Schroder REIT Change of Investment Policy

I am a shareholder in the Schroder REIT (SREI) and have therefore received the notice of a General Meeting to revised the investment policy of the company.

Their proposal is mainly focussed on a new emphasis on “sustainability” for their property investments. The manager will be required to focus on an ESG scorecard in future and the board believes this will make the company more attractive to investors.

At least that seems to be the gist of their argument for change to the investment policy. But it will complicate the investment policy very considerably.

I will be voting against the change as I consider it an unnecessary complication and to focus on one aspect of investment policy alone is wrong. I suggest other shareholders should do the same.

Roger Lawson (Twitter  )

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Deaths Crowding In

It’s a day to mourn the passing of several people who have made history. The latest is that of Lord Alistair Darling, former Chancellor, at the young age of 70 from cancer. As a leader in the Labour Party in the fight against the financial crisis in 2008, he effectively nationalised Northern Rock and Bradford & Bingley and took control of the Royal Bank of Scotland (now Nat West).

These actions effectively made UK banks uninvestable to the international investment world. Could he have acted differently? I believe so. The Government has yet to get rid of its holding in Nat West and Darling’s attempt to take control of the major UK banks in the socialist paradise of Gordon Brown was an abject failure.

Another death was that of Henry Kissinger at the age of 100. He had a major influence on international politics in the 1960s under more than one US President.

Two days previously the death of Charlie Munger was also announced. He was Warren Buffett’s partner in Berkshire Hathaway from which he became very rich but he was also a witty writer. For example, he said “I think you would understand any presentation using the word Ebitda if every time you saw that word you just substituted the phrase ‘bullshit earnings’”. You can certainly learn a lot from him if you wish to be an intelligent investor.

Munger died at the age of 99 while Buffett is still going strong at a few years younger. Clearly age is no barrier to investment success.

Me I am still trying to stay alive at the age of 77 having just commenced on kidney dialysis as the transplanted kidney I got from my brother is now over 25 years old and failing as expected. I am apparently not fit enough for another transplant at this time which is disappointing so no need to offer one!

I will continue to put comments on investment and the financial world on this blog so long as I can. But the financial world is certainly not helped by Andrew Bailey, Bank Governor, talking down the prospects for the UK in his recent comments. Bankers need to instil confidence in the economy not pretend we are headed for doom.

Roger Lawson (Twitter  )

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More Comments on the Autumn Statement

Here are some more comments on the Chancellor’s statement to add to those previously made.

The cuts to National Insurance are substantial. As someone who retired from paid employment over 25 years ago, I won’t get any benefit from that but maintaining the “triple-lock” on state pensions will offset that and mean a rise of 8.5% next year. I think reducing employment taxes was a sensible way of distributing the largesse available to the Chancellor. But personal taxes are still too high overall mainly due to fiscal drag from reduced indexing of allowances.

Retaining 100% capital allowances for businesses will please many companies but I am not sure investors will be that impressed. It might simply mean capital is wasted on projects with a poor return.

  • On ISAs it was argued by some that simplification should take place to make them more attractive. But the Chancellor has ignored that and made them more complicated. For example by permitting ‘certain fractional share contracts’ as eligible ISA investments. This is a recipe for encouraging speculation by unsophisticated investors rather than long-term investment and is simply unnecessary.
  • The Chancellor is proposing a retail offer to dispose of its remaining holding in National Westminster – the remains of its former holding in Royal Bank of Scotland. Investors should take a very jaundiced view of such an offer. Investing in bank shares is always tricky due to lack of transparency in their accounts (for example on cash flows) so I am personally unlikely to take up such an offer. But it’s certainly good for the Government to exit its holding if it can do so.
  • It has been confirmed that the lifetime allowance will be scrapped from pension rules from April next year, as previously announced by the Chancellor. This will make it more difficult for any future government to re-introduce the lifetime pension cap as Labour has pledged it would do if elected.
  • Other welcome news is on the treatment of pensions on death. Under current rules, if you die before age 75 your beneficiaries can inherit your defined contribution (DC) pension completely tax-free if it is under your lifetime allowance. HMRC has announced that, contrary to previous plans, this situation will continue.
  • The Government is to consult on allowing any house that can be converted made into 2 flats provided the exterior remains unaffected. This could get a lot of opposition in Chislehurst where I live. It would increase population density and traffic/parking problems with inadequate public infrastructure such as schools and medical facilities. Instead of tackling the underlying problem of excessive population growth this is a “sticking plaster” solution to housing shortages.
  • There will be £1.3 billion spent on helping 700,000 people with health conditions find jobs. Does that mean that I will be asked to take up some part-time job working from home or lose my attendance allowance? There are certainly too many people of working age and with minor health problems that are living on state benefits at present. I can foresee a lot of resistance to this proposal but it is a problem that needed tackling. Too many people are reliant on the social security system and the cost is one reason why we have high taxes.

Will the tax and other changes help the Conservatives to win elections? I doubt it. They are simply not revolutionary enough.

Roger Lawson (Twitter  )

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Brief Comments on the Autumn Statement

This is kind of Chancellor’s statement that I like. No big surprises that would cause panic in financial markets. The threatened “tax cuts” are not all that evident but at least my state pension will be going up substantially next April.

ISA changes are relatively minor but this statement gives me some concern: “expanding the investment opportunities available in ISAs to include Long-Term Asset Funds and open-ended property funds with extended notice periods”. This makes no sense and is a recipe for future mis-selling claims.

But there is a commitment to legislate to extend the Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) schemes to 2035 which will remove concerns about the sunset clause in existing legislation.

The Government is still intent on throwing money at what it perceives as hot sectors with this comment: “Funding of £4.5 billion has been announced to help unlock private investment in strategic manufacturing sectors, starting in 2025-26 and lasting for five years”. What is the justification for subsidising commercial ventures?

This is an interesting statement by the Chancellor: “The UK is uniquely placed to harness the power of health data to improve patient outcomes. In England the NHS has 1.6 million patient interactions every 24 hours generating real world experience and insights at scale. The government is therefore announcing a further £51 million for the Our Future Health (OFH) programme, a world-leading resource for health research, to genotype their first 1 million participants and to recruit hundreds of thousands of new volunteers, supporting the development of better ways to prevent, detect and treat diseases”. That is a useful project.

More comments may follow on the Chancellors Statement after I have digested it more fully.

Roger Lawson (Twitter  )

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Will Tax Cuts Make the Conservatives Electable?

There is a widespread expectation that tomorrow will see the Government announcing some tax cuts. One target might be Inheritance Tax (IHT) which is widely disliked by those who tend to vote Conservative even though the actual impact is often very small. Inheritance tax can be easily avoided with some planning and expert advice.

It is undoubtedly the case that overall level of personal taxes are too high and the tax system too complicated. For example we have the ludicrous situation where the Government has just paid out £500 in “Winter Fuel Payments” to me and my wife which is not taxable even though I can easily afford our fuel bills. It’s just a pointless gesture it seems.

Cutting Inheritance Tax won’t make me feel any richer as only my offspring will get the benefit and that many years in the future. The only justification for removing or reducing IHT is to simplify the tax system, particularly as it generates relatively small amounts of revenue. Electorally it won’t help as only the wealthy will benefit when the Conservatives need to appeal to the middle-class to get their vote up.

The TaxPayers Alliance have just published an updated report on how to implement a simpler tax system. The Single Income Tax was originally published in 2012 and is a proposal to fundamentally reform Britain’s tax system, replacing a complex swathe of direct taxes with a single tax on all income charged at a single rate of 30 per cent. See for more details and it’s well worth reading.

What will we get tomorrow? I predict more polishing of the existing system with a few bones thrown to the rabid socialist dogs. What we need is proper reform by gross simplification of the tax legislation.

Roger Lawson (Twitter  )

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BT Problems, Hotel Chocolat and Multibaggers Report

BT has managed to disable my business “landline” number of 020-8295-0378. Major network problem apparently which won’t be fixed until at least 24/11/2023. Even though this is the line used for my broadband service that is still working so anyone wanting to contact me should use this contact form to get in touch:

Will I be buying shares in BT? Absolutely not when the service is so poor.

Despite my previous recent blog post on the dangers of the attractions of luxury food products (see ) it has not deterred Mars from bidding for Hotel Chocolat (HOTC). They have offered to pay 160% of the previous market price which is a prospective p/e of over 190. This seems a wildly optimistic valuation for a retailer with no consistent record of profits.  

Stockopedia ran a webinar on “multibaggers” which I missed as the timing clashed with my usual dinner time. But they have produced a report on their research of UK stocks which you can obtain from their web site.

I hold two of the top ten winners over the last ten years which have certainly contributed to my portfolio performance and it is well worth reading their report.

We seem to be back in a political mess after Suella Braverman got fired and the Supreme Court rejected the Rwanda plan for migrants. That was always going to be legally and politically difficult without a very firm hand on the tiller which Rishi Sunak seems unable to provide. Moving illegal immigrants to a foreign country was never going to be easy. But Rwanda is surely not the best choice of location. How about St. Helena or Ascension or one of the remote Scottish islands instead?

As regards the bust-up in the Conservative Party as a result, as someone who has some experience of such events in membership organisations my advice to Suella is to act quickly. Removing Sunak would not be easy so best to form a new platform for like-minded right wingers.   

Roger Lawson (Twitter  )

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Regulating Cryptoassets

The FCA has published a consultation document on the regulation of cryptoassets – particularly stablecoins in the first instance. It should be of interest to anyone investing in cryptocurrencies or considering doing so. To quote from it:

5.9 If a cryptoasset custodian were to fail today, the lack of a clear regulatory framework could result in uncertainty that would likely cause harm to clients through delays in the return of assets, extra costs or, worst of all, loss of their assets. Without clear regulatory standards to which cryptoasset custodians are required to adhere, cryptoassets may not be safeguarded adequately, which may lead to losses should the cryptoasset custodian enter insolvency (whether due to being treated as assets of the custodian, or through operational errors). In addition to the harm to clients, an outcome that results in uncertainty in insolvency may impact confidence in the overall regulatory regime.

5.10 This was shown in the recent failures of Celsius Network LLC and the FTX group, both of which provided cryptoasset custody services. According to its recent bankruptcy filing, Celsius had misappropriated client assets and at the time of its insolvency owed $4.7bn to customers. In the case of FTX, at least $8bn of client assets were reported to be missing. According to filings in the US bankruptcy court for Delaware on FTX Trading, FTX’s practices included ‘potential commingling of digital assets…use of an unsecured group email account as the root user to access confidential private keys and critically sensitive data…’ and ‘an absence of lasting records of decision-making.’

See for details.

Roger Lawson (Twitter  )

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Patisserie Valerie and Shell Legal Cases

Shareholders in café company Patisserie Valerie were wiped out in 2018 after the accounts were shown to be fictitious and the company collapsed. It has now been announced that a trial date of four people alleged to be involved in the fraud has been set for March 2026. See

Is it not astonishing that it has taken so long to bring the case to court? Compare that with the recent case of FTX/Alameda Research in the USA where Sam Bankman-Fried was prosecuted and found guilty in just a few months. This demonstrates what is wrong with the English legal system for dealing with fraud cases. Justice delayed for years is no justice and is no deterrent to criminal action.  

Another recently reported legal case is that oil company Shell is suing Greenpeace for £1.7 million after “activists” boarded an oil platform that was in transit off the Canary Islands. Shell incurred substantial costs as a result.

Comment: as a Shell shareholder I fully support the company actions. I think more such lawsuits should be pursued against organisations such as Greenpeace and Just Stop Oil who clearly have substantial resources which are financed by the ill-informed and take part in criminal activities in pursuit of their goals.

Roger Lawson (Twitter  )

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CTY + JGGI AGMs and Market Trends

Yesterday saw a big improvement in my stock market portfolio valuation (up over 2% on the day). That makes a change from recent trends. Even some of the property REITs I hold picked up despite bank rate being unchanged.

In the last year I have been buying shares in BP and Shell on the basis that oil and gas will still be required for many years to come. This proved to be a big mistake on Tuesday when the share price of BP dropped by over 4% on results that were way worse than forecast. Shell did rather better later in the week but is it not very disappointing that analysts are unable to accurately forecast so much as a quarter ahead for such large and well researched companies? I am still in profit on my BP holdings but I will clearly have to review them.  

I attended the AGMs of City of London Investment Trust (CTY) and JPMorgan Global Growth and Income Trust (JGGI) this week. These were both “hybrid” meetings so I attended on-line. I’ll only cover them briefly as there were no surprises. CTY achieved a total return of 4.6% last year which slightly underperformed their benchmark. But they now have a 57 year record of dividend increases. I have held the shares since 2011 with limited trading in the meantime. Overall return has been 10.9% per annum which I consider satisfactory for a share I don’t need to constantly monitor and an on-going charge of only 0.37%. However stock selection last year had a negative impact.

They hold BP and Shell but sold BHP last year and bought Glencore instead. Long standing manager Job Curtis does not yet see a turning point in property.

The JGGI AGM was held in Edinburgh (they plan to alternate location) after the merger with Scottish Investment Trust. This was said to be “a transformational year” as the size of the trust has tripled due to the mergers and strong investment performance. They achieved a total return of 19.1% last year. Their aim is for long-term capital growth combined with a yield of 4%.

Their biggest holdings are companies like Amazon, United Health, Microsoft, CME, Coca-Cola, TSMC, Vinci, Uber and Mastercard and they have been buying Nvidia.

Questions were raised about them paying dividends out of capital, i.e. uncovered by earnings. But I see no problem with that as most of the profits arise from capital growth. But there were negative comments though from the lack of a resolution to clearly approve the dividend policy. I think they should improve that resolution next year.

Both the CTY and JGGI AGMs were useful events in terms of understanding the investment strategies and I am happy to continue holding the shares.

Lastly a postscript on the conviction of Sam Bankman-Fried (see previous blog post). Is it not astonishing that the SEC managed to prosecute and secure this conviction in just a few months when the FCA takes years to secure fraud convictions in the UK? The FTX bankruptcy filing took place in November 2022. There is clearly a much more effective legal framework in the USA to pursue, and hence deter, financial fraud.

What could have been a horribly complex legal case was dealt with quickly and efficiently in the USA.

Roger Lawson (Twitter  )

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Sam Bankman-Fried Found Guilty

Yesterday Sam Bankman-Fried was found guilty of fraud in a New York Federal court over the collapse of FTX. This was the second largest crypto-currency exchange before it ceased trading with a shortfall as much as $10 billion in its accounts. Billions of client money had been lent to Alameda Research a proprietary crypto trading firm, also controlled by Bankman-Fried who could not repay it.

Bankman-Fried tried to talk his way out by giving evidence in his defence that he had consulted lawyers and they said it was OK to use client funds, allegedly.

This verdict is hardly surprising. I have been reading the book “Going Infinite”, subtitled “The rise and fall of a new tycoon”, by Michael Lewis. Clearly there were few controls in the business of FTX and people were hired with no experience – lack of financial knowledge or experience was seen as an asset!

The gullibility of the public to new get rich quick schemes is well demonstrated in the history of FTX. The UK Government has recently announced plans to regulate crypto markets which should surely be done as soon as possible.

The book mentioned is essential reading for anyone who wants to dabble in cryptocurrency and highlights some of the stupidities associated with Bankman-Fried.

Roger Lawson (Twitter  )

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