The UK General Election

The UK General Election

Over the long run, the market has provided substantial returns regardless of who lives at Number 10. This is not a piece that I wrote, but it is worth sharing as it makes a very useful point. Think and act long term.

Next month’s snap election is the first national vote in the UK since the EU referendum. While the election’s outcome and overall impact are unknown, there is no shortage of speculation about how the election will impact the stock market. Below, we explain why investors would be well-served avoiding the temptation to make significant changes to a long-term investment plan based upon these sorts of predictions.

Here’s a chart to consider – Growth of £1 invested into the Dimensional UK Market Index between January 1956 – December 2016…. some 60 years, which is rather like investing at 30 and living until 90.

Note smallprint:

For illustrative purposes only. Past performance is not a guarantee of future results. Index is not available for direct investment, therefore, their performance does not reflect the expenses associated with the management of an actual fund. Dimensional indices use CRSP and Compustat data. See “Index Descriptions” in the appendix for descriptions of index data.

In plain English – this is really an example to demonstrate the wisdom of long-term thinking (and investing) rather than the constant short-term anxiety and to be blunt “mucking about”.

Investing is not meant to be gambling

Trying to outguess the market is often a losing game. Current market prices offer an up-to-the-minute snapshot of the aggregate expectations of market participants— including expectations about the outcome and impact of elections. While unanticipated future events (genuine surprises) may trigger price changes in the future, the nature of these events cannot be known by investors today. As a result, it is difficult, if not impossible, to systematically benefit from trying to identify mispriced securities. So it is unlikely that investors can gain an edge by attempting to predict what will happen to the stock market after a general election.

The focus of this election is Britain’s exit from the EU. But, as is often the case, predictions about the outcome and its effect on the stock market focus on which party will be “better for the market” over the long run. Exhibit 1 shows the growth of £ 1 invested in the UK market over more than 60 years and 12 prime ministers (from Anthony Eden to Theresa May).

Markets and 10 Downing Street

This exhibit does not suggest an obvious pattern of long-term stock market performance based upon which party has the majority in the Commons. What it shows is that over the long run, the market has provided substantial returns regardless of who lives at Number 10.

Equity markets can help investors grow their assets, but investing is a long-term endeavour. Trying to make investment decisions based upon the outcome of elections is unlikely to result in reliable excess returns for investors. At best, any positive outcome based on such a strategy will likely result from random luck. At worst, such a strategy can lead to costly mistakes. Accordingly, there is a strong case for investors to rely on patience and portfolio structure, rather than trying to outguess the market, in order to pursue investment returns.

INDEX DESCRIPTIONS

Dimensional UK Market Index: Compiled by Dimensional from Bloomberg securities data. Market capitalisation-weighted index of all securities in the United Kingdom. Exclusions: REITs and investment companies. The index has been retroactively calculated by Dimensional and did not exist prior to April 2008.

Investments involve risks. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.

Past performance is not a guarantee of future results. There is no guarantee strategies will be successful. The information in this material is provided for background information only.  It does not constitute investment advice, recommendation or an offer of any services or products for sale and is not intended to provide a sufficient basis on which to make an investment decision.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

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The UK General Election2017-05-19T17:32:12+01:00

Those overpaid teachers….

Those overpaid teachers…

This is an item I came across online that amused me and felt it should be reproduced. I imagine and hope that all of us can remember at least one inspirational teacher, probably rather more. As in all things, people are people and some are far better at their work than others. No single profession or group are all good or all bad. However I have come to deeply respect teachers over the years and they have had more than their fair share of mountains to climb. So here is a piece that I am reposting in response to criticism that is seriously misplaced.

Are you sick of highly paid teachers?

Teachers’ hefty salaries are driving up taxes, and they only work 9 or 10 months a year! It’s time we put things in perspective and pay them for what they do -babysit! We can get that for less than minimum wage. That’s right. Let’s give them £5.93 an hour and only the hours they work; not any of that silly planning time, or any time they spend before or after school. That would be £41.51 a day (8.30 am to 3:30 PM with 30 min. off for lunch and play –that equals 7 1/2 hours).

 

Babysitting Service

Each parent could pay £41.51 a day for these teachers to babysit their children. Now how many children do they teach in a day…32? So that’s £41.51 x 32 = £1328.32 a day. However, remember they only work 180 days a year!!! I am not going to pay them for any holidays .LET’S SEE…. That’s £1328.32 X 180= £239,097.60 per year.

Hold on! My calculator needs new batteries. What about those special education teachers and the ones with Master’s degrees? Well, we could pay them minimum wage (£6.90), and just to be fair, round it off to £7.00 an hour. That would be £7.00 X 7 1/2 hours X 32 children X 180 days = £302,400.00 per year. Wait a minute –there’s something wrong here! There sure is! The average teacher’s salary (nationwide) is £25,000.00/180 days = £138.90 per day/ 32 children = £4.34 / 7 1/2 hours = £0.58 per hour per student–a very inexpensive babysitter and they even EDUCATE your kids!) WHAT A DEAL!!!!

(from a post online)

In support of teachers

Whilst it is true that teachers have half-term and end of term breaks. It is grossly unfair and misleading to assume that they have lots of time off. The increased testing and micro management implemented over the years by successive “we know best” Governments has essentially replaced a lot of teaching with a lot of form filling. Something that the bueracrats are attempting to introduce everywhere with their obsession about “outcomes”.

The reposted story above assumes a very unusual day. I am unhappy to report that I know a great many teachers who work at least 12 hours a day often 6 days a week. They are exhausted. This is the experience from top to bottom across the age spectrum.

I appreciate that the reposted story is only one way of considering the numbers. There are many costs in running a school, not simply the cost of each teacher.

Let me pose a question. If we actually believe the experts who tell us that the formative years are the most important to “personhood” which has a life-long impact on citizenship, the ability to be part of a community that thinks and acts beyond self; shouldn’t we be investing in children and those that inspire and encourage them for the greater good. After all, these children will grow up to one day govern, pose and vote on laws about social policy, including whether you are cared for or dispatched early to make way for the new (which makes more “economic sense”).

Of course the same could be said of many aspects of our “State employees” – doctors, nurses, firemen, police and so on. The constant undervaluing and bogus attempts to apply market values to everything is utterly flawed.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

Those overpaid teachers….2017-01-06T14:39:18+00:00

Are You Safely Connected?

Solomons-financial-advisor-wimbledon-bloggerAre You Safely Connected?futurecrimes

You are online and connected, so in the interests of providing you with some useful information about the online world, I thought I’d share a podcast (and video) that I listened to recently. This is taken from a really useful free resource website called “I Love Marketing” which is run by Joe Polish and Dean Jackson. I know that marketing isn’t everyone’s thing… but don’t forget that I run a small business and also work with many clients that run small (and large) businesses… and these guys have some really good ways of helping understand marketing, so that we all waste less time wasting each other’s time and get to what we all actually want (or need). As someone that did a Business Studies Degree with a specialism in Marketing, albeit many years ago, I can genuinely say that these guys provide information that can be implemented – its practical and it works.

Anyway, episode 189 of the I Love Marketing podcast or the video (here) is really worth spending your time. I tend to listen to podcasts at 1.5x speed, which saves some time and remains clear. Joe interviews Marc Goodman, a guy with a new book (yes ok, something to promote) all about the near future of technology. We think we’ve seen an explosion of things to save time, learn and so on… online, but he argues its nothing to what is coming… and with it there is a price – the need for much better understanding of security and the possible flaws in your own technology at home or work, which are exposing you to possible crime. The podcast or video is a reasonable length, but well worth your time.

ilmlogoOf course if you run a business or are in a marketing role, then I’d certainly suggest you check out Joe and Dean’s website and podcasts. They are an engaging pair with a wealth of great ideas and invaluable experience. The podcast can be found on itunes here. I’ve been listening to I Love Marketing for some time and hope that by sharing this you, if you are a marketeer or business owner, also get some really useful ideas from it. You can check out Joe’s bio page here and Dean Jackson here.

Dominic Thomas

Are You Safely Connected?2017-01-06T14:39:29+00:00

How Was Your Last Quarter?

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How Was Your Last Quarter?JOBSposter

You may have seen the news that the Apple corporation have just posted the largest profits for Q4 in history. Apple is an enormous company, worth around $640 billion. At the end of 2013 Apple had a market capitalisation value (the value of the company based on the price of issued shares) of £302 billion…which at the time was about 2.2% of the total US market (£13,304 billion)… or to put it another way 14.6% of the UK market (then worth £2,057 billion)…. to give this some context the market capitalisation of Greece was £20 billion…. so back in 2013 Apple was worth 15 times more than Greece.

The results of Apple for the last quarter of 2014 saw profit of £11.8 billion. That’s profit. So one has to ask, what does Apple do that others don’t either as corporations or nations?…. and hence the obsession that many have with Steve Jobs. Much of the profit was due to the sales of the iphone – all 74.5million of them sold in the last quarter!… good to feel unique eh?

Many businesses will look at Apple with considerable envy, the more thoughtful will reflect on what they do to create such loyal customers…. perhaps a few lessons for the politicians too.

Dominic Thomas

How Was Your Last Quarter?2017-01-06T14:39:30+00:00

Hope at Christmas

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Hope at ChristmasHope

Sometimes, I probably stray a little too far from financial planning stuff within this blog, but that’s largely due to the fact that the clients I work for and wish to attract are people that have similar values to mine. As I have said before, if we are to work together, you may as well discard the glossy marketing and get a feel for who I am… after all there is so much more to both my clients and me than “money”. Anyway, on Saturday night I was part of a small crowd that was warmly welcomed to the home of the Kubrick’s who are generous advocates of local arts (the family of the late Director Stanley Kubrick) to support the launch of a new musician – Hope, my god-daughter.

Hope is only 15 and as you might imagine is still at school whilst making time to learn, practice and write new songs. Who knows if she will have a successful career in music, at this point she’s just having fun and seeing where it may lead. Hope’s parents are some of my closest friends since student days, and sadly her father Toby died of cancer some years ago in 2006 which was the first time that I had experienced the loss of someone close to me of my age.  As close friends, Toby and his wife Kym were people that also helped me in the early days of my career, acting a little as practice guinea pigs for my evolving advice. He was also the first client that I had to make a claim for against a critical illness policy. Unfortunately Hope and her older brother have both been diagnosed with the same causal disease (MEN Type 1). This isn’t an appeal, I’m just helping to draw a little attention to her first EP, produced by a new small record label called Jacket Records which should you like can be bought at any digital music store for a few pennies and the largest store (itunes) link is here. She has a website – which you can also find out more information, her first track is called So Much More… I know her dad would have been very proud.

Dominic Thomas

Hope at Christmas2017-01-06T14:39:32+00:00

Has War Just Changed?

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Has War Just Changed?

As is often the case, out of something that seemed trivial, we may have witnessed a “significant moment” in history without grasping the implications. In short, we are asked to wonder if war has just changed. It seems to me that war is invariably about an inability to cope with or live with difference. Often this is expressed as a conflict of ideology but of course theology too. Some regard war as a battle over land, which perhaps is the case, but I’d suggest that this is merely the physically binding frame of reference used to galvanise support along lines of difference and to physically represent the boundaries of control. This week we learned that the boundaries shifted. The vast majority of the media missed the story, selecting to reflect the inane rather than the insane.Good Night and Good Luck

The story? this is about a executives at a film company bad-mouthing movie stars and being caught. The real story is that national boundaries have just been obliterated by hackers, who acted to squash something they didn’t like… but not just squash, threaten. Of course, some countries operate on the basis of a few bullies oppressing the masses – this is sadly nothing new and will probably never cease. I found myself looking at an image in a magazine recently, wondering how on earth so few, odd looking irrelevant men can control an entire nation, yet it happens all over the world.

The sadness is that film-makers and journalists are meant to be the ones that keep our focus on the truth, revealing darkness and oppression, helping to inform and change. Sadly many in Hollywood shirked this responsibility for fear of reprisal and financial cost. George Clooney couldn’t get anyone to sign his petition – ANYONE. So why should we be concerned if others aren’t? – after all haven’t Sony executives themselves to blame for expressing personal opinion and hitting that send button? Well, certainly some wisdom is needed in expressing opinion in a digital age, but the truth is that I doubt anyone has not said something about someone at some point in their life of which they are now not terribly proud. However, this isn’t really the point – the point is where does this lead? Can hackers now be hired by anyone, any nation to bully another into compliance? How does this impact our free speech? and surely this isn’t simply the domaine of terrified, narrow-minded tyrants, but also enters the arena of corporations who don’t like stories about their leadership or activities. Surely this has the potential to influence how we perceive and from a financial services perspective, appearance can be everything – just ask Tesco or BP.

This story has implications for you and I, our use of social media and the freedoms we enjoy. Obviously it isn’t wise to hurl insults and the adage, if you wouldn’t say it to their face, don’t say it at all seems pretty pertinent. But we surely cannot live in a world where we are terrified of legal action or reprisal. This is a “tipping point” for the double-edged sword of the internet, offering the prospect of genuine freedom of information to all (which we take rather for granted in the comfort of the West). As for me, I have never liked bullies, whether they come in the guise of a big kid in the playground, a teacher, boss, an investment bank, politician, pseudo military general, bigot, racist, rabid fundamentalist or of course my own tendency to think lazily and turn to petulant expression in frustration, which certainly in my “madder moments” it is a very good thing that weapons are not within easy reach…and sadly my own temper is easily fuelled driving, cycling or walking these very streets all too easily… which is of course the advantage of a society that doesn’t permit liberal gun ownership, encourages thought, education, tolerance and self-reflection, but unfortunately often seems more obsessed with narcissistic reflection in the eye of… well the media.

Dominic Thomas

Has War Just Changed?2017-01-06T14:39:32+00:00

Walking With Dinosaurs

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Walking with Dinosaurs

You may remember the programme “Walking With Dinosaurs” which was first broadcast on the BBC in 1999. It was a ground-breaking award winning series due to the technical special effects that some clever people at Framestore achieved. One of my clients worked on the series and has since had  a succesful career in Hollywood doing similar things with monsters in movies. Anyway, interest in dinosaurs seems to have been re-kindled ever since, despite the efforts of the character Ross the palaeontologist from “Friends” who attempted to bore everyone to death.central-hall-dippy-pink-200-110574-1

It was only a few days ago that I was blogging about a video suggesting that IFAs will become extinct in 2014 much like the dinosaur. So it was some degree of irony that on Thursday night I was at an award ceremony run by the Financial Times Financial Adviser magazine held, you guessed it, in the Hintze Hall of the Natural History museum in Kensington. If you’ve been there, you will know features a huge Diplodocus. I’d been invited along (noted in our inducement register) by a company that we have used successfully with a number of our clients, very much a new world technology focused company, a company of tomorrow – or at least as far as we can see ahead. I hadn’t been to this annual event before and to be honest, probably wouldn’t hurry to return again.

FA Service Awards 2014This was a night for service awards, which frankly I thought might have extended beyond “Product Providers” the majority of whom were life and pension companies or mortgage lenders, but it didn’t.

The awards are voted for by advisers, the results were very surprising and seemed to contradict my own experience of dealing with some of the organisations over the years. I have to admit that we don’t arrange mortgages, so I have no idea today who is a good lender when it comes to service, though I have my suspicions.

Whilst I wouldn’t wish to pour cold water on the achievements of those that won, (seriously – congratulations!) it did make me pause to wonder, why advisers voted in a such a way, suggesting that many are still rather trapped in the old world and the old ways of doing things, in fact being advisers that arrange stuff rather than holistically plan, perhaps I’m wrong on this (it wouldn’t be the first time) but the results and event itself were rather… enlightening. I left wondering how many might find themselves in trophy cabinets rather than those that they clutched…. there weren’t any awards for advisers, so its not that I’m a sore loser… its just that I genuinely think the days of the giants within the life and pension industry are seriously numbered. The news on Friday that one giant (Aviva) is seeking to swallow another (Friends Life) for an initial £5.6 billion merely adds weight to my assertion that cannibalism within the financial services industry is still the main diet. Still, it was a fun evening and the people I was with, who were good company, certainly echoed similar feelings to mine.

Dominic Thomas

Walking With Dinosaurs2017-01-06T14:39:33+00:00

Arthur Wynyard’s Retirement

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Arthur Wynyard’s Retirement

We have come to the point where we say goodbye and heartfelt thanks to Arthur Wynyard who at 71 will be retiring at the end of August 2014. Arthur was my third hiring and has lasted the course longer than anyone else! We have seen huge changes and the ups and downs of life within financial services, heaven only knows how many regulators he has worked under!

Over the years, he worked in various capacities as both an adviser and paraplanner as he gradually prepared for his full-time retirement. Many of you will initially have come across him as an adviser, but he stopped this some time ago to work as a paraplanner. He has been something of a protective shield against the sometimes unhelpful tide of waffle and general incompetence that we experience from certain product providers and helped to ensure that details are correct and our clients are treated well. As with much of our work, a huge amount of what he has done has not been seen by our clients, but experienced by them, perhaps rather like the foundations to any good building

Arthur has gradually reduced his working week enabling him to pursuit his other interests which he will now be able to enjoy in a full-time capacity with his wife Liz, their 4 adult children and his several grandchildren. He is a very keen gardener and if you have visited the office lately, he is responsible for our rather marvellous hanging baskets that greet everyone upon arrival.

Thank you Arthur for all your efforts helping us to serve our clients, strive to improve what we do and how we do it. We have seen huge changes in the what, how and why of what we do – all rather different from when you joined with me all those years ago, with the aim of helping people make better financial decisions.  Thank you for putting up with my constant “improvement tweaking” and sticking with me through the “ups and downs” of commercial life and remaining willing to learn new skills. Thank you too for all of the roles that you have played which are incumbent for those working within a small business. You thoroughly deserve a happy and long retirement.

Dominic Thomas: Solomons IFA

‘All good things must come to an end’ as they say and the end of my time at Solomon’s is fast approaching. It has been an exciting, sometimes stressful, always interesting and mostly enjoyable. I have met and had the privilege to deal with some really great people over the years I worked as an adviser. I started with the company in the very early days and I would like to thank Dom for giving me the opportunity to be part of an expanding and growing organisation. I wish him and Solomons all the best for the future and pray that it will go from strength to strength.

What am I going to do with my retirement? Good question as I have not really planned anything, which for someone who is supposed to be a planner is not a good example. However, my family have some ideas to do with child care, decorating and gardening for them. I hope to be able to play golf, watch cricket and other sports more often and do a bit of travelling mainly around the U.K. I am also hoping to be able to provide some hands-on support to a local youth charity called Oxygen. However, as a Christian I believe that God guides my life and He may well have plans for me that I am as yet not aware and as it states in Proverbs 16:9 ‘We can make our plans, but the Lord determines our steps’. God willing the next phase in Life will be as exciting and as fulfilling as the previous ones. He may even grant me a long period of ‘retirement’ but I am sure that He will have something for me to do throughout it.

Arthur Wynyard

 

 

Arthur Wynyard’s Retirement2017-01-06T14:39:35+00:00

Out with the old, in with the…. Old?

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Out with the old, in with the… Old?

Well, the day has finally come. Skandia is being consigned to ancient history. Not precisely true, the parent company Old Mutual are rebranding Skandia from the end of this month as Old Mutual Wealth. As of 22nd September all references to Skandia will cease. So as with the multitude of “rebranding” of insurance companies in the past, will this one be any different? (other than a very good day for the printer). Skandia, er.. sorry Old Mutual are adamant that this is much more than a new coat of paint and a rebrand. They believe that this marks a new start and more innovation and giving customers what they want. Old-Mutual-wealth-BANNER

Skandia have certainly been a highly innovative company. Market leaders in the world of multifund offerings, enabling IFAs to offer a broad range of funds and the ability to construct some really good portfolios for clients. In fact few could really touch them, Fund Managers beat a path to their door simply to get onto the list as the first and largest fund supermarket in the UK. Times have changed and from an outside observers perspective the key changes seem to be – technology, regulation, competition and a change of parent. It remains to be seen precisely how Old Mutual Wealth will fare, but certainly the future will be far more competitive and require considerable foresight and innovation to keep pace, let alone lead the platform market, which is now rapidly becoming a crowded place.

If you have any Skandia arrangements, you will be getting a letter from them explaining the changes and the new branding very shortly.

Dominic Thomas: Solomons IFA

Out with the old, in with the…. Old?2017-01-06T14:39:35+00:00

Clarence Darrow

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Clarence Darrow

I was very fortunate to have friends in the right places who managed to get tickets for Clarence Darrow, a one-man show at the Old Vic, London. The “one-man” being the highly impressive Kevin Spacey, who many will know from a considerable film career, as well as many television appearances. However, much like the character he has inspired others. In his case, much to the delight of audiences, he has inspired many leading film actors from the US to tread the West-End boards of London, at the Old Vic and elsewhere.

Courageous walk into the futureClarenceDarrow

Spacey’s performance of Clarence Darrow was such that a full-house, standing ovation was highly deserved and assured. He magnified the wonderfully written legal history into a compelling story of one man’s stand for the little guy, the underdog. The text is littered with wonderful lines and I’m not sure whether this is the work of the writer David Rintel or Mr Darrow himself (as is often the case, when a great writer meets a great professional). Darrow (1857-1938) was a leading member of the American Civil Liberties Union, ahead of his time fighting injustice and prejudice. Naturally whilst the context may have been different, many of the themes sadly remain current, which is perhaps why Spacey decided to revive the role he first performed 23 years ago in the 1991 film Darrow. Darrow reminds us of our humanity when we are tempted to get caught up in blaming others, seeking to understand, be understood and ultimately to walk with integrity, appealing to take a courageous walk into the future rather than a “backward and barbarous” walk into the past.

Lessons learned and learned lessons

As we appear to be at yet other cross-roads in the Middle East and global markets react to news of extremists that step into the void created by fear, it is worth remembering that knowledge is the antidote to fear, not annihilation. This is unfortunately a well worn path that appears to be forgotten and buried much like the desert winds that shift the sands. As Darrow said “History repeats itself. That’s one of the things wrong with history”.

Dominic Thomas: Solomons

Clarence Darrow2017-01-06T14:39:36+00:00
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