Why the dip this week?
(Sharecast News) - London stocks were still in the red by midday on Tuesday amid continued uncertainty over whether a US debt default will be averted, and as data showed that shop price inflation in the UK edged higher in May.
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I know all too well why the majority of wealth is concentrated in so few hands. You can generalise the answer by putting these people into two groups. Iāll write later.
Here is one quick hint posted today which goes hand in hand why the wealthy get ahead and stay ahead.
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You donāt get rich spending your own money. Spend other peoples.
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Bunch of very interesting links this week:
- 10 bad takes on this market including 5 Stocks Driving It
- Investment Mistakes Even Smart Investors Make and How to Avoid Them
- Why Down & Sideways Markets are Bullish
- Regret optimized portfolios and optimal retirement income
- Are we headed for a massive bout of deflation?
- Why are large companies so dominant?
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We sold our wealth, industries, and future economy to China in exchange for low rate products that have long since been sent to landfill.
They played us as the greedy fools we were, and now they have the last laugh.
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They also repeatedly de-valued their currency to make sure that their exports were attractive. It appears that we are playing China at their own game - and it is what more recently successful voters have been demanding, although probably unaware that in order to have competitive exports there are broader consequences!
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So much great reading here, this week:
- Vanguard updating their 10-year asset class return expectations for different markets
- Lots of interesting insights on factor investing
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Few interesting topics in this weekās review:
- How to rebalance your portfolio including Vanguard study on frequency
- The risk of owning equities declines as the time horizon increases, or does it?
- Become a passive Investing Ninja ā the definitive guide to slashing ETF Costs and Taxes
- Is the Bear Market Over?
- Is a GDP Weighted Index a source of superior returns?
- The Power of Uncorrelated Assets
- The Fastest Rising Asset Classes in 2023
- Druckenmiller: AI is Dominating My Long Portfolio
- Universaās Taleb on Inflation, Global Financial Markets, & Crypto
- New Measure of Firm-Level AI exposure
- Mapped: The Growth in House Prices by Country
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Can you feel 10% rates coming?
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Well the last 12 interest rate rises didnāt work, but Iāve got a good feeling about this one.
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Iām glad theyāve gone for a bigger increase as painful as it will be. Rate rises take time to have an effect and this should accelerate things, hopefully. I think the BoE needed to make a bit of a statement, too.
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No more QE in our lifetime imo
The majority of mortgage owners aged 30 - 45 will get a lodger, or partly convert their property to get a lodger for 2-5 years. These mortgage owners will also push heavily for pay rises twice a year.
For 30-40 year olds who are yet to purchase a property, considering Portugal, Spain or another great location with incredibly well priced properties may be a great option to ride out 5-10 years.
A property fall in the west would likely only really happen once all paths have been exhausted and ridden to the highest lengths and only then would the cracks fall through.
Tens of thousands of mortgage holders could take in a lodger or two, family could help out, grandparents could help out, mortgages could be extended, mortgages could switch to interest only and also be extended, people could aim for higher paying positions, pay rises could keep comingā¦ thereās a variety of things which will take place for many years before a rare property market crash could take place, and by that time peoples pay may have risen faster than property prices and begin to catch up again, just like in 2019 when pay was getting extremely close for a generation of people to buy property, then cue the response to the pandemicā¦ perfectly timed response when the west seemed to crave some kind of decade event that always seems to come.
This is now hunting ground for cash rich buyers looking for long term property & land accumulation. Go take a look at the more elite areas of southern UK like Glastonbury, Surrey and now upcoming areas of Hampshire - there are solo property projects and desirable property renovations taking place all over. The stock market gains are being taken and pushed into hard assets. Itās a thriving time to be cash rich.
The real question is what do 25-40 year olds do who have not got into a property suitable for their lifestyle? Personally Iād say youāve been absolutely wrenched by the government, the Bank of England, the education system, the financial system, so one of the options Iād take is to completely change my own actions and where I spend money and completely sacrifice anything that does not align with my current target to get into a property to be proud of.
Bye bye tv licence, bye bye Waitrose, bye bye AA breakdown cover, bye bye Ā£15pm sim hello Ā£8pm sim O2, bye bye Ā£2.49 bottles of water, bye bye fast foodā¦ money and where you spend it should become sacred.
Replaced with picnics, tennis, bike rides, always bring your own waterā¦ completely stop spending even Ā£2 in a misplaced way.
This is a monumentously overly expensive period and I am not going to go into the cause because I know the causes I REALLY know whose failing & who has failed the country but like I said above, completely change even the smallest of actions and simply help to make certain things in the uk panic and fail, your money is yours and should not easily be extracted from you. During this period.
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I said bye bye to many of these things years ago. I get water from the tap, Ā£10 per month phone bill, no netflix, no spotify, no other subscriptions. My only direct debits are mortage, council tax, sim only phone bill, and utilities. Nothing more. Everything else like car insurance (down to one car since pandemic) I pay yearly and use cash for shopping once a week at aldi.
It does mean that I have a larger disposal income to try to commit to 20k per year to my ISA and overpay as much as I can on my mortgage before my fixed rate of 1.9% ends in two years time.
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Respect the frugality and it goes down to individual preference, but if you can afford to enjoy the fruits of your work in the present why not do so a little. Nothings guaranteed, certainly not returns on investment
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You say this, and SO many people tell young people to āstop buying takeaways and coffeeā.
Im 34, I have struggled to buy a property. I still rent, and have done since I moved out at 17. I donāt visit codfee shops, I shop at Morrisons and never buy brands, always supermarket own products, I never buy bottled water mainly because tap water is absolutely fine and have never seen the point in buying bottled water, I donāt have Netflix/Disney Plus/any other subscription services sinilar, I never buy takeaways, my lights never turn on in the evening to save electricity, water useage is minimal, the food I eat is minimal.
All of this, and I still donāt have enough to save for a deposit. All of this and I still donāt have enough to save for a rainy day. All of this and yet even though Iāve regularly been paying rent for 14 years with no issues at all, the banks still wonāt lend me money to buy a property. Wages against house prices are ludicrous and we need a big property crash.
Apart from winning the lottery, for some people, there is literally not much else we can do.
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