The Dangers of Rapeseed Oil

Last night I had the worst diarrhoea I have had for some time. This was almost certainly due to eating a stuffed chicken made with Rapeseed Oil. Even though the Food Standards Agency acknowledges that “Rapeseed Oil is known to cause allergic reactions in some people”, it is a commonly used ingredient in many prepared foods.

There is a petition on Change.org concerning its use and the lack of proper research on it. Personally I suggest rapeseed oil should be banned from human consumption.

Please sign the petition here: https://chng.it/whCrMLLsQj

Roger Lawson (Twitter: https://x.com/RogerWLawson  )

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Fundsmith Equity Fund, Greggs and Book Review

Last week was not a good one for my stock market portfolio. Greggs (GRG) issued a trading update on the Thursday and it read positively to me – total sales for the year up 11.3% to a record level and Q4 sales up 7.7%. More shops opened and new national distribution centre well advanced. But the shares promptly fell over 10%! 

The full year outcome for Greggs should be as anticipated but there were a few negative comments about consumer confidence, street footfall and higher taxes. If that was a profit warning, it was a very mild one. Paul Scott pointed out in his blog that other retail focussed companies have been reporting negative figures so maybe it’s simply contagion. I shall study Greggs in more detail to see if this is a buying opportunity.

The Fundsmith Equity Fund issued its Annual Report last week. It’s always worth reading what Terry Smith has to say. The fund achieved a Total Return of 8.9% last year which is below their equities benchmark of 20.8% (the MSCI World Index). But Terry points out that he has still beaten that index in the longer term. You can read his letter to investors here: https://www.fundsmith.co.uk/media/pirmvyly/fundsmith-annual-letter-to-shareholders-2024.pdf

The 8.9% return is comparable to the FTSE All-Share and my own overall portfolio performance so I see no reason to change my holding. Fundsmith has again been affected by being underweight in the large US tech stocks which is no bad thing as far as I am concerned. Us equities are being driven by momentum effects which may not last.        

And now for something completely different. Here’s a review of a recently published book I read over Christmas. It’s a biography of Alexander Hamilton by Ron Chernow who wrote a very good biography of John D. Rockefeller entitled “Titan” which I can recommend. It explains how to become the richest person in the world by monopolistic practices – rather like Microsoft, Apple, Amazon and Alphabet in the modern era.

Alexander Hamilton was one of the leaders of the American independence revolution. He was a close aide to George Washington in the revolutionary wars and had a big hand in creating the US constitution. From a poor background he achieved a great deal.

He died in a duel with Aaron Burr which he could easily have avoided. Burr was a crack shot and the events surrounding the duel are covered in some detail in this book. The book will interest anyone who wishes to learn more about US history and how their constitution evolved.

But the book is way too long at 1450 pages. It could best have been edited  down to a third of that length. This seems to be a modern failing of authors and publishers. For example the book Titan is only 770 pages. Increased length does not improve the quality.

Roger Lawson (Twitter: https://x.com/RogerWLawson  )

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The Gloom is Pervasive

Just thinking about the economic prospects in the UK turns you into a manic depressive. The pound is falling, the FTSE-250 is falling (which is a measure of UK mid-cap company prospects) and the cost of government debt is rising as the international financial world loses confidence in the UK.

We have bad weather in most of the UK which will depress economic output and very bad snow levels on the US east coast plus wildfires in California. I have fond memories of visiting Pasadena several times which apparently has been badly affected.

National media news is all about negative events while UK politicians are spending time debating whether a public inquiry is required over child sex grooming in the North of England. Personally I doubt such an inquiry would be useful. They are always very expensive, take years to report and there have been inquiries already into the events. The failure of the police to take action is blatantly obvious and this is simply a management issue. The police are now wasting their time on trivia such as non-criminal hate speech while freedom of speech is being undermined.

All of these events detract from the big issue of excessive immigration which is depressing UK productivity and wages.

But all of this gloom and doom will no doubt disappear when spring arrives and should not be an indicator of stock market investment prospects.

Roger Lawson (Twitter: https://x.com/RogerWLawson  )

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Year End Review of 2024

For the last 25 years I have been reporting on how my stock market investment portfolios have performed in the last year. This is my report for the calendar year 2024.

I am not very consistent as regards performance measured in total return. The year 2021 was a very good year but all the profits were wiped out in 2022. The year 2023 didn’t manage to beat the FTSE All-Share which is my benchmark objective. But 2024 showed a good recovery with a total return (capital and dividends) of 11.2% versus the FTSE All-Share of 5.5% (capital only – the dividend yield is about 4%).

It’s worth bearing in mind that my portfolio is very diversified across FTSE-100, FTSE-250 and smaller company (e.g. AIM) shares listed in the UK. I also hold a number of UK investment trusts which gives me exposure to overseas markets, and some Venture Capital Trusts (VCTs). Although I have some emphasis on AIM shares, they are not the very speculative ones. With 74 holdings altogether I am never going to significantly outperform benchmarks but at age 78 I feel no need to take an aggressive stance on investments.

The reason for my annual analysis is to pick out my investment mistakes of which there are always a few, which I will highlight in this note. Learning from one’s mistakes is an essential investment discipline.

I lost money last year on my holdings in BP, Rio Tinto, Safestore, Bango, Bioventix, DotDigital, Judges and Tracsis. The last 5 are all AIM shares and I sold Tracsis at the year-end but I see no reason to sell the others. I also sold some BP but held on to Shell. I consider oil/gas companies to be irrationally undervalued, mainly by institutions who have been bitten by the ESG bug. AIM company shares still seem to be out of fashion and it was difficult to make money on small cap shares last year. I bought several but they proceeded to go nowhere.

Big wins last year were Diploma, Paypoint, Polar Capital Technology Trust, Unilever, GB Group, Polar Capital Holdings and Intercede (the last one issued a positive trading statement today but it’s already highly rated).

In the property sector the Schroder REIT turned a profit but losses on TR Property Trust offset the gains. The property sector is still in the doldrums it seems with no recovery in capital values.

Our VCT shares continued to lose capital value but the tax-free dividends have held up so I will continue to hold. They continue to be negatively affected by the malaise in small cap shares.

Our large holdings in the Fundsmith Equity fund and Scottish Mortgage Trust did well again last year so I will continue to hold.

I have decided to sell one of our NS&I Index-Linked Savings Certificates – held since 2007 – I invested £15,000 then and it’s now worth £29,720, mostly as a result of inflation. But likely return on these is now much less so I do not consider them worth renewing. Savings rates for instant access deposits are now much better than in 2007 and more comparable to inflation. Returns on the stock market are likely better.

What are the investment prospects for 2025? I have no idea. I just like to buy shares in well managed companies with good prospects. That has worked well in the past and ensured decent long-term returns. My compounded total return over the last 25 years is about 10 times which has meant my wife has been kept busy on her expensive hobbies. It also means that unlike most people I have got richer in retirement, not poorer. But our offspring are looking for some financial assistance so they will soak up some of the profits. I will also be reviewing my usual charity donations near the end of the tax year and look at what we can gift out of surplus income which I track carefully.

It’s important to use all the potential IHT reliefs now that avoidance has become more difficult.

Roger Lawson (Twitter: https://x.com/RogerWLawson  )

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Paul Scott’s Podcast, SRT Marine Systems, Gelion, Ilika and Politics

The Christmas break gave me time to listen to Paul Scott’s latest podcast. As usual he has good words of wisdom to say about the UK small cap market.

He covers SRT Marine Systems (SRT) which I have held in the past. Forecasts regularly not met and a CEO who is always too optimistic. Good technology but the business model is the problem. Reliant on one-off big projects instead of recurring revenue. Paul is not optimistic about the company, and neither am I.

He also mentions IIika (IKA) and Gelion (GELN) negatively. They are both into battery technology. Ilika has been listed for longer but has yet to turn a profit. Paul argues such pre-profits, or lacking substantial revenue, companies should not be listed on the stock market and I agree. These are the kind of companies to avoid.

Such companies tend to list with optimistic stories about the ability of their technology to conquer the world, but it’s mainly bullshit in reality.

It’s time to reflect on the world of politics and our current leaders. I was sad to see that Bill Clinton has spent some time to hospital, probably with flu. He is aged 78 like me and has had major heart problems in the past. I also happened to watch a past speech by Ronald Reagen. Both Presidents were people who you could both trust and believe in. Convincing in what they said and providing good leadership. Donald Trump is not yet up to the same standard so I can only rate him as being the least worse choice. But the prospect for the US economy are still good.

In the UK our political leaders are second-rate in comparison. Keir Starmer is not someone I can trust and the economic decisions made by the Labour Government to date are poor in my opinion. Raising taxes on false claims about black holes in the budget are disgraceful. The UK is too highly taxed with a horrendously complex tax code. Confidence in the UK economy is rapidly evaporating. So on that depressing thought I will wish all readers a Happy New Year. Thankfully economic forecasts are generally wrong so don’t make any decisions based on my comments.

Roger Lawson (Twitter: https://x.com/RogerWLawson  )

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ShareScope (and Sharepad) Portfolio Management Changes

I have been using a product called ShareScope from Ionic for many years – first purchased in 2014. This is a PC based product that enables me to record the transactions in the multiple portfolios I manage, which are on multiple different stockbroker platforms. It provides market pricing and performance information plus reports of dividends that should have been received on both individual portfolios and also as a “consolidated” view across all my portfolios. It is therefore invaluable for recording and checking transactions in addition to the spreadsheets I use to record cash and trading transactions.

But a recent announcement from Ionic tells me that after 27 years the software is approaching its “end of life” so all ShareScope users will be forced to move to newer software called SharePad during 2026 which runs as a web platform when “legacy” ShareScope will be decommissioned. SharePad will also be renamed ShareScope just to confuse people.

I have already moved my portfolios over to SharePad so are running the older software and the new in parallel. SharePad seems to provide most of the functionality I need with some minor exceptions (such as recording unlisted shares and a global view of dividends received to avoid the need to step through multiple portfolios). ShareScope allowed for configuration of reports and setting of “Alarms” on news which are not automatically transferred when importing portfolios from the older product so there is some work yet to be done. There is good support and advice from Ionic when needed and more improvements are planned.

It is annoying to have to relearn a new software product at my advanced age but it is not unexpected that such an event would take place so I will accept  it was time to revise/replace the software. After 27 years it must be getting difficult to maintain.

Any investors with multiple and large portfolios running on different platforms will find a product like ShareScope/SharePad quite essential and I can recommend them. Good services with reliable and accurate data over many years, although I do use other products also to provide financial analyses.  

Roger Lawson (Twitter: https://x.com/RogerWLawson  )

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Polar Capital Technology Removes Performance Fee

The Polar Capital Technology Trust (PCT) announced their interim results this morning. It includes a statement that the Management Fees are being changed and that includes removal of the performance fee. This is to be welcomed as performance fees do not improve performance and just impose additional costs on investors. Managers have sufficient incentives to perform to the best of their ability without adding such fees.

The changes were summarised in the announcement as follows:               

Current fee arrangements: 

The current base management fee is structured over three tiers:

§  Tier 1:      0.80% on NAV up to and including £2bn  

§  Tier 2:      0.70% on NAV between £2bn and £3.5bn  

§  Tier 3:      0.60% on NAV above £3.5bn 

Performance fee: The performance fee participation rate is 10 per cent. of outperformance above the Benchmark, subject to a cap on the amount which may be paid out in any one year of 1 per cent. of NAV. Further information is provided in note 6 below as well as the Company Annual Report and Accounts for the year ended 30 April 2024.  

New fee arrangements:

The new base management fee will be structured over two tiers, and the performance fee will be removed entirely: 

§  Tier 1:      0.75% on NAV up to and including £2bn

§  Tier 2:      0.60% on NAV above £2bn

Performance fee: none

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Roger Lawson (Twitter: https://x.com/RogerWLawson  )

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Roliscon Blog Changes

The Roliscon Blog which mainly contains my comments on financial news (see https://roliscon.blog/ ) has been hosted by WordPress for a number of years. It has provided an easy-to-use blogging platform. However I have recently noticed that the “subscribe” function that enabled people to get notifications of new posts stopped working some months ago.  I am therefore removing mention of it from past blog posts.

You can obtain notifications of new posts in future by following me on Twitter (now “X”) – see https://x.com/RogerWLawson where new blog posts are usually mentioned.

You can of course easily review the blog for recent posts or search for any topic of interest to you at any time.

Unfortunately the Subscribe function in WordPress no longer works and their support appears to be negligible so I will be looking at alternative platforms which are as easy to use. I already use Wix for the Roliscon web site (see https://www.roliscon.com/ ) so that may be an option but if you have other suggestions please let me know.

Roger Lawson (Twitter: https://x.com/RogerWLawson  )

You can obtain notifications of new posts in future by following me on Twitter (now “X”) – see https://x.com/RogerWLawson where new blog posts are usually mentioned.

Bitcoin Hits Record High But One Sad Person has Lost £450m in Landfill

The price of a Bitcoin has risen to over $100,000 for the first time. One sad person is suing Newport City Council for the accidental loss of a laptop hard drive deposited in a council waste dump which he alleges contained the keys to 8,000 Bitcoins.

The Council have refused to allow him to excavate the dump to retrieve the laptop and in any case they claim it is now their property.

The moral of this story is that if you are going to speculate in cryptocurrencies take great care of your security and back-ups, particularly if you have a clear-out over the Christmas holidays.

For more details see https://localgovernmentlawyer.co.uk/litigation-and-enforcement/400-litigation-news/59307-court-to-hear-claim-against-council-over-ownership-of-460m-bitcoin-wallet-and-access-to-old-landfill-where-hard-drive-was-dumped-in-error

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

You can obtain notifications of new posts in future by following me on Twitter (now “X”) – see https://x.com/RogerWLawson where new blog posts are usually mentioned.