What is Money?

Have you ever wondered; 

  • What is money anyway? 
  • Why do we trust money?
  • What’s that five pound note in your pocket really worth? 
  • Where does money come from and where does it go?

I’m guessing the answer is probably not. Money is just an everyday thing.  It’s there, we just spend it or save it.

Our own currency that we spend everyday is taken for granted, except when we travel and it’s no longer accepted as currency. Why is it even called currency?  Well the answer to the last question is indeed predictable. It’s the current value of our money versus other countries money. Which in itself begs the questions; 

  • What was our money worth previously? 
  • Was it worth more or less?

To answer these questions we need to go back a long way in time. To a time before money existed. 

Sapiens

I have read some very influential books in my time. Very few have been works of fiction. I’m intellectually poorer for that I guess. My Northern upbringing of seeking “value for money” has directed me solely to books I can learn from. One such book is Sapiens – A brief history of mankind by Yuval Noah Harare. Before reading this book I believed the Agricultural Revolution was the time before tractors. But no. The agricultural revolution was the time when primitive humans ceased to be hunter-gatherers and became the farmers of crops and livestock. Who knew? That transition changed everything. Prior to farming, life was free, but probably not easy.  Food was collected as needed, a free for all endless all you can find buffet. Once all the food was taken from one area, individuals moved on. A truly nomadic experience. Nobody was a landowner, primitive tools were the only possessions, used to dig for roots perhaps. Recent Bill Gates funded research wouldn’t have been needed back then, like today’s Aborigines, we would be happy obtaining protein from grubs. 

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Turn off the news

“I’ve been saying this since the 2009 Financial Crisis, and I’ll say it again today:

Turn off the news.

Back then, I was glued to the financial media. I’d watch the major networks, read the papers, soak up the headlines. I thought I was doing my job as an investment manager by being informed.

But all anyone did on TV was scream at each other. The newspapers were filled with terrifying headlines designed to make you panic — and usually trick you into doing something stupid with your money.

So I stopped.

I stopped letting the fear machine into my head. I stopped investing based on other people’s emotions. I decided to let the market tell me what was happening — not the suits on TV or the clickbait headlines.

Fast forward to today. I’m seeing people on social media flipping out about geopolitical developments, bombs dropping, oil surging, and the stock market “about to crash.”

The U.S. dropped some bombs this weekend and the fear juices are flowing.

I get it. The world feels shaky sometimes.

But when those feelings rise up, I take a breath… and I go look at the charts.

Because here’s the truth: the market is the news.

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May The Force Be With You

“Sell in May and go away, don’t come back till St. Leger”s day”

When trading shares was a manual process, the above investment practice undoubtedly held true 70% of the time. However in this current fast-paced, algorithmic trading world, the results obtained have become no better than 50/50. Effectively the saying is today about as true as any other old wives tale. We do however continue to make higher returns over the Winter months usually. The beginning of 2025 saw early impressive returns eliminated as Donald Trump sent the markets into a tailspin with his tariff announcements. As this behaviour doesn’t occur every year, don’t expect this year to follow traditional patterns.

Politics and Investment

In my previous blog “The stroke of a pen” I quoted Eoin Treacy who correctly deduced that “The benefit of using tariffs for the purpose of manipulating the bond market is they can be turned off with the stroke of a pen.” March was not likely to bring a market meltdown like the structural problems of the Great Financial Crisis of 2009 did. The Trump tariffs have been raised and lowered in successive waves faster than a lady of the night’s underwear. (Toned down analogy to prevent blushes) Through pronouncement after pronouncement on Truth Social, the rattle of a keyboard rather than the stroke of a pen, which have seen the markets, and also currency rise and fall quickly in response. Trying to respond by buying or selling is a fools endeavour. I believe it is important to not let our political affiliations lead our investment decisions. Many Americans sold down and ran to safety, because they were card carrying Democrats. They have missed out on the best May performance of the US markets since the release of “Pretty Woman” in 1990. Our portfolios too have surged, held back only slightly, by a weakening Dollar. I can see the Dollar weakening further, but I cannot see the Pound strengthening much further. UK debt problems look set to accelerate as the amount collected in taxes continues to fall, making investment into the UK fall.

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