HindeSight Investment #115 September 2024 - Newsletter - READ HERE
HINDESIGHT INVESTMENT EDUCATION NEWSLETTER
CONTENTS
OVERVIEW
INVESTMENT INSIGHTS
PORTFOLIO UPDATE
HINDESIGHT DIVIDEND UK PORTFOLIO
OVERVIEW
Any pilot will know the term “V1” is the maximum speed, taking into account weight and conditions, that a take-off can be safely aborted. After which, despite any malfunction, take-off is deemed necessary as statistically less hazardous than not to.
I can’t help feel that this is relevant to both the geopolitical situation with potential war escalation, both in Europe and the Middle East and the UK economy and society falling off a cliff with the fear of the Labour government policies as we hurtle down the runway. Time is fast running out.
In the summer of 1914, the Edwardian Golden Summer by all accounts, the thought of a European war on any scale, after the century of peace since Waterloo in 1815, was almost impossible to imagine. Within a short time, despite the huge human losses on either side, with page after page of obituaries in The Times, people became ‘used to’ the human cost. As I read the news these days, I am surprised that I also seem to have become inured to yet another 500 dead in Lebanon, Gaza, Ukraine et al. It is this seeming acceptance that looks to lead us like sleep-walkers into escalation and greater tragedy as human beings, unfortunately.
I have just returned from my annual sojourn to the Munich Octoberfest, hence the late arrival of this month’s newsletter. Much discussion was had with our German friends of who had the worst politicians and policies and we parried on the ‘vacuum of competence’ among the political classes in both countries. Clearly, in Germany and Austria, the rise of the ‘Far-Right’ (which is really just an anti-uncontrolled immigration protest) is at the heart of most Germans’ concerns but the blind support for Ukraine without any diplomatic dialogue seems apparent as well.
Of course, the English among us thought we had far the better argument. It is very difficult to imagine a time in UK history with such a ‘vacuum of competence’ in politics as the current state of affairs. It’s funny how the Labour party that won a landslide victory just 100 days ago and yet now, it’s almost impossible to find anyone to admit they voted for them as they have fast become a party of hypocrisy and dire economic proposed policies with the Conservatives in disarray, nowhere to be seen in vocal opposition. But, at the end of the day, amongst our European friends, over many steins of beer, many felt that UK Foreign Secretary David Lammy was the ‘winner’ as the least competent politician to represent anything or anyone on the global stage. They might think that, I couldn’t possibly comment. Prosit!
Making investment decisions based on the global economic cycles are hard enough without the added worries of global war and ideological economic policies. The global debt-GDP ratios from decades of over spending to please the electorates are suppressing most economies’ growth profiles. The peak in the interest rate cycle seems to be behind us, with lower growth and lower inflation the current trend which should certainly be supportive for the bond markets, although they are broadly unchanged this year, although in recent weeks, surging higher. Maybe the strength in US employment or in the UK, concerns that Liz Truss’s disastrous ‘minibudget’ will look far better in comparison than Rachel Reeves’s first attempt at the end of October.
While gold investors are almost 25% better off this year than the stock/bond mix portfolios, the hope with gold is always it is a long-term protection from government incompetence and excesses, but my constant worry is reminiscent of the “I am Legend” movie as the last man standing, especially with the US fighting two proxy wars now.
UK-10 year gilt yield, 6-months
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