Indholdsfortegnelse for Issue 1240-1241 i MoneyWeek

“When your shoeshine boy is giving out stock tips, it’s time to get out of the market,” said Joe Kennedy. We don’t have shoeshine boys any more, but taxi or Uber drivers are also a handy barometer. In the summer of 2008, as Ireland’s property and credit bubble was peaking, I enjoyed a demonstration of greater fool theory from a taxi driver in Dublin. He had borrowed money to buy a property, flipped it, and then repeated the trick. He told me that he was targeting a place in Spain for his third investment, which he would rent out. I tried to warn him that virtuous circles can rapidly become vicious once the music stops, but he had decided that everything would be fine. I wondered later if he had…

America’s booming stockmarket has been underpinned by 20 years of steadily rising corporate profits as a share of GDP, says Robin Wigglesworth in the Financial Times. The “bonkers-on-stilts” profitability of US firms, which is unparalleled globally, is a key argument in favour of US stocks’ high valuations, says Albert Edwards of Société Générale. Bulls point to US tech innovativeness and “exceptionalism”, but a more dismal driver is also at play – Washington’s “fiscal dysentery”. Investors tend to “widely underappreciate” just “how crucial” US government deficits of 7.5% of GDP have been in firing up Wall Street’s recent profit performance. The US equity bubble is built on a shaky foundation of unsustainable government spending.…

1. M&S merges with John Lewis The two great retailing temples of Middle England have reversed places in the last few years. For most of the 2020s, John Lewis, along with its Waitrose grocery unit, expanded at a furious pace, while M&S stumbled from crisis to crisis. In the past few years, it is John Lewis that has been in trouble, racking up huge losses and cancelling bonuses for staff. Meanwhile, M&S has revived and is making money again, and its shares have risen by 40% over the last 12 months. John Lewis has already discussed the possibility of bringing in outside shareholders for fresh capital and expertise. Why not go a step further and merge with M&S? Together the two would dominate the middle market, middle-aged clothing and homeware,…

Investors in stocks can follow a number of distinctively different approaches – often referred to as styles – when deciding which companies to buy. The two styles that are most frequently used to classify investors are growth and value. Growth investors look for companies that are expected to grow their earnings faster than their sector or the wider market. They will often be willing to buy shares on valuations that appear quite high compared with other firms if they believe these may be justified by future profits. This approach places more emphasis on the firm’s potential, as opposed to its current financial situation. Value investing is the opposite. Value investors focus on companies that appear to be cheap today (or sometimes stocks that should be cheap in the very near…

“I am a professional attention seeker. Without attention I cease to exist. Professionally I need to do this, because this is my job. This is how you advertise that you’re still here. My job, fortunately or unfortunately, revolves around eyes being on you.” Singer-songwriter Robbie Williams (pictured) on why he wanted to do a biopic, quoted in The Guardian. In the film, Better Man, he’s played by a CGI chimpanzee “If you can’t explain to an 11-year-old in two minutes or less why you own the stock, you shouldn’t own it. Understanding the business behind the stock is the most important principle of investing in the stockmarket. This is why [Warren] Buffett only invests in what he understands and what falls within his circle of competence.” Fund manager Peter Lynch,…

www.honest-broker.com Ask a teenager who the most influential people in the world today are, and what will they say? Kai Cenat, Adin Ross, Jynxzi, Sketch, Zackrawrr, Summit1g. No, me neither, says Ted Gioia. But this is the reality of the new media landscape. The “mainstream has become fringe” – traditional media are fighting for their lives and struggling to hire and retain staff. And “the fringe has gone mainstream” – a “ragtag assortment of podcasters, pranksters, pundits, gamers, gadflies and influencers” on platforms such as Twitch, Kick, Rumble and Youtube are attracting millions of viewers. The only viable business model in legacy media today is to “find a billionaire owner”. But alternative media are “enjoying a gold rush”. Youtube is rapidly taking over the living room. Substack is innovating to…

Saba Capital Management, the activist hedge fund founded by manager Boaz Weinstein, is looking to take control of seven investment trusts, says Bloomberg. The US investor is targeting three Baillie Gifford trusts (US Growth, Edinburgh Worldwide, and Keystone Positive Change), two run by Janus Henderson (Henderson Opportunities and European Smaller Companies), CQS Natural Resources Growth & Income and Herald. Saba, which is the largest investor in all the trusts with stakes of between 19% and 29%, wants each of them to call meetings with investors to vote on appointing two of its nominees to each board, hire it as fund manager, shift the investment mandates to buy other trusts that trade at a discount to NAV and potentially merge with each other.…

There are some startling similarities developing between India and China. How many, and how concerned investors should be, will rank among the big questions in 2025. Western policymakers, CEOs and investors have for years debated the potential of the South Asian country to follow the path of its $18trn neighbour in terms of GDP per capita and global manufacturing might. Such comparisons are now taking on new meaning in Mumbai financial circles and beyond. For a start, the world’s view of China has dramatically deteriorated. Growth in the world’s second-largest economy is slowing, and Beijing’s relationship with Washington has soured. These two trends have increased India’s opportunity to shine as an investment destination on the global stage since the Covid-19 pandemic. China’s current chapter also expands the scope of what…

● More than a million rail passengers could be due compensation of up to £100 – but act fast. “The man who forced a train company to pay out millions of pounds for overcharging is urging his fellow commuters to register before the claims deadline on January 10,” says Ali Hussain in The Sunday Times. Justin Gutmann secured £25m from Stagecoach in an out-of-court settlement. He claimed that if you had a travelcard covering the London tube network you were overcharged for onward journeys out of the city. Up to 1.4 million travellers who used Stagecoach’s firm South West Trains between 1 October 2015 and 20 August 2017 could claim part of the settlement. You don’t even need proof. Gutmann had argued that if people held a Transport for London…

2023 Giant Steps, Single Vineyard Bastard Hill Vineyard Chardonnay, Yarra Valley, Victoria, Australia £50, laywheeler.com £60, australianwinecentre.co.uk; £54.95, nywines.co.uk As my annual 100 Best Australian Wines initiative has now entered its third decade, I decided to hold the launch, not at Australia House as usual, but with his excellency the honourable Stephen Smith, Australian high commissioner to the United Kingdom, at his London residence. We both invited VIP guests. Mine were a select group of the finest palates and wine communicators in the land, and his were international ambassadors and assorted grandees, as well as our very own deputy prime minister, Angela Rayner. The two groups were united in one voice regarding their profound appreciation for the incredible quality of the wines. Australia is making some of the most extraordinarily…

Dominic Frisby is a stand-up comic and composer of satirical songs as well as a regular contributor to MoneyWeek, and he returned in August to the Edinburgh Fringe to give one of his acclaimed talks. This year’s lecture considered why the mining industry has been getting such a bad press despite being absolutely vital to modern life – and essential for the energy transition. Last year’s talk was on the history of gold, covering its historic role as a monetary metal and safe haven from political interference and upheaval to its replacement (at least in some people’s eyes) in recent years by bitcoin. Frisby has now expanded this show into a book, The Secret History of Gold, which will be published by Penguin Business in August/ September of next year.…

MoneyWeek is launching a Christmas Charity Appeal this year, and we have chosen YoungMinds, the youth mental health charity. Young people often struggle with their psychological health, and since the pandemic, which had an especially deleterious impact on them, there has been widespread coverage of a mental-health emergency in children and young adults. Mental-health problems can stem from the everyday pressures of life, but there is a particularly close link to anxiety over finances. Around 90% of young people worry about earning enough money, and 44% say they are always or often worried about buying their own house; 40% of children under 16 also worry about having sufficient money. Many young people struggle to access support when they need it, which is where YoungMinds comes in. A donation of £67.50…

● “After the initial buzz around its June 2024 IPO, Raspberry Pi seemed to be getting a few raspberries from the market,” says Tom Sieber in Shares. The micro-computer maker had seen its shares drift from their early highs – until early November, when it announced a tie-up with Italy’s SECO to launch an interface based on its new Compute Module 5 (CM5) product. Raspberry Pi has so far hit every milestone that it set out before floating and has been collaborating with industrial users in developing CM5, say analysts at Peel Hunt, Investors are again excited and the shares have booted up, rising 40% to a new record. ● Johnson Matthey risks showing how “well-meaning ideas can turn into expensive misfires”, says Lex in the Financial Times. The group…

Sentiment towards China “is so dire” because the market is “missing the big picture”, says Tom Slater, the manager of Baillie Gifford’s innovation-focused Scottish Mortgage investment trust. “Everybody’s focusing on the prospect for stimulus in China to revive the property market and consumption, but that’s guesswork. “The real play is recognising what [China is] doing long term: growing its high-tech economy in the areas of national importance,” Slater tells Barron’s. As examples, he points to electric vehicles (EVs), semiconductors and advanced manufacturing. “China has swung from a net importer of finished vehicles to [an] exporter… The market in China is just moving much more quickly than anywhere else, with about 50% of new-car sales now EVs. The level of competition and sophistication is far ahead – and price points far…

noahpinion.blog The skies above New Jersey are “suddenly alive with drones”, and nobody knows why, says Noah Smith. Lots of people have panicked. But the fact that there are as yet no settled answers about who or what is responsible should “not obscure the fundamental reasonability of the panic”. Drones are changing the physical world in important ways and people are “only just waking up to how a big a change that is”. Drones are cheap to make in large numbers and hard to detect, and they have already changed life on the battlefield in war zones. Every town and city is now vulnerable to approach by potentially lethal drones. This is already a reality in Ukraine. People in New Jersey are panicking because the fact is now sinking in.…

■ Ecofin US Renewables Infrastructure has been forced into a cut-price sale of its US solar assets, says Citywire. The £41m trust, which is winding up, has accepted a $38.4m bid at a 26% discount to an already reduced valuation, after its adviser wasn’t able to get an acceptable bid for its whole portfolio. Also in renewables, Downing Renewables & Infrastructure Trust has sold its wind assets in Sweden for €36m, a slight premium to its carrying value. Foresight Environmental Infrastructure has sold its UK rooftop-solar portfolio solar for up to £21.2m, also at a premium to net asset value (NAV), and plans to use the proceeds to reduce debt. And Gore Street Energy Storage says it is confident that it will receive $60m-$80m in US tax credits for its…

Charitable giving is in decline in Britain, according to the Charities Aid Foundation. Today fewer than 30% of us give regularly out of our income, and older people are more likely to give than the young. The cost-of-living crisis has undoubtedly had an impact. So, how can you support charities with minimal impact on your own finances? One option is to donate regularly from your income before it reaches your bank account. Known as payroll giving, it is a tax-efficient way to support a charity. Your donation is taken from your salary or pension before tax is deducted. This means the charity gets more without it costing you anything. Say you want to donate £100. If you are a basic-rate taxpayer, you’ll pay £80, with the other £20 coming out…

Despite the hype around artificial intelligence – and particularly generative AI – many small businesses assume the technology is not for them. They worry that AI tools will be prohibitively expensive, require high-level technical knowhow and expose them to risks they don’t understand. That’s unfortunate – not only as many businesses will miss out on the benefits that AI offers, but also because many tools aren’t complicated or expensive. Indeed, there’s a good chance you’re already using AI to good effect without even realising it – many of the improvements made to the software that even small companies routinely use to manage their businesses are underpinned by AI technology of one type or another. In practice, the only way you’re going to become more comfortable with AI is by actually…

In October, OpenAI, the start-up behind ChatGPT, raised one of the largest sums of venture capital ever, bringing in $6.5bn, says Erin Griffith in The New York Times. This month, another AI start-up, Databricks, announced an even bigger haul, bringing in $10bn from investors including Andreessen Horowitz and Thrive Capital, and valuing the company at $62bn. Two years into the AI boom and investor enthusiasm for the technology seems not to have waned. Could it be a bubble? Well, of course it is, as the company’s CEO Ali Ghodsi (pictured) has admitted. “I mean, it’s peak bubble, yes, of course,” he said in an interview held during the Axios AI+SF Summit. It “doesn’t take a genius” to notice one when tiny companies with no product and no intellectual property, just…

“We are not in a business cycle,” says asset manager BlackRock in its “2025 Global Outlook” report. “Historical trends are being permanently broken in real time as mega forces, such as the rise of artificial intelligence (AI), transform economies.” The world’s biggest asset manager argues that “AI and the low-carbon transition” will require “investment potentially on a par with the industrial revolution”, and that this “fundamentally different landscape upends the nature of investing”. Contrarian indicators That all sounds a lot like the sort of “things people say at the top of the cycle”, says Robin Wigglesworth in the Financial Times. It’s “not quite Gordon Brown bragging on the eve of the financial crisis that he’d eliminated boom and bust”, but it’s close. Is it another sign that this bull market…

“Passive funds are eating the lunch of active managers. Our latest ‘Manager versus Machine’ report shows just a third of active equity managers have outperformed a passive alternative over the last ten years... The long-term performance of tracker funds in the key US and Global sectors has been nothing short of astonishing. The idea that a plain vanilla US tracker fund could quadruple your money in a decade would have been beyond the wildest dreams of all but the most overconfident investors. Yet that is precisely what has unfolded… Active funds have struggled to keep up because the performance of passive funds has been driven by [US] technology stocks... It seems pretty inevitable that unless and until there is a reversal of the dominant performance of the US stockmarket and…

In Russell Napier’s Anatomy of the Bear, he argues that bear markets don’t end in panic and capitulation, but in a complete lack of interest in buying stocks. I was reminded of this after writing about UK commercial property yields last week. The payouts available on some large UK real estate investment trusts seem at least fair value if you assume they can be sustained and grow a bit above inflation over time, but even so I struggle to get particularly bullish on them. In fact, while I can imagine a possible bull case for almost every major market over ten years (even slow-growth Europe… if necessity is the mother of invention, the next Trump administration may be the catalyst that Europe requires to remake itself so that it has…

Why America excels Edward Conard The Wall Street Journal Why does the US “excel” economically even though other nationalities do better academically? asks Edward Conard. According the OECD think tank, only 12% of Americans score at the highest levels on international academic tests, while 34% score at the lowest levels. Germany, Scandinavia and Japan have far more top scorers and fewer poor performers. This has “profound economic implications”. With “more talent and fewer needy people”, Scandinavia can, for instance, fund a generous welfare system. Yet Europe has created only 14 companies worth more than $10bn in the past 50 years, while Americans have created nearly 250. The reason for this is that US firms such as Microsoft and Google expose staff to “valuable knowledge, insights and opportunities”. This is why…

project-syndicate.org Back in August, the then US presidential candidate Donald Trump said that, if elected, he would change the law to give the president a greater say in monetary policymaking, say Sylvester Eijffinger and Edin Mujagic. Now that he has won office, will he do it? We must hope not because it could “cost the economy dearly”. There is “overwhelming evidence” that a “competent, independent central bank is the best guarantor of price stability and that keeping inflation low, and inflation expectations anchored, has massive benefits for the economy overall”. When the Fed bent to the will of Richard Nixon to help his election campaign in 1972 the result was a decade of stagflation that only ended when Paul Volcker hiked rates regardless of the politics and restored price stability.…

Japan’s Nikkei index is back to its 1989 high of 40,000, but the 30% fall in the yen since May 2020 makes sterling returns much less impressive. In addition, small caps have lagged. That makes the record of the Nippon Active Value Fund (LSE: NAVF) all the more striking: between floating in February 2020 and the end of November, its net asset value (NAV) is up 107% in sterling. Moreover, “we have more ideas than capital and the best opportunities we have ever had”, says Gifford Combs of manager Dalton Investments. This is despite absorbing the Atlantis and Aberdeen Japan trusts last year, which has significantly expanded its size to £365m now. “We could easily invest another $3bn without necessarily more holdings. Some businesses, though potentially very attractive, are currently…

The Gym Group (LSE: GYM) has recorded one of the best performances among UK small caps in 2024. The stock has returned around 42% over the year and at one point had gained almost 65%. The FTSE All-Share has returned less than 10% year to date. Even after this performance, the shares in the low-cost gym operator look cheap compared with its growth potential and cash generation. A growth streak The fitness and leisure market in the UK has recorded an impressive growth streak over the past five years. The number of gyms across the country remains below the pre-pandemic peak of 7,239, but the number of members has reached a record – 15.9% of the UK population are now members, up from 15.6% in 2019. The number of overall…

Got a problem Christmas gift? Whether it’s faulty, doesn’t work or you simply dislike it here’s what you are entitled to do about it. If the item is faulty, you have 30 days to return it for a full refund under the Consumer Rights Act. If it breaks within the first six months the retailer must replace it or organise a repair. If they can’t do that, then you should get a refund. But these rights are with the purchaser, not you the recipient of the gift, so you will have to involve them to get the situation resolved. Anything bought online can be returned within 14 days as an order cancellation. You then have another 14 days when you can return the items for a full refund. However, again,…

● Small and medium-sized enterprises (SMEs) are putting themselves at risk of cyber-security attacks and breaches by overlooking the vulnerability of mobile phones. A survey published by CyberSmart found that while almost two-thirds of SMEs now expect staff to use their mobiles to carry out work tasks, 60% of employees are not expected to undergo mobile security training, and 40% of organisations do not have a mobile code of conduct in place. That’s increasingly problematic, with cyber attackers now routinely targeting mobiles connected to companies’ digital assets. ● Four in ten SMEs have fallen victim to fraud in the past year, payments giant Visa warns. The average amount lost at each business comes to more than £3,800. The most common types of fraud hitting SMEs are billing and invoice fraud,…

The 35th iteration of Sweden’s famous ice hotel has opened in Swedish Lapland. Some 26 artists from 13 countries, including Lisa Lindqvist and Kate Munro from British design studio Gaia’s Bloom, came together to create the art for Icehotel 35. The hotel took six weeks to build in Jukkasjärvi, in the far north of Sweden, using 500 tonnes of ice from the nearby River Torne – and ten Olympic-sized swimming pools of “snis” (a mixture of snow and ice). Ephemeral art, carved from ice, fills the dozen suites, main hall and ceremony hall. In “Whoops, wrong room!!”, a huge ice-white rhino bursts through the wall. “Hideaway” is billed as an “immersive art suite” and sculptures by indigenous Sámi artists can be found in suite “Áhku Fáhcat”, which means “grandmother’s mittens”…

The best films and TV No one has had a bigger roller-coaster of a year than Donald Trump. From the nadir of being indicted for multiple crimes and convicted for falsifying business records, he rose to being elected the next president of the United States. His whole life story is as full of ups and downs. As The Apprentice, a film written by Gabriel Sherman and directed by Ali Abbasi, shows, Trump started out as a relatively small player in his fathers’ mini-empire of property rentals. The film charts the rise of Trump (played by Sebastian Stan) in the late 1970s and 1980s, thanks in large part to the help of ruthless lawyer and fixer Roy Cohn (Jeremy Strong), who takes a liking to the young Trump. The film initially…

Money 1. Sportswear giant Nike and US golf star Tiger Woods ended their commercial partnership in 2024 after 27 years. How much was the contract reportedly worth over its lifetime? a) $500m b) $100m c) $800m 2. Odysseus, the moon lander built by US-based Intuitive Machines, became the first spacecraft built by a private-sector company to perform a controlled landing on the moon. How much did the US space agency pay Intuitive Machines for cargo services to the moon? a) $200m b) $150m c) $118m 3. Which company, valued at £4.7bn, looks set to have won promotion to the FTSE 100 index? a) Close Brothers b) Pret A Manger c) Games Workshop 4. How much did Labour raise in donations during the 2024 general election campaign? a) £1.9m b) £9.5m…