Tag: General Election

Comments on the General Election Result

For the first time for many years, I will now be living in a constituency with a Labour MP – in Eltham and Chislehurst. This is not just because of the swing to Labour on the national scene but because of boundary changes. The typically true blue Chislehurst residents lost out to those in the poorer suburbs of Eltham.

Can’t say I am weeping over the loss of Liz Truss and Grant Shapps (an incompetent Minister) but the removal of Jacob Rees-Mogg removes one of the wittier MPs.

Reform actually did reasonably well with 7,000 votes in Eltham and Chislehurst but the lack of a proportional representation system meant that many voters are effectively disenfranchised. When will we get reform of our electoral system? Reform obtained many votes on the national level but only ended up with 4 MPs at the time of writing. 

At least Nigel Farage got elected but as one Tweeter commented, this is like letting the fox into the hen house. He should stimulate debates.

The stock market is calm after the Labour victory. A period of economic stability is clearly anticipated. My main concerns are the likely future attacks on inheritance tax and capital gains tax. Removal of business property relief on AIM stocks would seriously damage the AIM market where I have a number of holdings. Not that I bought them because of the IHT relief but because I wanted some small cap stocks. But clearly others did and they along with some IHT funds might dump their holdings. This could be very damaging but also an opportunity to pick up some more shares at cheap prices. Something definitely to monitor closely.

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

You can “follow” this blog by entering your email address in the box below.  You will then receive an email alerting you to new posts as they are added.

Mud Slinging and Scottish Mortgage IT

The General Election seems to have degenerated into a mud-slinging stage where the main parties are attacking each other in a last gasp effort to highlight the deficiencies of the opposition and swing the vote. As someone who used a postal vote two weeks ago, I am immune.

But the BBC have convinced me that they should be put out of business by screening an appalling session of Question Time where clearly the audience had been selected to prejudice the Reform Party and Nigel Farage and the questions selected to make them look bad. The BBC should not just be defunded – they need total reform to get them back to factual news reporting as a public service and with no more political bias.

I now consistently switch over if BBC news comes on our TV although Channel 4 news is no better as they apparently tried to “stitch up” Nigel Farage as he put it. I can believe it.

The BBC’s coverage of the US Presidential election is another example of their bias. Joe Biden is clearly too old and verging on senile for the job if you care to watch the debates. Donald Trump clearly has his own if different defects but does not deserve his negative media comments from the liberal establishment. How can democracy create two such poor candidates for the top job? That is a question worth pondering.

One thing I have done recently is to read the Annual Report of Scottish Mortgage Investment Trust (SMT) in which I hold some shares. This is one of the largest and most widely held UK investment trusts. After a bad year in the 12 months to March 2023 they recovered in 2024 so the share price regained the previous year’s fall.

In March 2024 they commenced an active buy-back programme to reduce the discount to NAV which I welcome. I don’t normally like share buy-backs but for investment trusts they do make sense where the discount widens too much.

The Manager’s Review in the SMT Annual Report is worth reading as it is a good summary of global economic trends and the portfolio holdings. There are particularly interesting comments on their holdings in Tesla and SpaceX.

These were the concluding comments from manager Tom Slater:

“There is a lot to be excited about. Artificial intelligence, digitalisation, scientific and engineering progress, and the opportunities presented by transitioning our energy model will provide fertile investment territory for years to come. Jeff Bezos stressed the importance of focusing on the things that don’t change as you build a business. For Scottish Mortgage, that means seeking the most exceptional growth companies, being patient and constructive owners, and harnessing the outsized impact of the small number of extraordinary companies to drive our returns”.

There is also a good review of the development of Artificial Intelligence and how it might impact companies by Lawrence Burns. Clearly many investors are betting that companies such as Nvidia will revolutionise the business world. I am not totally convinced that this will be the case. This could be another dotcom boom and bust.

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

You can “follow” this blog by entering your email address in the box below.  You will then receive an email alerting you to new posts as they are added.

It’s Decision Time

As I have a postal vote for the General Election, it was time to decide who to vote for. I covered some points from the main party manifestos in previous blog posts. None of those manifestos excited me and I have now read the Reform Party manifesto (or “Our Contract With You” as they call it – see link below).

There is much in there that I endorse and little that I would disagree with so I have voted for the local Reform candidate. They may not win in my local constituency or win enough seats to have an impact in Parliament in the coming election but I would like to see Reform continue to develop so as to have a major impact on UK politics. They do have a number of good leaders with sensible views – I include Farage, Tice, Habib, Bull, et al.

In conclusion Reform has a better platform than the other major parties and a more practical one. So I have voted for them.

Reform Party manifesto: https://assets.nationbuilder.com/reformuk/pages/253/attachments/original/1718625371/Reform_UK_Our_Contract_with_You.pdf?1718625371

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

You can “follow” this blog by entering your email address in the box below.  You will then receive an email alerting you to new posts as they are added.

Taxes, General Election Promises and the UK Stock Market

The Labour party will need to raise taxes if they want to meet their manifesto promises. That particularly applies to Capital Gains Tax which is always a good socialist target for those who think it is “unearned” income that people have not had to work hard to obtain which is blatantly untrue if your wealth comes from developing a business before you sold it. According to Rachel Reeves they have not even ruled out taxing the profit on the sale of your own home which has traditionally been excluded.

This is not such a daft idea as it might seem at first sight. People in the UK rely way too much on housing wealth to provide for their retirement instead of investing in a business. That is one reason why housing is so expensive – people buy houses as investments rather than simply as somewhere to live. So capital gains tax on houses would help to change the excessive devotion to housing wealth in the UK. It might also free up some underused space in big houses. But it would create enormous problems if the gain was not index-linked. With capital gains tax at 40% it would make it impossible to move house in pursuit of a new job if you had owned a house for a few years. Reducing labour mobility is never good for the economy.

There is a very good article by Michael Fahy on why London-listed small caps have dropped by a third over the past 20 years in the Investors Chronicle. This is indeed a major problem. Pension funds and institutional investors have been selling equities, particularly in recent years. There is a quote at the end which reads: “You can’t have deep and effective capital markets unless you have deep effective pools of long-term capital. We have big pools of long-term capital in the UK – the second largest in the world. They’re just invested in the wrong place”.

This is indeed the major issue which needs tackling and it arises from the regulatory structure of pension funds which has made the managers so risk averse that they shun equities.

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

You can “follow” this blog by entering your email address in the box below.  You will then receive an email alerting you to new posts as they are added.

A Quick Review of the Main Party Manifestos

It’s not yet time to make a final decision on who I will be voting for in the General Election but most of the party manifestos are now available. So I thought I would do a quick review.

The Conservative Manifesto is here: https://public.conservatives.com/static/documents/GE2024/Conservative-Manifesto-GE2024.pdf . At 80 pages long not many people will be reading it. Instead they will rely on sound bites in national media such as television channels and the views of their friends. That’s except those who always vote the same way as they have done historically.

The big problem with the Conservative Manifesto is that it makes promises to fix a lot of things which the Torys have had 14 years to improve but have failed abysmally to do so. Massive levels of immigration have damaged housing provision and the NHS is a shambles despite more expenditure on it. There simply aren’t enough doctors, nurses or beds to cope with a growing and more elderly population. There is no revolution in the management of the NHS which is what is really required.

Even when they mention a positive policy of “Backing drivers” they have their facts wrong. They say “While 20mph zones can help improve road safety in residential areas or outside schools, misuse undermines public trust and risks congestion and pollution”. There is no evidence they improve road safety, but there is certainly a lot of misuse of such schemes. The Tories fail to make a clear commitment on how they would stop local councils from abusing such schemes as LTNs with the object of tax raising.

There are some good policies in there, such as “introducing a legal cap on migration to guarantee that numbers will fall every year….”, but it is very unclear how they would make that stick. Likewise they say they “would end frivolous challenges that frustrate infrastructure delivery by amending the law so judicial reviews that don’t have merit do not waste court time”. Easier said than done and who is to say which have merit and which do not? Lawyers would be good at arguing on that.

There are many good things in the Tory manifesto but do we trust them to deliver? I don’t on their past track record and Rishi Sunak is more of a “consensus” politician than a forceful leader who can push through tough policies and get them implemented. In reality the Civil Service seems to be out of control and not implementing Government decisions.

The Reform Party has now become a serious challenger based on the latest YouGov opinion poll which puts them ahead of the Conservatives. You can see some of their manifesto commitments here: https://www.reformparty.uk/policies although it is apparently still a work in progress.

The key issues they identify in the NHS are: Record waiting list crisis; Staffing crisis; Ambulance and A&E crisis; Excess deaths crisis no one wants to talk about; Amongst the Worst outcomes in the developed world. Among their solutions are: NHS acquire extra operational and appointment capacity from not-for-profit providers and the private sector; tax relief on all independent healthcare and insurance – if you can pay more, let’s encourage you to do so. I would support those proposals to ease pressure on the NHS – faster better care for all they claim.

They provide some useful data on doctors, nurses and NHS beds to support their arguments and clearly want to scrap Net Zero commitments without spelling it out. In total the declared policies to cover defence, transport and many other areas are not there yet. Will we see them before the election or will Reform simply expect us to vote for change while avoiding the Labour Party and others?

The Labour Party Manifesto is here: https://labour.org.uk/change/ . They make lots of good suggestions about how they would improve the NHS without necessarily taking into account the practicalities of doing so – such as funding and staffing needs.

They say “Britain needs a new approach: mission-driven government”. Sounds good but what does it mean in practical terms?

They argue that “The National Health Service needs to move to a Neighbourhood Health Service, with more care delivered in local communities to spot problems earlier. To achieve this, we must over time shift resources to primary care and community services”. But big specialist hospitals are known to provide better services and kill fewer people. Diluting the specialist expertise will not help. This is a populist policy similar to having more neighbourhood police on the streets which is also in their manifesto, without much consideration of the practicalities and effectiveness of a new structure.

But the Labour Party certainly seem to have given more thought to what is in their manifesto so the document is more polished than the ones mentioned above.

As the policies of the major parties are so ill-defined it really comes down to who you will trust to do the right thing when they are in power!

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

You can “follow” this blog by entering your email address in the box below.  You will then receive an email alerting you to new posts as they are added.

Politics and Media Coverage

It’s the start of a new week covering the run up to the General Election and there are a few things to comment on. Europe seems to be moving to the right – particularly in Germany and France but also in the UK with Reform getting more votes based on opinion polls. But the national media, particularly the BBC, is wallowing in nostalgia for the good old days when we won World War II. Is it not time when we spent less time on this now very historic event and looked more to the future?

Personally I could not care less if Rishi Sunak chose to miss part of the D-Day celebrations. He needed to ration his time and spend it on more important matters.

The main UK political parties are talking about policies that they feel will be attractive to the public – more police, more prisons, an attack on anti-social behaviour, National Service to instil responsibility in teenagers; but until the full party manifestos are published (hopefully this week), it may be premature to comment.

The key issues that need tackling are surely uncontrolled immigration, housing provision and the capacity of the NHS – the last two of those made much more difficult by the first. That is why some political parties are doing better than others.

But the Labour party has not changed – they are now promising to save more jobs at Port Talbot by keeping one blast furnace in operation when Tata is losing £1 million per day at present on its UK operations. Keeping unprofitable steel making businesses afloat with Government hand-outs is as mad as keeping coal mines open in the 1980s. Mrs Thatcher put a stop to that nonsense and we need someone with courage to do the same now for steel making in the UK plus another Dr Beeching to rationalise the UK rail network which consumes billions of pounds in subsidies every year.

But the national media instead like to spend time on trivia – such as the unfortunate death of Dr. Mike Mosley – a minor TV personality who was unwise enough to go for an arduous hike in 40 degree temperatures and with no phone.

I will defer a final decision on who I will be voting for until I have read the manifestos and seen how all the hand-outs are to be paid for when the real priority is to cut taxes not increase them.

The Tories have promised to reduce the burden on motorists by outlawing the London ULEZ expansion among other things. But as others have pointed out, they could have done that two years ago but didn’t. The same applies to their promises to reduce immigration. That is one reason why Reform are doing so well.

When you have the power to change things, you have to use it!

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

You can “follow” this blog by entering your email address in the box below.  You will then receive an email alerting you to new posts as they are added.

Great British Energy – Major Labour Party Policy

The major political parties are rushing to promote new policies that they think will attract voters prior to the General Election. The latest such proposal from the Labour Party is to create a Great British Energy company to invest in new energy sources. This would be an investment company with funding from the UK Government.

But what would it actually do and where would the money come from? That is not at all clear.

But it looks like another case of gerrymandering as likely sources of power are in Scotland where there are possible wind power and wave power sources and of course an active oil/gas industry. Is this a sop to Scottish nationalists with the promise of more jobs to persuade people to vote Labour rather than the SNP who are on the defensive after recent financial scandals?

But SNP Westminster leader Stephen Flynn said: “This interview showed Keir Starmer is utterly clueless about the Scottish energy industry and his only Scottish policy has completely unravelled”.

It certainly looks like an opportunistic gambit to win Scottish votes to me. The other downside is that Government intervention in commercial activities always proves to be a failure.

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

You can “follow” this blog by entering your email address in the box below.  You will then receive an email alerting you to new posts as they are added.

It’s a New Day and a New Era

It’s 7.30 on Friday morning and the Conservatives have won a very large overall majority. This is a seismic change with what one might expect to be solid working-class constituencies such as Blyth Valley, Workington, Grimsby and Leigh being won by the Tories. This was very clearly a Brexit election with the SNP winning more seats in Scotland where most people wanted to stay in the EU, but the rest of the country deciding otherwise it seems.

However the Brexit party has won no seats although they have undermined the Labour vote in some areas. This is disappointing because they might have provided some moderation in Parliament to an over-dominant Conservative Government. All the concerns of the other losing parties may be lost also which might increase social division. We might see even more street demonstrations.

The pound has already jumped up against the dollar and other currencies which might put a damper on some of the large UK listed companies with major dollar earnings. But market confidence and business confidence should now rise substantially now that some uncertainty is over. We will no doubt see in a few minutes when the market opens at 8.0 am.

Not that I have much cash in my portfolio to invest because I have been betting on a Conservative win and resolution of Brexit for some time. I did not like to mention it previously because I did not wish to encourage speculation on the outcome. Perhaps the market may have already discounted the likely outcome in the last few days but overseas investors in the UK market will now be reassured that financial stability and prudence will be in place for some time.

We are of course not totally out of the woods yet because Boris will still have to negotiate a trade deal with the EU and other aspects of the final separation. But I judge he is clever enough to do that.

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

You can “follow” this blog by clicking on the bottom right.

© Copyright. Disclaimer: Read the About page before relying on any information in this post.

 

 

Investor Meet Company, Fevertree, Closet Trackers, Politics and the Environment

I recently came across a company called “Investor Meet Company” (see https://www.investormeetcompany.com/ ). They claim to enable individual investors to meet with company directors over the internet, i.e. via a digital web cast. The service is free to investors but there is a small charge to companies who take part.

The company was formed in 2018 by two founders, Marc Downes and Paul Brotherhood, who seem to have lengthy financial backgrounds and the web site looks professional. However, their contract terms are over complex and their privacy policy likewise so I am not rushing to sign up. They also invite you to provide details of companies you are interested in, which may be your holdings, which is not ideal. But if any readers have experience of this service, please let me know.

I mentioned Fevertree (FEVR) in my last blog post and Phil Oakley’s review of the business. Today the company issued a trading statement which was positive – it mentions “acceleration in key growth markets of the US and Europe in the second half”, but UK performance seems to be mixed. Growth in the USA is now expected to be c. 34% which is ahead of previous expectations. But the overall revenue forecast of £266 to £268 million is less than the previous consensus brokers’ forecast. The share price is up 7.8% today though. I may have to look at this business again because US growth is key to the share valuation.

The Financial Conduct Authority (FCA) have fined Janus Henderson £1.9 million for running two funds as “closet trackers”, i.e. actually closely tracking an index while charging high fees that are more normal for actively managed funds. This apparently was particularly obnoxious because they did not tell the investors in the funds that they were switched to a passive approach in 2011. The funds affected were Henderson Japan Enhanced Equity and Henderson North American Enhanced Equity. Investors have been paid compensation. Investors in funds need to be very wary that the fund managers of actively managed funds are actually putting in the effort and not sitting back and being a pseudo index tracker while charging high fees.

I watched some of the debate last night between Johnson and Corbyn but as it was so trivial in content I turned it off fairly quickly. I can imagine a lot of people did. The programme producer and compere can be mostly blamed for allowing such bland questions to which one could guess the responses and allowing evasions and irrelevant interruptions. The format of the US presidential debates is so much better.

Rather surprisingly I received a flyer in the post yesterday from an organisation called “Tactical Vote”. If I go to their web site it advises me that the best choice for me is to vote Labour in the Bromley and Chislehurst Constituency. The flyer makes it clear that their agenda is to keep the Conservatives out! But I suspect that they won’t get far in my constituency as Bob Neil had a 10,000 majority last time. If anyone was to switch it might be more likely be to the Brexit Party or the Liberal Democrats but there is not even a Brexit candidate standing so far as I can see. I am all in favour of “tactical voting” in some constituencies but we really need reform of the political system so that we have better representation. A transferable second vote system as we have for London Mayor is relatively simple. Tactical Vote seem to be pursuing a false agenda though; they should call themselves the “Labour Vote Promoters”.

One of the hot political issues, at least so far as the minority parties are concerned as the major parties are more focused on Brexit, the NHS and give-aways in the current General Election is the environment, i.e. how we become carbon neutral by 2050 or a date of your choice. Even the Conservatives wish us all to be driving electric cars, changing our home heating system and changing our way of life in other ways to avoid disastrous climate change. There was an interesting article in today’s Financial Times showing how this is quite pointless because China will soon be emitting more carbon from burning coal than the whole of the EU. They are expanding the number of coal power stations and the result will be to offset global progress in reducing emissions. In 2017 China produced 27% of world CO2 emissions, while the UK produced 1.2%. China’s emissions have been rising while the UK’s are falling so any extreme efforts by the UK are not likely to have much impact on the world scene.

However if you want to save the world and cut your heating bills (the latter is a more practical objective) I suggest looking at product called Radbot from Vestemi. The company was founded by a long-standing business contact of mine. It’s basically an intelligent radiator valve that monitors when a room is occupied and adapts to your usage.

Apart from that point, I consider there is so much misinformation being spread around about climate change and the impact of CO2 emissions that it is impossible to comment on the subject intelligently enough to refute much of the nonsense in a short blog article. But I do think it might be helpful to reduce the population of the UK which is just getting too damn crowded and leading to housing shortages, congestion on the roads and in public transport and other ills. That would be a better way of reducing emissions.

Part of the problem is that the NHS has become very good at keeping people alive despite what some politicians believe, while immigration has boosted numbers as well. You can see this in the latest forecasts for London’s population which is likely to grow by 18% to 10.4 million by 2041. See https://data.london.gov.uk/dataset/projections-documentation for more details.

Those are the issues politicians should be talking about.

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

You can “follow” this blog by clicking on the bottom right.

General Election and the Stock Market Impact

We finally have a possible resolution of the impasse in Parliament as a General Election is to be held on December 12th. That’s after the Speaker (not Bercow needless to say) rejected two wrecking amendments to a simple Bill authorising the election. My spirits were elated by this news because it finally means that the uncertainty over Brexit (will we or won’t we depart) may soon be resolved. That uncertainty has been damaging to UK business as their plans were put on hold, and has caused a fall in the pound as the world saw that we were in a political crisis and there was a risk of a hard Brexit. It also meant little other business was getting done in Parliament as the Government had no overall majority.

Now we have the situation that with a large Conservative lead in the opinion polls it seems likely that Boris Johnson will be returned with a Commons majority and will be able to push through his Brexit Withdrawal Bill. That Bill does seem reasonable to me in many regards, as a Brexit supporter. It avoids a “hard”, no-deal Brexit which was certainly going to have some impact on business, although not as much as some people claimed. It also seems likely that the marxist ambitions of Jeremy Corbyn and the Labour Party will be a dead letter for at least a few years.  I expected that the stock market would be lifted by this news but it has not happened. Why?

Perhaps some risks are still perceived. One is that the Brexit Party will split the right-wing vote in individual constituencies thus allowing other parties to win them. Or there could be mix of parties in the resulting Parliament with no overall majority which would put us back at square one. The key is the stance of the Brexit Party where Nigel Farage is opposed to the Withdrawal Agreement as he basically thinks it concedes too much to the EU (over fisheries, future trade, future regulatory alignment, etc). But if he wants to be certain of obtaining Brexit he has to think again and form a pact with the Conservatives. The Brexit Party has already been targeting Labour seats and that is surely a good focus for them leaving the Conservatives to target marginals and traditional Tory seats. As a relatively new Party, the Brexit Party probably does not have the resources to fight all the constituencies effectively in any case. Better to focus on a few. That way the Brexit Party could achieve some seats in Parliament for the first time and have a longer-term future with some say in Government and the future negotiations with the EU. The latter still leaves a lot to be settled under the “Political Declaration” so there is much to be decided.  Otherwise the Brexit Party surely has no future other than as sheep in the wilderness.

But all this complexity is probably lost on most investors, particularly overseas ones who dominate the UK stock market. They probably will not be convinced that the UK has returned to some sanity until a clear election result appears.

But as always I am optimistic. I am betting it will be resolved in a satisfactory way as most voters are fed up with the political gyrations and many of the worse MPs have been destroying their own reputations by repeated “about-faces”. Boris Johnson has to clean out the Augean Stables that are the Houses of Parliament.  To quote: “For the fifth labour, Eurystheus ordered Hercules to clean up King Augeas’ stables. Hercules knew this job would mean getting dirty and smelly, but sometimes even a hero has to do these things”. That’s politics in essence.

For those opposed to Brexit and still clutching at straws, the National Institute of Social Research (NIESR) has reported that they expect UK GDP to be 3.5% lower in ten years’ time under the proposed deal. But the Treasury and the Governor of the Bank of England do not agree. It depends on the terms of any free trade agreement that is negotiated with the EU. I am sceptical that there is likely to be any negative impact. Economic forecasts of just one or two years ahead are notoriously unreliable. Ten-year forecasts are simply incredible. The latter cannot take account of unexpected events and economic trends, and tend to ignore the adaptability of businesses. I suspect a more positive outlook for the country might stimulate more confidence in business and investment therein and offset any minor other impacts. In essence a Government with a good majority and a unity of purpose is the key. Perhaps readers should consider tactical voting to ensure that happens.

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

You can “follow” this blog by clicking on the bottom right.

© Copyright. Disclaimer: Read the About page before relying on any information in this post.