant has raised its payout for 30 years in a row; it has just increased the dividend for 2019 by 3.4%. And there should be plenty more years of dividend hikes ahead. The latest results show that the firm is firing on all cylinders, with sales rising by 8% to CHF62bn (£49bn) last year and earnings per share climbing by 11%. Bestselling products include Ocrevus, a treatment for multiple sclerosis, Hemlibra, for haemophilia, and cancer drug Perjeta. Goldman Sachs and Barclays are among the analysts who deem the stock, currently on a yield of 2.6%, abuy. This isa core holding for long-term investors.…

The crisis engulfing NMC Health, whose shares have fallen by around 70% since August, has “deepened”, says Alex Ralph in The Times. NMC is the top private healthcare provider in the United Arab Emirates, and the first company from that country to list on the FTSE 100. It has now admitted that the interests of its founder and associates “may have been misreported to the stockmarket”. The company has launched a review to verify the holding of Bavaguthu Raghuram Shetty, its co-chairman, as well as Saeed Mohamed al-Qebaisi and Khalifa Butti al-Muhairi, two other controlling shareholders. What’s more, there are concerns that Shetty may have failed to disclose a “memorandum of understanding” with al-Qebaisi and al-Muhairi that effectively gives them control of at least some of his shares, as well…

Sinn Fein has “delivered a political earthquake” by winning the popular vote in Saturday’s general election, “raising the prospect it could enter government for the first time in the Republic of Ireland”, says John Walsh in The Daily Telegraph. Although it did not field enough candidates to secure the biggest number of seats in parliament, Mary Lou McDonald’s nationalist party secured 37 seats while the centrist Fianna Fail and centre-right Fine Gael party of prime minister Leo Varadkar secured 38 and 35 seats respectively. Given the “fragmented nature of parliament”, it could be weeks before we have clarity on the next government, says Arthur Beesley in the FT. McDonald has “begun courting potential left-wing allies”, who have 50 seats between them, in a bid to succeed Leo Varadkar as taoiseach,…

Bernie Sanders may have won the New Hampshire primary, closely followed by Pete Buttigieg (pictured). But the big loser was clearly former vice-president Joe Biden, who only managed to come in fifth, with a paltry 8.4% of the vote. It’s therefore no surprise that the odds on Biden – who was the favourite as late as a few weeks ago – winning the Democratic nomination have slipped to 13 (7.6%) on Betfair. This puts him behind Buttigieg, Michael Bloomberg and Bernie Sanders, currently the new favourite at three (33%). Moving on, the next contest is the Nevada caucus in just over a week’s time. With £50,553 matched on Betfair, the favourite is Bernie Sanders at 1.36 (73.5%), followed by Biden on seven (14.2%) and Buttigieg on 7.6 (13.1%). Amy Klobuchar,…

Back in September, David Einhorn seemed on track for an “excellent year”, writes the high-profile US value investor in his latest quarterly letter. After office-leasing firm WeWork’s initial public offering failed, many growth stocks wobbled and “there were musings that value investing was ready to rebound”. That didn’t last. In the fourth quarter of the year, growth stocks surged again. That inflicted plenty of pain on Greenlight’s portfolio, which is long cheap stocks and short expensive ones. A return of 13.8% for the year lagged well behind the S&P 500, which gained over 30%. Greenlight’s short position in car maker Tesla won’t have helped: Einhorn is just one of many investors – including Jim Chanos and Crispin Odey – who have been burned by the stock’s recent surge. Einhorn is…

Members of the House of Lords will receive a 3.1% rise in their daily pay for turning up. From April, they will be entitled to £323 a day just for “signing in”, says Oliver Wright in The Times. That could, in theory, amount to £48,450 a year over 150 days. The payments for meals, accommodation and transport are also free of tax and national insurance, because they are connected with the House’s parliamentary work. Members are not legally employees or holders of office. A spokesman pointed out that the rise was in line with a similar pay rise for MPs and the wider public sector, and only the second rise in ten years. That was met with short shrift by John O’Connell, chief executive of the Taxpayers’ Alliance pressure group.…

■ Investors in Neil Woodford’s failed fund have suffered another blow, says Sabah Meddings in The Sunday Times. A £550m deal to rescue a portfolio of stakes in biotech start-ups has collapsed, which is likely to lead to a fire sale of 20 “promising” companies. A “boutique investing bank” had been attempting to assemble a group of investors to save Woodford’s illiquid holdings in order to return money to investors trapped in the fund. But it failed to meet the deadline to finish a deal, so stakes that are difficult to sell in small companies, including drug developer Immunocore, gene-sequencing “unicorn” Oxford Nanopore Technologies and Rutherford Cancer Centres, are now “likely to be auctioned off at knock-down prices instead”. The 300,000 investors stuck in Woodford’s flagship fund have “little hope…

aier.org No story in economics is as powerful as that outlined by Leonard Read in his 1958 book, I, Pencil, says Donald Boudreaux. “It completely changes your understanding of society.” Ordinary pencils, of the kind that are today so abundant that they are often given away free, are the result of the labour and creativity of literally hundreds of millions of highly specialised workers spread out across the globe. Almost none of them realise they are cooperating to produce pencils and not a single one of them knows how to make a pencil from scratch. To grasp the degree of unplanned and unplannable cooperation that makes pencils plentiful is to “appreciate the stupendous productive power of free markets”, and a warning to all who would prefer to direct growth with…

• What does your company do? Talking Drum is a West African restaurant serving traditional Nigerian cuisine. Delicious authentic dishes are coupled with bespoke and flavoursome cocktails in a rich, stylish and comfortable environment. Talking Drum is located in South London and was founded to create job opportunities for young people in the area and to challenge diners’ preconceptions about restaurants in the Old Kent Road. • What’s been your greatest achievement? In our second weekend post-launch we served 500 covers as a result of organic marketing (sharing information about the product and generating word of mouth, as opposed to paid advertising) on our social-media platforms. It’s always lovely to see people warm to your brainchild without the need for an elaborate marketing budget. • What’s been your biggest challenge?…

For those not in possession of a large amount of cash to secure a houseboat outright, there are mortgages available. But houseboats cannot be acquired with a typical residential mortgage and there is a limited number of marine mortgage lenders who will provide financing. Marine loans have shorter repayment terms at around ten years and a larger deposit –30% is typical – is often required. Pegasus Marine Finance offers loans between £5,000 and £2m, repayable at rates starting at an annual percentage rate (APR) of 5.9% over a period of up to ten years.This provider also offers zero-deposit loans at higher APRs. A £50,000 loan repaid over ten years would incur a 7.9% APR, making the repayable total £72,579.90. Promarine Finance asks for a deposit of 20% or more and…

Seeking out companies that are unloved or ignored by mainstream investors is the key to discovering pricing inefficiencies and outperforming markets. These stocks are not priced inefficiently because of inferior quality; they are typically beset by problems specific to the company that are unlikely to endure over the long term. The broad theme playing on people’s minds is uncertainty over the future growth of the world economy and hence the likely direction of future profits. This has resulted in heightened volatility and is another reason why solid companies may be available at attractive prices. Profiting from private equity Oakley Capital Investments (LSE: OCI) is a closed-end fund investing in and making co-investments alongside the private funds run by private-equity firm Oakley Capital. In August 2019 it was admitted to the…

“If you’d invested $1,000 in Wexner’s firm in 1969, it would be worth $62.4m today” When Jeffrey Epstein pitched up in Les Wexner’s life in the 1980s, some of those close to him were mystified as to why “a renowned businessman in the prime of his career would place such trust in an outsider”, says The New York Times. Wexner had shrewdly built a retail empire worth billions from scratch and was hailed as “one of the country’s most influential corporate titans”. Epstein, by contrast, had “a thin resumé and scant financial experience”. And yet within a few years he had “developed an unusually strong hold” over Wexner – assuming “sweeping powers over his finances, philanthropy and private life” while driving a wedge between the Victoria’s Secret tycoon and longtime…

7 Mistakes Every Investor Makes (And How to Avoid Them) A Manifesto for Smarter Investing By Joachim Klement Harriman House, £24.99 There are plenty of investment books telling you what to do. Joachim Klement takes a different approach. As he states in the introduction, even great investors such as Warren Buffett (pictured) have made their fair share of mistakes. Klement believes the thing that distinguishes great investors from the rest of us is their ability to learn from these missteps so that they don’t end up repeating them. Having made plenty of mistakes himself in his two decades working in the financial markets, Klement gives the reader the benefit of the wisdom he has accumulated. Put no faith in forecasts There are, as the title suggests, seven big errors that…

Next month we are going back to Argentina, where consumer prices are currently rising at a 54% annual rate. How did that happen? How does inflation work? There are three phases. America’s inflationary era got underway on 15 August 1971, when the US introduced a new currency, not backed by gold or anything else. This was the first phase, from 1971 to 1981, when inflation went into consumer prices. Consumers didn’t like it. So Paul Volcker “beat” inflation by putting the prime rate up to 20% and bringing on a recession. Inflation didn’t die. It simply moved to asset markets, where it was warmly greeted and continues to be more than welcome. This is the second phase. The third phase began on 17 September 2019, when the Federal Reserve began…