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What was in the weekend’s papers? (24/08/2020)

Category: News

FINANCIAL TIMES

“‘Two companies to pay £10.7m to investors sold risky schemes”

Avacade and Alexandra Associates provided investment services without being authorised by regulator.

COMMENT: You should always check that your adviser is regulated by the Financial Conduct Authority. Also, if you are advised to invest into something which offers high returns for low or no risk, you should be very wary.

THE TIMES

“Will the economy stop the runaway stock market?”

Will the economy stop the runaway stock market?

COMMENT: We often refer to the stock markets as a “time machine”. By this we mean that the value of a stock market today reflects the collective opinion on the prospects of the companies that are listed on it. As such it is the “expected” future, rather than the present, that affects its value. Whilst changes to our current situation can radically affect the markets’ view of the future, by and large they reflect everything we know about them now.

“The bubble may burst, but I’ll keep on investing”

Next month will mark the 300th anniversary of one of the biggest ever stock market shocks, the bursting of the South Sea Bubble. Back then, investors bought into businesses with little or no understanding of how returns would be generated, and soaring share prices became detached from reality. Sound familiar?

COMMENT: Following on from the previous story, a key belief in how we put our portfolios together is that market prices reflect all the information available to investors. What we do not believe is that all investors are rational. We can all make instinctive decisions based on what we see at the time which in hindsight we may regret. As such whilst it may be that there are some “irrational” valuations of stocks markets, no one can predict what will happen tomorrow. Even more so we cannot predict how people will react to what will happen tomorrow. As such we always believe not letting speculation getting in the way of long-term investing.

THE TELEGRAPH

“’It’s daylight robbery’: The Share Centre customer charged £3,000 for five trades”

One 82-year old investor paid the price for the being on the ‘wrong’ tariff.

COMMENT: You should always make sure that the product or service you use to invest in is suitable. That is something we are experts in, and this story shows the potential drawbacks of the “DIY” route.

“How to invest in a recession: property or stocks?”

History suggests stocks perform better just after a recession. But can rental income make up the shortfall?

COMMENT: All investment comes with risks. Property is seen as a “safe” investment although the figures in a recent article show it has not given stellar numbers overall once you factor inflation in. In addition, a story in the same paper states “In some parts of the country 40% of workers are on furlough and may be unable to pay their rent if they lose their job come October.” If you are investing for the long term, we believe spreading your money in various investments is the way to go. One of these will be property however we recommend this exposure is spread across the world rather than in one house with one set of tenants.

THE GUARDIAN/OBSERVER

“£9bn bonanza begins as child trust funds come of age”

Next month sees the first raft of an estimated 5.5 million teenagers receiving a pot of cash from a ‘baby bond’. And it could not come at a better time.

COMMENT: Rather than a bonanza in takings down the local pub (Or more likely on Fortnite) I hope we see some recognition of the value of saving. This is where financial education comes in and we all have a lot to do in that regard.

“Global dividends plunge by $108bn during Covid-19 crisis”

Study of world’s largest 1,200 companies reveals biggest quarterly drop since records began.

COMMENT: You can find our thoughts on income investing here.

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