Category: Economic

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Thanksgiving

This is potentially a long read if you choose to read it all. If however you do not have any investments held within a General Account you can pass on a long technical section and fast forward to later in the blog. The jump link comes about a page lower from here.

I like the US holiday of Thanksgiving. The holiday is held on The fourth Thursday of November with the annual day set in stone by Congress in 1941. 

Thanksgiving is day for US families to get together and enjoy eating too much turkey. Many watch a full programme of (American) football games with the extended family. A day to be grateful and celebrate being an American. This Thanksgiving finds us on a ship full of Americans and we too are celebrating alongside them for differing reasons. We are grateful that Wednesday’s UK budget wasn’t half as bad as expected. It wasn’t good for hard-working retired savers, but it could have been much, much worse. 

It’s sad to think that if we in the UK tried to celebrate the history of our once great nation, on any particular day like Thanksgiving, half of the population would accuse us of being racist or colonialists. Why can we not be proud of our nation and culture like the Americans surely are?

We can afford to celebrate, particularly with the Americans, as the majority of our investment growth this year has come from harvesting the strong performance of US companies. Although the majority of Americans celebrate Thanksgiving, half of Americans are not thankful for the current political leadership in the US. This dis-satisfaction with our current government is also true on this side of the pond, for the majority of the UK population too. We both live in nations that are deeply split, but here in the UK we don’t have a national holiday to try to bring individuals together to resolve their differences. It’s a pity.

Anyway let’s talk about the real reason we in the UK are celebrating the day after Wednesday’s budget on Thanksgiving day. The tax rises announced weren’t as bad as we all feared. This blog was originally titled “The nightmare before Christmas”, perhaps I will save that for Torsten Bell’s first budget next year when he takes over the reins as the next Chancellor of the Exchequer. 

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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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The Stroke of a Pen

“the pen is mightier than the sword”

was first used by English author Edward Bulwer-Lytton in 1839.

It seems 186 years later, the phrase still rings true. We have entered a period of extreme uncertainty for all global citizens, governments and of course for us investors. This week will surely be as gut-wrenching as the last.

Many powers around the world, China, Russia, Iran and of course the EU had become committed to the idea that the US was not the Superpower it once was. It could be challenged and nibbled at continually, without provoking a response. Three terms of Obama in power, (no, I don’t believe I’ve made an incorrect statement here) have lead to much of the world believing Uncle Sam is a spent force. With the stroke of a pen, actually with very many strokes of the pen, Trump has unleashed the only bargaining tool he holds – the keys to the US consumers spending habits.

Bombastic, Bully, Stupid, Oligarch, Orangeman, Criminal, Failed Businessman. All probably true of the man to some extent, but of one thing we can be sure, he has huge Cahoonas and follows through on his campaign promises.

I have pretty much devoured every quality article written so far to try to understand the rationale, but more importantly to plot our course once again, now the wind has swung through a full 180 degrees. So far the best reasoning has come from Eoin Treacy, who is a member of our own investment committee. He writes….

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