Making money: what the experts think
● Getting the jitters “Feeling nervous? You should be,” said Merryn SomersetWebb in the FT. That at least was the “basic takeaway” from experts taking part in a panel conversation on investment at the Edinburgh Festival Fringe last week. There wasn’t a person on the stage who didn’t express “some degree of terror about having to invest in the middle of the greatest financial experiment of all time”. Thanks to ultralow interest rates, established maxims have been upended – not just “in the strange world of bonds”, but in equities too. “Value stocks are trading even lower relative to [often unprofitable] growth stocks than they were in 2000 – a 44-year low, in fact.” US stock prices, overall, “are at a 50-year high relative to US GDP”.
● US-China decoupling
Against this backdrop, there is now “a new Cold War” between the US and China. One of the main drivers behind the relatively “benign conditions” of the past 30 years has been the “enmeshment” of the world’s two largest economies. The next three decades are going to be very different – “and that’s going to make investing very complicated indeed”. As Alexander Chartres of money manager Ruffer notes, this “decoupling” will probably “affect everything in your portfolio”. No wonder everyone is suddenly so keen on that ultimate store of value – gold.
● Under a McCloud As the presenter of Channel 4’s Grand
Designs, Kevin McCloud “is always ready to highlight when a naive housebuilder has overrun their budget”, said David Brown in The Times. Yet hundreds of investors in his “eco-friendly house-building company” now face losing 97% of their money. McCloud launched Happiness, Architecture, Beauty (HAB) in 2013, raising £1.94m from hundreds of investors who were promised returns of 5% by 2016. Four years later, HAB launched another scheme to raise £2.4m, dangling the carrot of 8% a year, over five years. Investors have now been told that the company, which has completed upmarket developments in Hampshire and Oxfordshire, “has not made the expected returns”. Indeed, its parent, HAB Land, has now been acquired by a restructuring company. McCloud recently admitted that he was “less experienced than many around me” when it came to finances. Clearly, they weren’t up to scratch either.