Musings on misadventure and market madness

I was listening to a young fellow on the radio who delivered himself of the observation that in lockdown the days are long but the weeks are short, and thought to myself there is wisdom in this 24 year old fellow.

It reminded me of Gretchen Rubin’s similar observation, that I watched on my office PC in my last month at work. If only I had seen that in the low-water mark early in 2011, half-way through my dispiriting passage out of the workplace. The half-way point in any long term goal is always tough, for you have committed enough resources to preclude other courses of action. And yet the final destination is not yet in sight. Rubin’s narration is cheesy as hell, as pretty much anything that involves parents talking about children is. But it is fluent. Part of our problem now is that we don’t know how long it will go on for. These days are long, and make for rumination. Such as

Did I err in jumping out of the market?

I jumped out of a lot of stuff in the second week of March. To put it into perspective I still have two-thirds of my holdings in my Iweb ISA. All my VWRL, all my HYP from way back. But I did make tactical errors in continuing to buy a little bit in 2019 despite the high valuations, although a lot of what I did buy was bonds and gold. But I bought some more VUKE in 2019. Bad move.

I sold all my VUKE, and other stuff I didn’t love. I have a Google spreadsheet of those sales, and it updates the current market values with the Googlefinance option. Those sales are still well worth having made, but the notional reduced losses have fallen by two thirds, because I did not account for the wall of money that was created and thrown into the system. This is not a crisis of confidence. It is an exogenous shock to the system. So far that has been rugby-tackled to the ground, in the view of the stock market, by a wall of money. Jolly good for the market, and us as asset holders. It’s a little bit shit for everyone else, though, no?

The hazard has changed from losses to inflation IMO

I am badly exposed to inflation in the long term, because half my income is an annuity, albeit with some inflation protection, but only up to 5% p.a. Any time inflation goes above that, I get permanently poorer for the rest of my life in terms of income.

Now to get this into perspective, there’s only a need for the tiniest of violins. There is some awesomely bad shit going down. Deaths are up, running about twice average for the time of year. As for the living, many people have lost 100% of their income, and there are some poor bastards who are sleeping on the mean streets of London because they used to work in restaurants and live in lodgings. Now they have no job, no money and no home. Half of the world’s workers’ jobs are under threat. The UK seems to be making a particular bugger’s muddle of handling coronavirus.

The John Hopkins tracker currently shows the UK has roughly 10% of the world’s Covid-19 deaths, which is a little bit crap for a country with 0.87% of the world’s population. Let’s hope that the good folk in London who are of the opinion that most people in the city have been exposed but were asymptomatic are right, because if this is what success looks like I hate to think what the face of failure is. At the moment if you’re a confirmed case1 you have the same chance of pushing up daisies as playing Russian roulette. Let’s look on the bright side. You’re likely to join Graham Greene on the side of the living. But the odds aren’t terriffic. Enter a hospital in the UK and they put two bullets in the chamber before spinning it. You really don’t want to see Arnie  in your hallucinatory dreams in the ICU, do you?

So I am hoping that I will be one of the lucky ones and inflation will be my problem 😉 If not, well, hopefully I have made a decent start on this recent investment

Life is too short to drink rubbish wine, and I’ve definitely not drinking homebrew wine again… There are a few months’ worth in there. In the end what will be will be.

So I took a look at iWeb, and pulled up their valuation for January. I am 13% down, and I haven’t added or taken anything out, avoiding the Beardstown Ladies Common Sense Guide to Investing error2. So I’ve had a relatively good war, so far. January’s valuation was fully puffed up with irrational exuberance, because coronavirus was only a thing that happened in China at the time.

I’ve no ‘king idea what we are doing up here mate…

I used that quote a while ago. It applies now, in spades. I take a little bit of solace that my ISA asset allocation is a lot less equity-heavy now.  It is about 2/3 equities with the remainder in a mix of mainly gold and cash. I don’t do property. Property is evil in my experience. I got out of commercial property a while ago.

I don’t do bonds any more either – I had IBGE as a salve against Brexit stupidity, but I don’t want to hold anything associated with Euros, because I fear that going titsup. Italy, Spain and maybe France have made a bigger SNAFU of coronavirus in terms of numbers but we are behind their curve, I am sure we will cock it up more3.

However, economically we can print our own money, so although I think the UK’s insouciance will cost us more lives per head, there’s going to be an ugly economic reckoning to be had in the Eurozone along the whole one for all/all for one axis. It really does go with sharing a common currency.

People cleverer than I hold US treasuries. They probably have longer investment horizons than I, plus I already have a massive bond holding in terms of the annuity that is my pension.

So I have a third of the ISA held in gold and cash. Plus I have premium bonds to cover this year and next years’ ISA allowance, so I have liquidity. I should remember that the value of those premium bonds is going down the toilet, and the next two years is probably a bad time to hold cash on that front. OTOH you need to watch gold. Had I bought gold on retirement, back in June 2012, I would have been a sick puppy until recently. Not one to hold for years.

Where do I think this market is going?

Down, down, deeper and down. In real terms. We haven’t got anywhere near the end of the beginning IMO, and an awful lot is unknown. Current market levels look like madness to me. I am buying, because I have seen madness before and been wrong about it. When VWRL gets close to what Iweb tell me I paid for it4 earlier, I buy some, although I don’t really think now is an illustrious time for index investment. Sadly it means I have added to VWRL twice now. I’ve owned it for years, clearly I didn’t call my original buying times well, eh? Or perhaps it is just that I moved in that direction in the second half of a bull market. I am also buying UK smallcaps, because: greed and fearfulness.

But I am not moving fast, up to a grand or two a month, because if Warren Buffet is sitting on his hands because he can’t work out where this is going, then perhaps I should take a lead there. On the other hand WB probably holds his cash in something inflation-proof, though I bet it isn’t gold, given his view on the barbarous relic. The value of my cash is being destroyed, which is why I will consume that first before starting to run down some gold.

I am greatly at variance with the market’s opinion, which seems basically ever upward. It’s back in bull market territory, FFS. Along with Monevator (so far justifiably) berating me for my excess of cock, there be grizzled ghosts of markets past that whisper in my shell-like “don’t fight the tape” and “don’t fight the Fed“. Talking of which, the last article has a staggering graphic of the S&P500.

All these big fish on the RHS are having a good war, and Uncle Sam is pouring money into them

I confess I am amazed by the size of MSFT relative to the others and thought FBK was bigger. Oh well. You don’t hold the SP500, you say? The Ermine is not an index investor5, but VWRL is my largest holding by far, and I hold a lot of L&G Devworld exUK. I hold a lot of the SP500 for the simple reason the US is over half the world index by capitalisation. And half of that half is MSFT,AAPL, FBK, AMZN, GOOG. These guys are having a good crisis, and social distancing can only add grist to their mill. Along with Trump’s billions. If you are an index investor you are having a good crisis because a quarter of your holdings are having a great time. Concentration is not always a Good Thing of course, the FTSE100 was very oily and finacials and look at how that turned out, eh.

What do I wish for?

An honest bear market. I am old, and at the end of my investing career, and yet still I yearn for one last fling… I also yearn for a reckoning of values, rather than taxpayer’s money being spaffed into inflating asset prices for the second time in a decade. I hope airlines get pummelled and many low-cost airlines especially Ryanair go bust. I’m sorry, but foreign annual holidays are not a yuman right, never mind four or five.

I don’t want to see people mithering on Facebook about how much they care for their children’s futures while posting pictures of their fourth flipping foreign frolic that year. Be the change you want to see and all that. I’m with the UN here. Let’s not bail out companies that actively screw the environment. We may not summon up the balls to discourage them, but FFS to aid and abet them? We really, really, don’t need more mass leisure air travel. Some is good. More is not always better.

For God’s sake save us from the charade of leaving airline middle seats empty. I’m with Ryanair’s O’Leary, for different reasons. You don’t get to social distance on aircraft, because of recirculated air and the sardine can thing. Sure, the WHO tells us recirculation is all tickety boo, what with HEPA filters and shit like that. I’m sure they work dandy and kill viruses stone dead. I am not quite old enough to remember smoking on aircraft, but I sure as hell can smell people’s perfume and BO from more than a seat away6. If you’re going to run aircraft, pack ’em in to reduce fuel per punter. Won’t somebody think of the grandchildren?

If you fear getting Covid-19 on a plane then ask yourself why they stop serving peanuts on a flight where someone has notified a nut allergy. Exactly what is the process whereby peanut dust spreads throughout the cabin but coronaviruses stop ¾ of a seat away? Is the guy in the row in front/behind you a seat’s distance away? Maybe in First Class. What happens when the lady in the window seat needs to go to the bog? Leans over to grab a glass of Chablis? Inquiring minds would like to know how this voodoo works. Perhaps airlines have tamed Maxwell’s Demon?

I don’t have anything in particular against the poor bastards that work for those industries, but I do hope that we take stock, both for the noise pollution, the endless scarring of our skies and the sheer wastefulness. You can now see in the blue of the skies what the cost was. You can smell things more, though that’s probably lower traffic pollution. There is a price to pay for all that gratuitous travelling, and because it built up slowly we never had it thrust in our faces just what that price was.

As a teenager I recorded sparrows and song thrushes7 in my parents’ south east London garden with my cassette recorder, and aircraft noise was not a problem, I could get 15 minutes of tape between one and the next. 40 years later when I extracted my aged mother from that place, there was a jet screaming overhead every minute and a half enough to make you have to yell to be heard. London airport is in West London, not the southeast where she was, although I think City Airport had a particularly bad effect on aircraft noise in Greenwich. City airport didn’t exist in the 1970s.

In the 1990s a return flight to Europe was about £200 (probably ~£450 now) and to the States was about double that. That’s about right IMO, as a pleb you can do it if you really want to but not more than once a year.

We need far fewer flights, and at higher prices. While we’re at it, airlines need to at least pay VAT, rather than get stringless bailouts. Some travel does broaden the mind. AirBnB racking up rents for Amsterdammers and people in Barcelona? Perhaps not such an unalloyed good.

Once again, some is good, more is not always better. Unfettered capitalism just doesn’t do balance, particularly if it can shift the costs onto some other sod who isn’t involved in the transaction. That’ll be the sleep of those in the noise shadow, and people suffering the pollution, and locals unable to afford to live in their home towns from AirBnB. And all of us suffering ever increasing jet noise and scarred skies.

Greetings, sky unscarred by Ryanair, BA and Easyjet. The blue is deeper and graduated more towards the zenith. This is straight out of camera, apart from cropping out the telegraph pole, no filters, colour or level adjustments 😉

In the 1940s it was decided that air travel be exempted from fuel taxation with tax breaks because

WHEREAS the future development of international civil aviation can greatly help to create and preserve friendship and understanding among the nations and peoples of the world, yet its abuse can become a threat to the general security; and

WHEREAS it is desirable to avoid friction and to promote that co-operation between nations and peoples upon which the peace of the world depends;

and industry lobbyists have pushed hard to keep those exemptions for 80 years, so that nation may speak peace unto nation, such as British stag parties  pissing on Latvian war memorials. Those 1940s stirring words are a little bit like the Second Amendment, sounded like a terrific idea and addressing a need at the time, but really hard to get rid of when the Law of Unintended Consequences turns it into a malign influence as the decades roll by.

This is the second time in a decade that public money is hurled at companies without asking for ‘owt back. For the last 40 years we have been told that privatisation and marketisation is the One True Way and TINA. Is it really so unreasonable to demand that companies save something for a rainy day rather than paying massive CEO salaries and getting out the begging bowl when their risk assessments screw up? And if they can’t get that right, they should honestly go bust and taxpayers take them over, pointing them in a less antisocial direction before launching into the wide world again? What is this private enterprise you speak of, that all of a sudden becomes public in times of trouble? Should there not be even the tiniest quid pro quo when the cocky prodigal son runs back to the Bank of Mum and Dad for a sub?

Not even all salaries capped at that of the Prime Minister? What, Mr CEO, you say you have a legal right to payment for failure? Fine. That was with the old company, which appears insolvent. Would Sir like to reconsider his options, particularly the worthless stock ones? It’s a common ploy to make people redundant and apply for their jobs again at lower pay. Sauce for the goose and all that?

What else do I wish for? A thinning out of bullshit jobs. How come so many people can work at home without missing a beat? Perhaps it’s the Information Economy and they are all adding terrific value. We are all about to get a lot poorer for a while. Do we really need/want/afford all this intangible frippery? Alternatively, if we really do want/need all this intangible stuff and people can make it at home, then why, in normal times, are we putting them in cars and trains five days a week, and concentrating them like salarymen  in massive conurbations like London?

A chance to reorient priorities. All that money being poured into inflating the stock market could have been used to create a universal basic income. Many of us are too talentless to be gainfully employed in a modern economy which has less and less use for also-ran skill levels. Fine, you have to go live somewhere other than the middle of a big city, but you could have a decent life without having to prostrate yourself in front of the DHSS Universal Credit goons, who are performance managed on how many claims they refuse/sanction/deny because they can. If we are going to have a crisis where loads of government money is going to be flung about, why not actually use it to push things in a direction that, y’know, actually makes voters’ lives better?

It won’t happen. I bet that in a couple of years it will be back to the same old. But hey. I can dream. Of a world with fewer aircraft, less tourism, no foreign stag parties, groceries that taste of something, less rushing around. Economic possibilities for our Grandchildren, a telegram8 from an economic crisis of similar magnitude in 1930 to us. We are the children of those grandchildren 90 years down the line. More balance in all things. It’ll never catch on.

In the meantime, yes, I missed the market opportunity

I think TI and Magnus are probably right, in their different ways. I missed the bus.

I’m getting a strong gut feeling that the low’s been visited for the next year or two at least, until the next financially-driven recession, that I missed it, and that continuing to hang on to a “hey, where’s my next-leg-down” mentality could be damaging


Too much cock, mate, to precis TI 😉 It’s a fair cop, guv, at least in terms of what we know so far. I have hope for redemption in terms of the unknown unknowns. But it’s a long shot.

A couple of weeks after I sold was the time to buy. The window of opportunity was between March 18th to the 25th. The corresponding points in the GFC were October 2008  to August 2009. That’s OK. Screwing up is part of life. I am much happier with my 2/3 rather than 100% equity allocation, and if I am 13% down in capitalisation on January I didn’t bugger it up too much. I now have enough liquidity to pay myself a top-up to my pension from the cash across the next few years, should those years be part of my experience of life rather than facing Arnie’s Magnum in a delirious haze in an ICU. I’m not going to be collecting dividends from the ISA for a couple of years I guess, because companies really should be tightening their belts rather than paying hangers-on, and I am totally easy with that.

Plus I have enough firepower to take advantage should the market succumb to gravity in the next three or four years. So certainly I erred in what I expected to happen. But I gained peace of mind. And ammunition.

So my active heart of darkness, revisionist thing that it is, changed the narrative to call the failure of prediction a success. If it’s good enough for POTUS and our dear government to call abject failures successes, then I can call a 13% loss from January to now and enough cash-like stuff to get a good uplift in income till SP a success. As far as buying into the bear market goes, nope. Epic fail. I blinked and missed it.

Dammit, I still hope for that honest bear market in stocks yet to come. Sadly, I think the bear market will be in the value of money. And there will be more human suffering than necessary because governments seem to be prioritising corporate welfare over human welfare. Shareholders are rich. 30% of economic activity has been lost. They should lose money when everything goes titsup. The correct response to 30% of the economy shuttered for six months and some unspecified period of iffy hammer and dance is not to whistle a jolly dancing tune and keep calm and carry on after a flash crash as if nothing happened. And young, starry-eyed FIRE folk should have opportunities for a leg-up, should they be lucky enough to still have jobs and the required intestinal fortitude. And heck, grizzled old gits too. Bear markets are what the risk premium is all about.

There’s nothing wrong in principle in the deep pockets of public money being used to fight an unprecedented shock. But that money should first help the public, and where it helps future profits there should be serious strings attached to get some public good attached to those private profits. Recessions are times of change an opportunity to reshape the way things are done, and this one will be a big one. At the moment we seem to be throwing public money into propping up the same old same old. Shareholders are not the people most in need IMO.

For those of us who are fortunate enough to be basically OK in this strange time, it is a time to learn something new about ourselves. There’s a lovely poignancy to the conclusion to this article by Helen Sullivan:

The question, when all of this is over, is what those of us who weren’t knocked around by it – who didn’t lose our jobs or have loved ones die, who weren’t essential staff – will do about being the luckiest people in the world.

As the pandemic appeared in country after country, the healthy were urged to worry not about how the virus might harm us if we caught it – but how, if we then passed it on, it might harm others. It’s a pretty good philosophy when it comes to other choices we make – politics, consumption, climate change – too.

I’m not absolutely sure that is the current direction of travel. But it would build a better world. I shouldn’t be such a cynical bastard. Be the change, etc…

  1. Optimistic folk would say that is because because most cases are asymptomatic or don’t get near a hospital, so they are not confirmed cases. To bring the odds down to the same as flu it seems that 16 people take the hit but don’t get tested. 
  2. Roughly summarised, your investment return does not include the money you put in. It is all too easy to focus on ROI but for most of us return of investment matters too. 
  3. It’s difficult to know whether to laugh or to cry that it was Dominic Cummings who brought lockdown forward by a week. He’s bright, getting a First in Ancient & Modern History at Oxford, but not a scientific expert. And yet there will be people alive today who wouldn’t be if he hadn’t made that call which the Boss was still harping on about an Englishman’s right to go down the pub. Dom probably knows more about the urgency in fighting an exponential rise than his boss. Sometimes you can get the right answer in the wrong way, let’s not carp at His Evil Geniusness on this particular occasion. 
  4. iWeb add together the cost of all the purchases and divide by the number of units held to derive an average price. When that’s below the current price they show in green (gain) and above they show red (loss) 
  5. I was definitely not an index investor when I started with the HYP, but since booting out the trash earlier this year it’s starting to get a moot point. I don’t have the passion or energy for stockpicking a HYP like I had in 2009. Once upon a time bear markets were allowed to happen. But if my future investing career is going to be in a world where corporations too big to fail collect government largesse every ten years, then VWRL isn’t such a bad way of getting one’s snout in the trough. Seems a rum version of capitalism, though. 
  6. The sense of smell is molecules of people’s sweat getting into your hooter and reacting with the olfactory bulb. That’s the communication of airborne real physical stuff between them and you… 
  7. a forty-something younger teenager in that house will have similarly quiet skies at the mo, but sadly most of London’s sparrows have fallen off their perch and the song thrushes were giving up the fight already as I was leaving home. Something not right is happening in the Great Wen if the cockney sparrers lose heart and the last chirp rings out. 
  8. JMK me old fruit, I’m sorry to tell you that the jury’s in. It really didn’t turn out that that way. TINA ate your lunch in the 1980s. 

51 thoughts on “Musings on misadventure and market madness”

  1. Totally with you on your thoughts about air travel. I really hope that when we emerge from the current unpleasantness air travel (and cruise holidays) becomes permanently much more expensive. The planet needs that, and much more besides, if we are not to find ourselves in a state of even more extreme unpleasantness in the possibly not too distant future. It would probably be something that few of us, if any, emerged from.

    I also have a capped (5%) inflation linked pension. I’m not too worried about inflation going a bit over 5% as long as it isn’t for a sustained period, but I am (just) old enough to remember the inflation of the early years of my working life in the mid 70s. If this is to be believed ( ) it was 24%! That is certainly how I remember it and the surrounding years weren’t too clever either. Let’s hope nothing like that ever happens again, DB pensions and annuities would be decimated. Very good for existing mortgage holders (and indebted governments) though, not so much for aspiring mortgage holders.


  2. Hmm I don’t know I can’t help but think that this will hit the UK’s disproportionately service based economy hard.

    Who will want to go to Pret A Manger/Costa/Greggs when it has all charm of a visit to coldwar era Russian supermarket with only five options and added plastic screens?

    Who will want to go to a restaurant half empty of people where the waiter serves you in plastic gloves and a face mask?

    Who will book a holiday for 2021 knowing that the tour operator/airline/hotel chain you book it with may well go bankrupt and even if they do not you will have to fight tooth and nail and wait for six months to get a refund if you can’t go?

    Who would now buy a car on finance?

    What company needs an ESG audit, Diversity training or would undertake an aggressive overseas tax planning relocation?

    How long will taxpayers be expected to support businesses that are effectively dead for a year or two?


  3. Thanks as always for the links. Also, 18th-25th March you say?

    Get thee onto Twitter!

    With the hubris out of the way, I genuinely think you’re berating yourself too hard too soon. 🙂

    There could be a long way to go in this crisis before the stock market is out of the woods. Buying at the March lows should prove to have set up an investor well on a 2-5 year view, but anything could happen in the short run.

    Specifically, I think with all the monitoring etc we’re almost certainly past the worst of the health care crisis in the Western World, but as the Americans say the other shoe — the economic hit — is yet to properly drop.

    I reckon TINA is the only date in town, ultimately, but there could be hiccups in the relationship for sure.

    Liked by 2 people

    1. @22 March 2020 I am, and have been increasing equities and risk all last week

      Chapeau, sir 😉

      > with all the monitoring etc we’re almost certainly past the worst of the health care crisis in the Western World

      Hmm, call me a cynical bastard but what monitoring in the case of the UK?


    2. > Also, 18th-25th March you say? Get thee onto Twitter!

      OK, so that’s where your active stuff has gone. Now all I need to do is find out how to scrub out all the retweeting stuff and convert it into email. If necessary scrubbing it through Procmail, because the biggest problem eith social media is the absolutely appalling signal to noise ratio. Perhaps I should key on “active” 😉


  4. The data below is something I knocked up for my own interest, using RPI from 1916 to 2017:
    1910’s average inflation: 14.7%
    1920’s average inflation -2.8%
    1930’s average inflation: -0.5%
    1940’s average inflation: 3.9%
    1950’s average inflation: 4.1%
    1960’s average inflation: 3.7%
    1970’s average inflation: 13.0%
    1980’s average inflation: 7.0%
    1990’s average inflation: 3.6%
    2000’s average inflation: 2.6%
    2010’s average inflation: 3.1%

    overall average inflation: 4.1%

    IMO you are rather fortunate to have half your income inflation protected to 5%

    Liked by 1 person

    1. Doesn’t matter what the average rate is. It’s inflation above the cap (and some are capped at just 3%) in one or more individual years that will permanently devalue a pension. The reduction is not recovered in the years that are below the cap.


      1. Assuming you are talking about a DB scheme, strictly speaking what you are saying only applies to indexation – that is, increases once the pension comes into payment. Revaluation (from the point of becoming a deferred member until the pension is taken) however can recover over the years that are below the cap.


      2. @ Al Cam

        I was indeed referring to DB pensions in payment, and also to annuities with capped index-linking. What you say may well be the case for deferred pensions, I no longer remember. For me, and Ermine soon if not already, and many (millions of?) others, and holders of annuities, an inflation cap is potentially a serious issue if inflation takes off in the aftermath of the current situation.

        Liked by 1 person

      3. > For me, and Ermine soon if not already

        Yup, that’s me. But then OTOH the equity part of the ISA is there to defend the long term, or in the worst case give me something to run down. Although shares do nominally help you in hyperinflation, there is a nasty several-year lag that you have to survive. It is difficult to extrapolate from the German situation because of the war, and the stock market didn’t do that well in the 1970s oil shock. Having said that holdings were much more parochial and limited – something like VWRL would be spread over a wider territory than typical 1970s holdings


      4. @Ermine

        Indeed so, I have decent amounts in ISAs and SIPPs that would hopefully weather the storm of higher inflation and provide something to top up a devalued DB pension (within reason). Many DB pensioners, and annuity holders, would not have that luxury.


      5. Sean & Ermine
        No doubt persistent inflation above any indexation cap is bad news.
        However, there may be a little bit more to this story.

        a) DB schemes use a variety of indexation approaches – the best summary I recall seeing is given on page 63 at

        Click to access security-and-sustainability-in-defined-benefit-pension-schemes.pdf

        b) some DB schemes rules include provisions such that the Trustees do have some discretion to make one-off extra award(s) in the event of high inflation

        Having said that, if your DB scheme falls into the PPF then it is probably even worse!

        Liked by 1 person

    2. > IMO you are rather fortunate to have half your income inflation protected to 5%

      Absolutely, and hopefully acknowledged in “there’s only a need for the tiniest of violins”. The risk is not zero though, those decadal averages smooth out some tough years. ISTR the high water mark for UK inflation was 25% in 1975. Had I been unlucky enough to retire in 1969 from the looks of the 1970s chart I would be on dog food by the time Thatcher took power.

      My Dad did all right out of that though – it crushed the effective value of his mortgage, which he paid off on a single blue collar wage in his 40s.


      1. You are completely correct about the decadal average – I did it this way as I could not post a graphic as a comment.


  5. There are two things that keep this mad circus (aka the economy) going: 1) Debt (low interest rates) 2) Consumption. Governments will not countenance anything that affects these. They will print as much money as needed, take on as much debt, introduce stealth taxes etc as required – I learned this in the early naughties when I was convinced interest rates would go up (and so paid off the mortgage – bad move it turned out – mistakes I’ve made a few). What I hadn’t considered was how much money governments are prepared to throw at a problem. Knowing all that, and what happened in 2009, I bought as soon as the 2021 tax year allowed it. Sure, the next couple of years could be dicey, but on a 10, 15, 20+ year time frame?

    I said in the early days when The Germ was starting to warm up in China that this would be an epic test of people’s portfolio design and so it has proved to be. There are those that reckon indexes are the only game in town. I have a good mix of indexes, managed, gold, silver, cash and property (my own). I think Ole’ Harry Browne was on to something with his “Permanent Portfolio” or whatever he called it – updated for modern times though. I have berated myself for holding too much cash in the past, and still do, but I sleep well at night as I’m sure you do. The black dog of FOMO never goes away though.

    My own guess is things will go back to normal quicker than we think, people have short memories. They will go back to buying brand new Audi A6s and Range Rovers on finance and choking themselves slowly to death on the monthly payments, not to mention Gregg’s sausage rolls, before too long. 😉

    In a nutshell, this is the time for 1) Diversification 2) Long-term view. All just my 2 cents and damned if I really know what’s going to happen, I’ve been wrong before, and it’s a crowded club. All the best.


    1. ‘[…] (2) Consumption. Governments will not countenance anything that affects these.’

      The government just switched off the consumer economy for six weeks and counting so I don’t know where you get that idea from?


      1. In this case they had *no choice* but to temporarily switch off consumption to avoid people dying. But it means that a drop in consumption has to be countered by sky rocketing debt. To keep things ticking over, and those £600 a month car repayments flowing they’ve had to step in with unprecedented stimulus. Point is that the stock market was never going to stay down long with that sort of stimulus/support package kicking in IMHO.

        Liked by 1 person

  6. I have a feeling Virgin is on the verge of a rescue. Why we would bail out an airline that is half American and was already struggling I do not know. My biggest worry about this is they will be back again in a few months as air travel is unlikely to recover quickly. Best to let it fold and allow the administrators to do their work.


    1. Damn!

      I hope it isn’t. Less competition would be a very good thing in this area. The absence of Virgin, Ryanair, easyJet etc = good news for our long-term future.


  7. It’s game over. There is no template for getting out of this mess. The getting back to normal will involve trial and error. The more the error, the higher the Ro. The higher the Ro, the higher the probability of a second wave.

    One can only describe it as the shit show it actually is, we are fast approaching a 1929 type depression. Will war follow? Who knows.


    1. Dude, pedo guy Elon hasn’t gone mad, he’s been barking mad for ever. I really cannot understand the almost universal fandom, I seem to be just about the only person resistant to his charms. He’s sociopathic at best. Yes, he’s clever. If he were the only guy in the world he’d be fine. But having to share it with the other billions seem to sit ill with him unless they’re fanbois


  8. I think you’re being a little harsh on yourself Ermine; I had the dry powder (bonds) and the mental fortitude to start rebalancing into shares… and it was kinda over in a flash. I was pretty disappointed, I only went from 35% bonds to 25% – that doesn’t feel like a real crash at all to me. If I look at my VHYL chart now, the timing was pretty good and I think I have bugger all to show for it hah!

    I do agree with you that there can’t be a good outcome going forwards though – people are reducing spending 1) out of no other option (commutes for example, can’t go out to the restaurant) and 2) because they have little money to hand. They’ve been shocked out of their day to day routine and are paying down debt and holding cash ( ) to which I say good on them in this uncertainty but it’s not looking good for retailers.

    No customers means no expansion or orders for businesses – probably why manufacturing is way down as well:

    It will surely recover eventually but you can’t just stop and start an economy on a dime. And the longer this lock down goes on (which I do support btw) I think we’ll see more and more unemployed in the next year which cycles again to less spending, less businesses being viable, etc. But what do I know, I’m just a guy on the internet 😉 Amazed the US is still going at the moment when they are predicting 20%+ unemployment and they don’t have an 80% pay scheme like we do…..

    (Apologies if there’s a few too many links in this post)

    Liked by 1 person

    1. flippin’ heck, that two of you that got into the market while the Ermine was looking to pull on his boots. I clearly need to raise my game 😉 Chapeau to you too, sir!
      I question the selection of VHYL for a much younger fellow. Perhaps it’s taking some heat for that income bias. It’s constituents are quite different to VWRL. But maybe you have different aims/it’s part of a wider mix.

      The credit cards are interesting, though I confess irrational in people with no money who fear a serious liquidity crunch. I’d rack mine up if I were in that position and feared losing income – the costs of going bankrupt are not so terrible, particularly if you do not own a home, and there will be many in a similar situation, so you could get a fair boost to cash. If you are going to go down anyway, why not take the buggers with you and all that, plus there was talk of interest abeyance during the crisis.

      At the beginning of the crisis I prepaid credit cards – I bought a laptop that was man enough to run Zoom which my old one wasn’t. I used a credit card to get section 75 protection but paid the amount to the card immediately using Online Banking in case the banking system or the power system went titsup as I didn’t want to be carrying the interest. As it was those fears were groundless, but it would probably also look like an anomalous credit repayment in the stats. But there probably aren’t so many doing it for that reason.

      Liked by 1 person

      1. I have a mix of VHYL, VWRL and VAGP (global bonds) in my ISA which I would like to be slightly less volatile than my pensions which are very heavy in global trackers (and I can’t touch for 30 years) so yes, more of a diversity play than anything. And as more companies decide not to pay out dividends VHYL is likely (though not guaranteed of course) to drop further so I’m holding out for now. I’m re-building my VAGP holding with the new ISA year actually in case we do end up in that predicted recession. I still have a dream of being done with (normal) work at 40, so this also let’s me test out that ‘living off shares income’ theory 🙂

        When people are fearful they hold cash, generally. As I was buying, more were selling shares. I imagine if you’re renting and refuse to pay your rent / declare bankruptcy then no landlord in the future is going to want you, exceptional circumstances or not. Plus there do seem to be an awfully large number of landlords who have no spare cash buffer and are insisting on full rent payment despite government advice and are probably itching to evict their non-payers as soon as they legally can (or illegally in some places…). I’d certainly put food before rent.

        I fear there may be a large number of young, broke, unemployed and angry people soon – more and more as this drags on. Not a pleasant thought…


      2. > if you’re renting and refuse to pay your rent / declare bankruptcy then no landlord in the future is going to want you

        Those will have been the rules of the old world IMO. There’s not going to be much point in landlords demanding a clean credit check in the years to come because they’re going to struggle for occupancy, particularly at the slumlord end of the market.

        I’d like to say I had sympathy for LLs, but TBH if something finally rams it down BTLers throats that with free money comes tail risk then I think it will be time for celebration. Perhaps in the BTL fire sales to come we will see house prices come down to valuations such that there is actually a hope of starters to service the debt and pay down the mortgage over a 30-year working life, ie loans of 3-4 times annual wages. I’m sure something will be done to stop that happening.


  9. Good read, ermine, albeit with a slight flavour of being driven by the second or third bottle of the evening – forgive the calumny. Those Virgin wines must be rocket fuel.

    I’m afraid I’ve mentally flung my investor hands in the air – your wishes for a good old style bear market reflect (I think) my own problem, that I’m prone to writing scripts of what I believe should happen and then giving them preference over the real world for longer than is healthy. When the markets were down 35% by cob on Mar 20, and the FTSE100 had briefly gone below 5,000 and the S&P below 2,200, I did think ‘hmm’, but believed it was too early for the bottom and was too fixated on further falls to take the plunge. The speed of it all took me by surprise. The S&P leapt 10% on the 23rd (SMT up 16% that day…) and the mental game switched around to bear-rally-or-new-bull. My own position yesterday was within around 1% of peak a couple of months ago, so not really burned, but I’m still mildly flagellating with the bugger-if-only-I’d lash.

    I’m also still somewhat incorrigible on where things go from here. I’m not a big fan of conspiracy theories, apart from JFK of course, oh and the moon landings 😉 but I reckon it’s pretty clear that Trump has been leaning all his foul morbidly obese weight on Powell to keep the markets defying gravity until November. I do wonder if – unless even the most extreme interventions by the Fed no longer do the trick – the real reckoning hasn’t just been kicked a few months down the road. Call me old-fashioned, but at some point the markets have to address reality. Don’t they?

    100% with you on your environmental musings. It’s kind of tricky preaching reduced carbon footprints to the current generation if, as I was, you’re of an older generation who used planes like buses for several decades. I am old enough to remember smoking on planes: even further back the abundance of life in the countryside – I grew up in a small Somerset market town – all the birds, the grass snakes, having to clean the dead insects off the car windscreen after a drive. Ah well, another stroke of the whip to add to the evening’s flagellation schedule…


    1. > Those Virgin wines must be rocket fuel.

      Crikey. If only. This paranoid android was stone cold sober through this rant. We try and keep it down to two bottles a week max and spaced out, because it’s probably not the most intelligent thing to do to assist the old immune system. But it’s technically within the UK nominal spec ;). And wine is there to help with the things you can’t change. Coffee is there for the things you can.

      > Trump has been leaning all his foul morbidly obese weight on Powell to keep the markets defying gravity until November.

      The interplay between irresistible force and the immovable object continues. Could make for an interesting October/Santa unrally. I’m surprised at the high level of stock ownership in Trump’s base! They don’t look the sort.


      1. We limit it to two bottles a week, being one glass each with dinner on, say, six evenings out of seven. My cardiologist said he didn’t believe in the “give your liver a rest” doctrine. If you’re drinking so little, said he, keep it steady. The liver will easily get used to it and flourish.

        I decided to follow his advice because (i) it suited us well, and (ii) much of the other stuff he had discussed with me suggested that he was an intelligent and reflective chap. He was particularly interesting on how I should choose to die.

        Liked by 1 person

  10. With you on wishing for a “normal” bear market, not this flash in the pan. But when money is cheap there will be a load of it sloshing around ready to deploy. There wasn’t real fear out there – it was spectacle. And we never really got out from under the last recession. The nature of this one reflects the warped economy the last one gave us.

    I’ll be a spectator for a while, having been laid off this week. Going to be rough searching for a new job in an industry where 9/10th of potential employers are in hiring freeze.

    PS: the Universal Credit reference reminded me of Ken Loach’s I, Daniel Blake (2016) and I got angry all over again. Thanks 🙂


      1. Thanks fella. It was always on the cards after private equity scoundrels took over the company last year. Will likely mean a step backward career wise and likely a pay cut in the current environment, but I’m fortunate compared to folks who don’t even have an emergency fund to tide them over.


  11. Hi Ermin. I don’t think it is worth agonising about missing market bottoms.

    I’m close to 100% equities. The fear bit of my brain must be broken because crashes don’t even cause mild anxiety.

    At the bottom of the market, I felt fear was rife and with my wife’s permission pulled our 50k prep bonds and almost perfectly timed the bottom.

    I only own VWRL, and that 50k is only up 10 – 15%. Now, if I had gone entirely to cash at the top it would have been great, but what’s an accumulator to do?

    I’ve exhausted my liquid non equity reserves now so if we get another leg down I hope it is delayed/prolonged enough for me to accumulate significantly.


  12. Quality rant. Lockdown madness getting to Sir? Recently while in a narrow-laned supermarket, something in my peripheral vision triggered me into alert mode out of autopilot and I realised I had a shadow. Some guy was stopping and starting with every move I made, like a toddler game where you mirror the person in front of you. It was strangely unnerving and I left the corridor to let him pass before going back to look for the item I wanted because I couldn’t concentrate. It’s interesting how your subconscious picks up on behaviour different to what you have been socially conditioned to accept as normal and alerts you to it as a possible threat, it must have initially questioned his sanity.

    Re: the economy, I think a lot of people have not yet realised how chaotic the ructions in the oil/energy markets will be, I know someone newly jobless from the oil industry who says that for technical reasons alone a lot of wells shut down now due to non-viable extraction prices will not be viable to re-open too. I’m still trying to work out the wider repercussions of reduced long-term supply, even given significantly lower demand in the short to medium term as the global economy wallows in a depression for quite a while.

    Liked by 1 person

      1. > 5 years at high oil prices is in the toilet,

        Fat lady ain’t sung on that. Some Peak Oil theory suggested an early manifestation of oil crunches would see increasing see-sawing of the price due to complex interactions between the price, demand and the damage done to production capacity of low prices. RDSB.L and BP.L are lower than since 1999 (or possibly 2003, I don’t have the resolution on the chart). You could double down on that electric car punt!


      2. > buy another one…?!

        Buy RDSB currently in the toilet at a 20 year low. Your electric car is a punt on higher oil prices, which will do Shell some good too. I’m not saying it will feel good…


      3. I’m not a truly active investor, more actively passive (buying ETFs). While I accept a small % of a global tracker features oil companies (they are huge after all), I don’t think I can ever morally justify to myself to directly hold their shares outright – potential returns be damned.

        I have solar panels and an electric car to reduce my usage of oil/gas – I’d feel like such a hypocrite to support them and hope they recover!

        Liked by 1 person

      4. I feel old. And cynical. I admire your principled stance. And who knows, in the world that may result from our first written warning perhaps your graceful idealism will prevail.

        We may learn that we are much more than the sum of our economy and our empowerments, that if we stand for nothing we must accept everything. A tip of the hat, though it is too late for me 😉


    1. What a delightful website, I look forward to indulging my inner curmudgeonly self over a few hours. With, of course, a generous side serving of inherent irony given the means!


  13. You are 13% down since January. I’m 20% down since January, or 23% down since December. I think my UK and income bias has had an adverse impact. Global growth would have been better.


  14. The graphic for the S&P500 is staggering ,if it’s meant to represent market cap, the stocks concerned represent around 20% rather than 50%.

    PS I wouldn’t worry about your market timing, the initial shock was quick, as was the bounce back, but there must be a reasonable chance of severe volatility ahead…


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