Tuesday, 28 September 2010

Bank of England really does want to punish savers – NS&I Index Linked Savings Certificates Mature

So Charlie Bean, Bank of England Deputy Governor, has now confirmed what I suspected all along. They definitely wanted to cut the incentive to save when they decided to bail out the reckless with their 0.5% rates, which they then thought would give all those savers an incentive to go out and spend those savings. What sort of crack pot notion is that? Hey everyone you’re now going to earn no return on your money so why not just go out and spend it all! Well I for one am not taking that advice. I can think of many reasons but how is this for a few:

- I never know when I might lose my job and so might have to survive for many months before finding a new one.
- I never know if I might become ill and so need some savings to tide me over.
- One of my family or friends could need my help due to either of the above.
- I don’t believe a state pension will exist by the time I am at the end of my life and even if one does it would be about sufficient to allow me to buy baked beans and toilet paper only. I therefore fully intend to support myself when I no longer want to work so I am not forced to live in poverty.
- I don't want to work until I'm dead.
- Someday soon I might want to “retire” to take up a new career that I might enjoy more with less stress, learn something new, undertake some charity work or if I choose just sit on a beach drinking margarita’s.

Sunday, 26 September 2010

How long until a house can be bought for 100 ounces of gold?

For a long time I’ve been saying that houses are overpriced. This keeps my family in rented accommodation as I refuse to buy at these prices. Instead I now watch what looks to be the early beginnings of an unravelling housing market from the sidelines. My last UK house price update was here.  Additionally, as I mentioned yesterday while gold is reaching new highs in nominal terms when prices in US Dollars it is not at new highs when priced in British Pounds although admittedly it is close. However, it is nowhere near new highs when priced in real (inflation adjusted) terms and so in my humble opinion still has plenty of upside potential if history is anything to go by.

Saturday, 25 September 2010

Gold Priced in British Pounds (GBP) – September 2010 Update

It’s been a while since I had a look at gold’s movements however with it closing at $1,297 on Friday and the BBC writing articles like this which reported that gold had reached a new high of $1,300.07 during trading before dipping back I thought now was probably as good as time as any to review golds prices. Today I’m going to look at its prices in British Pounds though, rather than US Dollars, as this is the currency that matters for me. This is because I’m based in the UK and earn in the UK which makes my portfolio a GBP portfolio in my humble opinion.

Sunday, 19 September 2010

The PE10 nears its 80 Percentile - S&P 500 cyclically adjusted PE (PE10 or CAPE) – September 2010 Update

Standard and Poors is showing, with 99% of earnings data available, that the Q2 2010 earnings per share for the S&P 500 will be $19.68. That’s a long way from the -$23.25 we saw in Q4 2008. This then has Standard and Poors all excited as they are now estimating that earnings for Q2 2011 will be $21.43 which is a year on year increase of 9%. So no predictions of a double dip recession there.

Why in this world do people always continually assume that because you have earnings of x this time that next time earnings will be x + 10% or so? My company does the same. You have a great year this year so the expectation is that next year you will have a great year plus another 10%. They do the same thing with turnover targets. To me this just seems nigh on impossible as eventually you end up so far up the exponential growth curve with it compounding year on year that you are almost destined for failure. Also where is this additional growth coming from? The world is not growing at 10% so the assumption must be that you are taking market share from someone else. But with the S&P 500 you have on average 500 companies all growing earnings by 9%. That doesn’t seem sustainable. I guess a good example of this is Nokia and the rise in competition from Apple and also the Android Operating System phones. I wonder if Nokia’s board was up until a couple of years ago forecasting this never ending exponential growth also? Now the flavour of the month is Apple but for how long?

Friday, 10 September 2010

Global Capitalist - My Asset Allocation

Back in August I introduced the concept of readers posts so that different perspectives other than those that I post and the comments that are posted in response could be seen.  So far only one person has taken up the challenge which is a shame because different perspectives was one of the outputs that I had hoped to achieved on this blog rather than just me talking to myself.  These different perspectives would allow us all to head off and do our own further research which could only be a good thing.  The person who has taken up the challenge is Global Capitalist who's previous post is here and who today discusses personal asset allocations.

Sunday, 5 September 2010

Look further than the press releases – UK Property Market – August 2010 Update

If you were reading the papers over the last few days you will have probably seen the house price data from the Nationwide reported on. This will have been taken straight from their press release and I’m sure monthly changes of -0.9% will have been mentioned. I however prefer to analyse the raw data as the figures presented to the press are seasonally adjusted. The actual figures are worse than that reported. In July 2010 prices were £169,347 and in August they are now £166,507. That is a fall of 1.7% in a single month with the annual change now at +3.9%. This is now 2 months in a row that we have seen price falls. This is all shown in my 1st chart today.

Wednesday, 1 September 2010

The low fee mantra – a look at the results of Hargreaves Lansdown

Firstly an apology to regular readers of Retirement Investing Today. My life outside of this blog has recently become extremely busy. It’s going to take me a couple of weeks to get everything sorted out which unfortunately means for the next couple of weeks posts are going to be very sporadic if I manage any at all. Please bear with me as once everything is back in control the regular posts will reappear.