What caught my eye this week.
I have often been chided for being too negative over the past few years – both in comments on Monevator and elsewhere.
Just last week, regular reader SLG asked:
It might just be that my complainy pants news filter is set too high to assess the state of the nation but are you sure you’re getting a balanced reading breakfast to keep your glass topped half way up @TI?
That was in response to a post where I was indeed being negative about the returns from investing lately – once you excluded the big gains from the so-called ‘Magnificent Seven’ US tech giants.
Well, investing returns – equities and bonds alike – have been mediocre-to-bad since I first got negative in late 2021 and then more so. Especially once you adjust for inflation.
I do understand this is in on top of my multi-year negativity about the rubbish results from Brexit, though.
Eeyore stories
Let’s be clear. I wholeheartedly agree there’s plenty of great stuff going on in the world, from new vaccines to the renewable energy cost collapse to the ongoing joys of K-Dramas.
But (geo) politically and economically it’s been rough sledding. Better, in some respects, than it might have been, especially when it comes to the US economy. But thin gruel elsewhere at best, and war at worst.
Here are five fairly random graphs I came across just this week that shine light on the gloom.
Graph #1 from: Britain has been reduced to Trabant-status among the West
In this Telegraph article the author rightly accuses the British State of self-harm against its own economy and citizens, but studiously avoids mentioning Brexit as one of the causes. (See Goldman’s latest estimate on the damage from Brexit in the links below).
Anyway his graph illustrates why workers feel they’ve not gotten any richer for many years.
It’s because they haven’t. That’s a fact, not me being negative.
Graph #2 from: UK economy falls into recession
Here we see the UK economy has stagnated for two years – and was in recession for the second half of 2023.
That’s a fact, not me being negative.
Graph #3 from: What is the UK inflation rate and how does it affect me?
Households are living through the worst inflation shock for generations. January inflation unexpectedly held steady – a small rise was forecast – which was welcome. But inflation is still double the official target rate.
Inflation should fall fast from here (more global strife notwithstanding).
But the pain is real and it will have lasting consequences.
Graph #4 from Where UK house prices officially fell the most in 2023
Falling house prices are good news from the personal perspective of priced out would-be buyers. You can argue too that a permanently lower level of prices would help the economy, by aiding mobility or redirecting investment to more productive areas.
Nevertheless, their own home is many people’s biggest investment and asset. Lower prices make them and the country poorer.
Property prices fell in 2023 as mortgage rates leapt higher.
That’s a fact, not me being negative.
Graph #5 from Decarbonsation, an annually-updated presentation by analyst Nat Bullard
You may be a Blimp-ish climate change denier – aka scientifically wrong – but for the rest of us, this is grim viewing.
Happily there’s far more positive visuals showing progress in the fight to curb carbon emissions if you click through the rest of Nat’s presentation.
But that’s for the future. Right now things are bleak.
When the facts change I’ll change my mind
I’m not having a go at any reader who feels Monevator has been a bit morose in recent years. Reader SLG above was perfectly civil about it – and I appreciated their nice words about the effort that goes into compiling these weekly links, too.
I am fed up with the negativity myself. The difference is I believe it is out in the world, and that noticing it is warranted.
Putting your fingers in your ears doesn’t make it go away.
Coming out of the financial crisis Monevator was sometimes accused of being a haven for happy-clappy permabulls. I look forward to getting there again.
And as I’ve already said, it’s true things could be worse.
The greatest architects of Britain’s self-harm – among the worst set of politicians we’ve seen in power in the UK for hundreds of years – are no longer fully in charge. The virus that was responsible for even more of the recent misery is a fading memory. Wars lamentably rage on, but so far they’ve not metastasised a into wider conflict.
Oh and at least it’s not the 1970s, as a wonderful series of podcasts from The Rest Is History this week reminded me. Start with that first podcast covering 1974 and work your way through the darkly comic chaos.
We survived the 1970s and we will get through this. Poorer, but who knows maybe wiser for the journey.
Have a great weekend.
From Monevator
Excess reportable income – Monevator
FIRE-side chat: why escape from work you enjoy? – Monevator
From the archive-ator: Bring me sunshine [February 2020] – Monevator
News
Note: Some links are Google search results – in PC/desktop view click through to read the article. Try privacy/incognito mode to avoid cookies. Consider subscribing to sites you visit a lot.
UK inflation sticks at 4% in January… – Which
…but Britain fell into recession in the second half of 2023 – Reuters
Will UK households enjoy a better year in 2024? [Search result] – FT
Brexit Britain has ‘significantly underperformed’ other advanced economies, Goldman Sachs says – CNBC
Brexit frictions hurting firms, says British Chamber of Commerce – CityAM
Construction of affordable homes in London grinding to a halt, Gove told – Guardian
The US stock market rally is fuelling another wave of early retirement – Yahoo Finance
US Bitcoin ETFs now account for around 1% of the circulating supply – Blockworks
Index funds have officially won [US but relevant] – Morningstar
China retrenchment mini-special
China versus India or Xi versus the West? – Adam Tooze
Hong Kong is self-destructing – The Atlantic via MSN
It pains me to say Hong Kong is over [Search result] – FT
Products and services
Energy bills set to fall by £300 a year to two-year low – Sky
LNER’s simpler fares trial adds more than £100 to some journeys – Guardian
Get between £100 and £5,000 cashback when you open a SIPP with Interactive Investor before 29 Feb. New SIPP customers only. Minimum £10,000 account value. Terms apply. Capital at risk – Interactive Investor
Annuity sales jump to highest levels in years on higher rates – This Is Money
The cost of looking for love on dating apps – The Times
Fixed-rate mortgage rates fall for sixth month in a row – This Is Money
Open an account with low-cost platform InvestEngine via our link and get up to £50 when you invest at least £100 (T&Cs apply. Capital at risk) – InvestEngine
Best places to live in the UK ranked [Tool at bottom] – Garrington
Challenger banks top the tables for customer service – CityAM
[US] spot ETF’s trading debut in six charts – MorningstarHomes for sale near great pubs, in pictures – Guardian
Comment and opinion
Telegraph journalist tries life on a bare bones pension for a week – via Yahoo Finance
‘Bed and ISA’ and ‘Bed and Pension’ to save tax – Vanguard
Downsizing can deliver big retirement funding boost, study finds [Search result] – FT
Most stock markets have a concentrated top ten – A.W.O.C.S.
Why not 100% equities? [Bit nerdy] – AQR
FIRE versus ICE – Humble Dollar
Invaluable simplicity – Money With Katie
The Holy Grail of Investing… – Cullen Roche
…versus The Holy Sale of Investing – Of Dollars and Data
Death by retirement – Humble Dollar
Why election years are dangerous for investors – Behavioural Investment
Saying ‘enough’ to stuff – Abnormal Returns
Maybe stocks aren’t quite so sensitive to rates in practice – Finomal
Naughty corner: Active antics
ISA millionaires have a lot more in investment trusts… – Trustnet
…yet investment trust sellers are at an all-time high – Trustnet
Yield is not return – Verdad
The CPI overshoot is a statistical artefact – Calafia Beach Pundit
What’s the true bankroll? – The Diff
The Berkshire Hathaway playbook – Rational Walk
Can ChatGPT improve your stock picks? – Alpha Architect
Kindle book bargains
How Not To Be An Antiques Dealer by Drew Pritchard – £0.99 on Kindle
I Will Teach You To Be Rich by Ramit Sethi – £0.99 on Kindle
The Tipping Point by Malcolm Gladwell – £0.99 on Kindle
Money Box by Paul Lewis – £1.99 on Kindle
Environmental factors
Plastics producers lied to public about recycling potential – Guardian
So much for the lithium shortage battery crisis – Marginal Revolution
Scotland’s critically endangered marine and coastal species – The National
People want to work for good companies – Klement on Investing
From turtles to fruit bats, migratory species under threath – Guardian
Relationships mini-special
What to do if love is not working out for you – The Atlantic via MSN
Reimagining life with friendship at the centre – Culture Study
The Lonely Girls Club – BBC
How to date when you’re a woman who doesn’t want children – Guardian
Why Americans suddenly stopped hanging out – The Atlantic via MSN
Off our beat
14 lazy sleep myths, busted – Guardian
The Slough sixth former taking 28 A-levels – BBC
Tim Urban after 40 hours inside the Apple Vision Pro – Wait But Why
Steve Wright: radio giant and feel-good friend to millions – BBC
Young people can’t read long texts anymore – Slate
What does banning AirBnB et al really accomplish? – HBR
The real-life diet of longevity expert Mark Hyman – GQ
And finally…
“If trouble comes when you least expect it then maybe the thing to do is to always expect it.”
Cormac McCarthy, The Road
Like these links? Subscribe to get them every Friday. Note this article includes affiliate links, such as from Amazon and Interactive Investor.
The post Weekend reading: five graphs that justify the gloom appeared first on Monevator.