Black Mirror – Nosedive

Black Mirror – Nosedive

The new series of Black Mirror has been released (21 October 2016) on Netflix and is a bit of a cross between Tales of the Unexpected and The Twilight Zone…. Remember them? If you do, then there is a fair chance that you will have had more than your fair share of adopting new technology over the years and Black Mirror is a small leap of the imagination into a future that is almost within our reach.

Nosedive, the first episode of the new series from the writer Charlie Brooker provides plenty of food for thought for those of us that use social media. Irrespective of who you are, there is something very satisfying about having a post or tweet “liked” or “retweeted” – a sense that you are being heard. Of course for small and large business, your social media marketing strategy is all about trying to engage people, both prospective clients and existing ones. This blog is no different.

Brooker draws out attention to the insatiable underlying desire for approval that underpins this and reflects a future society (not very much in the future) where “service with a smile” and the constant demand for ratings and feedback result in desperate collective anxiety and need to fake it in order to gain approval. Not only approval, but the point-scoring system acts as the new form of societal sorting and classification of us all.

image of Lacie, the lead character practicing her smile, current score 4.243image of Lacie, the lead character practicing her smile, current score 4.243image of Lacie, the lead character practicing her smile, current score 4.243

Are you getting feedback?

I thoroughly enjoyed his take on this rather dystopian future, of a world addicted to handsets and a numbing or removing of real experiences and interactions. I’m sure that if you shop online, you now get a request for some feedback. As with many things this was intended to be for our good – a chance to engage and improve services, yet it has become so widespread it now simply feels needy, like some spoiled child constantly asking for approval.

Here at Solomons are guilty of this too. We ask for feedback and comments – and for you to share posts, tweets and so on. This is now all part of helping spread the word about the business and how we help clients, how we bring value. That said, it can become very irritating (hence we try to limit our “neediness”).

Rage against the machine

I guess this reflects the changing nature of relationships between us all and the organisations that we use. Seeing people rant online, whether about Donald Trump, Hilary Clinton, Southern Rail or Brexit is at least raw and exposing, of course great care needs to be taken, but in Nosedive, we are faced with a “sanitized” society where genuine emotion, thought or comment is parked firmly out of sight, to the point where who you are seen to be and with are more important than who you are.

At least here in 2016 we continue to help our clients verbalise and express their true values, not simply those that are deemed “acceptable”. Its funny how often I ask people when they plan to retire and they invariably say 65 – which used to be the default State pension age, as though this is an appropriate “date”. The truth is that you can “retire” whenever you want – or not at all and why here at Solomons we prefer to use the term financial freedom day – when you choose to work, not because you have to, but because you want to.

Here’s a bit about Nosedive.

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

Black Mirror – Nosedive2017-01-27T11:12:38+00:00

Now we’re talking money

Now we’re talking money

Clients will shortly be receiving a hard copy of Talking Money. In it we highlight the inevitable end of tax year issues that need consideration – or at least some of them. We also have a feature on China “Enter the Dragon” in which five fund managers provide some thoughts about the state of the Chinese market each has a point to make.

We also outline a few of the changes to the State Pension – where for once the highly complex is actually becoming more simplified, this is truly a rarity when it comes to pensions. There is also a very small note in the news section which points to some of the problems of not using an adviser.

The real cost of not taking advice

In January the FCA produced some market data in an attempt to understand the impact of the new pension freedoms (introduced from April 2015). The figures show that one in five people who encashed a pension pot of £250,000 or more took no advice.

This is alarming because they would have automatically paid tax of 45% on the pension (as income above £150,000 is taxed at 45%). Huge sums of tax have been needlessly paid, reducing the value of a pension fund far more than the credit crunch – which at least has recovered somewhat.

Some speculate that this was and is the only real reason for allowing pension freedoms – to collect far more tax. Perhaps the Budget on 16th March will provide further insight into this position.

Similarly, only yesterday I met with someone who had not protected his Lifetime Allowance, which will result in a large tax liability.

Taking advice does have a cost, but so does not taking advice, however taking advice also has a value, not doing so does not.

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

Now we’re talking money2017-01-06T14:39:18+00:00

Don’t Panic! Captain Mainwaring… don’t panic!

Don’t Panic Captain Mainwaring

I find it increasingly difficult to resist the temptation to comment on the world stock markets. The media is constantly moving from positions of fear or greed, buy or sell. This serves their purpose of having something to say and of course becomes something that they then have to continue to say for fear of not providing “the news”. Of course panic is contagious and whenever I see it, I tend to think of Corporal Jones from Dad’s Army – don’t panic Captain Mainwaring.

So what is happening? The price of oil has fallen dramatically. The Chinese economy is not growing as quickly as it was. There is nervousness about the UK leaving the EU, the possibility of a thug winning the US presidential election, perhaps forcing a showdown with anyone with different opinion. Europe has little idea about what to do with thousands fleeing war in Syria or their own ravaged economies offering few prospects of employment. Our own austerity is causing our public services significant stress and of course there is the recurring fears about viruses, war, the environment and terrorism which all play into the narrative of “its bleak”.

Fear and Greed

Shares are part, ownership of businesses. The value of which is based in part on its actual physical assets (premises, stock etc.) and part on future revenue streams (forward orders, based on data from historic orders). There is also the matter of market share, industry sector and general perception of the company. The price of shares is therefore in part objective maths, part subjective opinion.

The problem with sudden shifts in price are invariably linked to a herd mentality – playing inevitably into two camps – fear or greed.

We know this when we invest. It is not new news, but it is certainly hard to live with, particularly when the noise is very loud and the doom-sayers are everywhere.

Any real changes?

If you have genuinely altered your long-term goals and do not wish to invest ever again, you probably should rethink your entire strategy, perhaps investing is not for you. I am being serious.

However if your long term goals remain roughly the same, then the key question is has anything really changed?


Your portfolio is split across a variety of asset classes, shares, bonds, cash and commodities. There is a global spread. You have a diversified portfolio. We have established tried and tested evidence based analysis to check that you have the right “mix” of holdings to suit your attitude to risk. To date, whilst the markets have been “disappointing” (understatement) since April 2015, the degree of “shock” is within your tolerance, but it is of course deeply unnerving, very unsatisfying and frustrating.

Time in the market not timing the market

However we are holding to the long-term principles of disciplined investing, which have been proven successful over time. This is simply part of the investment experience, albeit “painful”.

It is very tempting to think that getting out of the market now (or 12 months ago) would provide some solidity. However this is based on the notion of being able to time the market and determine opportune points to get in and out of the market (and which market). This is really therefore a double decision, when to sell and then when to buy again.

Historically, investors (professional and private) get this very wrong. Invariably they panic and sell towards or at the bottom of a market, and then decide to invest again once they are confident in the recovery (which has already happened by the time they get back “in”). This leads to further frustration and doing the exact opposite of what we all know investing is about – sell at the top, buy at the bottom. Selling holdings is the only actual way to make a loss real.

Reserve Levels

Any discussion about your financial plan has involved thinking about an appropriate amount of cash to hold on deposit – your emergency fund. You may have used some of this, you may not. It is there as a buffer, and is designed to mean that you don’t have to take money from investments when they are suffering. Perhaps some adjustments may be prudent, but this is your choice, money should serve you, not the other way around.

I am not pretending that the market turmoil is not scary. This is a normal, understandable reaction to headline news. I know of nobody that likes to lose money. Everyone wants high rewards for low risk. However, unless your circumstances have really changed, if you are at the end of your tether with the concept of “investing”, then stick to the course, taking the life-long perspective.

Pain is part of growth, falls are part of average annual returns, finance is not magic and doesn’t provide any real account of who or what you are.

We remain vigilant, we continue to work in your interests but yes, your funds have reduced in value, but we have no good reason to believe that this will be a permanent status. We do not have a crystal ball and cannot predict the future with certainty, nobody can (despite inferences by others). We are doing our best in an imperfect world. Thankfully, this is 2016 and we are not on rations or at war with the world and whilst not dismissing our troubles (which are very real) perhaps some old school laughter might help.

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

Don’t Panic! Captain Mainwaring… don’t panic!2017-01-27T11:00:44+00:00

China – 8000 miles

China – 8,000 miles

I’m sat in the shadow of Beinn Resipol, a remote and moody monument in mountain form, close to Moidart in the Highlands of Scotland. Shanghai is around 8,000 miles away. Still, I can hear the sound of investor panic.

The following extracts from Bloomberg’s daily Economic Brief sum up what’s happening over there…

‘In the second quarter, China’s markets and economy were in a virtuous circle upward. In the third quarter, they are in a vicious spiral down. The Shanghai Composite Index fell 8.5 percent to 3,209.9 at the close on Monday. The index is now down 37 percent from its mid-June high and below the 3,500 mark that many investors expected the government to defend.’


‘All of the forces that accelerated market momentum on the way up are now working in reverse on the way down. The balance of outstanding margin loans has fallen to 1.4 trillion yuan, down from a peak of close to 2.3 trillion yuan in mid-June. The number of new trading accounts has slumped as the “greater fools” to whom speculators had hoped to offload stocks have wised up.’

I don’t doubt that some investors expected the Chinese government to defend stock prices but, for the life of me, I can’t figure out how the government could possibly succeed in so doing; I know of neither mechanism nor precedent. Of course, the government will do something. It will engage more easing – most likely in the form of reduced reserve requirements for banks – and that might go some way to settling investors. But it won’t sustain asset prices for long. And besides, the Chinese government has far larger fish to fry.

China’s economy is slowing. That’s not necessarily a bad thing. In fact, it’s something of a necessity if policymakers are to be successful in re-balancing the Dragon economy toward a more sustainable model – away from debt-fuelled investment on the one hand, toward higher household spending driven by rising incomes on the other. The alternative is worse – economies with over-sized investment tend to slow too, ultimately, but in a much more dramatic fashion. And that would be a disaster for the one party, in a one-party system, whose legitimacy is founded on lifting living-standards. So, the period of transition that China faces is a very difficult one indeed. Success, if it is successful, will be hard won.

In the meantime, China’s slowdown comes at a bad time for the global economy. Brazil and Russia are in decline, so too is Japan and the euro-zone is struggling to escape the doldrums. It seems a great many investors were counting on China – which, according to the Wall St Journal, ‘accounts for 15% of global output but has contributed up to half of global growth in recent years’ – to maintain some momentum.

That was always a dangerous assumption.

Steve Williams


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

China – 8000 miles2017-01-06T14:39:25+00:00

The China Syndrome

The China Syndrome

The recent severe volatility in China’s share markets has raised questions among many investors about the causes of the fall and about the wider implications for the global economy and markets generally.

The Shanghai Composite index, the mainland stock market barometer and one dominated overwhelmingly by retail investors, more than doubled in the year from mid-2014, only to lose more than 30% of its value in a month.

The volatility was much less in Hong Kong, where foreign investors tend to get their exposure to China. The Hang Seng index fell about 17% from April’s seven-year high, though it had a more modest run-up in the prior year of about 25%.

Nevertheless, the speed and scale of the fall on the Chinese mainland markets unsettled global markets, fuelling selling in equities, industrial commodities, and allied currencies like the Australian dollar and buoying perceived safe havens such as US Treasuries and the Japanese yen.

The decline in Chinese stocks triggered repeated interventions by China’s government, which has been seeking to transition the economy from a long-lasting export-led boom toward more sustainable growth based on domestic demand.

Investors naturally are concerned about what the volatility in the Chinese market means for their own investments and what it might signify for the global economy, particularly given the rapid growth of China in the past 20 years.


Measured in terms of purchasing power parity (which takes into account the relative cost of local goods), the Chinese economy is now the biggest in the world, ranking ahead of the USA, India, Japan, Germany and Russia.1

Yet, China’s share market is still relatively small in global terms. It makes up just 2.6% of the MSCI All Country World Index, which takes into account the proportion of a company’s shares that are available to be traded by the public.

The Chinese market is also not a large part of the local economy. According to Bloomberg, it is capitalised at less than 60% of the country’s GDP. By comparison, the US equity market represents more than 100% of the US economy.

China is classified by some index providers as an emerging market. These are markets that fall short of the definition of developed markets on a number of measures such as economic development, size, liquidity and property rights.

China’s stock market is still relatively young. The two major national exchanges, in Shanghai and the other in the southern city of Shenzhen, were established only in 1990 and have grown rapidly since then as China has industrialised.

With foreign participation in mainland Chinese markets still heavily restricted, many foreign investors have sought exposure to China through Hong Kong or through China shares listed on the New York Stock Exchange.

As a consequence, domestic investors account for about 90% of the activity on the Chinese mainland market. And even then, the participation is relatively narrow. According to a China household finance survey, only 37 million or 8.8% of Chinese families held shares as of June 2015.2 As a comparison, just over half of all Americans own stocks, according to Gallup. In Australia, the proportion is 36%.

While the Chinese stock market is about 30% off its June highs, it nevertheless is still about 80% higher than it was a year ago. As such, much of the pain of the recent falls will have been felt by people who have entered the market in the past year.

A final point of perspective is that while the Chinese economy has been slowing, it nevertheless is still expanding at around 7% per annum, which is more than twice the rate of most developed economies.

The IMF in April projected growth would slow to 6.8% this year and to 6.3% in 2016. Still, it expects structural reforms and lower oil and commodity prices to expand consumer-oriented activities, partly buffering the slowdown.3

While such forecasts are subject to change, markets have priced in the risk of a further slowdown to what was previously expected, as seen in the renewed fall in the prices of commodities like copper and iron ore, which recently hit six-year lows.


The Chinese share market boom of the past year cannot be attributed to a single factor, but certainly two major influences have been the Chinese government’s promotion of share ownership and investors’ increased use of leverage.

The government has been seeking to achieve more sustainable, balanced and stable economic growth after nearly four decades of China notching up heady annual growth rates averaging 10% on the back of an official investment boom.

But the transition to a shareholding economy has created its own strains. The outstanding balance of margin loans on the Shanghai and Shenzhen markets had grown to 4.4% of market capitalisation by early July, according to Bloomberg.4

Under a margin loan, investors borrow to invest in shares or other securities. While this can potentially increase their return, it also exposes them to the potential of bigger losses in the event of a market downturn.

When prices fall below a level set by the lender as part of the original agreement, the investor is called to deposit more money or to sell stock to repay the loan. These margin call liquidations can amplify falling markets.

Chinese regulators, mindful of the potential fallout from the stock market drop, have instituted a number of measures to curb the losses and cushion the impact on the real economy.

These have included a reduction in official interest rates, a suspension of initial public offerings and enlisting brokerages to buy stocks backed by cash from the central bank. In the latest move, regulators banned holders of more than 5% of a company’s stock from selling for six months.

The government also has begun an investigation into short selling, which involves selling borrowed stock to take advantage of falling prices. In the meantime, about half of the companies listed on the two major mainland exchanges were granted applications for their shares to be suspended.

While such interventionist measures may seem alien to people in developed market economies, they need to be seen in the context of China’s status as an emerging market where governments typically play a more active role in the economy.

Whether the intervention works in the long term remains to be seen. But the important point is that this is a relatively immature market dominated by domestic investors and prone to official intervention.


The re-emergence of China as a major force in the global economy has been one of the most significant drivers of markets in the past decade and a half.

China’s rapid industrialisation as the population urbanised drove strong demand for commodities and other materials. Investment and property boomed as credit expanded and as people took advantage of gradual liberalisation.

Now, China is entering a new phase of modernisation. The government and regulators are seeking to rebalance growth and bring to maturity the country’s still relatively undeveloped capital markets.

Nevertheless, China remains an emerging market with all the additional risks that this status entails. Navigating these markets can be complex. There can be particular challenges around regulation and restrictions on foreign investment.

We have seen those risks appearing in recent weeks as about a third of the sharp rise in the Chinese mainland market over the previous year was unwound in a matter of weeks, prompting intense government intervention.

Markets globally are weighing the wider implications, if any, of this correction. We have seen concurrent weakness in other equity markets and falls in commodity prices and related currencies.

Yet it is important to understand that the stock market is not the economy. China’s market is only about 2.6% of global market cap and its volatile mainland exchanges are for the most part out of bounds for foreign investors anyway.

For individual investors, the best course in this climate, as always, is to maintain diversification and discipline and to remember that markets accommodate new information instantaneously.

1. Source: IMF World Economic Outlook, April 2015

2. ‘China Households Raise Housing Investment in Q2’, Reuters, July 9, 2015

3. ‘World Economic Outlook’, International Monetary Fund, April, 2015

4. ‘China’s Stock Plunge Leaves Market More Leveraged than Ever’, Bloomberg, July 6, 2015

Jim Parker

Vice President, Dimensional


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

The China Syndrome2017-01-06T14:39:25+00:00

What about China?


What about China?

For some time now, I’ve been complaining about the oversized contribution from investment in China’s recent expansion

[1]. Actually, I’m not the only one. Policymakers are busily crafting the conditions that might bring about a rebalanced economy – one less reliant on exports & investment and more reliant on domestic demand & consumer spending.

The IMF might be right Chinese Puzzle

‘Investment growth in China declined in the third quarter of 2014, and leading indicators point to a further slowdown. The authorities are now expected to put greater weight on reducing vulnerabilities from recent rapid credit and investment growth and hence the forecast assumes less of a policy response to the underlying moderation. Slower growth in China will also have important regional effects, which partly explains the downward revisions to growth in much of emerging Asia.’ WEO January 2015.

Building more and more factories to house more and more machinery manned by more and more workers will get you a long way; China’s economy is not far off 40 times larger than it was in 1978 when Deng Xiaoping succeeded Mao Zedong. But while ultra-high levels of investment are associated with rapid expansion they’re not generally associated with sustained growth. The returns that are associated with an over-reliance on debt-fuelled investment diminish with time (thanks in part to an inevitable inefficient use of capital) while the risks are amplified (owing to overleverage and rising volumes of non-performing loans).

China, I suggest, has a debt problem – today’s Financial Times reports that ‘Chinese corporations are now among the most indebted in the world’ – but with everything else that is going on in the world[2] investors are not yet fully alive to the possibility of a much slower pace of growth. Indeed the huge premium that the market for Chinese A shares (dominated by domestic investors, it has risen in value by over 60% in the last 6 months) has over the market for B shares (dominated by international investors, it has risen in value by a much less thrilling 19% over the same period) suggests that Chinese investors are most hopeful of sustained high growth rates.

So far as I can see, two paths are apparent; China’s rate of growth can slow in orderly form or disorderly form, but it will slow nevertheless.

Steve Williams

[1] Post 2008 in particular, where gross fixed capital formation has accounted for around half of the Chinese economy[2] It’s all so exciting; an extraordinary oil price decline, huge gulfs in monetary policy between those in the US and Europe, Syriza’s rise to power in Greece, another full-blown Russian crisis and Japanese policymakers throwing everything, including the kitchen sink, in a spectacular attempt to kick-start their economy

What about China?2017-01-06T14:39:30+00:00
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