Political Revolution in the Making and VE-Day Reminiscence

Political Revolution in the Making

With the Reform Party winning the by-election in Runcorn, its first two mayoral positions, and taking control of a number of local councils in England, it is clearly on a roll. Is this the end of two-party politics as Nigel Farage has suggested? Perhaps I would say but if it’s a victory for democracy it’s also surely more down to having two weak leaders in the Labour and Conservative parties while Nigel Farage represents the views of many on the big issue of immigration.

But it also demonstrates that Reform have built a local party machine with active supporters who can win elections, and have the funding to do so. They are not going to go away. Even more to the point, it suggests that we really do need a system of proportional representation to stop the “winner takes all” and divisive politics of the older parties. The socially divisive Labour and Conservative parties need to change their politics and public images so that they can represent everyone.

VE-Day Reminiscence

VE-Day which celebrates the end of the war in Europe is on the 8th May. It’s a good moment to recall what my father wrote in his diary on that day in 1945.  

My father worked for Boots in a reserved occupation maintaining their power station. Although he did briefly join the Home Guard he generally avoided military service. This is what he wrote in the days before and after the celebration day:

Sunday, May 6. Yesterday afternoon I did three hours hard work fixing a 1 kw heater in the upstairs water tank. I scrounged it from Bob some years ago and it will probably come in handy next winter, when coal supplies look like being even less than last. It was raining hard all day but milder.

Today was bright and sunny but there was a cool wind. Out before dinner with Grandpa and the lad and again after dinner to the University Park [in Nottingham] and took two snaps [one below is of my mother Nell and brother Adrian].

There was nasty news last night of the Russians dealing with the so called Democratic Poles, whom they now admit, after much delay and prevarication, to have arrested on vague charges of “sabotage” etc! A shocking business, which hasn’t made a good impression either here or in the USA. The Russians are a bit too keen on setting up their own governments in the liberated countries and I fancy we are not going to stand for it very much longer.

Wednesday, May 9. Well at long last, the announcement came of the end of the war in Europe. Rumours were circulating at 3 o’clock on Monday but I didn’t take much notice until CHJ told me and Fred Sutcliffe that it was semi-official and that the news would “break” at 9 pm. We argued for an hour about what to do; but in the absence of definite news, we decided we’d wait and see. At 8:30 pm the announcement was made that Churchill would speak at 3 pm on Tuesday. I rang CHJ and he was in a fog and told me he would get Bull. He did and told me that Bull also couldn’t make up his mind just whether it meant 2 days or only 1 day’s holiday. But at the 9 pm news it was made quite clear, so I went down there and got the arrangements made.

Yesterday I went to work, just to make sure but found the boys all shut down and away (by 8:40 am!). Jack Spenser rolled up also by 10:30 am and we adjourned to the Chequers, where a crowd was congregated waiting for opening time at 11:30 am. We got a pint each and by 11.50, the beer was all sold and we had to content ourselves with a Guinness each in a pint mug. I paid for that in a headache, which lasted the rest of the day. After tea, Nell and I went to the pictures but after three quarters of an hour, I couldn’t stand any more, so we left. Where such drivel comes from I don’t know. I forgot that after dinner, being fine and sunny after rain, we went into the University Park, where I got two snaps. The evening was quiet except for a few fireworks in the garden 2 doors away. Bed by 11 o’clock, very thankful that the job is finished.

VE Day Today was a grand day of sun, though with a fairly high wind. We took Adrian out before dinner and after, I went with Nell to play tennis but we only got 20 mins play when Adrian began to howl, so we were forced to abandon the game. We were home by 3:30 pm and after taking my last snap, we have just packed him off.

Well, I wonder what will happen now. All the shouting is still to do but on the whole, I fancy we may see a steady rise in our standard of living for the next 10 years; after that I’m not so sure. But there is much reconstruction to be done and I think Germany will be no great competitor for many years. Russia and the USA will take some holding though and whether the Commonwealth will hold together much longer is an open question. Sentiment alone counts for little now.

<End>

My father clearly foretold the threats from Russia and the USA which we are still living through. But the UK economy was in a dire state in 1945 and the difficulties are made clear in the book by Ed Conway which I reviewed here: https://roliscon.blog/2025/02/24/book-reviews-j-d-rockefeller-and-ed-conway/ . It covers the Bretton Woods conference which set the structure of international finance since 1945.

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

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Alliance Witan AGM

This morning I attended the Annual General Meeting of Alliance Witan (ALW) investment trust. This was a “hybrid” AGM with clearly good attendance at the physical meeting in Scotland and virtually via Zoom. It was well organised and I had no difficulty logging in or voting beforehand.

The Chairman Dean Buckley managed the meeting well and answered questions clearly.

I have held shares in this company since 2015 and it helps to give me a balanced stake in global equities. My annual return has been 7.7% p.a. according to Sharescope although I think it would have been better if I had not traded in and out of the shares since 2015.

The performance against it’s benchmark has been disappointing in the last year although this might have been affected by the merger with Witan. Like other global equity funds it’s low holdings in the big 7 tech companies has affected it also.

The company uses a “multi-manager” approach to ensure diversity of thought on new holdings. It has increased dividends for the last 58 years so is attractive to investors looking for stable dividends in real terms with some capital growth.

The Chairman said they had decided to alternate the AGM between Dundee and London in future but that attracted some criticism from a couple in the audience – is not Scotland the most beautiful country?

Another question raised was about the investment in a tobacco company which the board does not rule out but they do impose some restrictions on sectors such as ruling out thermal coal. Otherwise they do not interfere in investment decisions.    

My feeling is I am happy to continue holding this trust but performance does need to improve.

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

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Argentex + Podpoint + M&S Problems

My wife has suggested we buy some Marks and Spencer (MKS) shares after the shares fell by 5% after a reported cyber attack. She is one of their customers and certainly the business does seem to have improved in the last year after some years of disappointing results. But on-line orders have been halted which does not bode well for the competence of its IT management. I will study it before making a recommendation but at a glance it looks a quite low-growth business with a low dividend yield so even if it is temporarily cheaper it does not inspire immediate enthusiasm.

Last week the out of the blue bad news for Argentex (AGFX) shareholders was the suspension of the shares after “the company experienced a rapid and significant impact on its near-term liquidity position, driven by, inter alia, margin calls linked to its FX forward and options books”. It clearly needs a bale-out from a trade buyer or other rescue financing. It seems obvious that they had not adequately hedged their FX positions and has come in for criticism for not getting the basics of such a business right. Even experienced investors have been caught as a result and clearly this kind of business might be one to avoid.

Another casualty last week was Pod Point Group (PODP) who announced problems with bad debts and likely takeover offers. It is clearly in major financial difficulties and needs rescuing. Pod Point provides electric car charging devices and services which at a glance should be a major new demand area. The company listed in 2021 but has lost more than 97% on the share price since then. So much for great ideas!

I recall reading the admission document before the IPO and the risk warnings were numerous plus limited information on the competitors which included major energy companies. I did not invest then on the basis it was best to wait and see and it’s been downhill ever since.

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

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Stock Market Bouncing Around and Gut Problems

The sun is out and Spring is definitely upon us so surely it’s time to be more positive about the future. But the US stock market is bouncing around, mainly downwards, while the UK market is somewhat more positive. Are US investors dumping US stocks and buying UK stocks instead I wonder?  I have been buying stocks lately as when companies I hold issue positive trading statements or improved forecasts and the share price rises I tend to buy more.

There has been a lot of media coverage on gut problems of late, which I suffer from. See this article in the Telegraph for example: https://www.telegraph.co.uk/health-fitness/diet/gut-health/antibiotics-ruined-my-gut-health-heres-how-im-back-on-track/ .

It blames the cause on taking too many antibiotics which could be right. Treatments suggested are changes to diet to improve the microbiome, to include more fibre, and take probiotics. I have been trying several approaches. But it must be a common problem as TV advertisements at considerable expense now promote expensive products. I’ll let you know if anything works.

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

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Should I Sell US Stocks?

Easter gives one time to review your share portfolios. In last week’s Investors Chronicle John Rosier reviewed his portfolio and the impact of Trump tariffs. He has been “purging” US exposure from his funds portfolio. He has sold Polar Capital Technology (PCT) and JPMorgan Global Growth and Income (JGGI), both of which I hold, and several others. The exposure of Fundsmith Equity to US Stocks also proved unhelpful to his overall performance and mine.   

With the S&P 500 down 10% in the last six months, is it time to refocus on other markets and dump US holdings? I am not so sure.

It has certainly been the case that buying the US markets has been a simplistic trading strategy in the last couple of years. You couldn’t go far wrong by investing in US companies or US index trackers. Tariffs will certainly have a negative impact on the US economy and several other countries. China should be particularly badly hit.

But has the world really changed?  Famous investor Warren Buffett has said in the past “never bet against America” and he has proved right so far. The size and vibrancy of the US economy is not easy to beat and trade tariffs may only have a temporary impact. The US economy is so attractive to the best and brightest immigrants that it is like a lamp to a moth. That accounts for much of the success of the US technology sector in recent years.

It’s exceedingly difficult to predict what will happen to the world economy and changing portfolios based on short-term economic forecasts is surely a mistake.

There may be some opportunities to pick up as panicking investors dump holdings of US stocks or funds because they are scared of what Trump might do next, but this is surely a time for holding one’s nerve, not for responding to emotions. The dominance of index tracking funds is making the waves of emotions that sweep stock markets more pronounced than ever but now is not the time to ride those waves.  

With signs that progress on peace in Ukraine and Gaza is looking more likely, it is time to be optimistic rather than pessimistic about the state of the world and the major economies.

The UK economy is a different story though. Higher taxes are going to have a negative impact while Trump is aiming to reduce US taxes by cutting Government expenditure. He surely has the better strategy.

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

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Life on Other Planets and Tate & Lyle

There was a very amusing article in the Financial Times today following the alleged discovery of life on a planet many light years distant. The question posed by Lex is should we reposition our portfolios to anticipate intelligent life that might visit us from planet K2-18b?

The author (John Foley) made some suggestions such as investing in toilet paper makers – is that for demand from visitors or for us? Plus of course defence stocks and biotechnology companies. The author also suggests the planet could present a 56bn market for toothbrushes, cans of deodorant and luxury handbags, depending on the number of mouths, armpits and hands of its residents (the planet is bigger than earth).

All highly amusing but as planet K2-18b is 124 light years distant then discounting the time value of money might result in very small returns. FT Article here: https://www.ft.com/content/4502e62e-4538-42e6-a3a1-d9e5db038698

Another article in a recent Investors Chronicle under the “No Free Lunch” headline covered events at Tate & Lyle (TATE). This is a company that has a great historic brand and sells sweeteners and other specialist food products. I did hold the shares some years ago – last sold at 416p in November 2007 – the current share price is 539p.

I sold because I attended a presentation by the then Chairman and was not impressed – it seems that it was the right decision as progress since then has been very pedestrian. Sometimes impulsive decisions on brief impressions turn out to be sound.

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

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British Steel Takeover

On Saturday the Government took control of British Steel, although this is not a conventional nationalisation. See https://www.bbc.co.uk/news/articles/c230g09lvv9o for background. If you read the Act of Parliament that was passed you will see it is a quite short and remarkable Bill – see https://bills.parliament.uk/bills/3961 . It gives the Government powers to manage the company but not ownership.

It must surely lead to Government financial control and hence nationalisation in fairly short order. According to the current Chinese owners (Jingye) the company is losing £700,000 per day so the only way this business can be kept afloat is by massive Government subsidies out of your taxes.

With no UK supplies of coking coal required to operate a blast furnace (the Labour Government recently blocked opening of a mine to supply such coal), and no low-cost UK supplies of iron ore, it is difficult to see how a UK based steel business can ever compete on the world stage. It will always be uneconomic particularly when it has to adhere to the Government’s net-zero policy which is making UK electric power the most expensive in the world. Changing the Scunthorpe blast furnaces to electric arc ones will neither be economic nor produce good quality steel.

In reality the takeover of British Steel has been economic suicide with no sensible business plan in place.

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

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Market Gyrations and Other News

It’s been a truly horrific last couple of weeks on the stock market. It’s taken a big dive then reversed direction just as quickly. It’s impossible to keep up with the tariff policy changes announced by Donald Trump.

Folks are still trying to figure out which companies are going to be affected when the target of the tough regulations appears to be mainly China. A good example of a company that is likely to be affected is 4imprint Group (FOUR). This is a UK FTSE company in which I have a holding. It sells promotional goods mainly in the USA but a major proportion of their products are made in China. Since the start of the year the share price has fallen about 35%. EPS forecasts have not fallen much but there is clearly uncertainty about the future business.

Will the company be able to replace Chinese imports by production in other countries such as the USA, the UK or other low tariff countries? There are plenty that could produce the products at low cost so I think the answer to that question is Yes.

It seems way too soon to me to jump to conclusions about what will happen even if there is some short-term disruption to supply chains.

FCA Consultation. The Financial Conduct Authority (FCA) have published a consultation of changes to the regulation of alternative fund managers (that includes those who manage VCTs for example). I have not had time to  read it yet but you may care to do so – see: https://www.fca.org.uk/publication/call-for-input/call-for-input-future-regulation-alternative-fund-managers.pdf

Nationalising British Steel. It looks like the Government may nationalise British Steel, or otherwise financially bail it out. This is very annoying and even the Reform Party is in favour of this stupidity. Unviable and declining industries should be allowed to go bust as they can never be rescued except at enormous cost – to be paid out of our taxes. A short-term bail-out never cures the problems in the long-term. The Labour Government seems not to have learned from their past experience of backing losing horses.

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

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Important Petition to Give Shareholders the Right to Vote

The AIC has launched a Government Petition to change the law so that all platforms give you the right to vote your shareholdings. See https://petition.parliament.uk/petitions/716003 for details. PLEASE SIGN IT!

More background from the AIC here: https://www.theaic.co.uk/my-share-my-vote

This has been a gaping hole in UK corporate governance ever since the use of nominee accounts became widespread. 

You can also read more background on this issue on the Sharesoc campaign page that covers this subject here: https://www.sharesoc.org/campaigns/shareholder-rights-campaign/ which even includes a link to a video with me talking about it. Some action on this issue is long overdue.

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

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Portfolio Review and What To Do Next

It’s the start of a new tax year today and the stock markets fell sharply on Friday – the FTSE 100 was down 5% while both the S&P 500 and NASDAQ were down 6%. Markets worldwide are crashing in response to the Trump tariff changes. As usual my portfolio is not immune to the falls even if I now have a somewhat defensive portfolio which is paying high dividends. When selling gathers momentum there is nowhere to hide. Panic is gripping the market regardless of the fact that the impact of the tariff changes has yet to become clear. Uncertainty is the name of the game and it will be some months before we see the impact on company financial results. I anticipate that it will be less than the doom mongers are forecasting. It is always remarkable how companies can adapt to negative events.

What should one do in such circumstances? Well I have been through such panics before. My tactic is simply to wait for an opportune moment to pick up some cheap shares. I always have some cash in my portfolio (about 10-15% normally) and that will be deployed when the market appears to have bottomed out – but that might be some weeks or months away. I will resist the temptation to buy more shares in response to minor bounces, and I never gear up my portfolio by borrowing cash in response to anticipated bounces.

I will move cash into our ISAs to maximise my ISA holdings now we are in the new tax year with another £20,000 allowance but there is no great hurry to do that.

The moral is keep calm and carry on.

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

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