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”
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
Andy Haldane, Bank of England chief economist at the time, said that the economy was like a coiled spring, ready to leap into action after the Covid crisis. He’s now off to head up the RSA after 32 years.
An Ermine is left scratching his head and wondering what the backstory is here. Did Haldane always have a hankering for the arts, and his mastery of the metaphor made him wonder if the grey garb of the professional economist was beginning to chafe? Did he pitch for a promotion and get blanked? There’s also the admiration for a fellow up to working for more than three decades, clearly the FI/RE mantra speaks less to him that say one of the mustelid species, or Monevator’s TA.
When they reopen, pubs and restaurants could see a boom because of the Joni Mitchell effect: you don’t know what you’ve got till it’s gone.
It’s a fair cop, guv. Kicked off early last week with a full English Breakfast at one place which was mighty fine, and we repeated the exercise today, apparently they are overbooked for Sunday lunch so we needed to clear off by 11:20, which was fine, it doesn’t take an hour to eat breakfast! They’ve had to ring round to drum up staff, with the added incentive of free drinks at the end of the shift. However, it helps that the weather is reminiscent of that in lockdown 1 last year, a light breeze and sunshine. Their problem is that it’s all up to the vagaries of the weather – people aren’t going to want to sit outside in the rain, more typical of April weather in the UK.
A couple of days after the first breakfast we sought out lobster on the beach, now that it’s open season on them.
We were out of luck, perhaps the cafe doesn’t want to carry the capital risk to having too much of a wasting asset. I can see their point, so we slummed it with fish and chips instead.
However, we did see evidence of lobster being eaten by one of the other patrons. After such hedonism a wander up to the top of the hill and look out over the surprisingly blue sea. It is still a surprise to me. I am used to the coastline of East Anglia bordering on the North Sea, where the sea is shallow and easily churned up so it always looks like dirty dishwater.
In some parts of the Dorset coast it’s clear enough you can see your feet in the water, though I leave that sort of thing to Mrs Ermine. I’d always thought blue seas are a Mediterranean sort of thing.
Eating out is a slightly odd experience. Many people find it difficult being around others now, I am not sure I noticed a change. Perhaps I never melded with the mosh-pit in the first place. However, here’s a sound I haven’t heard for an awful long time, humanity in its garrulous exuberance.
As I was waiting for the bill I was trying to work out exactly what it was that disturbed me about the King Charles spaniel at another table. Obviously that a dog was in an eatery, but after a while I sussed it. This craven mutt had no lower canines. Not a gap where the original ones had been, just no pointy eyeteeth in the lower jaw, all incisors. No damn self-respect.
The markets are not the economy
Despite the Joni Mitchell effect, the coiled spring may not have much substance behind it in the medium term. Unless you’re in your twenties you shouldn’t really eat something and chips more than once a week, so you’re not going to eat a year’s worth of missed meals out in three months. As that Investor’s Chronicle article observed, much is in suspended animation at the moment, and jobs will be lost as the rubble hits the ground. On the flipside, capitalism turned out a lot more resilient in the face of the challenge than we expected this time last year. As evidenced in the markets. After settling down the frenzy of the first part of last year, I’ve been buying FTSE250 since mid last year, because sometimes you have to stake a claim on what you don’t believe in.
That has done well, but I suspect that some of the hurt is being felt more in the unlisted small firms, the tiddlers. Oddly enough I was looking out for this on the drive down to the south coast, and I didn’t really see much that was shuttered, more was shouting that it was open than usual1. Most of the pubs looked okay, it’s not like the drive through Dorset was like driving through the Welsh valleys, where the mark of Thatcher still blights the land three generations on. The worst part was coming back through Yeovil, but that’s a town that always looks like hope came to die. Enough boarded up shops, but I couldn’t remember if these were places that had been boarded up two years ago. Yeovil is that sort of place…
It’s hard to see where the markets are now. However, after the last post where the sentiment seemed to be that I am not representing the bond value of my DB pension adequately using the HMRC scale factor of ~20, perhaps I am overly defensive at the mo. It did lead me to ask the question of whether I really should hold getting on for twice my erstwhile salary as cash. I am not at the widows and orphans end of the risk profile scale. This mustelid fears inflation. It doesn’t have to be in equities, but it shouldn’t be so much in cash…
Hard to know what to use this year’s ISA allowance for, though. Perhaps a little more gold, and then there’s the Lars doctrine, nobody ever got fired for buying VWRL. Indeed, Lars’ latest has an indirect bollocking for those in cash because they fear the stock markets
If you feel the minimal-risk asset’s interest rate does not give you enough return in your simple two-product portfolio – and you’re willing to take more risk – I’d say maybe take that risk in the equity markets. At least that keeps things simple.
The non-equity part of the portfolio is bonds, which in my case is the DB pension. If I am undervaluing the bond component by using the HMRC multiplier of 20, then perhaps I can shift some into equities. Shame they are up in the sky… I missed this point about the State Pension shifting the needle on the dial in the more bonds department.
Since it appears that Vanguard’s ISA is a flexible ISA, I can ground my Charles Stanley and move it to Vanguard. What I will do is first open Vanguard with this year’s ISA allowance, and buy VWRL or the fund equivalent on the same day as selling out the similar fund in Charles Stanley. Which will reduce market risk. I haven’t yet worked out if Vanguard’s ISA will only hold Vanguard’s products. I normally transfer ISAs in specie which gets round that problem.
Perhaps the markets are expecting a massive post-pandemic boom. Personally I wouldn’t be surprised to see another lockdown as Autumn turns to Winter – yes vaccination is giving us breathing space, but the enemy is adapting too. Maybe capitalism has the resilience to adapt and profit from the new normal, though it seems to be doing so by throwing an increasing part of the workforce under the bus. That tends to have undesirable side-effects. There are cheerleaders for the concept of the Roaring Twenties, let’s hope that Kondratieff was wrong, because that didn’t end well on the last turn of the arc 100 years ago. Now is the winter of the fifth Kondratieff wave, let us hope that winter holds a spring…
There’s sample bias here, since if you’re the Abbotsbury Swannery you have 20 billboards advertising for the masses to bring their ickle children for a perfect family day out, whereas if your eatery is closed you can get away with a single ‘closed’ sign on the door. However, I was looking out for the latter ↩
Mrs Ermine and I recently celebrated a year of lockdown with a bottle of wine. A strange year, but there’s something to celebrate, which is that we are still here. I will drink to that.
This is one that a lot of the the rich world got wrong, ballsed up in spades, with the UK in the top ten with a death rate of 1 in 530. There aren’t any really big-picture commonalities that can be drawn, though the intelligencer’s high-level takeaway isn’t bad. We have become soft in the West from having it easy for a long time, so we didn’t really believe shit was happening to us. That’s bad when you are up against an exponential.
We have continued to just think that something bad isn’t happening to us, and that there’s an out somewhere — that, of course we’re going to solve this next month. It’s always been one month away. And as long as the solution is always one month away, the urgency isn’t there. And I do believe that this is a symptom of a bunch of nations and societies that really haven’t had to deal with adversity on our shores in a really long time. We are uncomfortable with making the hard decisions that have to be made.
Europe including the UK, the US, and for some reason South America made a pig’s ear of responding to Covid. You have to scroll down a long way down to South Africa to get out of Europe and America on the JHU table ranked in deaths/100k.
Yes, we have a route out in the vaccination programme, a win for science. It’s also a win for the one thing that Boris’s crew did get right – dropping a lot of money, and in not trusting Trump/Merck in the Oxford vaccine production.
Anyway, we are still here, and we cleaned most of the green slime off the camper van in the hope of being able to use it sometime next month. Even if only to go and eat lobster – except that it seems to be closed season so we will have to make do with fish and chips by the beach.
The NT opened only a third of the car park, so while we got there early the car park was already rammed. I asked them if they were going to open the other two, but apparently not. Helpfully they said it would be open for Easter, it was to do with the grass being ready. I had assumed they were doing it to limit numbers on the beach. Anyway, this is the south coast. There are beaches enough, indeed the next one westwards had a council car park where you could park all day for £2 as opposed to £6 for a day. The view was still superb, the fish and chips tasted better after so long and people were spread out.
Stock market gives Covid the middle finger
The Ermine sticks a snout at my ISAs, and it appeared they have still been creeping up. Didn’t really look like what I expected this time last year. It is now much more defensively biased and there is a fair amount of gold, on which I have taken a soaking in £ values. But the other stuff seems to have outstripped the loss of lustre. The change in the gold price leans away from the obvious possibility that our great British Pounds have become rather less Great, they are relatively spiffing of late. Maybe World + Dog thinks Brexit is the greatest thing to happen since sliced bread? Or they think Covid is on the run? Goldwyn had it to a T Nobody knows anything. I don’t think it’ll be over by Christmas, but I’m a nobody…
I can’t say that’s what I expected, but given I have a rammed Premium Bonds allocation and NS&I ILSCs and next year’s ISA contribution in cash I have far too much GBP exposure, so being wrong in that way is not a hardship. I’d rather be wrong than poor. I still worry what is coming our way though, and with the markets up in the sky what the hell do you buy to diversify that? Gold is one place. There have been other oddities. What’s up with BlackRock world mining? Have we all decided to start digging shit up from the ground then?
I am getting older, and perhaps not allowing for that.
I recently had to do one of those finametrica attitude to risk things, as a CYA exercise I guess. Less extreme results this time than last time. Perhaps that is as things should be, after all, a tenth of my three-score years and ten has rolled by since the original result. The ISA is now much higher than it was, buoyed by a rising stock market and swelled by the transfer of my old AVC/SIPP during my lean years of earning very little. To a first approximation I have achieved my financial goals, and I am reminded of Warren Buffett’s observation of the likely lads of Long Term Capital Management. “Too much cock, boys”
to make money they didn’t have and didn’t need, they risked what they did have and did need. That is foolish. That is just plain foolish. It doesn’t make any difference what your IQ is. If you risk something that is important to you for something that is unimportant to you it just does not make any sense.
My job as a wealth manager is to help clients hold on to their wealth and to preserve and grow it to keep pace with inflation. My number one priority is to ensure that money is there to meet their goals, when they are ready to spend it.
I don’t need to hit it out of the park. Just as well at current valuations, eh? Perhaps I have more in common with Warren’s last outing. He sounded pretty much out of ideas. I am not the desperate Ermine of 2009, needing to chart a route out of work as soon as possible. I need to look closer at preservation, and that is a different mindset.
Preservation is about asset class diversification. You give up return for security
The trouble with FI/RE is your younger self sets a course at the start of the journey. You have time on your side to ride the markets, and you need win, because over a working life you’d rather the mythical magic of compound interest double your savings in real terms over 40 years, and it builds a certain mindset. If you happened to be a feckless Ermine who started all this stuff far too late in life then you need a lot more punch, and the win that feckless blighter had was starting in the hole of the GFC, which coincidentally was also what made my job a bit shit hence the breakout requirement.
Trouble is, your younger self sets the direction, and what was right in the morning in the afternoon becomes a lie, not just in the psychological sense. I was playing that hungry younger self, this time last year, looking for opportunities in the noise and hum. I took them, more actively than most, and shorting the market in March/April to boot, and I have been fortunate, the numbers are decently bigger now than the end of December 2019. Obviously I am chuffed that it worked, but there’s a bigger Warren Buffett-style question I should be asking myself
“Self, what are you doing on the bleeding edge of the coalface shorting, when you are grizzled of fur? OK, so you have win, but you have to ask yourself whether you should have been on the playing field at all?”
Let’s hear it again from The Belle Curve. Now obviously I don’t employ a wealth management firm, so I am not sure I classify as being able to stay rich, I have never worked in finance or the upper echelons of IT, but I am reasonably well off, and I am with Joseph Heller. But Blair has some words of wisdom. She doesn’t help people climb the mountain. What she does is help them stay near the peak, and that appears to be a very different ballgame.
Few things compare to the high of making millions off a concentrated bet; whether that bet is on a single stock, building a business, or working for a successful start-up. I imagine the brain responds to this high in the same way it does to addiction. The temptation to chase the next high is all-encompassing. I talk to investors all the time who can’t stop chasing that high.
Hmm. Am I that guy? I recall reading TA’s Do Not Sell post into the teeth of the March selloff last year and thinking to myself “F*ck that for a game of tin soldiers, there’s win to be had”. Not only did I sell a load of crap, I shorted some of it, along with some of what I retained which was taking on water. Sure, I made errors along the way, like selling BRWM, only to rebuy it, fortunately still bent somewhat out of shape. But in the round it paid off handsomely, as I cleared a couple of numerical thresholds which are more a product of having ten fingers than actual significance, but nevertheless good for the fur.
I have now well over twice as much in my ISA as the capital assets I left work with1. Inflation makes that less riveting than it sounds, but it’s still worth having. I saved a capital amount starting three years before I stopped working that is over half the capital amount backing 23 years of DB pension savings. You aren’t meant so save for retirement that way, but all’s well that ends well etc. However, it’s got to stay well, and here perhaps I have something to learn.
I have to look in the mirror and wonder if this grizzled mustelid is doing the walk of shame as far as Warren’s LTCM comment. I didn’t need that boost last year. Maybe I should have listened to TA, much as it went against the grain. Self, be like Joe Heller, not the hedge fund manager in Kurt Vonnegut’s poem. I’d imagine by now it’s worked well enough for TA, if you did nothing than you are probably better off than before Covid in a balanced equity portfolio. Update: TA is 20% up on the deal. Chapeau that man. I am up a fair bit more, but I sweated buckets for it and in retrospect took a shitload of risk for it. Shorting anything always comes with a ‘here be dragons’ warning. TA just wiped his brow, went away with all this noise and hum and sat on his backside watching Netflix.
Sadly I know some ex colleagues who are well pissed off with the markets, I put my foot in it with one of them because I figured pretty much everyone with market exposure has come out well of the last year. Not necessarily. If you did something in the crossfire, it depends what, and how long you took to get back on the horse after you fell off if that happened.
I was balls-deep in equities before March last year. Some of that is because I have a DB pension, which is a very bond-like asset, and it is enough that if I scale the annual income by 16 to roughly get the capital value behind it, I will never tip the balance to the classic 60/40% equity:bond ratio because I didn’t save up enough in my working life.
However, if it leads to intemperate behaviour, then maybe I need less of that. I now have a large slug of gold, and because the shorting happened outside the ISA I have a fair amount of cash. I have as much premium bonds as I can have, still the old NS&I ILSCs and some random savings accounts earning sod all.
Much of that is because I took some money off the table selling rubbish and moved it into gold, and my cash was lifted by short-selling some of the ISA which indirectly moves money out of the ISA. Since then the markets have lifted the ISA in the same way as for TA , turning it into a sort of double win. TA will probably leave me in the dust over the Roaring Twenties with buy and hold. The Big One is gonna come, and TA is a young fellow, he can probably ride the suckout and hold on for the uplift. Me, not so much. Roaring Twenties be damned, as the Germans say
Gott läßt sich keinen Baum in den Himmel wachsen
the Lord sees to it that the trees do not grow into the sky.
I am closer to the Permanent Portfolio than I was before last year. All in all it was interesting reading the purity of purpose in my seven-year younger self – investing is all about return, about getting ahead. It was then, for me.
I could be more aggressive with the security of the DB pension floor to my income, but I am still a relatively young retiree and the value in my ISA holdings is in defending me against longer term hazards like inflation, so I should perhaps be more respectful of its value to me, and take less risk. It’s instructive to look back nearly 10 years at my younger self when I wrote about the PP last
Back then, I was in the final straight to retire. Fixed interest is the rescaled annual amount of my DB pension at 60 after tax (because I don’t giveashit about what I don’t see, it isn’t useful value to me). It was over half my networth. It has more or less stayed the same in real terms, but I have forced that beggar back to 30% of my asset allocation. Which is OK for a deadbeat who is considered ‘economically inactive’ by Her Majesty’s government. Yes I have earned lousy amounts here and there, but never amounting to more than 10% of my erstwhile salary, and most years less. The magenta part of the Pac-Man swelled, not only to match the cyan pie, but also to fund my life over nine years, spaff more on a house and fund the other 33% in gold and cash. At current valuations, it’s not inconceivable that it falls to half, but the problem is in calling when 😉
It is easier to derisk after having taken a win from one last Covid crash hurrah than if it had all gone titsup. While I am less exposed to the markets now, all that cash exposes me to inflation and currency risk. An obvious move would be to take half of it and buy gold over a period. I would still have less than Harry in cash and gold, but the balance would be better. Harry Browne was a 1970s USA guy. I am also not in the USA, and 50 years have rolled by. The West is not cock of the rock and insulated from China and Russia, it was still in the ascendant in his time (the UK was further along the Imperial downslide than the US is now).
There’s some hazard in having gold as the only non-fiat currency store of value – surely there are others, but I can’t think of any that I trust. I did give a short consideration to Monevator’s ‘should you own bitcoin in your portfolio‘ and thought – intellectually the answer is probably yes, but bollocks to all that. I should probably own a BTL or two but, well, bollocks to all that as well. I’d rather do bitcoin than go there.
the Vanguard Borg
I should take a leaf from AlCam’s book and switch out of Charles Stanley to Vanguard’s ISA for my standby ISA account. I shouldn’t increase iWeb any more – they are attractive because there are zero fees if you don’t hold OEICs and you don’t trade, which suits my general activity pattern well. CS charges 0.35% as a platform fee, which begins to irk me as the account increases in size. Vanguard charges 0.15%. There’s nothing racy in there. I hold a L&G world exUK fund in there and a L&G FTSE250 ex ITs fund. I favoured L&G over Vanguard to diversify away from Vanguard – I have a lot of VWRL and had way too much VUKE. I can accept the risk of Vanguard going titsup now because the great lump of VUKE is gone. Vanguard offer a serviceable replacement for the L&G Dev World exUK fund and a FTSE250 fund albeit without the ex-investment trusts tilt.
Main and standby is good enough ISA protection for me. Finimus has the go-to post on why you can’t rely on platforms client-money segregation rules. In engineering having 1+1 redundancy is usually the main win. You can do more to spread the risk, but complexity gets out of hand and you end up with a maintenance liability.
Your broker going down is a tail risk, very unlikely but the results could be devastating. From a gut feel Vanguard going down is less likely to me than CS going down. I will make sure in future that I don’t buy more Vanguard ETFs in iWeb, though I won’t liquidate VWRL. I am sure somebody else does an ETF like VWRL, though the substitute is not obvious on Monevator’s list. I don’t want a fund because iWeb charge platform fees on funds. Scratch that – having just checked to see if I can substantiate this, which was true when I opened my account, I can’t back it up from iWeb’s charges list. In which case the obvious course of action in iWeb is to go buy Ishares HSBC FTSE All-World Index C GB00BMJJJF91 and be done with it. Vanguard slightly frightens me – so many people believe in it and it is huge. The win for a bad actor taking it down is enormous.
Vanguard are a better and cheaper bet that Charles Stanley, with similar advantages of the flexible ISA offering and regular investing. So rather than putting cash into CS next month, I will open with Vanguard. I can defray part of the market risk by selling the L&G funds in CS and buying the equivalent ETFs in Vanguard on the same day. There’s a lot more than one year’s ISA contribution in CS but at least that takes out some of the risk. I can then do an ISA cash transfer at my leisure.
Covid makes spending and working very different
It’s reduced my spending overall. There was a flurry of spending at the beginning, to hedge some of the worst eventualities which didn’t come to pass. They also hedge Brexit to some extent, which is very clearly making the price of some things rise – oddly electronic gizmos from Amazon seem to have risen, and food is rising. We bought a lot of wine, but still have most of it in stock 😉 But overall outgoings are very clearly down.
Monevator has occasionally given me stick about a rabidly anti-work stance, basically the whole point of getting to FI was to get the monkey of The Man off my goddamned back. Work is overvalued in our society. It’s way overrated as a source of meaning in life, to be honest if you’re going to look for meaning from a belief in God or a meaning in work, I’d take the former any day. At least it gives you hope in adversity2. Whereas a belief in the meaning of the grind of the 9 to 5 is empty IMO – a form of terror management theory writ large. Even a Grand Fromage is typically forgotten about two weeks after they take the nameplate off the door.
The Protestant Work Ethic is a mashup of meaning and money. Niall Ferguson made a cogent case that it was what until recently made the West cock of the rock economically3. Not absolutely sure how you make sense of the more recent decline and the rise of the East, I am a little bit more with Oswald Spengler there, that there is a cyclical nature to empires. Let’s hope it’s not Jared Diamond and catabolic collapse eh? The problems Obama called out eight years ago don’t seem to have got any better. MAGA doesn’t seem to have improved the State of the Union that much.
We once had a positive view of a world with less work
I feel sure that with a little more experience we shall use the new-found bounty of nature quite differently from the way in which the rich use it today, and will map out for ourselves a plan of life quite otherwise than theirs. For many ages to come the old Adam will be so strong in us that everybody will need to do some work if he is to be contented. We shall do more things for ourselves than is usual with the rich today, only too glad to have small duties and tasks and routines. But beyond this, we shall endeavour to spread the bread thin on the butter-to make what work there is still to be done to be as widely shared as possible. Three-hour shifts or a fifteen-hour week may put off the problem for a great while. For three hours a day is quite enough to satisfy the old Adam in most of us!
The old boy did well in the what will happen. Compared to the 1930s his narrative of economic and material plenty has largely come true. But he achieved an epic fail in the why of work. It’s hard to know where we lost the plot, but if the peak human breeding age is about 30-35, then there’s no escaping that fact that those grandchildren have definitely come of age and entered the workforce, and they stick their head up above the parapet and go WTF? Where are my fifteen hour weeks, then?
One can argue that for a narrow section of the workforce, that has arrived, paradoxically amplified by the coronavirus pandemic. There be many workers who change the state of information. They don’t turn metal on a lathe or unload ships or build stuff. If what you do falls into that category, then working from home wins. I would say that if you’re doing that for an employer and you find it successful, then watch your back. If you can do it at home, then it’s susceptible to geographic arbitrage, and it can probably be done in a country with a much cheaper cost of living, to your detriment. Be careful what you wish for, and all that. I expect to see a big hollowing out of lower-end white collar jobs in the years to come. Pandemics accelerate change, because they squeeze the focus onto the essential to the detriment of the cosmetic. We didn’t hear so much about the Kardashians last year 😉 McKinsey say this is also acting on businesses, again amplifying the difference between the best and the rest.
Keynes was right about work in one way IMO
I gave thirty years and arguably the best years of my life to the god of Work. Unlike many others, I didn’t have a great attachment to it.
I never had a problem with keeping myself occupied since giving it up, but one thing I have missed in the pandemic is creative activity with others. I would do this in the area associated with recreation before, but in one of the clubs we decided to cease operations until a secure way of meeting is possible and it’s not, at the moment.
I am an introvert, I see in others quite serious distress at relative isolation, because the community of people I know are generally fortunate enough to be able to work remotely. Which may have its ups, but it seems to also have its downs. True home/remote workers probably compensated for the remoteness in the leisure or other non-work areas of life, like I did, though as a retiree you have more time to do that.
I recently physically built an instance of the design I made to qualify it worked, with somebody else. Physically assembling it was basically technician work for both of us, but there was an element of the case for working with your hands in it. We didn’t even really have the right tools4, so needed to improvise with a bench vice and a bunch of cardboard boxes, but there was something satisfying in assembling this component, making the connectors, and sparking it up and having all components report back as present and correct. I had been spending too much time in the virtual world spinning the parts on a screen to make them fit and optimise things at home, and it was good to do something real with real stuff and real people for a change. It was a good win for half a day.
There’s probably more of this work than I want to spend time on it, so I needed to think and prioritise, chase the higher value-add. Keynes was right. One day a week to one and a half is about right – although the pattern is different. Some of this work is CAD, and I am on the maker side of the maker/manager divide.5 It doesn’t fall neatly into days, or even half days, Sometimes I have to have at it, then take a walk. Strange things happen in the downtime, and things which were intractable before become obvious after.
You’d get sacked in a heartbeat doing that in a company. Where the hell is that Ermine? What do we pay him for if he’s not there? However, as a maker, the productivity of the time in such an unscheduled way goes way up.
On the other hand, working one day a week doesn’t earn enough to build a life – I’d be in the precariat renting a single room if I had 30 years of that behind me. I can do that now because I don’t need the money, other than to feel valued and to buy commitment 6. I can work Keynes’ pattern, but in an economy designed for a 24/7 requirement. Because: FI. There’s no other way for most people.
I am also doing a recreational creative project with somebody else. This is an entirely virtual operation. It was a chance to get my head round how to use Git, bitbucket and Cloudcannon to redevelop a website while making the technology usable to somebody who has had no background in software engineering. There will never be a revenue stream from this, but it is developing something bouncing ideas off other people, and that is something valuable, even to somebody identified as a lone wolf on leaving primary school. I am introvert, but not an island.
I am also privileged I can avail myself of these incidental upsides precisely because I don’t need to make them pay my costs of living. In What’s Wrong with the Way we Work. the New Yorker indicates that the cult of finding meaning at work started in the 1970s
“management must develop a better understanding of the more elusive, less tangible factors that add up to ‘job satisfaction.’ ”
Hmm, respect, enough pay to live well on, and not too much time lost to it seems a good place to start, eh? How did we let twats like Steve Jobs tell us rubbish like this
You’re not going to believe Usain Bolt telling you it’s easy to win the 100m Olympics, so why believe the DWYL-LWYD lie from Steve Jobs? No doubt it worked for him, but you shouldn’t infer the general from the particular. Not without at least some statistical analysis.
Work can offer you some of that peripheral claptrap, but only after it gets to pay your rent and put food on your and your family’s plate. The trends weren’t heading in the right direction before the pandemic, never mind after it.
Keynes was cheerful sort. Current visionaries, not so much.
Work is the fundamental problem. We have designed systems where you need to work to satisfy Maslow’s hierarchy of needs
In theory we have a welfare state that addresses the bottom of the pyramid, but you have to ask yourself why if you go around the streets of London or Oxford or many other towns and cites you see people who have clearly fallen between the cracks. There’s no law saying this has to be so – Asimov’s Solarians and Keynes’s grandchildren were imagined in worlds where you didn’t have to work to meet these bottom needs. But it was why the twenty-something Ermine signed up for working five days a week – to be able to get out from under my parents’ roof and get food on my plate. I could have occupied myself better elsewhere, there’s plenty enough to interest a curious mustelid. However, not being able to make the rent concentrates the mind.
Steve Jobs was telling us all to get into the green and blue bits up top, all the other stuff will take care of itself.But he had the self-same blind spot that many people who don’t have to fuss with the lower parts of the pyramid have. He spent his time up in the world of ideas, and that’s where a lot of the successful folk in our economy end up. The people who have the money are focused on the top end, and just like Al Capone, if you want some, then go where the money is. Hence all the poncey services to help the ultra-rich feel great about themselves, with their yachts and stuff. But that goes a long way down the line. Why is Facebook minting it? Ask yourself – does any human being really need Facebook’s services, in the way you need water, or shelter? I don’t use Facebook in any big way, indeed I don’t use social media in a big way – it was fun to learn about but after a while I came to the conclusion life was better without that stuff 😉
I’ve survived so far, in a way that I wouldn’t without water, or trying to use a cardboard box as shelter rather than a house. Facebook addresses the upper two tiers of the pyramid. Go where the money is. If you want to make money, compete at the top, and if your business has the capacity and smarts, then you see this as being all there is. That fellow made a cogent case for it, though he lost the plot at the end
Consumers in the Purpose Economy have too many options in every marketplace and want you to give them a reason to buy your product. Simply, they want you to help them find meaning in their lives. We are entering a world where meaning is the most valuable currency. What a time to be alive.
Same category error as Steve Jobs, mate. Meaning isn’t the most valuable currency for everyone. If you see people sleeping in boxes and cars, they couldn’t giveashit about meaning, because they’re down at the red end of Maslow’s pyramid.
I used to fulminate at the radio in the 1970s that that sonoabitch Arthur Scargill was governing the country, with his damn flying pickets stopping other people working and turning my lights off. Which he did, and I am still of the opinion that that sort of thing needed to be crushed. I have absolutely no problem with people withdrawing their labour, but getting in the face of other people working in industries that used the product (power generation) and threatening them with GBH to stop working isn’t good. Nor is dropping concrete blocks on taxi drivers when you’re trying to reduce strikebreaking. And yes, for the record, the violence wasn’t only on the miners’ side, though it did seem like they had the lion’s share.
All these white collar folks go tsk tsk, work is the route out of poverty, education, training, yada, yada. Really? You and I with our soft uncallused hand can say it’s easy, but it isn’t, and the rising water’s coming for us now anyway. There’s an argument my job went bad because of globalisation, though a humdinger of a financial crash didn’t help any. What do the good folk at Bloomberg have to say?
The unskilled worker is the next pandemic.
Let me just step back. First of all, I think that it’s pretty clear if you have high degrees of unemployment, there are basic economic impacts that are not good for the nation. It puts an incredible strain on the economy. It usually only gets addressed through higher taxes on a smaller and smaller tax base. It increases the gaps between the haves and have-nots, which historically has caused more social unrest if it goes on for a period of time. We saw high levels of unemployment like in the Depression create hopelessness and despair in individuals, in families, and their communities.
I think [unemployment] happens as quickly as automation displaces people from work without concurrently retraining them and retooling them for other types of work.
Ah, that old error again. concurrently retraining them and retooling them for other types of work. That’s OK if the other work is at a similar level and hopefully needs at least some of the same skills. I’m sure there are some ex-miners that went into high finance, but if you drive through the Welsh valleys 35 years after Thatcher won that fight and Scargill lost, there are still pockets where regeneration didn’t happen. Hope went to die and got buried.
When I was a child playing on the bombsites and slum clearances where they eventually built Goldsmith’s College halls of residence I had to watch out, there were builders all over the place who would give kids hell. 40 years on and at the end of my working life and the canteen at the Athlete’s village of 3000 flats of the London Olympics only needed a maximum capacity of 200 for a much larger build. The market for unskilled7 work has been falling for decades.
Less risk. More spending
is what I want to do with my post-covid world, if and when I get there. I can’t really do much about the more spending at the moment, but I can change the risk. Changing a mindset isn’t easy, however, but if and when the next crash comes along, I need to think to self
Real estate is actually my favorite asset class to build wealth because it is easy to understand, is tangible, provides utility, and has a solid income stream.
and an Ermine thinks to himself WTAF? Property was the greatest source of hurt in my entire personal finance life, and it grabbed me by the nuts at an early age and wouldn’t bloody well let go until 20 years later. I’d rather gnaw a leg off than rely on that. I don’t consider property as an asset at all. When we moved down here we went for a detached house, because I don’t want to hear the neighbours’ grandchildren squealing or Coronation Street on t’telly as they get mutton jeff. Mrs Ermine wanted more garden. I want to hear my own stuff, and if Mrs Ermine is away, then I want to play music at 1am without feeling bad about its impact on other people’s beauty sleep. So I spent more, but I considered the extra as frivolous lifestyle inflation, not an investment in property.
Whereas everybody else leans in, rubs their hands together and thinks ‘money tree’ when they spend money on bricks and mortar.
But I should also listen to the whispers in the wind. I have heard a few times now from people of a certain age that they got slaughtered in the stock market last year and are very pissed off. The advantage the younger Ermine had against being hammered by property was youth, in particular the ability to keep working. These greybeards don’t have that advantage.
There’s a lesson in here. Safety first for a grizzled pelage, though where you get safety in the current financial arena frothed up by money created out of nothing is a difficult question. It is why I have shifted it in the direction of gold, and RICA, RCP and VWRL, and I may sell out of some of the individual shares from the old HYP. It looks more like a greybeard’s asset allocation – and indeed the eponymous writer on Monevator took a lot of shit from young pups who said “investment trusts – pah – just buy a single world tracker and be done with it”.
They don’t know his hopes and fears, which is right, you shouldn’t put an old head on young shoulders. Conversely, you should take the young head off the old shoulders when you are grizzled of fur the return of capital matters more than the return on capital. Most people end up dialling down risk when the markets are in a hole and they have just lost their shirts. Spinning the dial towards risk-off when the markets are up in the sky is not a terrible time to do it…unless you need the return, of course.
TA will probably lean back in his chair bingewatching Netflix and double his money in the next year as the coiled spring doctrine of the UK economy does its stuff. I probably won’t be swinging for that ball, other than what’s already in equities. That’s OK. I don’t need it.
Now if Monevator posts another dark transmission like this one, from deep in the trenches of The Big One, then I don’t know. An old sailor still hears the call of the sea. Perhaps I should dabble in my residual SIPP with a few grand, after all, there are big wins to be had in the teeth of a storm, and it’s ringfenced from my main investments.
there’s a school of thought that accumulated assets from Imperial plundering may also have had something to do with being king of the castle, though our Niall would probably say the the PWE made all this imperialism a lot more effective and directed. ↩
fitting 250 screws by hand without a power screwdriver or even a Yankee screwdriver, or even damn it – a ratchet one gets old very quickly… ↩
Succinctly summarised by Monevator as “including, I say again, the feeling that getting some cash for doing something generates in a capitalist society, like it or not.” I may have outrun the getting meaning from work in a spiritual sense side of things, but the fellow has some point. I am just not going to work minimum wage, because I am a peacock like that. I pitched for a pay rise, not because I need the money or can spend it, but to feel valued enough to put in the time. How absolutely barking mad is that? Walt Whitman again. ↩
By no means all building work is unskilled, but particularly historically, a lot of it was more brawn than brains. I didn’t see any hod carriers on the Olympics site, but it seems the job still exists. They were the guys my primary school self had to watch for, because they were often up on the scaffolding with the time to look for miscreants on the way back. ↩
Every time one of these FIRE-ees announces their return to work, I think of another soldier falling to cannon-fire amid the thinning ranks of a Napoleonic line.
I am one of the old guard, I have passed the FI/RE event horizon, and it seems the chimera of reappearance from RE of some folk caused a disturbance in the Force. It’s time to start rolling the cannons to the front line and fight for the noble cause. For the record:
I am not working a few hours a week because:
FI/RE didn’t work out and I am skint
The step-changes at the end, while clear, aren’t important, they are one-off windfalls. You really shouldn’t charge around shorting stocks in a pandemic, Do Not Sell but if you are going to sell, double down and short. Still, if Monevator can ‘fess up to a bit of non-passive jiggery-pokery, well, so can I. The first lift in 2019 is not investing win, it was a dialled down PCLS and not all of the lift in 2020 was shorting – a lot was simply the market roaring back. We should also remember that this is denominated in Great British Pounds, and Brexit has made them more British and less Great. You need more of ’em to represent a given value. But what is clear, in a more understated way, is the trend of decline has been arrested and reversed, since mid-2019.
of valuations and safe withdrawal rates
When I left work I did not have enough ISA+SIPP capital to match the safe withdrawal rate. That was okay strategically because I had a DB pension to come later/ From 2012 to 2014 the market crawling from the wreckage of the GFC beat out what was a too high spending rate, but the fall showed up in 2014, as the irresistible force of spending overwhelmed the immovable object of ROI. I had to fall back, fall back, fall back and hope the engines restart in the low-water mark by the time I started to draw the pension.
It’s not supposed to, and perhaps it doesn’t if you accrue over many market cycles. I didn’t. Imagine the trajectory of 2015-2018 imposed upon the start. You’re never allowed to say that valuation matters to the passivista crew, but I would say that trajectory shows just that. I started out at low valuations into the GFC. I was able to make a SWR of 5% work – that’s what people said was OK back in the day. Don’t even think about that now. 3% is probably racy on current valuations. Continue reading “early retirement isn’t boring. Brexit and Covid are”
Thus quoth ZXSpectrum48k, over on Monevator. From a fellow who does this as a day job, looking at the legions of wannabe escapees from the office
Socrates was the counterfactual, though he defined the Dunning-Kruger problem in his first sentence.
for he knows nothing, and thinks that he knows. I neither know nor think that I know
Or Plato talking about Socrates. whatever, there still be truth in it
It is part of the way of the world – the young fellow must be ignorant to his faults to make his way in the world and try and put his ding in the universe. ZX was also talking of the younger ermine, and probably even of me now, after all, how would I know 😉
In it, TA postulates saving ten years worth of cash, to bridge your spending over 10 years between retiring early (the RE part of FIRE), and reaching 57, the earliest point the Agglomerator, hero of his journey, gets to access their tax-privileged pension savings (SIPP). I confess I haven’t studied his derivation of that requirement, but I was only a little bit older than his putative future Millennial when I packed in work, I was very early fifties whereas Agglomerator wants to clear the workforce at 46.
Let’s just zoom out a little and put that into perspective, the Agglomerator enters the workforce at 21 on leaving university, and clears it at 46, so he works for 25 years. In that 25 years, somehow he saves 10 years of spending as cash and about twice that much in tax-privileged accounts to see him out. That looks like a massive ask to me, saving effectively 30 years of essential spend1 along with buying a house outright and establishing himself.
Today’s FIRE community is very different from that 10 years ago
For a start, fat FIRE is a much bigger thing than it was in the past. When I started it was about frugality first
there are only 5/13 left standing (I haven’t counted those that haven’t been updated for over a year). It shows how different the world is now that it was just over ten years ago when I started down the FI/RE track. It was about saving and frugality.
Why was this – it was just after the GFC, people didn’t really believe the stock market would come good. Apart from Monevator, who sounded the clarion call into the low-water mark – git your ass into this market- NOW. However, valuations were such that you could get a decent return on shovelling money into that market. Although you were never going to retire early making minimum wage, you didn’t need the fancy City finance pay packet.
Today’s FIRE community is much, much richer than that of ten years ago. Some of that reflects these high valuations – if you want to accumulate enough to retire early now it’s a much tougher job. A safe withdrawal rate of 5% was conceivable in 2009, it’s much lower now, simply because valuations are higher. You need to be working in finance to get enough. There’s much more emphasis on fat FIRE now – starting off with a lot more, and spending at much higher levels. The frugalistas have been run out of town.
If you’re starting out, that’s not so bad, I have the suspicion that valuations will become more reasonable2 in the not too distant future, you need to keep buying into it. You have three decades.
But if you need to make it all happen in five years starting yesterday, then it’s going to be tough sledding. And I would imagine that a lot of getting-on-for-fifty-somethings are going to find themselves heading towards early retirement this year and next.
Talking of padawan, bless my younger self’s cotton socks, I thought I would have edge in sectors. Then I chased the HYP, is some ways because after a GFC yield was easy to find. Dunning and Kruger would be proud of me. I did do well. But not for the reasons I believed. I have no particular edge is stockpicking. But I was next to an open goal. Truth be told it didn’t really matter what you bought at that time. Valuations were in the dumps. My big win was to buy anything. I would probably have done better buying VWRL, except it didn’t exist in 2009 and before the RDR there were all sorts of dodgy practices to do with funds and backhanders. I was weak on the US market, which has been on a tear for most of that time. But I bought in at a low, and while I would have been better off buying a broad index, getting the timing right trumped sector allocation.
It’s not what I bought, it was when I bought – at low valuations. The rest of the journey was slowly coming to the conclusion that I am still a padawan, though not hopelessly so. I did OK, such that now, marked to market at high valuations (now) I have more capital than market to market at low valuations (the GFC) despite living off investment return over the last 8 years.
TA’s article says I was nuts. I agree, if I were starting now being balls-deep in equities other than three years’ essential spend would be crazy. It was less nuts starting from low valuations, because it is the truth that passivistas never allow to be heard – valuation matters, and the other name for that is market timing 😉 . But Dunning-Kruger probably would have the last laugh, because if TA went back in time to the younger Ermine and said ‘my crystal ball tells me you have to have enough cash to carry you for the next 8 years, what do you know that I don’t?‘ I am not sure that the younger ermine would have puffed up his furry chest and say ‘traveller from the future, valuations are historically low now, so the risk is much lower than it will be in your time.‘ TA wasn’t there, though Monevator said pretty much that at the time in his if not now, when?
A tale of desperation against logic
We are all, of course, the hero of our own narrative. Using the flight analogy from a few weeks ago, I ready myself for the eight lean years in a flimsy craft, refuelling and seeing fire streaking across the runway behind. I am faced with the choice of wealth or health, and choose health. TA would not have cleared me for take-off, I did not have eight years cash saved, I did not have enough to bridge the gap. But enough to be prepared to take the chance. Against the backdrop of the GFC, the increasing value of the shareholdings stiffened the spine enough that I felt I could make it, though I did have to experience the lean years, particularly at the beginning. But in the years after the GFC, many people were skint. The ask is much, much higher now.
Look at the sedate trajectory On the one hand they’re expecting to write lots of letters to the Chancellor on how they cocked up bringing inflation down to 2%, indeed this will be a regular event for the rest of my lifetime. The Bank of England has a lot of finance bods much smarter than me, and I am sure that they will say well, hey, this is what is implied by the yield curves, it’s not our opinion. Sort of like a variant on guns don’t kill people, people do. Nothing to do with us, guv, it’s wot the market numbers say.
All over the decadent demise of the Western world there is this refusal to take responsibility for the consequences of our actions in favour of magical thinking. I’m all for magical thinking, but in that case let’s have some magic back, eh, rather than pretending we’re all materialist rationalists. Smells and bells, please. At least some of the ride will be more fun. Meanwhile
it looks not so different from the B of E’s prognostications, if we stick to the last 40 years. We have to go back nearly 30 years to the last time it was over 5%. Case proven, m’lud. Along with history, inflation has ended. Obviously you need some inflation, else capital will sit back on its lardy butt rather than get out into the world making good stuff happen in theory, but we’re sorted as far as inflation taking off. Hmm. In other news
We seem to be suffering a general competence deficit
We seem to be suffering a major competence deficit these days. In the battle between ability and craftiness, everyone seems to be losing their grip. The malefic Dominic Cummings seems to losing his mojo – starry-eyed for Big Data, his feet of clay show when it comes to hiring people to do anything with it. Obviously you ask your mates first, because, well, corrupt bastards are like that. He’s of the view that leadership in politics requires a science degree, but his own ancient and modern history degree from Oxford clearly failed him in his/our hour of need. He’s unable to find competence in handling data.
If the answer to your data processing job is Excel, the question is wrong
Back in the day, the Ermine was chatting to the guy at the next desk, who was tasked with keeping records of set-top boxes. Now I had an electronics, not software background, but he was planning on keeping this in Microsoft Excel. “Your problem there,” opined the Ermine, “is that you can’t do ‘owt with the data. What you need is a database”. This guy was going to try and search for repeating faults and that sort of jazz. Now you can do that is Excel, but it’s a bit like Samuel Johnson’s quip about a dog waking on its hind legs, it’s not so much that it’s done well, it is that it’s possible at all. It grinds to ever slower after about a thousand records – I discovered this the hard way when running the records of a club that had about 1500 members at its high water point. I switched to Access3 after about 500 members.
The trouble is everybody can understand Excel, whereas getting your data into a database is a different level of abstraction. Even in DOS days, dBaseIV had the edge on Lotus 123, though wrangling the forms to make it work was a nightmare.
Excel just isn’t designed to handle huge amounts of data – wrong tool, wrong job. This fellow might have had a hundred thousand set-top box ids, and Excel was only good for 65535 rows back then. You don’t use Excel for massive lots of data. I’d get off that wagon at more than 5000 data points, so you don’t use Excel for tracking your set-top boxes. Or your coronavirus victims…
Now in fairness to our Dom, he’s busy getting his mates to do his data munging, falling for the old saw of anonymised data. The trouble with AI and Big Data in particular is that the aim is to de-anonymise everything. AI looks intelligent because it cross-correlates everything, at scale. The public data Dom’s giving his buddies may well be anonymised on its own, but when combined with other data the keys to the kingdom often show up.
Now is the winter of our discontent[…]
I am determined to prove a villain
And hate the idle pleasures of these days.
Plots have I laid, inductions dangerous,
By drunken prophecies, libels and dreams,
This lot seem to have skipped a few lines of Richard III, and gone straight on to the doing evil. The thing that’s saving the rest of us is the competence deficit – in driving out Brexit non-believers, they seem to also have driven out anybody who can spot a bad idea miles away. Or indeed anybody who’s got a clue. Funny old thing, that… Correlation is not causation, eh, Dom?
Brexit zealotry doesn’t seem to correlate with competence
Perhaps driving out those who had a clue was the point – disaster capitalism unfolding before our eyes. Never let a good crisis go to waste and all that. Perhaps it has to be the way- you need moronic slavishness to the Brexit Ideal to Get Brexit Done, and perhaps afterwards we can engage people who understand the art of compromise. A little bit of that on t’other side wouldn’t go amiss, either, but we have to stick with what we can change…
I’m sure we will trade with other people after Brexit. But let’s get some people who can talk in a civilised manner to others, eh, rather than yelling we have the sovereign right to do exactly as we damn well please, and thanks for all the fish. That’s an awful long way towards the Juche doctrine of North Korea, and I suggest Brits are a little bit too soft and used to their creature comforts to want to pay that sort of price for absolute sovereignty, regardless of what Jacob Rees-Mogg and his disaster capitalism compadres in the European Research Group have to say about vassal states.
I am old enough to just remember 1973. Britain was a lot more self-sufficient in many things then, like food and cars for instance, than it is now. We weren’t that good at a lot of this, which was roughly why we signed up to the Common Market as it was then – we were the sick man of Europe, economically speaking. However, the issues raised by James Goldsmith of the Referendum Party weren’t ever addressed with Maastricht. Brexit will definitely fix those. A little bit like burning the house down fixes bad wallpaper, but some non-ERG eyes can probably make Brexit work right after a few years. Britain’s economy did sort of work before 1973, and hopefully we have all learned something in the intervening 47 years. Just for God’s sake keep the British Eton-educated whazzocks away from leadership of our companies, particularly any that make cars, it took foreign management to make Britain’s car factories make cars that were worth buying…
work is not the route out of poverty for the ability-challenged or those with more children than skill
I confess I will struggle to drum up sympathy for the Red Wall if they find they are vassals to British plutocrats rather than EU technocrats. True, they weren’t to know of the coronavirus pandemic, but the deep compassion for those who fall on hard times of the crew that they voted in to Get Brexit Done has been hidden in plain sight for a very long time.
I still remember the relatively benign version of that looking for my first job nearly 40 years ago, it scared the hell enough out of me to never take any time between jobs until I packed work in for the last time. The experience of being unemployed in Britain doesn’t seem to have improved between Margaret Thatcher and the punitive and nasty Universal Credit.
Personalised, like the red dot from a rifle. The personal adviser will be targeted to make your life miserable. If you want to cop a feel of the quality of the personalised advice, knock yourself out on the gov.uk careers advice beta to gauge the accuracy.In the case of the Ermine, that’ll be
Because there is a fundamental truth here. Britain is a rich, First World country. That means the cost of living is higher here than in many other places.
Sadly, Brits are not, on average, cleverer than other people. We’re average. Quelle surprise, eh? As a result, the sort of jobs available in the UK that pay enough to live on need to demand a higher level of skill than the global average, and the bar is increasing all the time4. Because: globalisation. If you thought Brexit is going to fix globalisation, then you should have been more careful about the people you gave the keys to.
Elementary logic shows that the result of increasing skill requirements is that fewer and fewer people will be able to earn enough for the average cost of living. Some of them won’t be bright enough. Some of them will have had children too early in life, or split up with the other party involved. That means you won’t have enough time to get a full-time job. As a society while we mouth platitudes about wanting to make up the difference, by our actions we clearly don’t care that much to be prepared to carry your choices for years and years.
We have hidden this in the past by increasing the number of shit jobs in the economy, things that should have been done by machine or not done at all, and priced these at minimum wage. It is one of the reasons why productivity has gone down the toilet in the UK since the credit crunch. For contrast, I started work when this was about 55 on that scale, and left when it was about 95. Britain got better off while I was at work – not due to me I hasten to add. You need an increase in productivity to address poverty. There has to be more shit to go around per head for the country as a whole to get better off – it is a necessary but not sufficient condition.
There’s only so far this can go. Another way we are hiding this is to create a punitive DWP system for the un(der)employed called Universal Credit, employ young graduates who can read and write to be mean to people who perhaps have literacy issues or generally can’t stand filling in forms. We incentivise the graduates to disenfrachise as many of their ‘clients’ as possible so that they keep their sort-of middle-class jobs, while making it all look like the clients’ fault that they don’t have the natural ability to get/hold a job that pays enough to live on.
Let’s not even start on what we do to the physically and mentally ill, eh? We just don’t care. Oh and then we wring our hands about the amount of homelessness.
Now I’m not saying I am clever enough to know the solution to this problem, but I have learned over several decades is that whistling a tune and repeating inappropriate platitudes like ‘work is the route out of poverty’ isn’t the way to fix the problem. It would be more honest simply to tell some of the people with insufficient skills or chaotic lifestyle choices that there is nothing we are prepared to do for you. Work is not the route out of poverty, for the simple reason that the cost of living is too high in Britain to keep a roof over your head on anything less than the full-time minimum wage, and there are too many people in the UK who don’t have enough aptitude to add enough value to something to even justify the minimum wage.
Some people are seriously short of basic life skills, like recognising food 😉
Ceci n’est pas food
Microsoft offered me this picture of a field of Halloween pumpkins in some American field. It’s a little bit weird, a tad Magritte, IMO. How do I know it’s American – there are no trees, hedgerows, we don’t have one-armed pylons unless there’s a really good reason and we don’t run our railway tracks with no guarding, and I don’t think I’ve seen boxcars like that.
However, it’s in keeping – Halloween never used to be a retail-fest or even A Big Thing until about 30 years ago, and it’s been pushed like hell, imported from Over There. It’s still rather disturbing that a significant proportion of British parents were presumably raised by wolves themselves in being unaware that you can eat what’s inside pumpkins5. Although I had no idea how they grew, I was aware of this by the time I left home, though it wasn’t particularly useful information as Halloween wasn’t a big thing, and I am child-free anyway 😉
However, I am with hubbub – eat your damn pumpkins FFS 😉 Tossing 90% of the pumpkins we grow is just plain rude. Mrs Ermine grows these smaller ones which look the part but taste better. We don’t need to carve them, but with cucurbits size does not correlate with flavour IMO.
It’s not so much that the big supermarket ones will taste horrible, the main failure mode is to taste of nothing much at all. Think marrows as opposed to courgettes. Having said that, if it tastes bitter, then toss it out. Pretty much a rule of everything to do with eating really, but according the the RHS bitter squash can give you bellyache if it doesn’t breed true. So don’t seed save curcubits unless you know what you are doing.
Last year I was in Morrissons and they actually labelled their Halloween pumpkins as ‘not for human consumption’, which makes me wonder what the hell they spray the buggers with. And quite frankly, parents, maybe you want to ask yourselves, if you buy this sort of contaminated shit for your kids, then what sort of world you are encouraging capitalism to build for them?
I know, he doesn’t keep it all in cash and gets some return on his money. But the maths works out at enough for 30 years essential spend, even if it isn’t deployed in that way. ↩
Valuations becoming more reasonable is otherwise known as a bear market ↩
Before all the DBAs take the piss, Microsoft Access was the right solution for a club database, easy enough to a tyro to make it work. If it didn’t, the result was going to be embarrassment rather than death. I’m not saying PHE should have used Access ;) ↩
I took my O levels in the mid 1970s. The typical class sizes of my grammar school was 31, but after the O levels class sizes were about half, because half the kids had gone into the world of work. They were fixing cars, helping in businesses, all without A levels or a degree. I saw far more people as a child building the Goldsmith’s College halls of residence than I saw on the entire Olympic Athlete’s Village building site in 2012. You wouldn’t need to be able to read and write as a hod carrier in the 1970s, I saw nobody carrying bricks onto the scaffolding up a ladder in 2012, there were mechanacal aids t do that. ↩
While I despise Halloween for being a jumped up capitalist consumerism-fest, rather than an honourable celebration of the turning of the seasons/harvest festival/thinning of the veil, the truth is that parents who eat their pumpkins with their kids and then carve jack o’lanterns out of them use more of the fruit than I do. Upcycling writ large and they should be applauded! ↩
It is August, California has recorded the hottest temperature on Earth at the aptly-named Furnace Creek. I just can’t imagine 54 degrees. I went there in 1993, and overheated my rental Grand Am in the 1500 meter lift up from Zabriskie Point through Daylight Pass, with the heater flat out and all the windows open. In July…
Nevertheless, in Blighty there is the hint of Autumn in the air in the changes of the natural world. Birdsong has changed from the frenzy of the breeding season, perhaps most clearly and commonly with the Robin, which sings a song that sounds in a minor key to me, which we associate with mournfulness, though of course this is pure anthropomorphising. The retired Ermine is more physically active than the working Ermine. Earlier this year in lockdown there was an edict from the government that you were permitted to spend an hour walking. I stayed with some of this, while I don’t do it every day I cover about three miles. Walking is good for reflection and rumination – in the heat of summer I started earlier, and there is some reward to doing it before wrangling anything that needs an Internet connection to happen.
I get to know the small area better, and living in a small town it is easier to get out into the countryside by shanks’ pony. The transition between town and country is sharp, I cross the liminal space in about fifty yards. Earlier in the year I got to know the territory of some of the blackbirds and robins by their individual song. Now these ranges are more fluid, and I hear the lovely sound of flocks of goldfinches who have swelled their ranks in the breeding season, feasting on the seed-heads. Although the swifts have gone some time ago, the swallows are still swooping over the fields with their chattering sound.
Swallows chattering hawking insects over the fields as I come to the main road
The bold song of the chaffinch has been replaced with the double finch-finch sound of their alert call, and the lovely arrow-like white tail feathers flicker in the morning light as they make their swooping flight away from the paths into the trees. I have seen herons courting and the odd egret drifting lazily on the summer breeze.
I have learned that the sound of the wind in the oak is not the same as the wind in the ash or the willow. In some ways it is reminiscent of the almost animistic approach of my primary-school self, where I knew a very small area intimately. I cover more ground, and there is far more natural variation in the natural world of the Levels than there was in the urban landscape of New Cross. When I checked the size of my childhood world on Google Maps the size of my patch was amazingly small. Continue reading “winter is coming”
When is a bank not a bank? When it’s a fintech startup pretending to be a bank. For example let’s hear it for Revolut, strapline “get more for your money”.
I like a lot of their offering. You can hold cash in all sorts of different currencies. Most of the time that’s only useful to globetrotters and people buying goods over international borders, and even that can be handled by a decent credit card in many cases.
Way back when, sometime last year, I had the fond idea of saving cash in a bunch of currencies. I don’t ask much of cash, I don’t even expect to come back in a year and find it worth as much as it was before. However: Brexit. I don’t believe in it, and I don’t think it’s going to be good for me.
Revolut seems to match the requirement of being able to diversify that cash holding across currencies, with very low transaction costs.
Retirees need a bigger emergency fund that their employed selves
Anyone living off investment income but without an income stream against which you can borrow money has to hold a fair amount of cash, typically one to three years’ spending, to avoid becoming a forced seller into a down market.
For people with investment income only, a market crash is an emergency writ large, because realising income from bombed out stocks hammers your capital. You need to sell of a larger part of your capital to get the same income, and a cash buffer puts that off. Unlike emergencies when you’re working, the emergency lasts a while, and there’s nothing you can do to swerve it. A bear market can last a couple of years.
Unlike your normal emergency fund of three to six months, that’s more exposed to losses simply by being larger.
Emergency fund counterfactual – if you’re working, you don’t need a year-long cash buffer
I had come across people who didn’t subscribe to the working life emergency fund of three to six months expenses approach, early on. I read Early Retirement Extreme who was characteristically straight between the eyes on the subject.
I don’t have a disaster fund or an emergency fund. For emergencies, I use a credit card.
If I use a credit card, I will have a 20 day grace period during which I do not pay interest. This gives me sufficient time to move money from my savings account or my broker account into the checking account from where I can pay off the credit card. This way I am not losing money from money gathering dust in a checking account.
Hmm. The first this to say here is that ERE was young and employed, so perhaps more resilient. We tend to get more fiscally conservative as we get older, which is the way of the world – the future income stream from work is less because there are fewer years of income. But I recently read a similar iconoclastic attitude at EarlyRetirementNow, who is much further down the line than ERE was. He takes the same line. So does MedFi. Let’s take a look at ERN’s answer to an emergency
Credit card float (=interest free loan from the credit card company between the transaction and the credit card payment due date)
Papa ERN’s paychecks
The $100,000 HELOC (home equity line of credit) on our condo
Finally, a large sum in several brokerage accounts, more than half our liquid asset net worth
The Ermine is short items 2 and 3 – although there’s an argument that my pension is some variant of 2. A HELOC is probably what I understand as an offset mortgage. ERM is/was a banker, and is much more comfortable with leverage than I am. I don’t ever want another mortgage in my life – I spent 20 years trying to ground the last one. I do accept that’s an opportunity cost, Monevator tells you why. Some things are just a gut feeling, in the same way that so many people violate the personal-finance principle “never take financial responsibility for something that eats” for lifestyle reasons. Britons tend to regard property=money tree, but I do not regard property as a finacial store of value. I value it for the usufruct. This is because I have had the experience of the capital value of a property falling by a third, and about a half in real terms. Bricks and mortar is not a store of value in my book.
It is possible that living for several years with no capacity to borrow money has skewed my perspective. All lenders want to see an income, paradoxically the financially independent are zeros in the eyes of lenders, because they are atypical. Your average wage-slave wants to borrow money because they want to spend more than they earn, and lenders are used to that. Sometimes that is reasonable – few people save up for a house to buy it cash, because it is easier to live in it and service the debt than to pay rent on top of saving for 20 years to avoid paying the mortgage interest. OTOH if it is for weddings, holidays, cars or other wasting assets then it’s barmy. But lenders gonna lend, and unlike bank managers of yore they want to do it at scale, so they don’t really put any effort into analysing edge cases.
If you’re FI and not working, you need an emergency fund. You are your banker of last resort
We want to be financially independent, and for many of us that’s independent of The Man. But there is another side to financial independence. You look damned odd to the system, and in practice that means the non-working financially independent are independent of finance too. They are pariahs. You’re not going to be borrowing money from anybody unless you can show income. In practice that means your non-working self needs a larger emergency fund than your working self. Continue reading “fancy fintech’s fishy fun”
Boris, me old buddy, the prospect of 10% unemployment1 is heading towards these punters you’re exhorting to shop with confidence. Isn’t it better to shop with confidence you will have a job to pay for your consumerism first? Not sure I’d start with Westfield either, I don’t have fond memories of my last visit to Westfield – a food desert of overpriced junk.
Nevertheless, we decided to go egg on the economy the Ermine way, so we headed off to the South Coast. Mrs Ermine wanted to swim in the sea. She was much taken with it – on the south coast you can see some depth into the water, which is a step up from doing that in the North Sea, which is pretty murky.
Personally I can’t understand the attraction – you get salt in your hair and sand everywhere. I am a weak swimmer, however, and when I hear this sort of thing then I just don’t fancy my chances at all.
Indeed Mrs Ermine started talking of rampant consumerism – she is thinking of getting a snorkel and fins. I was picturing this sort of thing and wondered if that’s really a kindness on a public beach. Suppose it’s one way of encouraging social distancing
Apparently she means flippers. That’s future consumerism. We had more immediate requirements for consumerism, and dropped £60 on this,
and mighty fine it was too. We got to eat it on a table, but we had to provide that and the eating irons ourselves – we had it in our camper van in the National Trust car park. Call me timid, but I think trying to wrangle half a lobster on one’s knees using a blunt wooden fork could easily end up a tragic waste of fine seafood.
Although we were doing our bit for Britain, personally I think that hospitality is toast. This sort of thing is all very well in midsummer, but it’s going to suck bricks in winter
plus there’s still rent and maintenance on the buildings that you can’t turn a profit on. Sure, you need the kitchens, but there’s a lot of wasted space on the eatery. Perhaps they will have got that sorted by Autumn, because al fresco dining in the rain isn’t the cheeriest prospect in the world. Margins seem razor-thin in the restaurant trade. Second-hand catering equipment and premises will probably be very cheap next year, perhaps it is down to a new generation of restaurateurs to build the new world out of the ashes of the old. Continue reading “ermine egging on the economy”
If you’re going to sell into a market suckout, do it, do it decisively in the shortest time possible, and if at all possible do it early. Well, I got two out of the three right. A bit before then I also started to short a lot of what I had1 . In a couple of cases I shorted more of the stock than I had in the ISA.
I had been chasing income into the ageing bull market, so I ended up with more FTSE100 and investment trusts than I should really have had. And then I sold into a low, though nowhere near the true low-water mark. I did not sell VWRL, gold, or my HYP from way back when. I didn’t sell any of my index holdings in Charles Stanley, and indeed pumped LGITI up. Among what I saw as crap I sold BWRM which was a mistake in hindsight. You don’t have to hit zero bum notes, just more high ones than bum ones.
I bought a shedload of gold to add to my existing stash bought before the Brexit vote in 2016, and a few shares, and some VWRL. I was selective about what I sold – mainly UK based stuff and also income investment trusts, though only the excess I had bought in 2019, I have a core holding of ITs that I have had for years. At least TI seems to approve of the selectivity, just about.
9. Invest for the long-term: run your winners, and cut losers
You’ve had a good war. You did not sell, and you are now sitting on a tidy profit. All around you the smoke is rising from people’s business hopes and dreams, but you stayed passive, and you did not F*ing sell, you kept the faith, and you are up on the year? I don’t want to take that away, well done you.
I did F*king sell. Investing FAIL. Had I done n’owt I would probably be back where I was in Jan at a guess. Oddly enough when I look at my ISA now compared to January it’s not epic fail, but still FAIL. Advantage passive.