Indholdsfortegnelse for Issue 1246-1247 i MoneyWeek

I was reminded this week why I switched off news alerts a fortnight into Donald Trump’s first term. Every day feels like a global reality television show – a mixture of The Apprentice and Supernanny. Far-fetched new ideas are being tested, the president is making a deal through intimidation followed by compromise, and someone new is on the naughty step. In just a few days, his trade policy has upset Mexico, Colombia, the EU, and South Africa. And global markets, of course (see pages 5 and 9). “He would have upset the UK,” says Charlie Morris of ByteTree Research, “but rumour has it that the Trump administration was struggling to see what Britain produced.” “US tariffs are back at 1940s levels; it is sobering how fast liberalisation can be undone”…

Gold has hit a record high as investors look for a safe haven from tariff chaos. Spot gold traded as high as $2,845 an ounce (oz) on Tuesday. Gold rose 7% in January in dollar terms, marking the yellow metal’s best month since August 2011, says Ryan Dezember in The Wall Street Journal. The yellow metal jumped 27% last year, beating the US S&P 500 stock index’s 25% rise. Once they get going, gold rallies are usually “long-lasting”: in five of the past six years that gold futures have risen by at least a fifth, the following year brought further gains. Wall Street analysts see $3,000/oz coming into view. “London and New York” are the two main global hubs for gold trading, says Leslie Hook in the Financial Times. Physical…

Donald Trump complains that America is “losing” tens of billions of dollars every year to Canada. The US president’s view of trade deficits is unusual. It is rather like believing that you “lose” money every time you go to a supermarket, forgetting that you receive goods in return for the money. Trump believes that countries that run large trade surpluses with America, such as China ($252bn in 2023), Mexico ($162bn) and Japan ($66bn) are “taking advantage” of America. The European Union (not shown in the chart) collectively ran a $155bn goods surplus with America in 2023. By contrast, America ran a $14.5bn trade surplus with the UK in 2023, allowing Keir Starmer to hope that Britain can stay out of the tariff fight.…

In a “major setback” for the London Stock Exchange, the FTSE 250 company Dowlais is set to be sold to US rival American Axle & Manufacturing in a £1.2bn deal, says Jessica Clark for This is Money. If the deal is approved by Dowlais’ shareholders, they will receive cash as well as a 49% stake in the new entity. The hope is that the combined firm will be able to save £242m by cutting the total workforce by 1,250. It would eliminate redundant administrative or management positions and end duplication in manufacturing or research and development (R&D). The takeover is far “from a done deal”, says AJ Bell’s Russ Mould. One problem is that the 25% bid premium looks “very skinny”, especially compared with an average premium for UK-listed stocks…

Ferrari Group, which specialises in shipping jewellery and luxury goods, is planning an initial public offering (IPO) on the Euronext exchange in Amsterdam, “becoming one of Europe’s first companies to seek a listing this year”, says Bloomberg. But it also marks another blow for the embattled London Stock Exchange. London-headquartered Ferrari, which is not related to the luxury carmaker, is seeking a valuation of more than $1bn, and the Deiana family, which controls the company, plans to sell a 25% stake in the listing. Ferrari generated about €333m of revenue and made €90m of earnings before interest, tax and depreciation in 2023. It expects sales of roughly €345m this year.…

HarbourVest Global Private Equity has put forward three changes to narrow its 35% discount to NAV after coming under attack from activist investors, says the Financial Times. The investment trust plans to double the proportion of cash profits set aside for share buybacks, introduce a continuation vote at its 2026 annual general meeting and implement a simpler structure using a dedicated vehicle to make direct investments rather than investing via funds of funds run by its manager, HarbourVest Partners. In November, Activist Metage Capital called for the trust to change its strategy, speed up share buybacks and rethink how it invests spare cash, while fellow activist Asset Value Investors disclosed in December that it had been increasing its stake.…

“Yesterday, Beyoncé announced her new tour… I will say, though… there’s tariffs. We can’t afford a new tour, right? Maple syrup is about to be $50.” South African comedian Trevor Noah (pictured), quoted on BBC News “Foreign aid is taking money from poor people in rich countries and giving it to rich people in poor countries.” British development economist Peter Bauer, quoted on X “Inflation means paying £20 for the £10 haircut you used to get for a fiver when you had more hair.” Pensions expert Ros Altmann, quoted in The Sunday Times “I left Gucci never having to work again in my life because I had an enormous number of shares.” Tom Ford, former creative director at Gucci, quoted in The Sunday Times “We have had conversations with the…

laveenladharam.substack.com Potholes cause motorists around £474m in damage each year, says Laveen Ladharam. And every year since at least 2011 politicians from all parties have promised action. In December, Keir Starmer committed £1.6bn to the problem. Yet our roads continue to get worse. Why? Politics, like everything else, is all about incentives. Politicians have an incentive to maximise votes in order to win elections. A road without potholes is more or less invisible to voters. Potholes, on the other hand, are highly visible to voters, and so become a mini-battlefield where local politicians can gain ground. The best thing to do about potholes is actually not to fix them, but simply to repair and maintain roads properly. But this takes time, increases traffic and is annoying. Then voters would complain…

Most companies are, by definition, mediocre. Some are good. Fewer still are great. And a tiny minority are truly exceptional. These are the ones I want to own. I’m looking to invest in durable, adaptable and – above all – resilient businesses; those selling critical goods and services, with high levels of recurring income from loyal customers. I believe the three companies below pass these tests with flying colours. Experian (LSE: EXPN) owns the world’s largest credit bureau. It aggregates credit data from lenders, then sells it back to them. Without this data, banks would not be able to lend and the world economy would grind to a halt. Experian has successfully expanded into new applications, using its data in more ways to solve more problems for more customers in…

Almost 15% of Britons over the age of 55 who have retired have gone back to work or are thinking about doing so, Standard Life reveals. The pension provider says most of those returning to work are choosing this course of action because they’re short of money – either their living costs have risen, or their pension income doesn’t stretch as far as they expected. For many, the return to work will feel like a retrograde step, but going back could give you a major financial boost. Not only is it an opportunity to supplement your income with a salary today, but it’s also a chance to build up more pension savings for the rest of your retirement years. Still, it’s important to tread carefully to stay on the right…

Buffett & Munger Unscripted Alex MorrisHarriman House, £29.99 There are already a huge number of books on investment legends Warren Buffett and Charlie Munger, covering everything from their biographies to their investment philosophies. Readers could be forgiven for rolling their eyes as yet another one hits the shelves. Can there really be anything fresh to say about either of them? It turns out that there is. Alex Morris’s book proves to be far more than just another attempt to cash in on the legions of fans who follow the “Sage of Omaha”. It is based on Buffett and Munger’s responses to questions put to them at the annual meeting of Berkshire Hathaway, the holding company for the conglomerate/investment fund that the duo ran for six decades, beating the market by…

The climate crisis is expected to cause a $1.47trn decline in US home values by 2055, according to First Street, a US climate research company. This will be driven by increasing home-insurance costs and homeowners avoiding risky neighbourhoods, say Nicole Friedman and Deborah Acosta in The Wall Street Journal. Many Americans are reeling from the recent wildfires that devastated Los Angeles and hurricane Helene that ravaged five US states in September. Financial losses from natural disasters are hitting all-time highs, and despite climate change worsening, more people have moved to areas vulnerable to disasters, increasing risks to property. People may be forced to sell at a loss or struggle to sell altogether, which might lower local tax revenues. First Street predicts average home-insurance premiums will rise by 29.4% in the…

More bad news for drinks giant Diageo, says Jessica Newman in The Times. It has announced that the spectre of US tariffs and uncertainty in many of its markets had forced it to jettison a longstanding revenue growth target. Since 2021, the world’s largest producer of spirits has been targeting yearly organic sales growth of between 5% and 7% over the medium term. However, while the tariffs on goods imported to the US from Mexico were delayed by a month at the last minute, the company says the chance they may yet be imposed “adds further complexity” to its ability to predict future trading. Diageo is right to be “cautious”, says eToro’s Adam Vettese. After all, the company is particularly exposed to the “spectre of tariffs” given that it imported…

Five to buy Diploma The Telegraph Diploma supplies specialist technical products such as gaskets and seals. The company offers scope for “capital growth and index-beating returns”. Earnings have risen 16% a year over the past 15 years, partly thanks to acquisitions, and there is scope for more deals. Diploma’s robust market position, solid balance sheet and exposure to the fast-growing US mean “there is further room to run”. The shares are “worthy of their premium” to the FTSE 100. 4,408p Nvidia The Times Nvidia’s shares have surged 400% in three years but $500bn was wiped off its market value recently. Given a now “relatively reasonable” valuation, “any investor with a contrarian bone in their body will be itching to buy”. The arrival of China’s DeepSeek has “taken some of the…

In a smart piece of rebranding, what used to be known as “second-hand”, “used” or perhaps even “junk” has now become “pre-loved”. Start-ups are commanding huge valuations and major companies rushing into the market. Ikea is the latest to jump on the bandwagon. The Swedish furniture giant said last week it was rolling out its secondhand marketplace for pre-loved furniture across Spain and Norway after successful trials in Madrid and Oslo, and if that works it may soon be expanded globally. Other companies such as Zara and Lego are also offering second-hand marketplaces. More may join them. A few major start-ups have already taken a chunk of the market. The Lithuanian-based Vinted, which specialises in clothes, last year achieved a valuation of more than €5bn in its latest funding round,…

■ Investors in Baillie Gifford US Growth, CQS Natural Resources Growth & Income, European Smaller Companies, Henderson Opportunities and Keystone Positive Change all voted against attempts by Saba Capital to oust their boards and hand control to the US activist fund. Saba has now lost six of the seven votes it has called; a vote at Edinburgh Worldwide will take place on 14 February. ■ Henderson European – the £580m trust formed by the merger of EuroTrust and Henderson European Focus in July – is under new management after its team resigned from Janus Henderson to join GAM. Janus Henderson has appointed interim managers, but the trust’s board said it now would solicit shareholders’ views on its strategic direction. ■ The newly merged Aurora UK Alpha trust has got off…

conservativehome.com Universities got caught up in the culture wars and conservatives are now wary of them, says David Willetts. That is a mistake. Going to university still boosts earnings. By the age of 31, graduates earn 37% more than non-graduates with at least two A-levels. Moreover, graduate earnings tend to grow for much longer than for non-graduates in vocational jobs, and graduates tend to stay in the workforce for longer. Over a lifetime of earnings, an undergraduate degree is estimated to be worth on average £280,000 for men and £190,000 for women, net of tax and student-loan payments, relative to what a non-graduate like them would have earned over their lifetime. Setting targets for numbers going to university doesn’t make sense, but informed personal choice and a diversity of providers…

Pension schemes have £160bn more than they need to pay out on the promises they have made to pensioners, says chancellor Rachel Reeves. She wants to change pensions legislation to make it easier for this cash to be invested productively in the UK economy. But those proposals are worrying some experts. They say the £160bn surplus is purely hypothetical, largely reflecting the sharp increase in gilt yields seen over the past year or so, because this is the benchmark that actuaries use to make valuations of pension scheme assets. A fall in yields could see the figure come down or even slip into deficit. Pension scheme members should also be concerned. If a scheme gives away its current surplus – by returning the cash to its sponsoring employer, say –…

David Dicker – a tech firm founder, private-jet owner and, at least for a time, billionaire (pictured) – now lives in a mobile home, says Ainsley Thomson on Bloomberg. It’s “way off grid” in New Zealand’s Southern Alps with glorious views –but Dicker’s “eyes are trained elsewhere”. In 1999, the entrepreneur, now 71, “upended his life” – he is CEO of Dicker Data, which resells PCs and other equipment and software for corporate clients – to focus on his passion: cars. His aim is to build one of the world’s fastest and “win the ultimate prize”: ownership of a Formula One racing team. His racing-car company, Rodin Cars, is developing the FZero, a four-litre, ten-cylinder car with a top speed of 224mph that looks like a Batmobile and has just…

2024 De Wetshof Estate, Bon Vallon Chardonnay, Robertson, South Africa £15.95, finewinedirect.co.uk I first visited De Wetshof some 20 years ago. Back then, this impressive winery, overlooking the Breede River, in the relatively cool and breezy climate of Roberston, was already acknowledged as a global chardonnay specialist. I toured the estate with Danie De Wet and was delighted to meet his wife, Lesca, who was responsible for this famous brand’s image and crisp label designs. I also met a very chirpy fellow, marketing whizz-kid Bennie Stipp. While the De Wet family, including the next generation Johann and Peter, are the visionaries and the driving force behind the winemaking style of these classically dimensioned wines, Bennie’s boundless enthusiasm made a lasting impression on me. While I rarely bump into him, whenever…

Freedom Memoirs 1954–2021Angela MerkelMacmillan, £35 Few world leaders have seen their good reputation evaporate as rapidly after leaving office as Angela Merkel has. When she stepped down as German chancellor in 2021, following 16 years in office, it was still possible for pundits to portray her as the voice of centrist reason. Since then, the Russian invasion of Ukraine and the continued rise of the populist right in Europe has forced even her most ardent apologists to admit that many of her policies – allowing huge increases in the numbers of immigrants during the 2015 migrant crisis with the cheery assertion “Yes, we can” (cope with the inflows), for example, and shutting down Germany’s nuclear-power industry, making the country ever more reliant on cheap energy flows from Russia – were…

“Keep faith in UK equities,” advises Scott Evans of the London Business School: “They’ve done well over 70 years.” Over that time, annualised real returns for Treasury Bills (comparable with savings accounts) have been 1.4%; for long-dated gilts, 2.1%; house prices 2.8%, world equities 6.3%, and UK equities 6.5%. UK smaller companies, at 9%, have performed even better, but have lagged in recent years. Yet unlike US investors, British ones chase after the lowest returns. According to Janus Henderson, cash savings rose £51bn last year to £2.05trn, or 80% of the national debt. Half of defined-benefit pension funds’ assets are invested in bonds, despite yields having risen (and thus values fallen) for four years. According to Abrdn, 50% of personal wealth is invested in property, nearly double the ratio in…

“European equities have started fast out of the blocks... In 2024 the eurozone index returned 12.5% in the first quarter of the year and then ran out of steam... Will Europe... again fade after a promising start?... Optimists highlight the growing calls... for Germany’s deficit rule to be reformed... The prospect of Europe’s largest economy casting off this fiscal hair shirt is seen as a potential game-changer... I’m a sceptic... Reforming the debt brake requires changing the German constitution, which is hard to do at any time, let alone when Parliament has just been dissolved... Even if the monumental reforms required were somehow passed, I can’t envisage Germany suddenly metamorphosing into a fiscally liberal big spender. Its deeply ingrained conservative approach is more akin to hunching over the 2p coin-pusher…

Shares in Smiths Group, the “last large industrial conglomerate on the London market”, jumped by more than 10% last week after it announced it would break itself up, say Sylvia Pfeifer and Jonathan Wheatley in the Financial Times. Smiths, whose businesses range from aerospace to energy and security, said it would sell or demerge its baggage-screening and electrical-components divisions and return a “large proportion of the proceeds to shareholders”, leaving it free to focus on industrial technologies. While Smiths’ management insists that the move had been planned for some time, the decision to “overhaul” the company comes after US activist investor Engine Capital urged it “to explore a break-up that would bolster its valuation”. It’s true that the break-up “has long been sought by some investors”, with analysts arguing that…

Dollar General’s stock has plunged 70% since its 2022 high as earnings have kept disappointing. But it “now looks like a bargain”, says Barron’s. The US budget retailer has a “solid” balance sheet and an “entrenched position as the general grocer to rural America”. It plans to remodel and open new shops and clamp down on shoplifting. Although retailing giant Walmart poses a threat, its closest rival, Dollar Tree, is less profitable. Analysts say the pre-tax operating profit margin can return to the 6%-to-6.5% range, potentially resulting in earnings per share of $8 in 2027 and pushing the share price above $100; it is now $72. The stock yields 3.3%, and the dividend is “well covered” by earnings.…

On Monday, for the first time since Brexit, the UK prime minister joined the 27 EU leaders for an informal summit in Brussels. However, the day was “less a UK-EU summit” and more “the UK as one of several items on the agenda at an EU meeting”, says Jon Stone in Politico. And although when Keir Starmer took office, Brussels had high hopes for his “Brexit reset”, officials no longer expect any “game-changers”. Labour has come up with broad ideas but little practical detail or timescale. With “challenges like Donald Trump, AI and the climate emergency testing governments across Europe”, the UK simply isn’t a priority. This “reset is just the first of many”, says Rafael Behr in The Guardian. Britain is “tethered to the EU by forces of geography,…

The initial public offering of Smithson Investment Trust (LSE: SSON) was one of the biggest launches the investment trust sector has ever seen. Backed by Terry Smith, the manager of the £22.5bn Fundsmith Equity Fund, Smithson had no trouble raising £822m from investors who queued up to back its small- and mid-cap investment strategy. Its assets under management have since expanded to £2.3bn. Smithson pursues a version of Fundsmith Equity’s quality and growth investment strategy, targeting companies that might not fit into the larger fund. The trust’s own website proclaims, “We aim to provide you with a similar investment experience to the Fundsmith Equity Fund, being a superior risk-adjusted return over the long term, but by investing in a group of global small- and mid-capitalisation listed companies.” Unfortunately, the trust…

We’ve lost the AI arms race Larry ElliottThe Guardian The arrival of DeepSeek last week is a “wake-up call” to the US and any developed country wanting to enter the AI race, says Larry Elliott. Even if the budget Chinese chatbot isn’t all it is “cracked up to be”, it doesn’t change the “bigger picture: China’s threat to Western technological dominance is real”. No longer merely the factory of the world, in 2023 China “filed more patents than the rest of the world put together”. Chinese universities are producing more than 6,000 PhDs in science and engineering subjects a month, more than twice the number in the US. Although, as Donald Trump says, a bit of competition is no bad thing, in some sectors – EVs, lithium-ion batteries – it…

capx.co Upon taking office, US president Donald Trump instructed his government to tell the Organisation for Economic Co-operation and Development (OECD) that its deal on a global minimum tax – which had taken a decade to thrash out – was null and void, says Ryan Bourne. That leaves the UK, which has already integrated parts of that deal into law, in a “fiscal and economic quandary”. Britain jumped in early in the hope that forcing multinationals to pay more tax on profits where they have sales and to pay a minimum of 15% of profits would lead to a jump in revenues. But it all depended on compliance, especially from the US, which is home to most of the world’s largest multinationals. In adopting laws early, Britain now “sticks out…

Primark sells bargain-priced clothes. Its products may not exactly be known for their durability, but its owner, Associated British Foods (AB Foods), has endured for decades. And like its clothes, AB Foods’ shares look very cheap. In the last ten years, the company has become more profitable and executed its strategy well. Yet its shares have nearly halved. Even having fallen so much in the past ten years, however, over 30 years the shares are still up 14-fold. The company has been a great British success story and has the potential to carry on growing well into the future. Now is the time to consider an investment in this great business. The cheap valuation seems nonsensical. It is probably a result of its unusual corporate structure, which has rendered it…

Gresham House Energy Storage Fund came to market in 2018, aiming to profit from the increased need for energy storage to support intermittent renewable energy generation. Operational capacity has since increased from 70MW seven years ago to around 1GW at the end of 2024. After Russia invaded Ukraine in 2022 and gas prices doubled, GRID’s annualised monthly revenues peaked at around £210,000 per MW. It raised £150m of equity in May 2022 and a further £80m in May 2023. Since then revenues have collapsed by 80%, to around £30,000 per MW at the beginning of 2024. To fund ongoing construction of new capacity in such a difficult environment, the fund’s net cash of £222m in June 2022 has swung to net debt of £140m September 2024. That equates to 60%…

● If you’re a higher-rate taxpayer, did you claim higher-rate tax relief on your pension contributions on your latest self-assessment tax return? Private pension schemes automatically claim basic-tax rate relief on members’ contributions, but you normally have to claim the higher-rate relief for yourself. A survey from Interactive Investor claims higher-rate taxpayers could be missing out on additional pension wealth worth £97,000 (from lost tax relief and investment growth on the money) by failing to do so. But it’s not too late. Even after you have filed your return, you can write to HM Revenue & Customs with details of your contributions. You can also claim back for the past three tax years. ● Higher earners may need to increase their pension contributions to hit their retirement savings targets, Hargreaves…