What caught my eye this week.
I enjoyed Fire V London’s post this week – Feeling Broke – although it sounds sort of cruel to say so. Schadenfreude isn’t really my thing – unless it’s just a whimsically named accompaniment to a pork schnitzel at the Munich Octoberfest.
Anyway Fire V London’s post captures well a mood I’ve shared, but haven’t really alluded to as much as I could have on Monevator.
Which is the sense that while tiny violins are definitely called for given the genuine hardship so many others are suffering in the UK nowadays (let alone in Ukraine and beyond) the past 18 months has felt like a hangover for the ages.
As Fire V London writes:
I no longer feel as financially independent as I’d like to.
Right now, I would struggle to give up earned income; in principle I could probably cope, but on a monthly basis I would feel like I was haemorrhaging cash.
Same bro, same.
Money’s too tight
In not-even-really hindsight, 2021 was truly some sort of Bizarro World.
The pandemic still rampaging around us, millions of people getting paid for literally doing nothing, lockdown anxiety rampant and your neighbours furtive in masks, broken companies going to the moon – and yet our portfolios at an all-time high.
It was bonkers and I kind of miss it.
On paper I’m not even nominally down that much since then. And I’m certainly still well up on where I was when Covid first hopped across the channel and/or the Nothing To Declare line back in 2020.
But in real terms – in both the financial sense and the ‘real world’ sense – it’s a different story.
My monthly interest-only mortgage payment has more than doubled. Everything from utilities to cheese to a decent bottle of wine costs a lot more. Some of the crowdfunding perks I got for making fun-sized investments in cafes and restaurants back in 2018 and 2019 now barely cover brunch. Only a few years ago they paid for two.
All trivial in themselves, but just some things that came to mind on a list that is endless. Inflation wasn’t dead, it turned out. It was
Holding back the years
As for my portfolio, the wheels came off in 2022 and I’ve stubbed my feel several times since then running along like Fred Flinstone.
Perhaps we all make money the same basic ways but we uniquely feel hard done by.
Clearly I am still in a pretty privileged position. Financially independent if I pay attention, portfolio well-diversified and essentially intact, a home of my own – although I’d argue I saved hard for years and invested wisely to get here, as RIT used to put it back in the day.
This position isn’t entirely a fluke, in other words. The sun was shining for many years, and I put something aside for these rainy days.
But maybe that’s why I feel my pride is more wounded than my net worth?
Active investing hasn’t delivered for me for nearly two years now.
I saw what we’ve been living through on the horizon back – and warned about it back in early 2022 – but it hasn’t really helped me much. (And the Tory party seems to have had it in for me personally!)
I was even talking mortgage stress a year before it was fashionable ubiquitous.
Harrumph.
Yet I also know I’ve been here before. It’s darkest before the dawn and all that.
And as FireVLondon points out, those of us with financial flexibility are meant to be feeling this way:
I also realise that psychology changing over the last two years is Exactly The Point.
This is why base rates are increasing – to increase the cost of financing things, and thus reduce the disposable income left for everything else.
I haven’t found myself existentially exposed by interest rates reaching hard-to-remember levels, but nonetheless my psychology has changed.
True. But this change too won’t last forever.
Sooner or later interest rates will have their affect – curbing inflation and probably also economic growth – and asset prices will soar.
Unless inflation has really become unmoored, which I doubt, this will include beaten-down fixed interest this time, too. Long bonds will leap, for all they look today about as lively as Pete Marsh.
Portfolios will be re-upped.
Weenie’s submarine will be a rocket ship again.
Something got me started
When you’re hiking in the mountains but you’ve been stuck in a valley forever, you just keep on trudging. Eventually you notice you’re actually stumbling uphill. Shortly thereafter the goal is back in sight.
Until then just try not to lose more height along the way.
Have a great weekend.
How are you feeling two years into The Suck? Let us know in the comments below!
From Monevator
Is gold a good investment? – Monevator
If you’re a member then you may want to bookmark our Mavens and Moguls archives – Monevator
From the archive-ator: Accounting for big expenses and depreciation in your FIRE budget – 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.
Higher energy bills forecast for UK households next year – Guardian
US economy grows at fastest pace in nearly two years – BBC
Students have 50p a week to live on after accommodation costs – Guardian
Real living wage now £12, more employers sign up – Living Wage Foundation
New online state pension top-up service to be launched in spring – This Is Money
Argentina faces economic crisis as inflation hits 138% – This Is Money
Comparisons are odious for London’s stock market [Search result] – FT
Products and services
Is there a catch with HSBC’s £205 cashback offer on current accounts? – Which
Beware cheap mortgages that come with hefty loan fees – This Is Money
Get £50 free trading credit when you open an account with Interactive Investor. Terms apply – Interactive Investor
EDF launches new cheap electric vehicle charging deal… – This Is Money
…but surging UK insurance premiums pose risk to adoption [Search result] – FT
Shared appreciation mortgages: the 1990s deals that became a nightmare – BBC
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
Understanding the MyWaitrose loyalty scheme voucher revamp – Be Clever With Your Cash
Not down with the coming Netflix price increases – The Lefsetz Letter
Wilko brand to return to High Street under new owner – BBC
Homes for sale with a basement, in pictures – Guardian
Comment and opinion
Inflation has eaten away at wealth [Search result] – FT
How time horizon affects the odds of equity investing – Morningstar
A disordered mind makes mutual fund salad – Demonetized
Ageing populations affect economic growth but not stock returns – Morningstar
Retirement takes work – Humble Dollar
How to save thousands by overpaying your mortgage – Which
Where is the 60/40 valuation at? [US but relevant] – Morningstar
A bit of a bad thing – Mr Stingy
Don’t forget to forget investment noise – A Teachable Moment
How much time is needed for stocks to outperform bonds? – Best Interest
Dollars are for spending and investing, not saving – The Big Picture
No more income tax cuts – Simple Living in Somerset
Naughty corner: Active antics
The risks of missing moat, management, or valuation – Flyover Stocks
Aswath Damodaran: making sense of the market [Podcast] – I.L.T.B. via Spotify
US IPO market teetering on the brink [Again…] – Bloomberg via Yahoo
Galaxy Digital predicts 74% rise in first year of Bitcoin ETF – Coin Telegraph
Shorting socialism – Verdad
Don’t worry about money market funds [Nerdy, search result] – FT
Kindle book bargains
The Panama Papers by Bastian and Frederik Obermaier – £0.99 on Kindle
The Simple Path to Wealth by JL Collins – £0.99 on Kindle
Mastering the Market Cycle by Howard Marks – £0.99 on Kindle
The Power of Moments by Chip and Dan Heath – £0.99 on Kindle
Environmental factors
UK rewilding brings endangered species back from the brink – Guardian
Nigeria to receive 500 mini-solar grids in renewables push – Semafor
Government heat pump grants raised by 50% to £7,500 – This Is Money
Texas bets big on undersea carbon storage – Hakai
Warning over ‘eco’ cups that pose risks to health with toxic resin – Guardian
Robot overlord roundup
Why one author let an AI chatbot train on his book – Vox
Off our beat
America’s unique, enduring gun problem explained – Vox
The scientists looking for extraterrestrial plant life – BBC
Finding Los Angeles with Anthony Bourdain – Current Affairs
Cracking the key to a $231M Bitcoin fortune on a USB stick – Wired
A second 20 years’ crisis? [Heavy] – Phenomenal World
Little flaws [Podcast] – Morgan Housel via Spotify
A better way to ask for advice – Behavioural Scientist
The subprime attention bubble – Hot Takes [via Abnormal Returns]
And finally…
“Money doesn’t mind if we say it’s evil, it goes from strength to strength. It’s a fiction, an addiction, and a tacit conspiracy.”
– Martin Amis, Money
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