Ground Control to Major Tom–turbulence ahead

What are the five most dangerous words in investing?

It’s all different this time

Actually it was Monevator who spotted the turbulence, and even he had to admit he was winding y’all up with the clickbaity headline. He’s a much better headline writer than I am, anyway. Plus an George Orwell-esque intolerance of waffle, which is why he shot the long-form “the high price-to-sales multiples / low profit stocks” in favour of growth stocks. Now where have we seen high price-to-sales multiples / low profit stocks before? Ah, I remember, the dotcom boom. I made money in the dotcom boom, despite quite shocking levels of churn

Contract notes from back in the dotcom days. I keep these to remind myself. Do. Not. Churn. Just don’t. There’s an argument I spent far too much on churn, reducing retained profit, these were £12.50 a turn dealing fees which was considered cheap at the time – about £20 in today’s money. But i did get ahead.

Where I screwed up was after that. One was not selling anywhere near the top, and the second way is hanging on to enough of this shit till deep into the suckout and selling out into cash. The chart is in that post. About seven kilosods down the tubes, and the Bank of England tells me that this is equivalent to £12,000 in today’s money. Well done me, eh?

Oddly enough I consider that tuition fees in the art of investing at the University of Life. You can spend a lot more that that in getting taught to be a shit-hot day trader, and people invest more than twice that much into going to uni. The edge I had on them was this was money I had earned, rather than borrowed, and the investment was repaid handsomely in carrying me from when I picked up this bat-signal in the teeth of the GFC.

I didn’t believe him one whit, but needing to get out of the workplace ASAP because otherwise the management crap and miserable metrics would have driven me round the bend I figured it was worth a punt. I had reason to be grateful to that signal, and the training in what not to do, so that doing pretty much the opposite looked like it was worth a go, and when I cleared the workforce three years later it, and the training, were vindicated.

Anyway, turns out the Ermine has had a windfall of late, to add to that from last year, of shorting the suckout. It appears I will continue to be a net accumulator for a little longer. I have too much in cash, and my asset allocation has been crouched in a defensive pose. Cash is not good in current inflationary times.

For pretty much any time over the past 10 years the obvious place to invest capacity I don’t need for spending would be the stock market, but it’s not the obvious place for me now. Valuations are sky-high. Some of this is apparent – loads of money has been created, firstly in trying to dodge the longer recession we should have had after the 2007 GFC. And now with the coronavirus pandemic. I’m not a head-banging Austrian school nut-job, but companies going bust is how capitalism flushes out old forms and misallocations of capital, and low interest rates foul up this mechanism, zombie old forms clutter the system up and starve the new of capital. Personally I feel the place for government is to soften the blow and help reallocate people who suffer the result of these forces, rather than driving interest rates down so companies that should go bust don’t, but that’s not a majority view – we didn’t support people made redundant after Thatcher destroyed mining, we haven’t done that in any of the other layers of creative destruction since. These failures alienate more and more people and weaken an established order, in the words of Gramsci

The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear.

This process started pretty much at the start of my working life in the early 1980s, as Thatcher and Reagan remodelled the post-war international order into what is now called neoliberalism, this is illustrated at length in Milan Babic’s ‘Let’s talk about the Interregnum’ article. Some of the morbid symptoms appeared PDQ, but not in areas I was particularly exposed to.

Drive through some of the old Welsh mining valleys, and you still see some places where hope went to die 40 years ago. My Dad carried on working to the mid-1980s as a fitter until he was 65 and retired with a final salary pension but soon after that they cleared the place where he worked in the city of London (nowhere near finance) which actually made something, and turned it into a conference centre. His job would have been roadkill if he were a little bit younger.

There is froth and the stench of decadence in the areas of plenty.

I introduce you to the 20 minute avocado delivery in the Great Wen. Okay, a superyacht is a more egregious example of decadent excess, but most of you can’t afford that. I’d say we can all afford to pay £5+£1.8 for something that would cost half that if we walked to the supermarket, even if it were a Tesco Extra where everything seems to cost half as much again as if you walked a bit more to a regular Tesco. It’s hard to deny the decadence and the froth.

Gorillas grabs close to $1bn Series C funding …values the on-demand grocery delivery biz at $2.1bn

Series C funding is late-stage venture capital funding. Venture capital spends shitloads of money on vapourware. Why do they do that? Heck, so they can do the IPO, get their cash back and sell this shit to you in your passive index funds, rinse, repeat. Because think about it. Hipsters can diddle on their smartphone apps in the London loft spaces to have meal ingredients delivered by e-bike. Where’s the obvious catch? Surely it’s that the self-same hipsters can diddle on their smartphones and have a fully-cooked meal delivered to their loft space, and have been able to pretty much ever since Deliveroo and Just eat. Heck, even when I was working in TV in the Great Wen  in the 1980s we’d ring up (on a dial office phone) for a pizza delivery if it looked like Production would wrap late.

Where have we seen this unprofitable firms worth loadsamoney movie before? 1999. But it’s all different now. Yeah, right. Why are valuations up in the sky? Because money is searching for a return, because there’s more bloody money flying about made to try and dodge the consequences of the global financial crisis and there are fewer places to park it where it does better than slowly die into the night, and it’s getting less and less discriminating about doing due diligence on whether that return has any real hope of existing. We are buying this fluffed up crap in our index funds. This sort of garbage is one of the reasons valuations are going up – there are too many companies

What’s this make-believe rubbish doing in our index funds? Some indexes require profitability for inclusion, but an increase in unicorns are a bad sign of irrational exuberance IMO

that are worth gazillions and yet don’t turn a profit. Still, look on the bright side. Valuations haven’t reached the heady heights of the dot-com boom. Things can only get better, eh?


S&P Composite CAPE (from Shiller)

A fellow on Monevator sensibly asked me why, rather than buying puts at the moment, I don’t

Why not just invest what you are comfortable with for the long term and just forget about the drops?

I’m not a young pup saving steadily from income for 30 years, so I don’t believe in the fundamental premise of index investing because I don’t have that many market cycles. I believe valuation (and indirectly, timing) matters in a cyclical market. Those valuations worry me. If they stay up in the air for a couple of years then I will have spent a manageable amount in puts. If they stay up longer, then yes, I will need to suck it up and conclude things really are different this time and stop buying puts 1. The equity purchases I will make between now and a couple of years will be up in the sky along with all the rest of what I have had for years. I just happen to be of the opinion this has to go titsup sooner than later. But if I’m wrong I can eat that too, the increased balance in my ISA will salve my dented pride somewhat 😉

For all that, my largest holding is in VWRL, but I am happy to say that the vast majority of it wasn’t bought at current eyewatering valuations.  But I’m not buying into this market large-scale at current valuations, and yes, I am prepared to pay over the odds to insure against some downside in what I have at the moment, because I perceive the downside hazard is a lot higher than the upside opportunity at the moment. It’s not a general view however, and again, a lot of money is flying about the place. The inflation manifesting itself now is one symptom of that – consumer spending seems to be strong in those households that saved money through the pandemic, and in combination with the lost capacity.

Inflation worries sort of jumped me into working, at a fairly minimal level. I guess I need to be careful to stay below the lower profits limit, since now I have a full state pension entitlement there’s no point. It is surprising how the lower profits limit is twice as much as the upper earnings limit, where permies start to pay NI. I am selling pure mind, so pretty much all my pay is profits, and because of my pension I pay tax on all of it. However, I will charge out my replacement computer against income, because the old one was driving me bonkers with the fans screaming as the CPU overheats due to the thermal paste drying out. And it is time I charged my IET/chartered engineer registration to tax again, even though it is largely vanity 😉

But when I sit down and actually think about it, there is no earthly financial reason why I am working. It’s not a permanent job, so it doesn’t protect my future against inflation. It doesn’t really shift the needle on the dial, my dividend income works harder than I can. But I carry on because it gives me connection with a different community of people, and it turns over the grey matter. I have seen a couple of very serious cautionary tales over the pandemic – one fellow I know, bright but seems to have dived down the rabbit hole and is almost a hermit. And another is drifting that way. These are hidden hits of the pandemic. Pandemics accelerate trends that were already latent, in society at large but also at the micro level it seems.

Inflation is bad for me in terms of the pension, since it seems likely that it will overtop the cap, and for cash, and it favours the stock market as a poor choice among those available. At 5-6% inflation, if for example, I sit out five years in cash trying to avoid a 30% drawdown in a bear market, I may get to eat a 30% drawdown in the cash instead. Valuations seems particularly high in the case of big fish, this is, of course, most of the market capitalisation in VWRL. I am trying to diversify away from those high valuation stocks in new purchases. In the flash crash of last year I was buying VMID which seemed particularly beaten up, and I have been adding to that holding. It is now trading sideways, and has a poor yield of about 2.5%. Back in the day I wanted to avoid drawing down capital, but as it is in covid times I find it hard enough to spend my regular income.  I have still never drawn income from the ISA, because just as I started to run out of money drawing down my DC SIPP my main pension came on stream. So I can let that hangup go.

There does seem a greater trend towards tax and spend, which implies minimising my taxable income. That means reorganising my ISA, booting the gold ETFs out into the unsheltered GIA by selling it in the ISA and then buying the same amount in the GIA with new cash. The proceeds in the ISA let me buy shares and shelter the dividend income from tax, which wouldn’t be the case if I used the cash to buy the shares in the GIA. But I do get to eat dealing fees and the spread on the gold 😦

There be turbulence and hazard ahead. I do wonder how many people will be talking about FI/RE if the big One comes in the next couple of years. It’s all looked terrifically easy in a stock market that only climbed higher over the ten years since the GFC, with the exception of what turned out to be a deep flash crash due to Covid last year/ Even at the low-water-mark of that, valuations were getting on for twice the value after the GFC.

Something stinks to high heaven about valuations to this mustelid snout, but the rapid increase in inflation is robbing us of the opportunity to sit out on the sidelines. But I am mindful of Gramsci. This is the interregnum, and morbid symptoms appear. One of them seems to be stratospheric valuations. Unicorn shit is on the rise.

  1. Shortly after that no doubt the Big One will hit us all, because life is like that. You don’t have to win every punt if you take an opinion, these are relatively cheap, though throwaway 

Safe haven by Mark Spitznagel

Try imagining a place where it’s always safe and warm
“Come in,” she said, “I’ll give you shelter from the storm”


I bought Safe Haven by hedgie Mark Spitznagel from a recommendation in one of Monevator’s comments. I’d agree with the comment that the book doesn’t leave you with anything actionable, but perhaps as Dion Fortune said of the Cosmic Doctrine, the object is to train the mind, not inform it. This Spitznagel achieves IMO. It isn’t a long book, I read it in a couple of hours in one sitting, albeit punctuated by watching a movie with Mrs Ermine.

Reading has its systole and diastole, which is why cramming is tough, which is why doing something else midway lets you digest it better – Darwin was a fan of walking for this purpose. I only find that useful for when I originate something creative, but the movie improved the digestion of the book’s 240 pages, presumably by letting something in the background reflect.

Spiznagel is pretty full-on, a reasonable storyteller, and uses metaphor and analogy well. The main takeaway is that many of us  evaluate investment prospects by expected value. Despite the standard FSCS warning that past performance is not a guarantee of future results, that’s sort of what happens. The author disses macro investing, and goes on to make the assertion that managing (tail) risk can be cost-effective. In particular, that it can improve your compound annual growth rate (CAGR) without costing you performance

cost‐effective risk mitigation—or raising compound growth rates and thus wealth through lower risk—is really our comprehensive goal as investors.

Spitznagel, spends the rest of his book showing you how you can recognise an asset class that could do that.

Tragically for you and I, dear reader, that asset class isn’t something that you or I could go out and buy, or synthesise from something we can. It might be possibly in the hedgie world. I am somewhat glad that intuitively I found one of the few assets that sort of comes close-ish. The book also has value in showing that you can compute the optimal amount of that asset class.

Yes, there really is a buried treasure for investors, one that solves our monumental problem by showing that the great dilemma of risk—the ostensible tradeoff between higher returns and lower risk—is actually a false choice. […] We need a more holistic approach; we also need a treasure map to know where to dig.

But just because that buried treasure exists doesn’t mean we will ever find it. The greatest value—more than in the treasure itself—will be in what we gain from the hunt.

I was tempted to issue a refund request, having gotten to the end and being told that the ideal was a chimera, for civilians at least, and since less than 24 hours had elapsed between buying it I would have got away with it.  Amazon track how much of a Kindle book you have read, though I don’t have a habit to returning Kindle books so I’d probably be OK.

But after sleeping on it I came to the conclusion that I did learn something, but in a Dion Fortune like way. My mind was trained, not informed. Most non-fiction reading is to inform the mind. So I got my £15 worth, but it wasn’t the £15-worth I expected.

Spitznagel insights – training the mind, not informing it

Take the Saint Petersburg dice game, a single roll of the dice offers


Wotcha going to pay to play this game? The expected value is ($1+$2+$6+$22+$200+$100000)/6=166,705

but I am guessing most people wouldn’t pay that much, intuitively. It seems obvious that with five chances of being largely wiped out you wouldn’t pay the expected value. Bernoulli’s computation shows if you compute the geometric mean of what you end up with, you can estimate what a reasonable proportion of your total wealth you would pay for this wager. If you had £100,000 then paying about £37k or less to take part gives you a better than even chance of ending up better off. It quantifies the fact that you can take more risk if you have more capital that you don’t immediately need.

Reading the methodology gives an analytical solution to the gut feel approach, and is intriguing. However, the training not informing shows, because most risks you take give a return proportional to amount you put in. However, Spitz has only got started at this point, and he uses a sequence of returns that includes a catastrophic loss (to 0%) to show that where you have a sequence of returns that build on each other then risk mitigation can be worth while,

The arithmetic cost of its risk mitigation is more than offset by its geometric effect—such that its net portfolio effect is positive.

Most of us invest in a single lifetime of a specific sequence of returns. I still remember hearing my German great-grandmother describing sequence of returns risk – they lost their (financial) life savings twice. Fortunately most Anglosphere stock drawdowns aren’t that extreme, but Spitznagels view on central bank meddling suggests that this is not an immutable law of nature, particularly in a declining Imperium.

The Spitznagel edge

Spitznagel despises modern portfolio theory, which is the rough assumption that you buy a mix of less volatile but lower-returning assets like bonds and more volatile but higher returning assets like equities. Inherently in that mix is the takeaway that you will give up some return, and Spitz has no time for such milquetoast ambition.

However, to this mustelid reader he spends a lot of his book in search of something that you could replace bonds with, bonds being the most common MPT risk mitigator of choice1.

As one example, say at the beginning of the ISA year I could save that £20k in an ISA, less an amount that I could go to an insurance firm and say here is £x. If this time next year the market falls more than y%, pay me some lump sum proportional to x (but note NOT proportional to the fall, this is a cliff-edge function and therefore non-linear).

He spends a fair amount of time showing how you would compute the right amount to spend on this insurance, and in his examples it’s not very much. I haven’t given enough thought to whether you can do this with options and CFDs, but I don’t know of anywhere you can go to buy this sort of thing.

You can spreadbet against losses, but in general it is always cheaper to simply buy less of the asset and sit on cash. I have spreadbetted against my ISA in times of market turmoil, but that’s not the same as doing this steady state, which is an exercise in futility.

However, to return to the training the mind aspects, one of his key statements is

We experience profits and losses and all accounting ledgers arithmetically; we experience life arithmetically—one thing after another. This is linear thinking versus geometric thinking. It’s a big difference and essential to our understanding of risk and the disastrous impact of losses on wealth. But it is highly counterintuitive. Here you face an inconvenient, uncomfortable but crucial truth:

Your raw, linear returns are a lie; your true returns are crooked.

Bernoulli’s call to map returns through the logarithmic function was thus a normative one, not a positive one. In basing decisions on the geometric average of expected wealth or returns, not on the arithmetic average, Bernoulli was showing us how we should view risk—not how we necessarily do view risk. And this is precisely where economists got it so wrong.

I find this reasonably compelling. It’s not totally new to me but this exposition is good. I have no idea of if economists got this wrong, but we generally experience a particular sequence of risk. In both the housing market and in the dotcom bust I experienced that the crawl back from a double-digit loss is long and slow, and best made up by Saving More than trying to make it back in that market. If you lose 50% you have to make a 100% profit on what you have left to get back to where you were before.

Some of this you can lean against by not being 100% invested in equities – you reduce your arithmetic return natch, as you are less exposed to the equity market. But you improve your geometric return, because you live to fight another day. Spitz gives you the lowdown in the bit on the Kelly ratio, but again, what makes that less actionable for most is that having seen the value of your equity holdings go titsup in the markets you need to get right back on the horse and throw some of your cash into that now undervalued market. Easy to say, not so easy to do. That’s why people have bonds, and I have gold.  I don’t do bonds, because I estimate 25 times my net DB pension as a bondholding, and unless I get a fair bit older I can’t manage the right mix.

Theory would therefore point me in the direction of 100% equities. But I have had a pretty decent run, I don’t need to shoot for the lights, and sometimes comfort is more valuable than performance. So while Spitznagel wouldn’t approve, I take a lower expected return, because I can.

The big killer is there is no safe haven for little people

Spitznagel has turned the handle on all the things people typically regard as safe havens and qualified them against his specific criteria of cost-effective safe havens (ie they get your CAGR above the 95% confidence interval  of the S&P over a representative set of trial periods)


And the results are in. Little people, you are hosed. As it happens an Ermine does use gold (and there is a useful piece of the Spitz in how you qualify how much gold you should hold, about 20% is right for me)  But before you all rush out to buy SGLP, most of the trial periods where gold lifted itself into Spitznagel success territory happened to be in the 1970s, after Nixon repudiated the convertibility of the dollar into gold at a fixed rate. So gold may not be all that after all.

“Gold is pretty darn good. You just have to understand there’s been a lot of noise around it.” – underlining gold’s value as a safe haven, while noting that it performs best when inflation expectations are high, and historically it’s been inconsistent in mitigating portfolio risk.

Obviously if you can buy insurance on Spitznagel’s terms then you are off to the races. But those terms are tough –

Any punter can devise a trade that does well in a crash. The key is how do you do in a crash relative to the rest of time.

Yeah, quite. From his Yahoo Finance interview via Business Insider interview

“The Federal Reserve is manipulating the most important information parameter in the economy, and that’s the interest rates.”

“I have this expectation of destruction in the financial markets. That doesn’t necessarily mean that someone should just hide away, because that may not be the best strategy either.”

Where’s Clint when you need him, eh? Do you feel lucky, punk?

Spitznagel’s Universa Investments hedge fund returned 4,144% in the first quarter of 2020

An Ermine felt pleased to get out of the first quarter of 2020 with the black tip to my tail intact after selling some crap and shorting some of my ISA. DNFS – bollocks to that. Going for a 40-bagger, now  that’s ambition.

More Spitznagel

Spitznagel’s company Universa

Spitznagel on the FT (Oct 20 this year)

“It would be very hard for bonds going forward to provide cost effectiveness. Bonds really represent the canonical case of the mean-variance approach of lowering the volatility in a portfolio, but being poorer because of it.”


No book is ever gonna tell you what to do successfully as an investor.

Well, this one sure ain’t. There’s a lot of good stuff in there, and I am sure I have brutalised the principles from a mixture of a lack of comprehension, not being as smart as Spitzy-boy and the exigencies of making it into a post. Nevertheless, it will probably reward re-reading, though I am almost 100% sure that it won’t give me anything actionable. Training the mind, not informing it…

  1. TIPS is the archetypal risk-free asset class – risk-free, that is, if you believe the CPI inflation index used by the Fed, which is a different matter. 

Ermine abroad – first the smartphone came for the workers, and now it’s come for me

I extended a mustelid paw across the sea to visit the prehistoric standing stones of Carnac in France. I figured it would be a low-key attempt to test foreign travel post/during Covid. It’s not the first time I have been there, but there are one hell of a lot of sites in a very small area. The stones were good –

Geant de Manio

Carved stone inside tumulus at Locmariaquer

roof inside tumulus at Locmariaquer

Kermario stones at night

and it was an opportunity to remember what the point of this early retirement lark is. So I had a good time, also visiting Mont Saint-Michel on the way back.

Mont Saint-Michel

France seemed to work well in my view

Firstly a shout out for the fine Starling Bank corporation, where you really can use your debit card like you would in Blighty, you get the Mastercard interbank rate and no minimum amount, fees, loading or whatever. And they will send you a notification of the transaction and cost in pounds, pretty much before you get to put the card back in your wallet. Foreign travel money done right. What’s not to like, apart from that every other bugger nickel-and-dimes you for this that and the other.

There’s a lot of argy-bargy ‘twixt buccaneering Brexit Britain and our nearest neighbours, whether it be Brexit in general, fish in particular, or submarine contracts though Albion seems to be thought of as a bit-player in that specific perfidy.

I am not used to carrying ID in public, one of the nice things about this country is that what’s not specifically prohibited is considered allowed, so unless you are carrying tools for breaking and entering or hurling a ton of metal around menacing bystanders, there’s not a general sus law of people asking ‘papers please’, though you may feel differently about that if you are young and black…

Whereas in many countries and France more specifically it is illegal to be out in public without ID. I’m of the general view that when in Rome etc, so I go along with it if they feel strongly that way. Similarly I wouldn’t go to Dubai and get pissed up, because they are uptight about things like that.

One of the things about the French is they are really big on masks indoors. I admit I find that really unpleasant, because it makes me paranoid, because it’s a big statement that all other humans are out to get you. Yes, I know it’s irrational, it’s how it feels to me. But that’s the way it is.

They don’t generally let you into restaurants (and public buildings like museums of prehistoric artefacts or the Locmariaquer sites) without a Covid vaccination pass as well. You will generally get into shops with a mask but no pass, so you won’t starve, but if you are an anti-vaxxer your life will be hard in France in a way it wouldn’t be here. In France this is done via a smartphone app called TousAntiCovid. Quite remarkably, I had found on expat forums that TousAntiCovid (TAC) will accept the NHS Covid Pass QR codes, which seems either a quaint throwback to earlier times of the Entente Cordiale or a tacit acceptance of the value of the British spending. Given the current state of Anglo-French relations which I would describe as frosty it surprised me. Note that this is not the same as the NHS letter you could request. This isn’t infallible – sometimes it helps to delete the app and generate a new NHS QR code and enter it in, and the fact that TousAntiCovid accepts your NHS codes isn’t necessarily a confirmation that it will go through the app restaurants and museums check it with. Fortunately the first place we went, the Carnac Archaeoscope, wasn’t a stickler for the check actually working, it just had to be there, but some places were less forgiving, so you need to sort it out. And this is where the rest of this post will descend into a rant.

Once upon a time you could travel with just a passport and a ticket

Nowadays, you need to maintain a serious IT operation on the road to jump through all the hoops. I can see a role for that endangered species, the travel agent or some sort of concierge service. Continue reading “Ermine abroad – first the smartphone came for the workers, and now it’s come for me”

Ill fares the land

Ill fares the land to hastening ills a prey
When wealth accumulates and men decay.

The Tory party conference is in full swing and celebratory high-fives, with Lord Frost chuntering that the long bad dream of EU membership is over. Now unlike some of you whippersnappers, I recall what the sick man of Europe looked like in 1973, though as an ankle-biter I wasn’t that economically aware. Ermine Command sent an expeditionary force to the fair city of Oxford. Through the crackling wisps of t’internet came this signal


Our nonplussed forward team commander wondered if they’d picked up the time machine by mistake “I’m in a time slip and it’s Thatcher’s Britain all over again” – at least they’re all set for CDs if they can find a way to put them in their phones.

Continue reading “Ill fares the land”

Taking the Great out of Britain – welcome to your new Brexit vehicle insignia

You probably won’t be able to get any fuel to be able to do this, but if you decide to drive abroad in a British registered vehicle then you need to display your country of origin.

Back in the day, before we had joined the EUSSR Common Market I watched my Dad fit a GB sticker to the rust-bucket otherwise known as an Austin A40, to cross on the ferry and drive through Belgium and Holland to visit my grandparents in Germany. Your GB car sticker predates EU membership. Even oo7 had one.

James Bond’s sticker is no longer valid as of tomorrow. No, really. Bite me. Her Majesty’s benighted and incompetent ship of fools masquerading as a government has decreed it so. No. honestly. I’m really not shitting you.

If you want it alongside your number plate to cover up that pesky blue EU roundel, then you will have to display this full Brexit regalia


Now since my vehicle is old enough that the hated EUSSR insignia is stuck on to be legal at that time and looks sort of like this


so I have the option to peel that off, and get myself a nice, vanilla UK sticker a bit like the one my Dad used fifty years ago, except that he used a GB sticker like James Bond.


I’ll go that way rather than the number plate version because people waving union jacks around declaring their Britishness in the EU comes across a little bit, er, gammon.

Where the hell is James Bond when you need him? We used to know how to be British with some semblance of class, even if the Continentals had already sussed out hat you couldn’t trust perfidious Albion before 1973.  Come to think of it, where the bloody hell is King Arthur in Albion’s hour of need? It’s all very well to lob Excalibur into the Lake off Pons Perilis but you’re asleep at the switch, mate.


the last sleep of King Arthur in Avalon

Would you mind awakening and waving the old sword at the fourth-division crew in charge of the Kingdom of Logres who seem hell-bent on cocking up anything that can be cocked up, and then a fair few things besides.

Brexit. Taking the Great out of Britain. You really couldn’t make it up. What are we going to change it to when Scotland goes its own way?

Nostalgia nuts can take comfort that there’s a plentiful supply of GB stickers for sale on Ebay, indeed there are special Remoaner editions with full blue stars. But if you want one to do its proper job, you need a UK one. Beats me what Ukraine is going to do. Greedy bastards that we are, it looks like we bagged ISO country code GB and UK, although the UK is exceptionally reserved so the ISO is with James Bond on the primacy of GB. With 111 years of tradition, the backing of 007 and the ISO I’m not sure why we trust the judgement of Grant ‘there is no shortage of fuel‘ Shapps, but that’s the ship of fools for you. This is the same fellow who tells us that

Shapps said there were no supply problems at the six refineries

Hmm, apart from the second largest one in Britain about to go bust, eh Grant? Chin up and get a grip old boy.

Fintech Fantasyland – Raisin and Coinbase

In more innocent times once upon a time, I walked into a branch of Barclays opposite where I worked, showed them my staff pass card and 20 pounds to get the ball rolling, and walked out with a shiny new Barclays bank account. No passports, name rank and serial number proof, no pack drill, just me and them. They knew The Firm, they knew what a staff card looked like, and that was good enough. They knew their customer, in an analogue way.

Nowadays the process is grief-stricken and involves webcams picturing your driver’s license(sic) and all sorts of aggravation. I figured I should start to get a teeny bit better return on my cash than 0% as the amount started to creep up to Harry Browne regions, so I was tempted by Hargreaves Lansdown’s Active Savings, on the principle that I already had an account with them, so I wouldn’t have to go through all that customer ID crap. I stopped as soon as I read signing up for active savings means they will always send an SMS to log in, even for my SIPP. I am sick of this stupidity. It’s the easiest job in the world to slam your phone number to some ne’erdowell, particularly if you live in rented accommodation with a shared mail access. But it’s not that hard to do for everyone else.

We had/have a perfectly serviceable alternative – your bank card and one of those reader things to generate a one-time password. But no, it the general fetish to have everything on your damn smartphone, SMS messaging is a less secure alternative they are pushing. Because every bugger has a smartphone surgically implanted, FFS.

The advantage of Active Savings is that you have a single interface to the account, and they then let you save with a number of other organisations without signing up with those separately. Which is good, because the process of signing up for a bank account in the UK is absolutely horrible now with all the ID checks, I’m sick of it.

So I looked for an alternative, and Raisin seems to do the same thing. Given that I have a SIPP with HL, running with a separate FSCS institution seems a good idea anyway, and though I have to suck up the SMS bullshit at least I only have one sign up process to do.

The time to worry about bail-ins is before they happen

If you look at Raisin’s FSCS protection page, once you have signed up for savings account through Raisin, you get the FSCS (or Euro equivalent) protection of the destination institution. One of the biggest drags about savings is having to sign up with many institutions, the implication here is that you could break up your holdings below the 85k FSCS amount all through Raisin, provided you were careful where the destinations were.

There is some argument that holding more than the FSCS limit in cash is mad, unless you are really, really old. However, at current valuations I can see myself doing that for some time. Inflation is not the only hazard I see, and looking at what happened in Cyprus the FSCS limit is roughly where you become a tall poppy and a source of emergency bank funding of last resort.

So far so good, but though Raisin is associated with Starling Bank and I used Starling as a feeder account, it seems to be taking its time to happen – transferred about 10am and only got there 11pm. In general I expect better from Starling, my experience to date has been of quiet, understated competence, and blistering speed at posting details of transactions. Pay for something using the card, and by the time you have picked up the phone and opened the app that transaction is there to be seen in your account right away.  I don’t bother to ask for paper tickets for those card transactions because there’s no point.

For other Starling customers wondering what the hell their sort code is, Starling tell you there is only one: 60-83-71 at the time of writing.

I found Raisin confusing in operation. Some of this of course is that the nominee method of banking is new to me. For example I applied for a 32 days Investec notice account, paying 0.8% APR. Time to order some tiny fireworks, eh? So I get an email saying the Ts and Cs for the Investec savings account you viewed, and I think fine and dandy, to be treated to a pdf with 16 pages of solid cruft about Meteor Asset Management, with nary a peep about Investec. If you look at How Raisin Works you will see that Meteor Asset Management is the pool account front running Raisin’s customers, sort of analogous to a nominee account1, which is how you don’t get to streetfight the onerous Know Your customer crap for each and every share line in your ISA.

I happen to have read the how it works page before getting this 16 page Investec Ts and Cs not mentioning a word about…Investec. I was more tolerant of this rum carry-on because I had already qualified Starling as a competent operation, but that sort of inconsistency is going to scare the horses in customers of a more nervous disposition. Continue reading “Fintech Fantasyland – Raisin and Coinbase”

Welcome to the Weird

It’s the dog days of summer, the lazy time but late enough that you can smell the change in the seasons, the rich scents of decaying plant matter signalling impending Autumn. The robin seems to have moulted and is now a bright orangey-red and singing again.

There’s a fractious feeling about. The Ermine thinks back to my mid-teens. We didn’t have a TV in 1975, but you could see the iconic photograph of the last Huey out of Saigon in all the papers. Harold Wilson, bless his cotton socks, had kept Britain out of that misbegotten enterprise.

Saigon 1975 and Kabul 2021
Saigon 1975 and Kabul 2021

I’m kind of with Al Jazeera in this particular instance – Blinken may say that this is not Saigon, but if it walks like a duck and quacks like a duck… Looks like Pilger had a point that the wide boys who promoted the Project for a New American Century got something wrong. Rummy didn’t do badly on the limits of epistemology

there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns—the ones we don’t know we don’t know. And if one looks throughout the history of our country and other free countries, it is the latter category that tends to be the difficult ones.

but knowing something is the case and acting coherently on that knowledge are different things. “You have the clocks, but we have the time…”

Apparently it was all about whupping OBL’s ass, not all the other stirring sound and fury. It’s a shit situation and there are no good answers, other that perhaps the inference that winning hearts and minds through military means in far-flung places with very different approaches to living is a really tough ask, and probably beyond the capabilities of the Imperium at this stage of its decline.

The Big Short

Markets are weird, too. Valuations are up in ths sky. There’s much froth and excitement about fintech and apps bringing the little guys in to the markets. When was the last time we saw that show – ah yes, the heady dotcom days. Michael Burry, he of the Big Short’s observation

Greatest Speculative Bubble of All Time in All Things. By two orders of magnitude. #FlyingPigs360.

seems apposite.

I took a look at the FCA’s Strengthening our financial promotion rules consultation H/T Monevator and thought to myself I am the drunk offering directions here:

“If you want to get there, you don’t want to start from here, mate”

I cast a cynical eye at the attempts by the FCA to save our blessed citizens from the blandishments of bitcoins and the cons of cryptocurrencies and think to myself this is like Centralia, guys. The fire’s burning deep underground and it’s been going for some time. Let’s deconstruct the vexed problem of fixing people who think a 30% annual ROI is only just about remarkable. Continue reading “Welcome to the Weird”

Brexit dividend at last – labour shortages are a feature, not a bug

Ah, diddums. Employers are yelling the house down that they are having labour shortages in, ahem, the lower end of the skills range. That’s your fruit pickers, kitchen porters and the like.

Now I am not a fan of Brexit. It is a pain in the arse – if one could travel to Europe it’s difficult to say if I could drive there, what sort of IDP I would need etc etc. I’ve stopped using places like Thomann and any EU suppliers, because you can’t say what you will pay. Curiously enough the Chinese can still deliver ebay components into the country, but you can’t reliably order from the EU. So if you want to buy things in Global Britain, buy it from anywhere but the EU it seems. UK Component distributors are bellyaching about supply shortages.


Brexit is delivering

Back to the Brexit dividend. I would say these low-end skills shortages are a sign of Brexit working, in delivering what many people voted for. If you look at Lord Ashcrofts reason for leave  a third wanted more control of immigration. The sentiment is stronger in the 2018 ESRC report, which also notes Remainers have a less accurate sense of what drives Leave than vice versa. The immigration issue is split in some unknown element from people who dislike immigrants and people disliking immigration separate from disliking immigrants, and the latter usually boils down to economic fears of spreading a pie that’s too small (jobs, schools, NHS, housing) more thinly. Although we have seen an increase in racist talk and events since the Brexit vote it’s nowhere near as much as feared at the time, perhaps favouring the economic over the racist. The West in general and perhaps Britain in particular is in a secular economic decline, against that background such concerns will rise in importance.

It’s just not true that Brits won’t do those jobs

I an old enough to remember a time when Brits did these jobs. I was one of them – a kitchen porter in the City of London in the university holidays. KPs are one of the labour shortages enumerated. Scaling for inflation I was working for less than today’s minimum wage. That’s not as bad as it sounds, because the rest of life, in particular rent/housing was cheaper in real terms in the 1980s than now. For some reason inflation figures do not usually reflect the cost of housing, though it’s very often the dominant part of a young person’s outgoings.

Fruit picking wasn’t always done by EU immigrants, although itinerant labour has historically been associated with that, so it’s not totally a freedom of movement thing. Back in the day (before Thatcher, roughly), Kent strawberry farms were big on PYO (pick your own) presumably because of the cost of labour meant packing all this stuff into plastic punnets wasn’t cost-effective.

Sure, people’s kids presumably scoffed half the weight paid for before it got weighed, but that was probably allowed for. In Suffolk, as I started in the late 1980s, I used to walk past the CITB training facility on the way to the pub – that’s the construction industry training board, where they used to teach local apprentices how to lay bricks and all the other good stuff that goes into construction. These same companies that are bellyaching now used to accept that they had to train their raw recruits.

So to be honest, I have little sympathy for these employers, particularly employers at the bottom end, yes, hospitality, I’m looking at you. Of course the rest of us will have to pay a bit more for our lobster. With a bit of luck the bottom end dirty chicken shops selling factory farmed fried chicken will go to the wall and there will be fewer Mickey Ds, and yes, Waitrose fruit and veg is going to be dearer for Guardianista metrosexuals, presumably Lidl and Aldi will find a different way.

Beach cafe
I will get to pay a little bit more for this beach view and the accompanying fish and chips/lobster. London metropolitan types will get to pay a little more for eating out. It’s not the worst thing in the world that could happen…

People at the bottom end have been treated like shit for a long time due to a semi-infinite pool of young cheap labour that could be drawn on to push wages down. The official pack drill from erudite sources such as the Bank of England is basically move along now, nothing to see here.

There seems to be a broad consensus among academics that the share of immigrants in the workforce has little or no effect on native wages.

Hmm, so the usual laws of economics and supply and demand are suspended in this specific case? Let’s take another look

“If you look at the evidence of why we have seen wages going down, there is actually very little evidence that that is being caused by migration, aside from in construction.”

Labour MP Anneliese Dodds, 24 May 2018

And they wonder why Labour lost the red wall, FFS. Before somebody charges the Ermine with being Nigel Farage and claiming their £5, it is perfectly coherent that perhaps immigration is great for the UK economy as a whole, after all you get more shit done, perhaps for less. But at the same time a bit shit for some sectors of the population. I believe the art of managing who is in the end of the boat going up and who is where it’s going down is called politics, so it behooves a politician to not explicitly deny the reality of folk they want support from. Our present PM is a lesson in how to do that indirectly without copping flak for your BS 😉 So it does appear that you can come unstuck generalising the ‘it’s the economy, stupid‘ Clintonism too far.

Because  – life experience the economy for those on the margins. Guess what – the poor tend to be the lower skilled, and jobs for the lower skilled are being stripped out of the economy and either automated or sent to lower-wage countries in the process of globalisation. For some of them, Brexit was a massive vote against globalisation, in a sort of stop the world, I want to get off way, by people who were shat on by it. Maybe they were allied with old gits dreaming of Imperial glory days and not needing a job, along with a fair few other reasons for disaffection, some of which are considered less than pretty. In a rare retrenchment, perhaps the unskilled will become a bit more/better employed, until clever people work out how to automate their jobs or eliminate them.

But if you want to avoid pushbacks like Brexit then you have to ease the pain of the people who get crushed by the policy and spread the win – Universal Basic Income, go steady on the whole Protestant Work Ethic, there’s nothing inherently beautiful about getting meaning from work, and just STFU about work is the route out of poverty – it hasn’t been since the 1970s. Particularly at the bottom end of the ability range. And before you start going on about education being an answer to that, you need to find something to put in the water supply to raise the ability range, because not everybody has skills that are valued in the marketplace. Or the inclination to develop suchlike. Not everyone has skills at all.

I am not sure there will be graduate jobs for the third of a million university applicants this year, though bless their young hearts if nursing and medicine are the rising star subjects, perhaps I am just being a cynical git…

And you may have to pay a bit more for your food, and hopefully bottom end fast food will be run out of town. Still, look on the bright side. Australian beef with free growth hormones will be cheaper. I guess the wine should be cheaper, though I’m not personally a great fan of Australian wine.

The return of the Great Barrington Declaration

Looks like Britain is adopting a modified from of the Great Barrington Declaration as far as dealing with Covid, starting with a Wembley super-spreader event to get it going.

We know that all populations will eventually reach herd immunity – i.e. the point at which the rate of new infections is stable – and that this can be assisted by (but is not dependent upon) a vaccine. Our goal should therefore be to minimize mortality and social harm until we reach herd immunity.

The most compassionate approach that balances the risks and benefits of reaching herd immunity, is to allow those who are at minimal risk of death to live their lives normally to build up immunity to the virus through natural infection, while better protecting those who are at highest risk.


I guess that’s one way of battle testing the irresistible force of contagion against the immovable object of vaccination, and the best of British luck to us all, eh. I do think if we are going to go the whole ceremonial magic approach of the GBD, which is basically the state of things will be what we declare, then we need to go the full Monty and do something about that NHS app. Ceremonial magic only works as a method of changing consciousness according to will if enough of the participants get with the program. That app’s gotta go.

There’s a small company supplying the project the Ermine is occasionally working on and they have been absolutely pole-axed by the self-isolation requirements. It’s not that there’s a pyramid of dead bodies piling high in the machine shop stinking the joint out. It’s that they haven’t got enough boots on the ground because of self-isolation, and they are running about trying to shovel jobs out as best they can, so they are sending out production jobs before the prototypes and occasionally measuring things from the wrong reference plane, presumably because the old boy who does that is self-isolating and the poor devil press-ganged into filling his shoes doesn’t have the domain knowledge.

Hospitality is spitting bricks on this subject, for once not on the vexed question of Brexit, but in a situation designed to serve lots of the general public, you will easily have waiters close to carriers, who then get close to kitchen staff, and all of a sudden you lose an entire shift of wait staff and back of house.

Magic only works in the places it will work if you believe in it, so if we are going to eschew epidemiology for English exceptionalism and the Great Barrington Declaration, or at the very least state that vaccination is going to save us, then you gotta believe in vaccination, and act that way – give all the vaccinated a free pass on the self-isolation thing and get those suckers back to work, pronto. All the time crossing one’s fingers and hoping that the Chirac doctrine that

“If you look at world history, ever since men began waging war, you will see that there’s a permanent race between sword and shield. The sword always wins.

doesn’t hold in this case. The shield has held in other germ fights – polio, TB, smallpox. But at the moment this is more magic than science IMO. It reminds me of another piece of magical thinking that didn’t quite go according to plan –  George Bush’s  Mission Accomplished speech

Dubya tells the world Mission accomplished. Eight Eighteen years later the United States Army switched the lights off in Bagram and beat it in the middle of the night

We shall see.

On the subject of magical thinking to assist the economy, Grant Shapps has decided that, in a similar vein, we don’t really giveashit about road safety – fresh in from the Twitter

We’re aware of a shortage of HGV drivers, so I’m announcing a temp extension of drivers’ hours rules from Mon 12 July, giving flexibility to drivers & operators to make slightly longer journeys.

“We’ve ramped up the number of driving tests available & will consider other measures.”

What the hell is it with man-children and Twitter? Grant Shapps’ Twitter feed really is an absolute delight of magical thinking and a blessed unfamiliarity with elementary logic and the scientific method. Sustainable aviation, for crying out loud. In a theoretical and intellectual way, sure it’s possible. It’s just that a 747 jetliner would take 1.5 hours of the output of Sizewell nuclear power station at full tilt, so something tells me this won’t scale – you get 18 daily long-haul aircraft movements per Sizewell… Heathrow is gonna need a hell of a lot of nuclear power stations for sustainable aviation1, and fuelling your 747s with biofuel stealing land for food in a world where that appears in short supply is just plain…wrong IMO. You’re gonna have to fly less or burn fossil fuels. Simples.

Right, capt'n, where do I plug this sucker in? Photo Dave Croker, Geograph

Dr Strangelove would like to fly sustainably. You know the pack drill, too cheap to meter…

Grant Shapps seems to have a very tenuous grasp of epistemology in general. Apparently there is no sign people are deleting the NHS app to avoid being commanded to self-isolate. Grant me old mucker, absence of evidence is not evidence of absence. It’s the oldest trick in the book – don’t ask questions to which you don’t want to hear the possible answers. Pity David Cameron didn’t jump to that re Brexit, but  presumably Grant had his fingers in his ears and closed his eyes when the pretty young thing on t’telly said she was icing the app for just that reason. Curmudgeonly Ermines never installed the app, but that’s because I don’t carry a tracking device plugged into the hive mind around with me.

And avoid having big trucks behind you on the motorway at the end of the day, poor devils….

Now I’m not inherently against ceremonial magic and magical thinking. It’s not a bad way to change consciousness in accordance with will on a smallish scale. But use the right tool for the job. It’s a rum way to run something on the scale of a country. I guess we will find out about the wisdom of the Great Barrington Declaration in a couple of months. It is closer to fiat lux! than e=mc²

  1. There is a reasonable debate to be had as to whether nuclear power counts as low-carbon, given the amount of concrete you have to pour to keep the Bad Shit in, and there’s also a good argument to be made that it is a fossil fuel, albeit a low-carbon fossil fuel, particularly if the idea of sending nuclear waste by train to fast breeder reactors doesn’t give you a warm and fuzzy feeling inside. Considering something sustainable where you have to post keep-out warnings for tens of thousands of years is also stretching the definition of sustainable for some people. But I just don’t want to try to imagine the amount of wind power or solar to keep leisure flying at current levels. We will have more pressing uses for it, anyway 

The Coming Gilded Age and Vanguard’s mustelid indigestion

Diversification is  a decent principle with bank accounts and the like, particularly given the tendency of financial organisations to freeze people’s accounts without due process due to the money laundering regulations. Then there’s the Madoff risk of the unknown unknowns cratering a business. So much to worry about.

1+1 redundancy is a good principle in many things-when I did a parachute jump there was a main and standby. Whether I’d have had the presence of mind to pull the standby1 before becoming a grease spot is another thing, but main and standby is A Good Thing.

To that end I have a second ISA with Charles Stanley as well as the main one with iWeb. The aim here is damage limitation, and you get most of the win with the first standby system you introduce. In theory I could get better security against providers going titsup by balkanising my ISA to try and stay under the FSCS compensation limit. Life is too short for that. Main and standby – and stop there.

My main ISA with iWeb is pretty spit-and-sawdust. Their win is not charging me annual fees, provided I hold no funds (shares and ETFs are fine) and don’t trade. I am OK to pay them transaction fees, the aim here is not to churn. They have no monthly investing facility, and you can’t borrow from the ISA – it isn’t a Flexible ISA.

Flexibility is valuable to people with no income

The financially independent are despised by the banking system, who won’t lend them money because without a salary income they can’t qualify the risk. So it’s handy to be able to borrow from your ISA, though you should never aim to use it. I hung onto my Charles Stanley account for its flexibility, but what with one thing and another it tended to grow, and CS jacked up their fees a while back. This begins to irk me. According to the Great God Monevator, CS rocks in at 0.35% where Vanguard are 0.15%. The difference in that makes it slightly worth while to shift as the account gets larger. As an old git I don’t need to flay costs as if they were the tattooed agents of darkness is the same way as TA, because I am a decumulator, and there aren’t as many decades to accumulate as for a 20-something. On the other hand I carry a lot of gold in the iWeb ISA and have shifted my risk balance lower, so maybe I do need to up the ante on the equity part. I was pointed toward the behemoth Vanguard as a lower-cost supplier with a flexible facility via a comment on Monevator. Although flexible access tends not to be a bargain basement offering, Vanguard do indeed offer it. To wit

The Vanguard ISA is a “flexible” ISA, meaning that money you withdraw may generally be paid back in during the same tax year without counting towards your annual allowance

Don’t transfer your old ISA as your first act. Because: AML theatre/freezes

Continue reading “The Coming Gilded Age and Vanguard’s mustelid indigestion”

Crab House Cafe, Dorset

Somerset Levels

LivingCheapinLondon gave us a great tip from recent post about a fine source of modest decadence, and Mrs Ermine was on it immediately. We were going to dine at the Crab House cafe, where Chesil beach starts to leave the mainland at the southern end. This took place is the sort of intermediate phase of the coronavirus pandemic loosening up, where you could eat out, as long as outside meant outside, which is a little bit on the brass monkeys side in late April, even on the south coast.

The Hellstone via Dorchester

To work up an appetite we took a look at the Hellstone dolmen, I have been coming to Dorset regulars with some old college pals ever since one of them had a camper van in the late 1980s. I last saw this some time in the late 1980s or early 1990s, when one of our party who shall remain nameless managed to get an impressive thump followed by outpouring of blood as he made the mistake of standing up in the Hellstone. You don’t want to do that because the headspace is about 5ft 4in, enough to get a good heft because the irresistible force loses out to the immovable object. There’s a reason the AONB booklet calls this land of bone and stone

We hustled him back town the track to the Hardy monument, and figured we really ought to take him to A&E at Dorchester General after deploying the first aid kit in the camper van. Fortunately it wasn’t concussion and he only needed a tetanus jab, but that site had been crossed off the list for ever afterwards and this is the first time I’d been in the area without him in the party.

I regaled Mrs Ermine with this story, and fortunately the imp of the perverse did not prevail. Peace has been made with this fine site.

Somerset Levels

which is a short hike from the Hardy monument. For some reason Mrs Ermine took objection to this object, because I had said it was to commemorate Thomas Hardy, for the last two decades I assumed this was Thomas Hardy the author, he of Tess of the d’Urbervilles etc. The trail to the dolmen starts from the Hardy monument, and the National Trust educated me that this was Thomas Hardy, the naval fellow to whom the dying Lord Nelson was reputed to have said “Kiss me, Hardy” Continue reading “Crab House Cafe, Dorset”