The Daily Telegraph ran an interesting article today on the amount of client cash held by stockbrokers and what they earn from it. Most brokers pay no interest on cash held in broking accounts, but get significant interest on it that they retain for themselves. They singled out Hargreaves Lansdown who apparently received £91 million in the last 12 months (to June) for some criticism. They obtained a margin of 0.75% on the cash held.
Many investors moved out of the stock market during the March epidemic rout but left the cash in their broking accounts rather than move it out, mainly because it’s takes effort and can be tricky to do so with ISAs and even more so with SIPPs.
But you can take cash out of an ISA and put it back in later, just so long as you put it back in within the same tax year. In fact I took quite a lot of cash out of our ISAs and with the market recovering strongly I am moving some back in. I did not expect the recovery to take place until much later in the calendar year. It’s quite difficult to understand why the market is recovering so quickly. Perhaps investors are looking further ahead than the short term poor economic numbers, or are betting on a vaccine working and soon (the FT reported on Russia going into production with one). But I never try to figure out the rationality of the market – I just follow the market trend but selectively about which shares I am buying and selling.
There is a great deal of irrationality in the world at present. A good example was a webinar I attended this morning run by Landor Links on Low Traffic Neighbourhoods (LTNs). These are being promoted by the Government and frequently consist of road closures using the euphemistically named “modal filters” Several of the speakers promoted the wonders of such schemes typically using slides showing the joy of cycling in sunny weather. They failed to cover how the residents of boroughs such as Waltham Forest got to vote on the proposals, before or after implementation. I know there is a very large amount of opposition in Waltham Forest, in Lewisham in the Oval area, in Islington and several other parts of London. But the Covid-19 epidemic is being used to justify emergency measures without any public consultation.
It’s all quite disgraceful as democracy is being undermined and the road network is being destroyed. Traffic congestion in Lewisham for example has been made a lot worse to my personal knowledge and that’s even before the schools return. Labour controlled Councils are frequently a particular problem as they tend to like to decide what is good for you rather than listening to their electorate or taking into account any rational arguments.
Roger Lawson (Twitter: https://twitter.com/RogerWLawson )
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