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LLOYDS is going to FLY

lse:lloy

#1909

Hi Eadwig,

Probably the “Lifetime ISA”. These seem quite attractive for those aged at least 18 to under 40. Details linked. - Regards.

https://www.gov.uk/lifetime-isa


#1910

thanks, JD. I’m too old, daughter too young, so no interest in LISA from me


#1911

Yes it was a LISA, great saving machine. I find it fun gambling with her money, she’s saving £4k a year and receiving £1k government bonus. She doing well, £10k saved almost after 2 years and she’s not even 20yrs old on minimum wage.

If I can pick some good dividend payers to re-invest and some steady risers, I guess she will have the house deposit in 10 yrs


#1912

I have my almost-six-year-olds £5k savings in a JISA earning 3%. I’m waiting for the big market crash we are (over) due and then will transfer into stocks for her. Maybe by the time she’s 18 I can cover a year at college for her …


#1913

Great idea, I agree a correction is inevitable and you have a good plan. I’m hoping that I am not caught offside with my trading that day. Hopefully us ii users spot the signs earlier.
Saying that, the signs are forming aren’t they.


#1914

Hi All, Well after today’s huge rally I confess that I have been wondering where we go from here. Today has been a really great day for anyone invested in sectors that have been unloved for a very long time now, notably UK Banks and Property of any form (housebuilders and REITS in particular) while things that have foreign earnings and have previously prospered have been punished. The GBP has soared about 3.5% against the USD and the EUR in the last few days so any overseas investments have taken a bit of a hit, even though those markets have actually been up in general – in fact some quite strongly.

Thinking about any brexit deal, while I personally would be delighted if whatever BJ has planned came off and all of the uncertainty of the last 3 years was ended, I just can’t see it. Even if the EU dont scupper the deal then the numerous factions in Parliament seem to me to be almost certain to do so. I just can’t see it happening, even though I would REALLY like it to. The coming week will be critical, we should know by the end of it if there is a deal that the EU will go with and on Saturday we will see if Parliament will agree to it without further delays or referenda. My guess is not and we will head off into a General Election and maybe a second referendum and more uncertainty. But I suppose if BJ does come up with a deal at least he might be championing that rather than a No Deal brexit ?.

So what does this mean investment-wise ?. My personal views are as follows:-

  1. That the current rally in unloved shares may continue next week (or not) and the GBP continue to rise perhaps, but if no brexit deal is agreed next week then it could all unwind VERY quickly. So selling or setting a stop loss on any really significant gains might be a good idea just in case they slip away. However if a brexit deal IS done next week then at least some more of what we have seen today is likely and correct market positioning will be important – noting that today some things have done very well and others pretty badly.
  2. Personally I should think about perhaps reducing some of my overseas exposure just in case the GBP returns to 1.30 – 1.40. If that should happen then I might be looking at a 3-4% loss on my portfolio which I would prefer to avoid.

As always I could be totally wrong and what I have described cannot in any way be guaranteed to come to pass. But as usual I think that it pays to be prepared and have some form of plan.

I would be interested to hear the views of others on this subject. But I would be obliged if we can keep responses to be investment strategy focussed, as I would not want the topic to disintegrate into a brexit wars type discussion.

ATB

Pref


#1915

it’d be nice if you can time it, but I look on them as a hedge against most of my assets which are priced in GBP or property in UK.

So if GBP rises to those levels - or even higher if article 50 is revoked - then the loss in my portfolio will be as nothing compared to my overall wealth having risen by 5% or 15% respectively.

Like many people you seem to be overlooking the fact that if a deal is done, it is just a start to the uncertainty. It is a basis to start discussing future trade deals but that wont happen straight away because almost certainly it will be the starting gun for a general election with a Labour-led government potentially starting a programme of nationalisation and a policy to have all major companies give 10% of their stock to workers.

Then, once the election is over we can settle down to 5-15 years of trade negotiations and independence referendums followed by negotiations on breaking up the Union.

Or we could revoke article 50 and have done with this nonsense and we will all get much richer over night.


#1916

Hi @Eadwig, Don’t understand what you point here, perhaps in relation to your Poland situation ?. If my property assets become more valuable that is of no practical use to me as I don’t have any investment property. The only affect that I can see is a reduction in my portfolio value and associated income. Yes I take your point about possible ongoing uncertainty, but an escape from the current political deadlock would be welcome. Well as long as we didn’t end up with a Corbyn government with their radical socialist agenda.

ATB

Pref


#1917

The pound in your pocket would be worth 5%-15% more than it is today, whether you think that is practical or not.

E.g. The devaluation since the referendum has added 6p-7p per litre of petrol at the pump. That has been adding costs across just about all sectors which have been passing them on to customers. That would disappear (from petrol) if the GBP returned to values somewhere closer to where it was prior to the referendum.

Inflation generally would also drop markedly as all commodities, E.g. coffee, cotton, copper etc, are priced in US dollars and suddenly the GB pound would by more, well, per pound.

If you think it hasn’t been affecting you and every single person on the Clapham omnibus, I can assure you it has.

You say you don’t want a debate about Brexit, but its unavoidable when talking about the value of the pound and also the market impact. Surely after yesterday no one can deny what it has been costing us and continues to do so? (And don’t say it is the uncertainty that has been costing us, because that is all part of Brexit and was inevitable both prior to the exit date and afterwards).


#1918

Well @Eadwig, I can only do anything about those things that I am personally in control of. Whatever I do personally I cannot affect the brexit outcome and see no point arguing about it. What will be will be and we just need to make the best of it.

Inflation has not been high this last year, both as per the BOE figures and our personal experience. Actually we have spent slightly less this year than last (my wife records ALL expenditure so we know our situation pretty precisely).

Have a good weekend.

ATB

Pref


#1919

You must have stocks that are affected though. I’m not arguing about Brexit - I’m just pointing out the impact it is and has been having on stock prices, mostly driven by GBP weakness, but also Labour’s stated policies and the potential for yet another General Election with a chance they may get power.

Personally I don’t think there will be a deal. Johnson appears to have backed himself into a corner by adamantly naming 31st October as the leave date and is obviously giving away things that May didn’t have to (see chemical, aerospace and defence, auto and pharma industries in the papers today) because he is desperate now not for the electorate to see him preside over any extension as he realises that will probably be the end of his tenure.

Whether or not he will be prepared to show contempt of the law and crash us out with No Deal remains to be seen. I believe he will because ultimately he wants power.

I know you don’t want to discuss it so I wont expect a response - but there are others here reading this discussion board.

I wonder if you and your wife have noticed, as I have, that many products have not gone up in price but have reduced in size/weight? as someone who is out of the country for 2-3 months at a time, I notice it every time I return. One or more products in my normal shop has always gone up in price or the product has reduced in size. Returning next Saturday and I expect to see it again.

You say inflation isn’t that high, but it is higher than it would have otherwise been and higher than most years previously for a long time and appears to correlate with the Brexit situation (see chart below).

Pensioners are doing well with their 2.5% minimum triple lock on RPI because their pensions have risen above that in recent times, and that costs all of us that pay tax too.

I’m not disputing your wife’s figures, you understand, but I’m sure you realise that our individual experiences aren’t necessarily representative whereas the ONS exists to produce figures that are:


#1920

Hi Again @Eadwig, Sorry but I have limited time now, off out in a minute. To answer some of your points I would say:

  1. As far as I am concerned the rules of the “game” are all set by someone else. I just try to observe and play as best I can.
  2. I have long since dumped all holdings that I thought were directly affected by brexit or a possible Labour government. In consequence while I made some money yesterday I didn’t make the stellar returns that some will have achieved.
  3. Your ONS chart doesn’t look too bad. Anything less than 3% I am not too unhappy with, but obviously the lower the better. Only about 50% of our income is triple lock or otherwise inflation protected, that’s in part why the investment income is important.
  4. Yes we have noticed the packaging size / price issue that you mentioned (I go shopping too these days).

Lindsell Train GE (and FundSmith & Rathbone Gbl Opps) all down 1.5-2% yesterday (currency ?) :slightly_frowning_face:. But US up big yesterday so hopefully they will come back next week so I can exit and put the money into a dividend earner.

Last post for me today…

ATB

Pref


#1921

Exactly my argument about “sovereignty” and why it isn’t something individuals should be concerning themselves with, certainly not taking a 20% ‘pay cut’ over.

The only real sovereignty for the individual in our society is measured in GBP and how much it is worth at home in the UK and across the world, especially with regard to USD which all commodities are priced in whether we like it or not.

I did too but then I inherited a load that are almost all badly affected by the recent uncertainty for UK-centric stocks. I also had 6 figure commitments made abroad BEFORE the referendum was announced. That has cost me a lot of money over the last 3.5 years and continues to do so.

Actually I edited the original ONS chart and replaced with the existing one which are the same source but over a longer period and more up-to-date too; showing the inflation first caused by the Brexit devaluation working through the system. CPI is still high given the economy is flat-lining at around 0% growth despite very low interest rates.

I think the correlation between Brexit and the weak pound is very, very obvious. Which was the point I was making previously. 3% may not be ‘too bad’, but for those getting 1% pay rises in the NHS or in interest on their savings etc then you do feel it, I assure you.

I’m sure you understand as an investor that a 5% dividend really only starts after you have allowed for inflation. 3% CPI means a 2% return in real terms and putting money in stocks is a big risk for just 2%. Big enough for 5%, lets face it. If I could get 10% return as my parents did on their savings in a building society I’d sell 90% of my stocks tomorrow. (the building society went bust!).

In fact the UK dodged a bullet in that this all happened around a time of massively depressed oil prices and other countries devaluing their currency by varying degrees also. Otherwise we could have seen inflation at something more like 6% or 7%, I believe, if oil and commodity prices had been closer to the average from the previous 10 years.

However, the real point is that it is all a cost of Brexit which was supposedly going to save us all money when clearly it has cost a tremendous amount so if it happens it is already in a massive deficit which it has to make up with all its benefits - none of which anyone seems to be able to name or describe, by the way. I’m not hopeful, personally.

I don’t mind playing ‘the game’ with the hand I’m dealt. I do draw the line at the rules being changed at half time though.

Hopefully you think these re valid points about Brexit and not some attempt at point scoring. As an investor I’ve been dismayed at how few people here have prepared to actually talk about how to get through the Brexit process with investments intact or bettered.

I’m afraid I don’t buy all that ‘jam tomorrow’ stuff about Brexit, I’ll invest in an AIM oiler if I want to hear that stuff.


#1922

A good end to the week as hopes of something bettter than a no-deal rise. On the week my portfolio was up 3%. That will do. Definitely a split in sentiment between UK facing and overseas focussed investments. As the day’s unit trust prices came in yesterday evening this was very clear with those focussed in other parts of the world down a bit. The current situation is that my portfolio is down around 1% from its all-time high attained on 30 September. If the talks with the EU hit the rocks then the market could fall back again but, hopefully, the international exposure in my portfolio could cushion the fall. Best of all in terms of portfolio value would be for Article 50 to be revoked altogether.

Cheers,

Frog in a tree


#1923

What does next week hold for the markets?

If Brexit talks continue in any meaningful sense with the aim of avoiding no deal then the outlook could be quite positive.

In the US The Groper seems to be reining in his tariff threats against China and this too could improve sentiment.

With both Brexit and the China/US trade talks literally anything could happen. We wait and see but my hunch is that markets will rise.

Any views?

Frog in a tree


#1924

Lloyd’s straight back into the swinging 60’s Eric


#1925

Hi @Eadwig, Well we’ve been to Cambridge today (from Reading) to visit our son and his family. Bit of a trek but mainly on motorways and A roads, takes sort of 100-120 mins depending on the traffic. Not nice coming back in the dark this time of year. But absolutely worth it to see them all, especially the three grandchildren who are most attentive when we visit.

Not really quite sure how to respond to your post on brexit. I do recognise that you are uniquely disadvantaged by your dual life here and in Poland, and the associated currency effects I am sure have been significant.

You talk about a “20 percent salary cut” and I’m guessing by that you are referring to the fall in the value of the GBP vs overseas currencies including the USD. But those of us who are permanent UK residents and who have no desire to venture abroad (been there and done that many many times when I was working and now I don’t have any desire to travel anywhere again TBH) have not been damaged quite that badly. Our actual expenditure figures are proof of that… Yes inflation is higher than I would like and that’s why my prime focus is on growing our investment income, which I have managed to do quite successfully since March 2018. Capital increases are nice but some losses on occasion are unavoidable regrettably, but steady increases in income (aided by dividend reinvestment) are a viable goal and one that I consider the main aim of all my investing activities. I figure that as long as I can outpace inflation through my investing activities then our financial situation should remain viable. Were we totally in cash it would be a different story…….

I can see no real way to have avoided the impact of the falling GBP. Moving large amounts of capital into foreign currency accounts would have been costly and might not have been the right thing to do (and STILL might not be). It has also occurred to me that those who have maintained a totally UK focus since the referendum (eg investing only in FTSE 100 and All Share Investments) have done pretty well really, avoiding much of the impact of the currency moves (at least they have been far less affected than investing overseas of late). I am pondering a measured reduction in some of my overseas investments but will wait to see how the coming week plays out first.

Your inherited investments in housebuilders and utilities must have done extremely well on Friday. Their performance was quite unbelievable really, especially when so many other “solid stocks” were firmly in the red.

Anyway time for a game of online chess before I sleep……

ATB

Pref

PS Chess was good, Won 2 Lost 0 against highly ranked overseas opponents. Time to sleep now…


#1926

A lot of the cash I had committed to spend was coming from a 25 year endowment. It matured July 2016, almost exactly 1 month AFTER the referendum. After 25 years I had a fairly close idea of how much it would be and how much that would convert into. After the referendum the figures worked out 20% less. I never had the chance to move it in advance or i would have.

Housebuilders yes, utilities, not so much. Many stocks, and the GBP, are not back to where they were when May’s deal was on the table. That is a fairly good measure of Johnson’s deal and how things stand, the fx market especially.


#1927

Far from unique. Over a million of us and that is only counting UK citizens.

I think you are basically wrong about this, although it is understandable why. Many people may well have done ‘pretty well’, but they haven’t done as well as investing in other indices. When I talk about a 20% pay cut etc I’m basically measuring our prosperity to the rest of the world. I think that is the modern reality and looking at it any other way is a tad blinkered.

You can be sure foreigners looking-in see it exactly as I have described. Just spend a little time watching CNBC or Bloomberg with some American talking head talking about the UK economy.

From your perspective that doesn’t matter as you have made clear (I think it does, but I’m not going to argue with you about your own accounts).

Most people in the UK DO buy things from abroad, directly or mostly indirectly E.g. electricity, oil, gas, petrol, cotton, coffee, rice, wine and even rice wine to name just a few.

Very, very few of us live off things that are just made or grown here, and even if we do, those providers’s prices have gone up because they are obliged to use products or services from abroad.

However, I’m not so interested in our personal positions as a point of discussion but where we think things will go from here, what impact that will have on investments and how to play that. I.e. Possible scenarios and their impact on investments

IF you have any ideas, that is, going forward. My personal position is meant I have spent a lot of the last 3.5 years trying to avoid losses rather than concentrating on making money, so I’m looking for people who are prepared to discuss the future investment environment.

Investments don’t have to be within the UK. Of course the current fx rate does matter, but I have managed to get plenty of my cash in USD so the poor exchange rate right now isn’t a factor.

What is a factor is the slowing global economy and the trade wars between China and USA, although they seem to have eased a little at the end of the week, and where it all may end up.


#1928

Hi Again @Eadwig, Well your previous posts made me ask myself the question “ How has our net worth fared since the 2016 referendum?”.

So I took a look at our accounts and our net worth has increased by ~25% since June 2016 and would have been EVEN more if we hadn’t lost a significant amount due to the Pref crash in 2018. But we aren’t typical I’m sure.

However I quite see that your situation is very different and the timing of everything has been very bad for you.

ATB

Pref