SHREDDED

Solomons-financial-advisor-wimbledon-blogger

SHREDDED

I wonder if you have seen the video of the moment that a Banksy piece was shredded as soon as it was sold. There has been speculation about whether this was simply a stunt or a genuine attempt to expose the folly of the art world. It does not matter, nothing will change. The world we live in is obsessed by fame and will spend vast sums to share in its light. It is always something of a mystery that so many will be taken in by so few.

The financial services world is no different. Obsessing over performance that happened and marketing investment gurus or fund manager as stars. Fund Managers are actually given stars by ratings agencies. Those same agencies that told us all that day was night when it came to “creditworthiness” before the credit crunch.

Drawn to Success

Time has moved on, memories fade. Promises of lessons to be learned have come and gone. We are still lured by the glisten of success. Little has changed to investor behaviour. It is about as bad as it has always been. We may have some new terms or names for it, may even be able to spot it a mile off, but few are willing or able to adopt behaviours that are actually successful.

To be a successful investor you have to take a long-term view. You ought to hold a high proportion of your portfolio in a globally diversified portfolio of equities, bought as inexpensively as possible and held, ideally within a wrapper that enables you to choose how and when you draw money to suit both your circumstances and taxation. That is pretty much it…

You can attempt to beat the market, through selecting specific stocks/shares but remember that this has at least two key decisions – when to buy and when to sell. Few people achieve this with any repeatable success. They will tell you that they do, but the truth is rather different. Conveniently forgetting their losses which make up their averaged net returns.

There will always be someone willing to forecast precisely what will happen in the future. In a planet of over 7 billion people, there are plenty of them. Many will promote their views as alternative or counter-narrative, pandering to your sense of doom, or throw so much money and impressive glossy statistics at marketing a theory that you come to believe that they really are onto something different. Occasionally they will be right for a time.

Unvarnished Truths

Here are some truths. If you plan to withdraw money within the short-term, bank it, do not invest it. If you wish to build the value of your money so that you have a shot at financial independence, invest. Invest cheaply, invest long-term, invest heavily in equities, invest globally. Invest with an understanding of taxes. If you want to give yourself a good dose of anxiety, look at your portfolio on a regular basis. If you want to enjoy life, don’t – but have a plan and make sure that someone is monitoring yours.

Normal and Ordinary Perfection

Remember that market corrections are normal, crashes are normal, booms are normal. We do not know when and mostly do not know why. You cannot control the markets, it is impossible to time investments perfectly in a repeatable way. The same cannot be said for Banksy, who timed his (or her) shredding of “Girl With Balloon” to perfection, shredding it… whether the value has depreciated or in fact appreciated is a debatable point and only time will tell…

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 Big Short

I have been looking forward to the release of “The Big Short” for some time. I suspect that many will yawn with incredulity at the prospect of watching a film about Bankers and the financial crisis… all that jargon, which is, lets face it, all rather dull and old news… I beg to differ.

This is a story well told, but a story that is frankly unbelievable, yet it happened. I would urge you to go and see it, I managed to do so on Monday evening (no I did not claim it as an expense). It will not change your mind about the Heads of Investment Banks or regulators, it will remind you of how utterly corrupt and complicit they have been in ripping off investors for years, and I see little evidence to suggest that this will alter.

The film makers attempt to explain some of the key terms that underpin the entire credit crunch. It is reminiscent of the musical about Enron – yes a musical essentially about accountants, but as with the musical, this is really an exposure of some rather foolish human behaviour.

Whilst the vast bulk of the film concentrates on the American story, the financial services industry is of course global and the setting for the story is largely irrelevant.

Are you sitting comfortably?

There are many that will not like the content of the film. The film is damning in its criticism of Government, regulators, bankers, credit rating agencies and mortgage brokers. The only group to have really been punished for the crisis in the US were the homeowners and the poor – by losing everything (a story told very well in the film “99 Homes” – see my piece on that too).

Here in the UK, we took the collective punishment of austerity, tax hikes and pay cuts. But at least the head of the regulator (then the FSA) was even knighted for services to the financial services industry (!).

You may have some questions after watching the film, both at the practical level and the “what one earth are they thinking?” level. Here is the official trailer to get you in the mood… oh and the film is nominated for an OSCAR. Mind you, I was even more incensed having watched “Four Horsemen“… to my mind The Big Short is the softer option (pun intended).

Dominic Thomas
Solomons IFA