Making money: what the experts think
Defying gravity
“The old order is crumbling,” said Patrick Hosking in The Times. “In another era, we’d be buying tinned food and preparing for anarchy. Now we shrug and buy shares.” Whatever fresh shocks and setbacks come along, the indices keep going up. The FTSE 100 has risen some 400 points since Theresa May called the election on 19 April; meanwhile, “the policy U-turns and pantomime antics of the Trump administration” don’t appear to have unnerved American investors at all. Sebastian Lyon, who runs the “ultracautious” Personal Assets Trust, points out that US price-to-earnings ratios have only been higher “at the end of the Roaring Twenties” and at the peak of the tech boom, in 2000. “We know what happened next.” PAT, which is heavily invested in gold and government bonds, underperformed the UK market by 7% last year. Lyon stoically quotes Rousseau: “Patience is bitter, but its fruit is sweet.” A crash now would make him look “very smart”.
Crumbling houses
“Nothing strikes fear into hearts as much as the thought that the family home could be worthless,” said Iain Dey in The Sunday Times. And the latest data from Nationwide – showing average prices edging down by 0.2%, the third consecutive monthly drop – certainly points in that direction, with London “seeing slightly sharper falls than everywhere else”. Given that the number of £1m-plus properties in Britain has jumped by 124% in a decade – and that most of them are in the capital – it’s hard to argue that falling prices are a bad thing. A “healthy readjustment” would level regional disparity and aid social mobility. “Yet it would also whack a large chunk off the nation’s stored wealth.”
Handbagged
If all else fails, buy a handbag, said Rupert Neate in The Guardian. Rare and expensive versions – especially super-luxe French labels such as Hermès – are the new “must-have collectable” for the superrich. Last week, a diamond-encrusted Hermès Birkin sold for a record £293,000 at Christie’s Hong Kong, and the auctioneer plans six more dedicated bag sales this year. Baghunter.com estimates that, over the Birkin bag’s 33-year lifetime, it “has beaten both the stock market and gold as an investment class”, yielding an average annual return of 14.2%. Recession-proof? We may shortly find out.