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Seasons Greetings

Don’t worry, I’m not one of those who stretches Christmas out over 2 months. Less “‘Tis the season to be jolly” this blog is more “‘Tis the season to make money”. In my last blog I revisited seasonality, explaining that more of our financial returns occur over the northern hemisphere winter period versus over the summer period. Team that up with year three of a presidential cycle usually bringing the best returns out of the four and we stop battling a headwind and enter a period with a tailwind.

Rebalance

As you can see we rebalanced yesterday and put some of our cash to use. Interest rates in the UK rose by 0.25% recently which will no doubt filter through to our cash held on platform soon, but we believe we can now do better than just a cash return over the coming months. Some defensive shares (not defence industry) have been let go or reduced, some on our long term watchlist have been added and some of our past and current star performers have been increased.

This rebalance reflects 4 geo-political changes that have occurred since the Spring series of equity sales.

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What am I thinking?

Hasn’t the year flown by so far? We are already mid way through October, well in to “The Spooky Season” and that leaves less than 10 weeks left until Christmas!

Hunting Season

Half way through October marks a special time in the seasonal investment returns calendar. These next two quarters on average bring around double the return we receive over the previous two quarters. As you know October to March last year brought a far higher return than we could have rightly expected and April to September has been below average at best. Holding more of our portfolios in cash throughout the Summer when return expectations were low has been a comfort to many clients. Yesterday was the 39th anniversary of Black Monday. The FTSE 100 fell 10.8% on the Monday followed by 12.2% on the Tuesday. I had only been in the industry since February ’87 so it was a rude awakening indeed. There was much talk of a similar market outcome yesterday, but we were spared. Perhaps the 40th anniversary next year is the one to look out for. Celebrating 40 years in this profession next February 3rd will be pretty special for me.

Political Season

Along with the opportunities that this coming period of the calendar brings, we receive another tailwind from the US Presidential cycle. This third year is on average the strongest of the four year cycle. So a couple of intersecting good investment periods on the doorstep; What’s not to like?

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Capitalism

“The problem with socialism is that you eventually run out of other people’s money” – Margaret Thatcher

We have yet another budget looming over us, scheduled for 28th October, unless local boy Andy calls a General Election beforehand. So with that in mind I want to announce my undying dedication to capitalism and my complete opposition to the theory of socialism.

The Early Years

I have worked hard since I was 15 to better my lot. I’ve collected driving range golf balls, worked weekend shifts at a petrol station and out of term jobs through 3 years of university in a record store. I’ve even dug ponds. I am authentic working class, with a blue collar, shop-steward father and a shorthand typist mother. The families wealth today has been created by turning up everyday for almost 50 years so far, increasing my business and invest knowledge and taking risks. I’ve paid higher rates of tax along the way and have never been in a position where income tax was avoidable by receiving undeclared cash. UK financial services regulations ensure I cannot handle cash.

Creeping Unfairness

I continue to pay my UK dues. I’ve contributed to HMRC more than most. I’ve been proud to do so. I know many of our clients have similar back stories. However the UK is being turned into a country where working hard is becoming a mugs game. Those who have saved hard and retired with independent means are progressively being unfairly targeted. I wrote about the announced changes to Individual Savings Accounts in my last blog.

Capitalism in the UK is under threat.

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