CRASHING PRACTICE

Solomons-financial-advisor-wimbledon-blogger

CRASHING PRACTICE

It has now been ten years since the collapse of Lehman Brothers, the investment bank at the centre of the credit crunch. The impact of this has been felt here in Britain with years of austerity, tax rises and pay cuts. You and I have lived with the consequences and are mindful that it may happen again.

In reality a market crash happens about 25% of the time and despite required regulatory warnings that the value of investments may go down as well as up, the reality is that they will fall in value and they will rise in value. Fact. The issue is not if they will but when and why. As a financial planner I am sorry to tell you that those offering to know when or why are delusional fraudsters. We only know after the event and frankly, even then we may not truly understand why.

Time in the markets, not timing the markets

The unvarnished truth is that over time, over decades, investment in mainstream equities rise in value. This is proven time and time again. However, few of us are very good at thinking long-term and obsess over the short-term. This is for good reason – we can relate much more readily to the short-term and cope better planning for it, but thinking longer-term and much further ahead proves very difficult for us. Inevitably investors are persuaded by the short-term reality more than the long-term probability.

The Lehman Trilogy

It is timely that “The Lehman Trilogy” by Stefano Massini was shown at the National Theatre to “sell out” audiences. So much so that the production is moving to the Piccadilly Theatre in May next year. The play charts the early beginnings of Lehman’s, arriving in New York. Their story is familiar. In 1844 Hayum Lehmann arrives with nothing, moves to Alabama and starts a modest shop selling equipment to farmers. Along with the new business is a new name Henry Lehman is born or created. His brother Mendel follows a couple of years later and finally Mayer arrives in 1850. Lehman Brothers.

150 years in the making

Their story unfolds, experiencing the ups and downs of commercial life, but also reflecting the wider society and the development of business and capitalism. Disaster and opportunity meet along the way, the business diversifies becoming a cotton buyer and then trader. Experiencing blight, fire and the American Civil War, using maths and credit to smooth the path from the present to the future, eventually becoming a bank in 1867 to help rebuild the nation. Agricultural know-how becomes financing of business. Throughout all challenges, adapting and surviving. In many respects Lehman’s practiced crashing – regularly experiencing very dire trading circumstances, yet confused survival for skill and ultimately began to believe that they could not pick anything but winners…

The story is wonderfully presented by Sam Mendes and the three actors (Simon Russell Beale, Ben Miles and Adam Godley) were brilliant. A single, rotating minimalist set and the audience is transported through time, which you should allow 3 hours to cover 150 years that is very well spent. If you get the chance to see it in 2019, I would recommend getting tickets early. Here is a link to the ATG ticket booking site if you are interested.

Here is Sam Mendes talking about the production at the National Theatre.

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

Email me

CRASHING PRACTICEDominic2025-01-27T16:25:16+00:00

Julie – a matter of trust

Julie

I noted in social media last week that a fight broke out in the balcony of the Lyttleton Theatre between two male members of the audience at the end of a performance of Julie. I already had a ticket booked, but of course wondered, whether it was something about the play…

I can report that the acting was rather good, (Vanessa Kirby and Eric Kofi Abrefa to name two key performances) but to be blunt, this was a play that I simply did not care for. The dialogue was awful and reminded me of various unpleasant characters. It was meant to be reworking of August Strindberg’s play Miss Julie, but it felt dated and done before, many times before, but rather better.

The basic background premise is one of a sense of being trapped by circumstance. In this case rich it-girl with the traumatic experience of being the first to find her mother following her suicide. We can only guess why, but mine is that the mother also felt trapped in a life of luxury, lacking any meaning or any significant connection with her obviously wealthy, materially successful but invariably absent husband. The resulting wealth used as the justification for a lack of presence. The price of “success” and the excesses are its ongoing punishment.

Held in Trust

Julie, who has no money of her own, because it is held in Trust “because she is irresponsible with it”. She certainly is irresponsible, but whether this came before or after the Trust fund is one of the few talking points. I’m not a fan of Trusts (a bit odd for a financial planner to admit) but living from someone else’s money rarely has a good outcome and to put it bluntly, those that do best are the legal advisors, all (mainly) to avoid the clutches of a divorcing spouse, which from my point of view merely sets up the prospect of not living with the consequences of actions. A Trust might be a suitable metaphor for many elements of the play, the lack of trust between parent and adult child, the lack of trust between a self-serving man and a woman. The lack of real trust between a socialite and her maid… I could go on. Trust is quickly sacrificed for pleasure, or perhaps relief from the trappings of situation.

Do You Trust the Trustee Savings Bank?

So, who to trust? What is the price of trust and should you ever trust anyone? The truth is that we all must, being human we will be failed, but not trusting makes for miserable existence, albeit possibly right in a few instances. Trusting any adviser is hard, trusting someone else with your money is one of the most difficult realities. Consider the recent muck up at TSB – Trustee Savings Bank, an utter fiasco. Advisers and the financial services industry must do an awful lot to shift the default setting of “mistrust”. Yet when it comes to your financial planning, this is what you need to remove. Any decent adviser will build trust over the years, by keeping promises, doing what they said they would do, looking after all your financial “stuff” and communicating in plain words.

A Problem of Wealth

One of the natural problems of having a significant amount of wealth, is that it tends to attract the wrong people, like bees to a honeypot. The opening scene of Julie reveals a birthday party composed of people that she neither knows nor likes, friends they are not. We can all probably think of people that have been parted from their money by their acquaintances.

Never underestimate the positive power of a proper financial fiduciary. Its not simply what we do, its also what we do not do, which includes not putting a hand in the till – or in this case the blender.

Here’s a promotional video from the National Theatre for Julie.

Dominic Thomas
Solomons IFA

Email me to get in touch

Julie – a matter of trustDominic2025-01-21T15:48:30+00:00

Money and Power

Perhaps my age is showing, but it is only day 6 of the new year and I am already fed up with the election campaign. I ought to be celebrating our democracy and the opportunity to hear reasoned arguments, however inevitably we seem stuck in a cycle of who will tax or cut most, the prospect of genuine change and improvement for all seems rather unlikely with the inevitable tension around money and power.

In a more reflective moment, I remind myself that this is not a dictatorship and we at least get to vote and I don’t really think we are at the mercy of a despot who has anger issues and a twitching finger poised over an end-all button. This isn’t the case for millions of “voters” around the world who are marched off to vote for egomaniacs. This in mind, a relatively new musical to arrive via New York at the National Theatre “Here Lies Love” is based on a 2010 concept album of the same name, which gives musicals a nightclub injection. If you think that a nightclub is exclusively for the “young” perhaps think agains as, the creators Fatboy Slim (Norman Cook) is 51 and David Byrne is 62. The production has the flavour of community theatre, with the execution of high-end night club. A moving stage and audience, all combine to great effect and an entertaining, immersive experience.

Imelda Marcos

This is the story of Imelda Marcos, her rise and fall from power. Byrne and Cook wanted to explore what makes powerful people behave the way they do. I’m not so sure that this was explored terribly well, whilst displaying a delusional, drugged up Imelda, she isn’t portrayed that badly – a little bit too vanilla in Manilla – little about her excessive flamboyancy and penchant for hundreds of shoes. The story is chronological, revealing the fragility of her marriage, her inability to cope with her rags to riches story and a familar narcissism of Heads of State that seem to believe that they “give their all to their people”.

The Price of Democracy

There was little in the musical that gave me reason to believe such behaviour was understood or how to spot it in others and take precautionary action…so no tips for our elections. The world seems to have done little during the period of martial law and assassination of the opposition including the shooting of Benigno Aquino on the steps of his ill-advised return flight to Manilla on 21 August 1983 (age 50) which you may remember. In the Philippines, the Marcos regime was eventually cast out by a peaceful protest, following a corrupt election (February 1986) against Aquino’s widow following which the public simply decided enough was enough. Marcos and his family took US advice and support then fled to Hawaii along with 24 suitcases of gold bullion and jewellery. Sadly for Imelda this took precedent over her 2,700 pairs of shoes. It is estimated that Marcos stole over $10billion from the country, much was invested into various family related businesses and Swiss accounts. The Swiss have so far returned about $684 million. So for me, this musical, whilst being entertaining does little to understand how and why power corrupts so absolutely. Indeed one might argue that the catchy tunes, flashing lights distract from the real story… but then, perhaps that’s the point.

Dominic Thomas

Money and PowerDominic2023-12-01T12:39:50+00:00

The Film Interview at Common Sense Money

A while back a friend and fellow financial planner asked me if he could interview me for his podcast show. He knew I was interested in film. Chris Daems is a thoroughly good bloke, doing some great work on his side of town. It’s a bit of a strange interview as neither of us knew where it was going, but both enjoy films. As you may have gathered, I like most art forms and seek to draw out what lessons I can from the stories and the characters that are portrayed, be it Coriolanus which I saw last night. This was streamed live by the National Theatre to a local cinema (and hundreds around the world) from the Donmar Warehouse (which was excellent, though I won’t be giving up going to actual theatre) or a film like The Reluctant Fundamentalist.

The underdog, freedom and passion

If you want to listen in to the interview, I’m put on the spot about my top three inspirational films and to be honest I hadn’t given this that much thought, but those that I mentioned for various reasons were Braveheart, Field of Dreams, The Power of One and The Reluctant Fundamentalist (though I couldn’t quite remember the title). My three least favourite – Elf, The Tree of Life and, well… rather unfairly “The Double”, which I had only recently seen. Its far from one of the worst movies I had seen, its just that I was disappointed and it was recent in the memory. Anyhow, the podcast is “out there” in cyberspace as episode 18 of Commonsense Money. Apologies to film aficionados for being rather limited, I hadn’t really thought too hard about what I would be asked…well that’s my excuse – I won’t be giving up the day job to become a film critic.

Here’s the trailer from the film that I blundered over (it had been a few months since I saw its UK premier). I can thoroughly recommend it.

Dominic Thomas: Solomons IFA

The Film Interview at Common Sense MoneyDominic2023-12-01T12:38:54+00:00