Brexit or not – opportunities and hazards?

In about a month’s time the UK will have a referendum on leaving the EU. I’m not going to spend much time on the merits or not, because the result will be whatever it is. I will observe, however, that you get to know something about your destination if you look at your fellow passengers on the bus. And the passengers on bus Brexit seems to be folk I don’t want to ride with – people who haven’t realised that the sun set on the British Empire a very long time ago and a few random chancers and headbangers from the Tory party. The one thing I do hope and pray for is once the result is known, whatever it may be, we don’t get to do this again for another 40 years[ref]in which case it’s highly unlikely to be my problem either way[/ref]. I suspect by then it will be a moot point for different reasons.

The quality of discourse about which way to vote is terrible, largely because so much is inherently unknowable. Osborne stands up and says house prices may fall by 18% if Leave wins. To which I ask myself exactly WTF this is regarded as a bad thing in the first place? Is it really so terrible that some of our young people might actually get to be able to buy a house and some borrow-to-letters get to know the deep joys of negative equity, and secondly, what is Osborne’s confidence interval on this stat? How certain is he of the assumptions behind this ridiculously precise-to-two-figures assertion – the range is probably between -50% and + 25% and he may as well say God knows. The same charge can be levelled against the other side – deciding to leave is a complex and chaotic process that depends on many variables that are inherently unknowable, open to fate and the whims of other people and countries. I’m not clever enough to have an informed opinion, and that probably goes for most 😉 So this is not about the merits of either course of action, and headbangers of either side aren’t welcome in the comments.

Financial hazards and opportunities

The choice is between the status quo and something different, and it’s probably fair to say that financial markets in the short term don’t really like ‘something different’ in general. That’s not specifically to decry the putative upsides the Leave camp are making – if they are right these upsides will show up over the five, ten, twenty year timescales. Certainly if one is convinced by the Leave economic case the course of action is to buy UK equities into the post-June whirlwind and sit tight for a few years – a mix of VUKE and some UK small-cap index fund would cover most bases.

I’m not personally that convinced. There is also the slow run on the pound which is already 25% down from the financial crisis, as a chart of IMF special drawing rights (a basket of foreign currencies to try and average out individual country forex swings) per UK pound shows


Which has no doubt made my ISA look better than perhaps it really is because there is now a fair amount of foreign stuff in it – indeed it is making my Charles Stanley ISA, which is purely a index fund of Dev world ex UK look better than it really is. And since that is over 50% US and I think the US is shockingly overvalued it’s not what I want to do. But sometimes in investing you have to invest in stuff you don’t believe in. The US isn’t a bad place to have a lump in if I am expecting turmoil in the UK and perhaps also Europe more widely. Obviously there’s the potential turmoil of the follically challenged trickster becoming POTUS in November[ref]I don’t necessarily agree with all of the Spectator’s conclusion, but it’s a fun description and one by Americans rather than a slightly more balanced way of saying the same by us effete Europeans, which seems right in something that is essentially an American choice[/ref], but let’s tackle the nearest fire first, eh. Oh and let’s not forget the Greek crisis and other tribulations. One of these days that damn Euro is going to go titsup…

Now a run on the pound could be countered in many ways. Buying foreign stuff, indeed buying forex or spreadbetting it. Buying gold isn’t a bad way to go, although I already have a bit too much gold from late last year. But I’m not after optimizing my long term asset allocation. I am looking for a defensive position until after the referendum.

There are two outcomes I can see. One is that remain wins. My asset allocation is broadly where I want it to be at this stage, and in five years time the referendum will have been a hiccup in the general trend. The only opportunities in this eventuality is if the uncertainly before the referendum makes prices cheaper. I bought some VUKE a couple of times earlier this year, this holding is currently 7% up. Should the turmoil of Brexit send that below par, or close, I am tempted to buy more of that sort of thing. Although a Brexit win will probably hit those firms, they are big fish and 70% of earnings come from overseas they can probably come good over time.

The other is of course that Leave wins, in which case gold will have been the right way to go because the pound is likely to come under severe pressure for a while. I’m still okay with the FTSE100/VUKE which I think will come good in the end. So, undecisive bastard that I am, I have chosen to do all three. I have switched the cash in my TD ISA with gold ETFs, I have brought forward my monthly purchases of the L&G Dev xUK index fund for the next three months and if FTSE100 starts to tank in the runup to the referendum I have a full year’s worth of ISA allowance to put into Charles Stanley, although I’m not going to use all of it on this. In the end I can’t protect myself against the downside, but I may as well try and lose a little less in the worst case, and if possible profit from the volatility in the best case.

The FT has a piece on Brexit finance ramifications and a poll tracker as does the Economist. But in the end William Goldman has the edge on all the pundits  – “Nobody knows anything”. He was talking about movies, but it applies just as much to Brexit and its outcomes or not.


Buy to let is a rich person’s game – shock alert.

Aw, diddums. The Torygraph is spitting bricks about the unprecedented assault on private buy to letters in the Budget. Apparently buying houses to rent out to people too poor to buy them themselves is becoming a rich person’s game. Colour me flabbergasted. You’re buying extra copies of the single most expensive thing most Brits ever buy, just because you can, so you can fleece some of your fellow countrymen for an essential good. Of course BTL is a rich person’s game. The amazing thing is that we permitted, nay subsidised, non-rich but still extremely well-off people to borrow cheap money to give poorer people the shaft for so long, and indeed it’s another rum thing that it was a Labour government that aided this stiffing in the first place and a Tory government that applied the brakes, ever so gently.

Obviously if you’re rich enough to buy more houses outright, well, go for it. But the one thing that the British housing market doesn’t need is more cheap borrowed money chasing a limited stock of houses, so it’s about time that these leveraged ‘landlords’ got run out of town, particularly at the moment when interest rates are low.

Now it’s been a very long time since the Ermine rented a place, but my experience of private landlords was that in general they were thieving scum that wanted all the profit for themselves and spent as little as possible on their properties. Now part of that was my own fault – I had bought into the collective mantra the pollutes the British psyche that renting is fundamentally A Bad Thing. I was Monevator’s sister, probably before she was born 😉

“I am just throwing money away by renting.”

I combined this with another toxic tendency, one I still struggle with at times, which is if it’s something I don’t feel a passion for, I buy cheap. And often buy twice 😉 Now with renting I avoided the buy twice, but I did buy cheap. Not because I had to – I could have afforded to pay twice as much. But I was tight. Because I am throwing money away by renting, I tried to throw as little money away on that. Not to do something else clever like save for a pension but to spend it on beer and travel and music and shit like that. I was in my 20s FFS. The downside of this of course is that I was drawn to cheapskate landlords, because I was a cheapskate. I’m sure there are good landlords. I never ran into them. I never rented houses, either – only rooms – well and got together with others to rent a house but we each occupied a room. The only decent landlord I had was the work colleague I rented a room from for six months before I stupidly threw money away on buying a house at the top of the market.

So when the Torygraph wheels out some dude called Craig Scott-Dawkins, ten years younger than I am who  owns five buy-to-let properties in Leamington and Warwick, the Ermine heart of stone chills to his plight

He said: “I voted Conservative because I thought they were going to take a steady approach. But they’ve knifed us in the back. These changes are making it more difficult for those of us who want to prepare for retirement. 

Let’s bottom out what is actually happening here. Let’s take a look at Maslow’s Hierarchy of needs, what the human animal focuses on


A house sort of goes in the red bit. Since we’re not snails or tortoises, we need a roof over our heads to keep the rain off, and hairless wonders that we are walls keep the wind off us so we don’t freeze in these cold Northern climes. There’s no fundamental need to own houses, true, and in many other European countries renting is a perfectly good alternative. There is a strong argument to make that renting suits modern employment patterns better, at least until having children, but that’s a different issue. So our poor Craig isn’t rich enough to actually afford to buy the capital base of his evil empire, and he’s bitching about losing his subsidy. Well excuse me Craig, but you aren’t a landlord because guess who owns these damned houses – that’s the bank. You are a lord of jack shit, you are a bank worker making their money work for them. You are also exposing your unfortunate tenants to the risk of you getting taken out by rising interest rates on your overleveraged farrago. How do I know it’s overleveraged? Because you’re a subsidy junkie. If you really had the money you wouldn’t take the hit on the tax changes, because you were charging interest against tax, something that the poor bastards who actually want to buy a house to, y’know, actually live in the darned thing, haven’t been able to do for over 25 years.

The trouble is that the government in the UK had made regulations about renting so bad for both landlords and renters that it’s a deadly embrace that isn’t much fun for either when it goes wrong. The renters have little security of tenure, but if they dig their heels in the landlords seem to have to jump through some odd legalistic hoops too kick ’em out. It’s something made for people with deep pockets who can play a long game, not the ‘my BTL is my pension’ brigade, who believe in housing as an asset class because they can touch it as opposed to things like shares or bonds. That’s religion, and it shouldn’t be subsidised by the taxpayer, particularly when it puts our young people at such a disadvantage compared to our old gits who have suddenly got pension lump sums to splurge from Osborne’s pension freedoms.

learning to spend again – consuming more intentionally this time

With a regular income now, and only so many years to use it in, it is time to review one of the Horsemen of personal finance from the other side, consumption and lifestyle. It’s an opportunity to think about it properly this time and consume intentionally – to spend on what matters to me and furthers my values, rather than the admen’s. This is a big difference to how I spent money up to 2009 – that was the classic slow lifestyle inflation of moving from a student through escalating jobs. That sort of lifestyle inflation is unthinking, and while I generally avoided consumer debt which is the #1 win against the black tide of advertising making consumers spend badly, I didn’t always get value. Some was bought for the promise that it would make things better and easier. Some of it didn’t because of the Diderot effect, and some of it was sheer being suckered.

As proof of how much of this wasn’t necessary, in the seven years I have not lived a life of abject poverty or the Rowntree Foundation’s inability to take part in society – most of the stuff I had seven years ago is still in service and works well enough, and is not shockingly low-quality compared to modern offerings. One 20-year old piece of consumer spending that did give me great value that failed in service over that time was my Naim power amplifier for my hi-fi, already secondhand when I bought it, which developed a shorted turn in the transformer. I missed that, but anything else that broke I lived happily without. Some of this is because digitalisation means the world is getting a little bit more virtual and less physical, but much of it was simply because I didn’t give a damn, once you have freedom you can be more creative or just go do something else instead.

It’s hard to get perspective as one gradually inflates lifestyle to match income, but I have had a long break from consumerism – for seven years the answer to how much to spend on Wants was ‘as little as possible so I can save’. So it’s like starting anew, but with the wisdom of hindsight from the previous experience. Not all consumption is bad – the consumer society didn’t get where it is today by never offering value. What I want to win from the hiatus is the discrimination to spend well, to get value on my terms rather than other people’s. So it still means a ruthless avoidance of advertising in its many forms, and I still don’t have time or inclination to watch TV 😉

One of the I’m going to do with my return to a regular income is to enjoy some of the interests and hobbies I used to do before I made the decision to get out ASAP. Some of these I simply put on hold because they cost money to pursue on needed travel I didn’t want to spend money on, some of them I quite because I didn’t have the energy. All of these fall into interests; they are firmly in the Wants category and not in the Needs. So canning Wants when I Needed to retire early was an entirely rational thing to do.

Sadly the rational thing to do isn’t always the right thing to do. In hindsight maybe I should have got that amplifier fixed and saved a grand or two less, because I missed decent sound, the sound systems I have with my computer and in the bedroom are okay but nowhere near as clear. I know everybody else uses Spotify and good for y’all but I like being able to listen on speakers and it not all blending to mush. So I should have pushed the boat out here, but the other interests etc, well, the time was better spent on learning and honing my art. When I was working and short of time it was always about the next great thing and gizmo that was going to turn me into a great photographer/recordist/birdwatcher/writer/whatever. In the long lean years I discovered that I was usually the weakest link, and learning to use the stuff I already had and more about my targets, to learn about what I was interested in and just damn well slow down and listen and observe FFS was often the secret sauce I was missing.

One of the conclusions I have come to is that any sort of pastime I do in future needs to definitely not be primarily stuff-consumptive, it needs to involve some sort of challenge, or creative expression. I don’t necessarily have to have an audience, but I do want to be changed by the experience, have some element of mastery. So that’s no to the beach, anything that ends in -collecting, yes to things that involve some sort of art and craft, or reward for effort. So of course the first thing I go and do to celebrate is purely consumptive, but in experience

The Swan hotel in Lavenham
The Swan hotel in Lavenham

I stayed a couple of days the Swan at Lavenham with Mrs Ermine for a short break. Apparently much used by London types up for a weekend, from Mrs Ermine’s chat with the spa staff. I drank coffee and spent time in the peaceful courtyard reflecting, reading and listening to the birds.

the courtyard
the courtyard at the Swan in Lavenham

The Londoners clearly know a thing or two about demanding high standards for the grub, because it was excellent on both nights in at atmospheric half-timbered hall. I then had got Mrs Ermine a couple of hours of owl flying experience with Lavenham Falconry. She’s mad on owls, and you get to see them close

Barn owl
Barn owl

though personally I’d say getting up this close to this great big lump was too close for my liking.

Steve the proprietor with Bonnie the owl
Steve the proprietor with Bonnie the owl. That’s one big owl IMO…

I ducked every time this one came close 😉

Inside the Guildhall
Inside the Guildhall

Lavenham is a nice part of Suffolk and the Guildhall was worth a gander (does a very decent afternoon tea and cakes too). I was taken by the mummified cat, there to ward of evil spirits coming down the chimney, a common feature of mediaeval Suffolk buildings – there’s one hanging from the ceiling in the tiny bar of the Nutshell in Bury St Edmunds too.


The NT have a nice feature that you aren’t hit by the grisly sight from the off, he’s respectfully covered in some cloth, but the temptation to peek is too strong…


The village itself is all wild jaunty angles of the ancient half-timbering in many places.


A couple of weeks later we stayed three days at a dedicated spa, because this is something that Mrs Ermine really enjoys, and we went to Norfolk for a couple of days. Some of this I have to pack in in a short while because it so happens this is a better time of the year for her to be able to get away from the farm for a bit because of the vagaries of the growing season. While I have the time and now the money, she finds it harder to go away for more than a few days, which favours the fast and furious sort of decadence rather than slowly ambling along on a journey of discovery which I will be able to do on my own.

a requiem for The Firm’s sports and leisure association

One of the things I will mess around with again is amateur radio, despite the fact that the Internet happened between when I was a youth and now and has pretty much destroyed the whole point. But it’s an excuse to climb some of Britain’s hills[ref]most things radio work better with more height, which is the relevance of hills[/ref] and make contacts and gawp at the scenery, a little bit of the experience and being changed by the challenge. Now when I joined The Firm, as a joint full of electronics engineers pushing the boundaries at times there was a very active amateur radio society. I never did much with it then because you need time. So many recreational interests are like that, you need time in the field to get any good.

POTUS with a Blackberry - in Nov 2014 WTF?
POTUS with a Blackberry – in Nov 2014 WTF?

And time is something we don’t have while working, and it got less with the always-on way work drifted after 2000 as mobile phones poisoned the work/life balance after the Crackberry (who remembers that from 2004, eh?). Time is not just the total number of non-work waking hours, it’s also about how many contiguous days of them them you can string together.

I joined The Firm in the late 1980s as a twenty-something pup. In a research lab you are surrounded by clever people and there is always something more to learn, but The Firm was more than a workplace, it was a community, albeit a somewhat strange community. It was intellectually biased and technical/electronics engineering biased. Let’s face it, at times there were issues of personal hygiene in some places where guys spend too much time thinking, I actually switched job t at one time because I couldn’t stand the hum in the office from one fellow, though he was brilliant at what he did. And the girls in the town did get to know that while the odds were good (engineering facilities tend to be very male-biased) the goods were odd…

But for all that it was still a community, and a vibrant community in that the social and leisure association had a dizzying array of clubs and societies, on all sorts of things. I used to borrow records then CDs from the music club, I spent lunchtime for a few weeks trying to learn Japanese. With a deep loathing of sports and particularly team sports that started in schooldays and persists to this day I was never going to see the point of half the clubs, but it was good to know they were there.

In browsing on the Web I saw traces of The Firm’s radio society, but it’s a pale reflection of its former self, last significant news from 2009. I looked at the website of the umbrella leisure and social society and there’s a whiff of tumbleweed around there too, of the 19 clubs all are sports apart from the radio society, photography, angling, sailing and golf. There were three times as many when I was there, and it’s only been four years… Not only that but the link to the radio society goes to a lapsed domain. I still clearly remember the all hands meeting when a head of department said ‘although we are closing many of the labs we aren’t turning this place into a jobbing shop’ and while I subconsciously picked up that he was lying because I remember the oddness of the statement and shiftiness still now.  I failed to consciously pick this up, nor to take the corrective action which would have been easier to do from 2000 that it would have been ten years later. Oh well.

It’s all a sort of creepy independent verification that this particular outpost of The Firm is a pale reflection of its former self. It’s also a signal of a wider malaise, where form is prized over function, which seems to weaken physical communities. I was talking to a bunch of people at the Aldeburgh Food and Drink Festival. They’ve been going round schools showing kids how to grow stuff to eat and all good things like that, but they were now getting stonewalled as schools cut out everything that doesn’t go into pumping up something called SAT scores. These are primary schools, by the way. And people used to bitch about the eleven plus FFS, but now we measure the little tykes twice in primary school, comparative to each other. Well, I suppose you have the groom the youngsters for the ghastly world of performance management at work, though it seems a little bit tough to do that at primary school. School is a larger part of a child’s world now than it used to be, with parents working and commuting long hours. You’d have thought eliminating the broader education of how they fit into society and where their food comes from for example, in favour of the misery of metrics draining the meaning out of life is a regressive move. But fortunately this is not my problem, though it looks like a rum way to run a school to me. My primary school, in the 1960s urban wasteland of inner London, found a way to take us ankle-biters out to see nature. And still get some of us to pass the eleven plus despite the shocking digression into the sordid realms of General Knowledge.

I’m reading Nicholas Carr’s The Glass Cage, where automation is leading us, and he seems to make a cogent case that our thought processes are becoming shallower, that the hive-mind or the Big G will fix things for us. I mean hell, Amazon will sell you a gizmo[ref]Amazon Echo is not yet available in the UK at the time of writing[/ref] that we used to know as a bug. For the convenience of ordering pizza you livestream everything said in your house to Amazon for their computing hardware to parse and answer your questions. They will of course, so not parse everything else you say to use in evidence against you feed into their algorithms so they can upsell you more consumer shit that you will have to spend more hours of your life earning money to pay for. George Orwell was absolutely wrong, we will buy the telescreens ourselves and demand to be heard, doubleplusfeelgood social media indeed.

Something else I learned is that while I take information in from the Web, I don’t gain deep understanding, compared to learning the same thing from books. Indeed, I’d also challenge the assumption that learning ability inherently decays with age. I was trying the understand the craft of designing aerials, and I spent way too much time on the Web, getting conflicting opinions. Then I pulled out a textbook that I had bought as a teenager. I had passed the radio test as a way to try and expand my application to Imperial College, though we didn’t have personal statements in the late 1970s there was some sort of CV and it helped to add bits to it. I had never understood that chapter, because I didn’t have the ability to imagine the electric and magnetic fields travelling through space. It was much easier to grasp this time, though I am 35 years older. By rights the younger me should have had no trouble, but it was the older me that made the grade, and turned some of the learning into action. Of course perhaps that is because I am a Physics degree and thirty years worth of experience later. But it is an interesting insight into knowledge learned from the Web can easily be, to pinch the words of Lord Kelvin “of a meagre and unsatisfactory kind”.

That’s not to knock the big G, after all in a fast moving world often you don’t have time to go deep, you simply need some sort of heuristic rough guess right now. But it was an interesting insight in how all too often the Web tells me how but not why. Somehow that doesn’t seem to be improving my understanding of the world, though it an get a specific thing done. I am not sure that the answer to this conundrum is to spend more money on Freedom to ice this chatter, as opposed to learning to switch it off more, but that is much easier for a retiree I guess than if you’re working, so maybe Freedom is onto something!

It’s one of the odd things about the cornucopia of information and stuff that we have around us – to use it well we must still know ourselves better, to know what do we want, how to gauge value and how to qualify the opportunity cost of doing one option of buying something, because every road travelled is a bifurcation with the road that was not taken. I once navigated that path by the need to avoid running out of money each month. I now want to navigate it more intentionally. It was necessary for me to escape the rat race that was freedom from. Living and consuming intentionally is part of the freedom to, not the freedom from. It’s inherently more pathless. I will no doubt spend money on crap in the future, what I want to avoid is doing it more than once, through deliberation, reflection and knowing myself. The only increase in spending I’ve done so far is these trips out with Mrs Ermine, because I have time enough to work out what I want where it doesn’t involve other people. I will change things slowly, only a few things at a time, because living intentionally can’t be rushed.