Investing ideas – FIRE v London

April ’24: Juggling cash as new UK tax year begins

2024-05-112024-05-11 FIRE v London3 Comments

The temperature in the Middle East got even hotter in April, with Israel and Iran trading attacks on each other’s sovereign buildings/territory. Somehow World War III has never really seemed in danger of breaking out but it is a reminder that only change is constant.

Over in New York Donald Trump was falling asleep in court. You have to hand it to him he knows how to stay in the headlines.

The markets in April

Meanwhile the UK stock market continues to fill newspapers for the wrong reasons. Amidst all the doom and gloom – heightened at the end of the month by the takeover of Darktrace, a rare UK tech stock – you might have missed that the FTSE-100 is not only at a record level but in fact outperfomed other markets significantly in April.

All the markets seem to want to know now is when interest rates are coming down, and how fast. April saw expectations of cuts dampened / postponed, which appears to have dampened valuations of both equities and bonds. In the US this was heightened by an increasing sense that the AI-driven tech boom may have got a bit ahead of itself – there is still little to show for concrete extra revenue / cost savings (bar a few notables such as Klarna) but plenty of increased infrastructure spending.

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In praise of Berkshire Hathaway

2024-01-27 FIRE v London8 Comments

I think I first clocked Warren Buffett’s (and Charlie Munger RIP’s) Berkshire Hathaway around the year 2000. I loved the story. Starting from, as the story was told back then, humble beginnings and a paper round, Warren Buffett (and Charlie – who I will stop mentioning but absolutely deserves practically half the credit) had built Berkshire into a giant.

Buy & hold – what’s not to like?

Berkshire was the holding company of an investing approach par excellence. Buy great businesses at a fair price, hold forever, reinvest dividends, job done.

The business had never paid a dividend or split the stock, which by that point had reached over $70k per (Class A) share. It had annual meetings in Omaha, its home town, which were already becoming a cult following.

There was also something about Warren Buffett’s penny pinching ways that appealed to me. He lived in his first house, he drove practically his original car. Part of his aversion to splitting the stock was the (tiny, in the scheme of things) cost of a stock split (though he did thankfully create the B shares in 1996, which are identical to A shares but a fraction of the price). He preached from the book of compound interest and his lectures were very compelling.

And yet

There was something sufficiently compelling about Berkshire Hathaway to me, as a baby FIREr back in 2000ish, that I named one of my assets after the business. That asset remains to this day, though it has sadly failed to prosper in line with the mighty BRK.

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Mar ’23: Harvesting tax losses

2023-04-07 FIRE v London3 Comments

March has been rather a wet month in London. Wet, and cold. This translates into the ski slopes in the French Alps (finally) having great conditions – sadly too late for me to enjoy.

Further north, it’s been a month of big change in Scotland. Nicola Sturgeon, the populist/nationalist leader north of the border, and one of the most formidable politicians in the UK, resigned in February. But March has seen her party, the SNP, in disarray. I don’t follow Scottish politics closely, but am no fan of nationalist parties and I regard March as a good month for Scotland and the UK.

Closer to home Rishi Sunak, the leader of the populist/nationalist party in England (still called the Tories but don’t let names mislead you), had a very good month thanks to his Windsor framework for improving/ameliorating the arrangements between Northern Ireland and mainland UK. Given that the problems here all arose from Brexit, which Sunak was an original supporter of, I am not minded to give him too much credit for this Windsor Framework. The new arrangements clearly lag the pre-Brexit arrangements. It grates to see Sunak championing N. Ireland’s advantages being a member both of the UK and of the EU, and until I see Tesla/similar set up a car factory in Northern Ireland I don’t think he fools anybody.

Another story that got a lot of coverage last month was how miserable the London Stock Exchange is. Versus the USA stock markets, the case is pretty unarguable. But the point that gets missed by all the UK coverage is that all the other major stock markets, such as Hong Kong, Australia, etc suffer from the same concern. A combination of its tech strengths and network effects have given the US what appears to be an unassailable lead. But somehow I consider the US has plenty of capacity for self harm, and the UK and EU are likely to sync up their financial markets more in the future, so I am more optimistic about London than the current media.

Market movements in March

In the markets, the key stories remain energy and inflation. Interest rates seem to be close to their peak, which has helped lift bonds and depressed the USD. Equities generally sagged, though tech stocks rose significantly – this combination left the US up, the UK down, and Europe/Australia somewhere in the middle.