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24 January2020|Issue983 Britain’sbest-selling financial magazine From theexecutive editor... As regularreaders dinner,“Whothe hell cares mayknow, I’m about thebudget?”. That’s no always on thelook- surprise coming from aproperty outfor contrarian manlikeTrump,but it is a indicators –signs surprise whenit’saddressedto that abelief supporters of theUSpolitical hasbecomesowidespreadin partythat’ssupposed to be the markets that even themost fiscallyresponsible one. extremeoutcomesmustbe As BenHuntofthe Epsilon “pricedin”.Davos –the Theory blog points out:“If you Switzerland-basedtalking shop don’tsee that everygovernment forthe greatand thegoodand in thedeveloped worldisabout thegrossly overpaid –isusually to embark on amassive deficit- k oc fertilegroundfor such indicators st spending spree... you’re just not er tt

andthisyearhas proved no hu Gordon Brown: bust followed boom as usual paying attention”. exception. In an interviewwith ©S What does this all imply? Bloombergthisweek, Bob “Davos is usually fertile ground for contrarian It rather impliesthatthe race to Prince,the co-chief investment indicators and this year is no exception” thebottom–in termsofpublic officerofBridgewater,the financesand monetarypolicy– world’sbiggest hedgefund, came out downsinthe economy, that makeshis continues. It impliesthatassetpriceswill with this beauty. Arguing that central jobharder. continue higher until inflationtakes off. banksaround theworld hadlearned their However, hisfeelingsare irrelevant. It impliesthatyou should probably lesson from theFederal Reserve’sabortive Thereare twomainissueshere,one linked owngold(whichis, in fact,one of the attempts to raiseinterest ratesin2018, he to investmentmarkets andthe otherto suggestionsthatPrinceagrees with). Oh, said:“...we’ve probably seen theend of the economic policies.Onthe investment andifyou’relooking for other contrarian boom-bust cycle”. side,ifeveryonebelievesthatinterest rates notionsfromDavos,you should probably Now, as Albert EdwardsofSociete will stay lowforever andthatthere’s no ownenergystocks. Firstly, accordingto Generale pointedout on Twitterin pointin“fighting theFed”, then even the theBoA survey,fundmanagersstill hate response to thisquote,our former prime bearswill go all in on stocks.Bankof them rightnow –evenworse than they ministerand chancellor Gordon Brown America’s(BoA) latest survey of global hate cash.Secondly, andhot from Davos, famously claimedtohaveended “boom fund managerscertainly suggests that we also hadJamie Dimon –the chief andbust” for theUKeconomy –right “capitulation” is coming closer. Fund executive of JP MorganChase,currently aheadofthe financialcrisisin2008. managersare currentlyholdinglesscash king of thebanking sector –arguing for So in termsoftemptingfate, it’s quitea than they have at anypoint since2013. acarbontax.Justbewaryofplaying the claimtomake. Admittedly,Prince, unlike On theeconomicside, if politicians sector viaRussia(seeMatthew Lynn’s Brown, didn’t appear especiallyhappy come to believethatboomand bust is over, column on page16). aboutboomand bust beingscrapped. then there is nothingtostop them from Hedgefunds (inthe popularmythology, deciding that thereare no limits to their at least)makemoneyfromvolatility. spending.USpresident Donald Trump John Stepek If centralbanks have endedthe upsand reportedly told donors at arecent private editor@moneyweek.com

od ee fo Scandal of the week Go w k r: Billionaire Peter Hargreaves (pictured) is to establish a charitable Africa’s richest woman, foundation, to provide financial support to help underprivileged Isabel dos Santos young people and those with disabilities through education and (pictured), is accused of sport, says The Times. Hargreaves will transfer shares worth exploiting Angola’s £100m from his 32% stake in Hargreaves Lansdown, the assets to enrich herself investment platform he startedin1981, andsteppedbackfrom whileher father,former almost five yearsago.The foundation will hold on to theshares for presidentJoséEduardo at leasttwo yearsand draw on theincome, whichwould have been dos Santos,was in wortharound£2.2m last year. power,saysMichael t in Forsythe in TheNew es lM ag TheVan GoghMuseuminAmsterdam hasauthenticatedan1889 ya York Times. The Im Ro ty self-portraitofVincent VanGoghasgenuine. Norway’s s; et to “Luanda leak”of715,000 ©G Nasjonalmuseet hasowned it since1910, but itsauthenticityhad pho documents relating to ock been disputed since1970. However, VanGoghreferstothe “whenI St

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tt amassed $2bn viastakesinAngolan telecoms, Theo,fromthe same year.In1998, another VanGoghself-portrait Ge

: diamondsand construction firms. Forexample,in

os from 1889 sold for$71.5mwithChristie’sinNew York. 2017,$57mwas transferredfromAngola’s state ot

Ph oilcompany,Sonangol, whichshe chaired at the am. Badweekfor: lli time,toaDubai firm ownedbyafriend.This

Wi “drained”Sonangol’s accountatEuroBic,the JaimeBotin,amemberofthe Spanish bankingfamilythathas run Mc rd European armofanAngolan bank whichis42.5% Santanderfor overacentury,has been fined€52.4mand wa

Ho ownedbydos Santos.The bank said it hasended sentencedto18months in prison,for smugglingPablo Picasso’s n: its“commercial relationship”withher andwill Head of aYoung Woman outofSpain,saysBloomberg. Botinhad tio investigate. Angola’sgovernment claims to have been deniedanexportpermittosellitthrough Christie’s in London k ustra oc ll been deprived of $1bn andhas vowedtoforce her in 2012.The €26m painting waslater foundonhis yacht, off st ri er

to return. DosSantosdeniesany wrongdoing. tt Corsica, in 2015.Ithas sincebeenhandedtothe ReinaSofia art ve hu Co ©S museum in Madrid, whileauthoritiesdecidewheretosend it. moneyweek.com 24 January2020 MoneyWeek 4 Markets Trade truce boosts stocks – for now

Alex Rankine Markets editor

Don’t get too excited about the new “phase one” US-China trade deal, says James Palmer in Foreign Policy. Donald Trump heralded a “momentous step” after formally signing the accord with the Chinese vice premier, Liu He, last week, but this limited agreement will only “forestall further escalation” rather than unwind the damage already done to global trade. Tradetruce,not trade peace Markets saw the sunny side. The S&P 500, Nasdaq Composite and Dow Jones Industrial Average all posted their biggest weekly percentage gains since August last week, note Chris Matthews and Mark DeCambre for MarketWatch. “The Nasdaq has climbed for six straight weeks, os with a year-to-date return of 4.6%”. The ot kph pan-European Stoxx Europe 600 hit a new The price of soybeans has fallen since the deal was announced oc St record high on Friday and the FTSE 100 ©i regained a six-month peak. fallen since the deal was announced, while Even as negotiators signed off the deal, Beijing has pledged to increase its wheat, pork and dairy products have federal agencies were considering new imports from the US by $200bn, roughly barely moved. That is a sign of serious restrictions on Chinese telecoms champion double the current level. Washington will doubts about whether the paper promises Huawei, which they deem a security suspend some planned tariffs and halve the will have any “real economic impact”. threat, says Nathaniel Taplin in The Wall tariff rate applied to $120bn-worth Street Journal. Top US officials speak of a of goods. Carryondecoupling “clash of civilisations”. So this agreement is The fact that “tariffs on hundreds of It would help if America knew what unlikely to herald an era of calm. Over the billions of dollars’ worth” of other goods it wanted, writes Martin Wolf in the next decade it may be Asia, not the Middle will remain in place on both sides even Financial Times. Welcome provisions East, that proves the world’s biggest after this deal shows “how much the status in the agreement covering intellectual “hotspot for political risk”. quo has changed”, says The Economist. “A property, currency manipulation and “Investors betting on a quick truly grand pact between the two countries financial services should encourage China conclusion to this... trade row are set to be is some way off.” to operate more like a normal market disappointed”, agrees Liam Halligan in Key commodity markets remain economy. Yet, incoherently, the $200bn The Daily Telegraph. China-US quarrels sceptical, notes Jon Hilsenrath for The import deal will only promote more state about manufacturing, services and, Wall Street Journal. The price of soybeans, intervention. Meanwhile, in areas such above all, technology, will be with us “for “by far the largest component of US- as technology and investment in the US, decades”. That’s not good for global trade China agricultural trade”, has actually Washington’s aim is clearly to “decouple”. or growth, but it’s “now a fact of life”. The bulls return to emerging markets Financial markets are “getting productivity growth continues aheadofthemselves”, says to converge with that of the Michael Mackenzieinthe rich world. Talk of the end of FinancialTimes.The inkhad emergingmarketcatch-up barely driedonthe tradedeal growth appearstohavebeen before thebullswerepouring greatlyexaggerated. into emerging markets. Emerging marketshave Tradershavenoticedthatthe been in a“nine-yearbear valueofChina’srenminbihas market”since peakingin2011, been “quietly”appreciating says Andrew Addison in relative to the dollar.Stronger Barron’s.But long cycles of localcurrenciesimprove underperformance areusually dollar-denominatedreturns. followed by periodsof With US assets so expensive outperformance andthe asset manyare keen fora China’seconomy is lesscommodity-intensive than inthe 2000s classhas been picking up “prolongedrotation”towards steamrelativetothe S&P500 emergingmarkets,which have shiftpurchases of the 2000s“pulled commodity- indexsince the end of last “longbeencheap”. foodstuff to the northern exporters” alongfor theride. year.Moreimportantly for Yet“truces canbefragile”. hemisphere. Akey challenge But todayitis“less long-terminvestors, on a Details of the dealcould also foremergingcountries this commodity-intensive”, bad cyclically adjusted price/ prove amixed blessing. decade hasbeenChina’s newsfor the exporterswho earnings ratio(Cape)of15.8, Brazilian soyfarmers, for economy, says TheEconomist. hadcometorely on Chinese emergingmarkets arefar- es

example, areunlikelytobe TheMiddleKingdom’s growth. Still, in other cheaperthan thedeveloped ag Im

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MoneyWeek 24 January2020 moneyweek.com Markets 5 Coal market’s drasticdecline Can Europe keep going? “Coal’s fortunes look bleak”, Will Trump’s next trade fight says Jeremy Hodges on be with Europe? ask Ana Bloomberg. The fuel’s price fell Swanson and Jack Ewing in by almost a third last year to The New York Times. With around $62 per tonne with little North American and Chinese prospect of a pick-up in 2020. A deals in the bag, some analysts combination of falling gas wonder if the US president prices, “ever-cheaper wind and will turn his attention to the solar power” and carbon- world’s biggest trading bloc. emissions reduction policies The transatlantic partners are driving a “drastic” decline are already embroiled in spats in generators that burn coal. over everything from aircraft Last spring the UK went for subsidies to France’s planned a full week without coal power for the first time since the digital levy. A phone call industrial revolution. between the US and French s ge presidents this week delivered a a Bulls point to new coal-fired Im The German economy barely grew last ty power stations coming online in tentative truce. et year, and fiscal stimulus is unlikely Asia, say Joe Wallace and David ©G Hodari in The Wall Street Asubdued growthoutlook contractionof3.6%dragged causeinvestors to become less Journal. China accounts for The eurozone’s stocks had an down everythingelse.That focused on problemsinEurope about half of global coal excellent 2019. Germany’s weakness prompted “an andAsia, PeterOppenheimer demand. Yet Beijing is taking a Dax returned 25% last year, aggressive response”fromthe of GoldmanSachs toldTrista protectionist turn as it wants to while France’s CAC 40 index European CentralBank, which Kelley on Business Insider. preserve “the domestic coal rose 26.4%. The surprise cutinterest ratesand “launched Thegap betweenyieldsonthe industry because it’s the source standout performer was Italy. an open-endedbond-buying” region’s equity andrisk-free of employment for so many Shares on the country’s FTSE programmelast September. bondsis“higher nowthanat people”, says Manjot Singh of MIB index gained 28%. Yet YetGermanpoliticians arestill anytimesince thefinancial CRU Group. It is importing less there are “serious hurdles” to unwillingtostepinwithfiscal crisis”; that “substantialyield coal, which has also tempered a repeat performance in 2020, stimulus:the country’sfinance cushion”should insulate shares global demand. says Bloomberg. The earnings ministry reported a1.5% from anydramaticfalls. Australia’s coal industry has outlook is underwhelming. budget surpluslast year,the Forall theindustrial been hardest hit, reports Adam Between April and December sixthinarow. malaise, consumptionis Morton in The Guardian. last year earnings downgrades However, expectations notdoing badly, sayCedric China’s imposition of what outnumbered upgrades. that theglobalmanufacturing Gemehl andNickAndrews for amounted to “an unannounced Companies are forecast to slumpwill bottom out at the GavekalResearch. Excludethe ban” on the country’s coal last year means that the industry’s see 8.9% profit growth this startofthisyearare feeding “metal bashers”and third- export earnings are forecast to year, falling short of the 9.3% renewedoptimism, says Piotr quarterexpansion wasa1.7% fall by more than a quarter over predicted for the S&P 500. SkolimowskionBloomberg. year-on-year.Easymonetary the two years from 2018. The region’s economy has TheZEW indexshows policy,fallingunemployment Western markets are not taking struggled to gain traction. that investor confidence in anda“gradualreversal” of up the slack. Demand for coal- Germany expanded by just Germany’s growth outlook austerity policies couldhelpthe fired power fell 23% in Europe 0.6% last year, notes Tom is nowat“thehighest in continentsurprise on theupside and 14% in the US during the Fairless for The Wall Street more than four years”.This thisyear. “The European first nine months of 2019. Journal. A manufacturing year’s US election risksmay recovery lives, just.” Viewpoint n The global agriculturalrevolution “The past year has seen an increase in my intake of literature critical of the For all the fuss about current monetary and... debt culture that 18 productivity in much of the appearstohaveinfested... Western developed worldstallinginthe [countries. Ifearweare]close to a 16 last tenyears,alonger-term cataclysmicpopping of theEverything view suggests that humanity Bubble... Thequestion...iswhattodo... I 14 should continue successfully look at gold as acurrencyand agenuine 1866 =1 doingmorewithless. Take storeofvalue…Inancient times(pre- Corn acreage agriculture,saysJohnMauldin 12 in Thoughts from the Frontline. 2000)when cash andequivalents hada Corn production time value representedbyaninterest Research by JesseAusubel of rate,gold, with itsrealcostofcarry,was 10 Rockefeller Universityshows ahardcalltomake, but todayitis–as that theworld is producing ourUSfriendsmightsay –adoosy (not almost five timesasmuchcorn sure if youspell it that way, but youget 8 peracre than 70 yearsago;itis my drift).AsJohnButler writes... in his usinglessfertilisertoo (fertiliser book TheGolden Revolution,Revisited : 6 consumption peaked in the ‘All purely fiat currencieseventuallyfall 1970s).Weare also squandering to theirintrinsicvalue of zero.’ ALL– 4 much less water.Water usefor when theprice of money fallstozeroor agriculture hasbeenflatsince less,then that wouldinmysimpleview 1975 whilethe production of of theworld tellyou allyou need to know 2 corn andsoybeanshas aboutthe valueofit.” quadrupled.Wheat andpotato 0 output is up by 60%and 25% SirStevenWilkinson, Good&Prosper respectively.Feeding agrowing 1850 1870 1890 1910 1930 1950 1970 1990 2010 population will be no problem. moneyweek.com 24 January2020 MoneyWeek 6 Shares MoneyWeek’scomprehensive guide to this week’sshare tips

Three to buy

digest its2016acquisition of management hassold its Harworth Group online retailer Worldstores, wholesaleheating and TheMailonSunday butisnow “firmlybackon plumbing business for £46m This property developer thefront foot”. Theonline andalsoplans to dispose of specialisesinregenerating business is growingrapidly and DIYchain Wickes.That old industrial sites. Spun out thesuccessfulrollout of anew wouldmakeitlessdependent of UK Coal, Harworth turns digitalplatformisparticularly on thecyclicalretail tradeand itslocations, often former encouraging. Free cash flow give it more spacetoinvestin coal mines, into places where andmargins areimproving and strongly performing divisions peoplewanttolive andwork. talk of apost-election bounce such as Toolstation, which Thegroup is well managed, Dunelm in consumer confidenceshould is “snappingatthe heels” boasts soundfinancesand has Investors Chronicle also provideaboost. 1,082p of Screwfix.Changes to stamp astrongportfolio.The new Dunelm operatesaUK-wide duty,along with abrighter government’s pledgetostep networkof171 superstores Travis Perkins outlookfor housing, should up northern investment bodes selling home furnishings. The TheSundayTelegraph also providetailwinds. well.The shares have doubled firm went throughadifficult This builders’merchant “There is more to gain from since2015, butthere should be period afterstrugglingto hasa“do-it-yourself” plan: thisrenovation”. 1,661p plenty more to come. 154p

Three to sell AO World earnings ratio of 17 is profit will be “significantly Reach The Times too high. Avoid. 86p below market Shares The “hype has long gone” exppectations”. Shares in this media publisher, from this white-goods internet Joules The group says that it formerly Trinity Mirror Group, retailer. It was once valued Shares wwas unable to satisfy have risen by a staggering 45% at £1.8bn, but operational Our bullish call sstrong Christmas since December. The market problems in its continental on this premium shopping demand realised that negative sentiment divisions and weaker consumer British clothing because of towards traditional publishing spending have cut that figure company hasn’t an “internally had gone too far. Reach’s to £411m. A turnaround plan worked out. The ggenerated stock transition towards more digital involves revamping product shares have slid by availability issue”. operations provided a further lines and the German unit. more than 30% over WWhile the underlying attraction. The shares are still That may eventually bear the past year after brb and appears strong, cheap, but further upside will fruit, but profitability is still a bad Christmas tthis apparently “self- require more good news on at least two years away and in trading update came infi licted” problem the fundamentals. “Lock in” the meantime the shares pay with a warning that dod es not inspire a spectacular profit “while the no dividend. A forward price/ full-year pre-tax coc nfidence. Sell. 170p going is good”. 143p ...and the rest The Daily Telegraph biggrowthopportunityfor IT alookatAllianzTechnology Ten-pin bowlingisa play AVEVA (4,772p).High- Trust (1,789p).Sharesin “perenniallypopular form of growth Europeantechfirms fantasyminiatures business family entertainment” and areoften overlooked by global GamesWorkshop aremaking TenEntertainment,the second- privateequity, butthatopens newhighs,but itsvaluable biggestUKmarketplayer, seems apromising niche for venture intellectual property should areliableincomepick (310p). capitalist Draper Esprit (490p). continue to drive strong US-focused plumbing-supplies returns.Keepbuying (6,970p). business Ferguson hasbounced Shares Supermarket Wm Morrison back from adversitytobecome From electronicsincars facesatough competitive 1.52%the pricelooks elevated aresilientoperatorwith“very to e-commerce to cloud landscape, but thebalance sheet giventhe risks (1,975p). strong management” (7,216p). computing, technology is is in order (192p). Specialist chemicalsgroup transforming theway we CrodaInternational is an InvestorsChronicle live.Thisisanexciting, but The Times impressive FTSE 100performer Industrial businessesare also expensiveand complex Avoid HikmaPharmaceuticals: andits life-sciences division is increasingly lookingtodigitise sector where there is acase thisyear“will be no blowout” another promisingsourceof theiroperations, presenting a forprofessionalhelp, so take andonadividendyield of growth –hold (5,060p). AGerman view IPOwatch Twoyears agothe semiconductor sector wasrocketingamidtalk Tech start-up Casper Sleep, knownfor sellingmattresses on the of achipsupercycle, says WirtschaftsWoche.The euphoriawas internet, hasfiled foraninitial public offering (IPO), says Lauren puncturedbyDonald Trump’s trade war, whichhas severely ThomasinCNBC. Thecompanyreportedsales of $357.9min dented theshare prices of majorchipmakersand their suppliers. 2018,upfrom$250.9m theyearbefore, with losses of $92.1m Thatmakes Germany’sSiltronic, aproducer of siliconwafersused and$73.4m respectively.Casper wasvalued at $1.1bn following in semiconductors, well worthalook.Itisonaprice/earnings itslatestround of funding, but it hasyet to disclosehow much ratio of just 12 andyields 3.6%,yet thereshouldbeplentyof moneyitplanstoraise or the valuationitwill seek. Casper’s growth ahead. Long-termtrendssuchasartificial intelligence, salesgrewby46% ayearbetween 2016 and2018, says TaeKim the“InternetofThings” andthe proliferationofdata centresall in Barron’s. Afterthe poorly received flotationsof2019, notably pointtosteady risesindemandfor chipsinthe yearsahead. Uber andWeWork, Casper’s IPOwill “testmarketappetitefor Siltronichas netliquidity of €500m on itsbalance sheet. loss-makingunicorns”,saysCiara LinnaneonMarketWatch.

MoneyWeek 24 January2020 moneyweek.com Shares 7 City talk Blood on the high street l Last year advertising agency M&C Saatchi said it had overstated profits by Last year was the worst on record for the sector, and Christmas £12m, prompting founder Maurice Saatchi to resign, trading brought little cheer.MatthewPartridge reports says Lex in the Financial Last year was the worst ever for British retailers, Times. Now the group says it has found an extra £10m. Still, says Sarah Butler in The Guardian. According to any boost is likely to be the British Retail Consortium and accountants temporary as “big ideas and KPMG, total sales slipped by 0.1% , the worst bigger specs” are no longer performance since they began monitoring the enough to preserve a “dying sector in 1995. One of the main factors behind business model”. Not only the downturn was a 0.9% fall in sales in the has cost-cutting at “crucial” final two months of the year when multinational consumer many retailers make most of their money. In groups such as Kraft Heinz contrast to the high street misery, online sales hurt, but the whole industry is suffering from the disruption rose by 2.6% in November and December. caused by Facebook and Sales of clothing and footwear were hit Google. M&C Saatchi may particularly badly, say Andrew Atkinson and have made its name through Lucy Meakin on Bloomberg. They fell by 2.3% “witty, niche advertising year-on-year in the last three months, with campaigns”, but as the retailers having to offer “deep discounts” to industry becomes “an online attract customers. This meant that stores from scale game” the group is Marks & Spencer to John Lewis ended up being being left behind. hit particularly hard. It’s not surprising that the Online-only brands such as Asos have posted solid growth l The government has bailed retail sector is underperforming the UK market out FlyBe, but “where is the as a whole. help for Sirius Minerals?”, Still, some stores have managed to escape the out of the mobile phone market” as people grow asks Ben Marlow in The Daily carnage, as Ashley Armstrong points out in The tired of shelling out “for new handsets that aren’t Times. Next, as so often, impressed investors, that much different to last year’s models”. growing sales in the final two months of the year by 5.3%. And “despite expectations of no Internetsales:too little, too late? growth”, Dixons Carphone recorded a 2% rise One thing that should worry traditional retailers in electrical sales for the ten weeks to 4 January. is the “lacklustre” performance of their online This was mainly down to increased sales of operations, which were expected to “deliver “supersized flatscreen TVs, Dyson hairdryers significant sales growth” to compensate for and Apple AirPod headphones” during Black shrinking physical sales, says Jonathan Eley in Friday, which Dixons managed to stretch into the Financial Times. This suggests that many a two-week period. This is good news for the of the big chains are paying the price for having Telegraph. Sirius has been forced into the arms of Anglo company, which is in the middle of a turnaround moved online “too late, and with too little American for an offer “just a programme led by CEO Alex Baldock. conviction”. M&S saw its online sales go up by fraction of what the company It’s nice to see that someone is clinging on, says only 1.5%, much lower than the results delivered was once worth”. This leaves James Moore in The Independent. But don’t bet by online-only brands such as Asos (up 15%) many shareholders “facing on Dixons “doing much beyond walking” over and Boohoo (40%). Even Next’s 15% rise in ruin”. And supporting a the year ahead. For one thing, you have to wonder online sales involved “lower-margin sales of mining project that “would whether consumers are going to be buying third-party products”. While traditional retailers have churned out 20 million smart speakers or Apple headphones in the same hope recent investment in e-commerce will tons of fertiliser every year for numbers in 2020. In any case, Dixons’ overall “bear fruit”, the competition from online-only export” would have done more to help the regions than sales were only flat thanks to the “bottom falling operators “will only get more intense”. saving a few flights a week from Leeds to Southampton. Fever-Tree fadesasgin boom cools l BAESystems hasshown “audacity”byspending Shares in drinks andmixers than it thinks to breakintothe $2.2bn on twoUSfirms groupFever-Tree slid by afifth US market:building abrand is involved in satellite navigation early this week,saysJoanna “challenging”and distribution andradio,owned by Bourke in theEvening is “tough”. Still, allisnot lost .A Raytheon andUnited Standard.Founder andCEO buyer “withpockets deep Technologies respectively, TimWarrillow hasblamed a enough to breakthe US”could says ChristopherThompson “subdued end to theyearinthe snap it up. on Breakingviews. TheGPS UK”for a1%fallinUKsales and Don’t be so sure,says unit hashealthy marginsand haswarnedthatFever-Tree’s Andrea Felstedon will help BAE’ssales grow by “muchvaunted”expansion Bloomberg. Apotential one-tenth annually over the into the US will suffer “slower acquirer will firstwanttosee next four years. Abigger growth than before”. evidence “thatthe company market shareinthe US will Thewarning hasreduced the promised that home saleswill is stabilising”.After all, also defuse anyresidual stockprice to athree-yearlow. “returntogrowth”,thisismore Fever-Tree’s attraction to concerns over BAE’s Fever-Tree’s market value has than just atemporary blip,says shareholderscomefromits dependence on Saudi Arabia. declined to £1.76bn, down from KateBurgess in the Financial “fastgrowth”,and while10% Reducingthisdependence apeakof£4.5bn18months Times. Competition from rival revenue expansion “isstill will help BAEclose the ago. WhileFever-Tree’s soft drinks firmsis“hotting up” much better” than thepace valuation gapwith managementhas attempted to whilethe “craze”for ginand seeninconsumer goodsor US-focused Raytheon, which cushion theblowwithtalk tonic“is turning”.What’smore, food retail,it’shardly trades at 18 timesearnings about“good momentum a“smallish Britishcompany” impressivebyFever-Tree’s compared with BAE’s15. outsidethe UK”and has like Fever-Tree will find it harder recent standards. moneyweek.com 24 January2020 MoneyWeek 8 Politics & economics Should HS2 be scrapped? The fate of the high-speed rail link is the most pressing issue for the newPM, says Emily Hohler Few issues in Boris Johnson’s in-tray pose “quite the same political headache” as the HS2 rail link, on which a final decision is expected before the Budget on 11 March, says the Financial Times. Originally priced at £30bn, the leaked figure from a still unpublished and long-awaited review by Douglas Oakervee warns that the final cost could reach £106bn. That sum, say critics, could pay for 200 flagship hospitals or 1.7 million social homes. An “intense row” is currently underway within Johnson’s government as to whether to carry on with or scrap HS2. In theory, the project “helps to fulfil one of the central ambitions” of Johnson’s new government, to “level up”

the regions and narrow the gap between s ge the north and south. Plus, £8bn has already a Im ty been spent on preparatory work. Johnson: the actual work will prove challenging et ©G Ahuge blowtothe industry create around 30,000 construction jobs. people’s lives – improved public transport Scrapping the project would please some They argue that no alternative projects can links and commuter services – being cut. Tory MPs and plenty of Tory voters, but sustain the number of workers “needed But will HS2 help Johnson to achieve would “leave most political and transport to maintain Britain’s engineering and his goal of “levelling up” the regions? leaders in the north and Midlands aghast” construction capability” and that HS2 Growing regional divides are a “pan- and be a “huge blow” to the rail and provides a golden opportunity to train the Western phenomenon”, as Martin Sandbu construction industry, even if funds could workforce in modern construction methods points out in the Financial Times, and be diverted into other northern projects, and make the engineering sector “even more if Johnson succeeds, his strategy will be says Gwyn Topham in The Guardian. exportable”. Signatories have already been “scrutinised” abroad. But he would Writing in The Sunday Times, four civic awarded contracts worth millions and have also do well to “scour other countries’ leaders warn that voters in the regions that engaged thousands of companies. experience”. One of the “most fascinating” “handed Boris the keys to Downing Street” Opponents include transport minister indicators of disaffection in a recent will be “watching and waiting”. Andrew Gilligan, Johnson’s chief adviser French study is the “disappearance of Meanwhile, the chief executives of Dominic Cummings and Munira Mirza, local shops, cultural amenities and Britain’s biggest construction companies head of the Number 10 Policy Unit. public services”. Out-of-town shopping – among them Balfour Beatty, Skanska Eighteen MPs from the new intake, centres and centralised healthcare facilities and Sir Robert McAlpine – have written including many who seized so-called “red may be efficient, but community cohesion to Johnson insisting that ditching HS2 wall” seats in the north, have joined a is vital to wellbeing. Local communities would lead to “irreparable damage”, say group of Tory rebels seeking to block HS2, “need a role” in shaping policy, Louisa Clarence-Lee and Robert Lea in The say Caroline Wheeler and Tim Shipman in “something the hypercentralised UK is Times. The 250mph railway line, destined The Daily Telegraph. They want the money particularly ill-suited to manage”. Johnson to link London, Birmingham, Manchester spent on other infrastructure projects and has taken the first step by “grasping and Leeds, is the “biggest infrastructure fear that HS2 will result in schemes that the depth of despair”. Delivering on his project in Europe” and is expected to would have a much greater impact on local promise is much harder. Davosfinds anew mission “Workersofthe world, good headsofstateand aclutchof businesses aree starting measurelevels of employee news!” says AndrewEdgecliffe- celebritiesincludingWill.i.am, to treat their trust. Even if CEOE sdo Johnsoninthe Financial Times. are“well-intentioned”, but for employeesbettter– recalibrate their priorities, Youhavebeenrebrandedas themostpartbig business, PayPal boss Daan regulatorsand lawmakerswill “stakeholders” andyour bosses politiciansand lobbyists are Schulman, for havetowork outu howtohold nowthink youmatter“everybit “activelyengagedinanunholy example,who has managers to accoc untfor this as much”asthe shareholders alliancetoenhancethe role of raisedwages and “renewed coc rporate “onwhose returnstheir thestate, increase regulationto improved condditions missionn”,addsAddisu bonusesare calculated”. The theadvantage of gigantic –not least Lashiitew of the theme forthe WorldEconomic incumbentsand centrally plan becausehappyy Broookings Forum in Davos, celebratingits the livesofthe 7.8billion employees Instit tution think 50th anniversarythisyear, is all humansonthe planet”. boostthe tannk.“Stakeholder about stakeholdercapitalism Boris Johnsonwas right to ban bottomline. capitalism will andsustainability.All talk of government ministersfrom That said, reequire buybacks andtax efficiencies attending;the ban“shouldbe YPO, aglobal coomprehensive areonhold: “thisweek is about permanent” andChancellor network of reeforms on ahealthierplanet, happier SajidJavid shouldnot have 28,000 CEOs, mmultiple fronts.” customers –and you”. been exempted.Anyone findsthat Wouldn’t that be nice,says “committed to liberalismand fewer than

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MoneyWeek 24 January2020 moneyweek.com Politics & economics 9

Betting on politics The president goes on trial An interesting case came to light recently on the Donald Trump faces his accusers in the Senate. MatthewPartridge reports betting website politicalbetting.com In a “defining moment” senators may be solidly involving a dispute the US House of behind the president, between bookmaker Representatives but the more the Paddy Power and a formally sent articles Senate leadership tries punter who had placed of impeachment to to hurry along the three separate bets on the Senate last week, process, the easier it is the date of Trump leaving allowing the upper house for the Democrats to office, a Scottish to start a process that build a political case referendum and alien could result in President that the president’s existence being proven, selecting the option Donald Trump becoming party is “complicit in “2020 or later”. The the first president to be a cover-up” that aims punter assumed this dismissed from office, to “withhold evidence meant that if these says The Guardian. from the American events hadn’t happened Trump himself regards people”. Indeed, many by the start of this year, this as nothing more than moderate Republicans he would have won the a “partisan witch-hunt”, are already “squeamish” k

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two “genuinely serious” hu Mitch McConnell wants to release Trump quickly Mitch McConnell’s he would only be paid ©S when the events had charges: firstly, that “brazenness” at trying actually happened. Trump “abused the powers of the presidency” by to condense the entire trial “into just two days” and Whatever you think trying to get Ukraine to intervene in the 2020 US have forced him to agree to more time. about the rights and presidential election; secondly, that he obstructed wrongs of this case, it Congress “as it attempted to carry out its lawful Apolarised debate does illustrate that power of impeachment” by ordering officials to The Democrats say they want a longer trial, disputes do happen. defy subpoenas to testify. but they may not like the consequences, says We haven’t had many The Wall Street Journal. The Republicans are problems with this Aforegoneconclusion? “legally justified” in insisting that senators make column and I generally don’t make my own Given the “overwhelming” evidence that Trump a judgement on existing information, but the best private bets on politics, did indeed “shake down a foreign government strategy to avoid charges of a cover-up would be in the service of his own re-election campaign”, to “call the Democrats’ bluff” by giving them his legal team seems to have fallen back on the witnesses. In return they should insist on calling argument that his behaviour didn’t technically those whom Trump’s team would like to hear break any law, says Jesse Wegman in The New York from, such as Hunter Biden and Joe Biden. Times. But this is “legal claptrap”. It has always Despite what they say, Democrats want to avoid been accepted that impeachment isn’t just about such a “spectacle”. the law, but also about providing a remedy for the Whether or not Trump has to fight a longer trial, “innumerable ways” apresident could “abuse or the result won’t have much effect on the presidential ere violate” the people’s trust. Still, Trump’s lawyers’ election, says Henry Olsen in The Washington Post. “preposterous” argument is likely to work because Popular opinion on whether he should be removed but back in 2017 Paddy the Republican majority in the Senate “knows that has “barely budged” since the impeachment process Power did take a little its own survival is tied to Trump’s” and is therefore began, so it’s unlikely a few more weeks of debate time to pay up after likely to acquit him after a short trial. will change that. The scandal has been “absorbed Elaine Duke left Trump’s Not so fast, say Lauren Fedor and Courtney into voters’ pre-existing viewpoints” – Democrats cabinet (the claim was Weaver in the Financial Times. Republican see blue, Republicans red. eventually settled). If you feel you’ve been badly treated, remember that you do have the right to Putin plays musical chairs complain to the minister andabodycalledthe the ambiguityofPutin’s plans Independent Betting statecouncil”, andwere may help to keep hisoptions AdjudicationService. It’s importanttoread accompaniedbythe resignation open andmutepublicreaction. theterms andconditions of theprime minister,Dmitry By removing aprime minister of anybet carefully, Medvedev,and the rest of the whohas been accused of takingascreenshot if government.The reformsmight “rampant corruption”and youthink therecouldbe signal “a riftatthe topof replacinghim with atechnocrat, Russia’s hierarchy”,but most Putin may also be hoping “to

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Bettingexchange Betfair I Im Dmitry Medvedev(right) has ty “well-coordinated” plan by startevenifheremains in is particularly good et been swept out of power G © about providingthe © Putin “tohold onto power by charge”, says Dasha Afanasieva exactrules of all itsbets, Vladimir Putin’s “sweeping reshaping thepolitical system”. on Breakingviews. He might also though even it hasbeen constitutional changes”, Putin’s not goinganywhere, be thinking that,ifheleavesit involved in theodd announcedlastweek, have says TheGuardian.Evenbefore toolate, theRussian peoplemay dispute. If youare still in created“feverish uncertainty” this shake-up,mostRussians becomemorehostile to such doubt, I’dsuggestthat aboutwhatwill happen when he took forgranted that he would “games of politico-musical youerr on theside of stepsdownasRussianpresident remaininpower afterhis second chairs”. Thesechangescan’t, caution andavoid in 2024,saysAndrewHiggins in consecutive term (and fourth however,hidethe fact that the makingany bets that are TheNew York Times. The termoverall)endsin2024. To economyis“stagnating” and

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et disputeinthe future. powersofparliament, theprime simply abolishedtermlimits,but reform”. (See also page 16.) ©G moneyweek.com 24 January2020 MoneyWeek 10 News

Washington DC London AMacron-Trump truce: French president Jobs market solid: Ajumpinemployment, suggesting resilience in the Emmanuel Macron (pictured) andUS economy, hasmadeaninterest-rate cutmuchlesslikely. Thenumberof counterpartDonaldTrump have peoplefinding jobsrose by a“whopping”208,000 in thethree monthsto respectively agreed to suspenda November,“whichwas much better thanexpected… andthe largestrise digitallevyand tariffsuntil theend sinceJanuary 2019”, notesThomasPughofCapital Economics. Annual of theyear, says MehreenKhan employmentgrowthrose from 1.0% in Octoberto1.1%inNovember; the in theFinancialTimes.Latelast unemploymentrateremainedunchangedat3.8%. Thepercentageofthe year theTrump administration labour forceinworkisnow at arecordhighof76.3%.Much of thelatestrise “balked” at long-runningtalks canbeput down to asurge in thenumberofwomen,aged25to34, finding at theOrganisation forEconomic work,assistedbychanges to childcaresubsidies,saysPhillipInman in The Cooperation andDevelopment(OECD) Guardian. Theriseinthe retirementage for women hasalsoprompted many over rewritingdigital taxrules that would to stay in work for longer.Year-on-year paygrowth, meanwhile, held steady directlyaffectcompanies in SiliconValley. TheWhite at 3.2%,which is still lowerthanthe 3.9% recorded from MaytoJuly. Houseretaliated by promisingtariffs on $2.4bn of French Nevertheless,wages arestill easily outpacing pricerises, whichbodes well imports, includingChampagne andRoquefort cheese,if for consumption. Theannualrateofthe consumer priceindex (CPI)was Parisdid notstop pursuing anationallevythatwould hit 1.4% in December. thelikes of Google andAmazon. Talksbetween France’s financeminister, BrunoLeMaire,and counterpartSteven Mnuchinwere meanttotakeplace thisweek, butina “surprisemove” Macron said he andTrump hadhad a “great discussion” about digitaltax.Macron’sstance contrastswiththe UK’s,asBoris Johnson’sadministrationn refusestobackdownonplans to impose adigital tax from April, from whichithopes to raisealmost£500m a year,noteChris Gilesand JimPickard in thesamepaper. Washington hasthreatenedretaliatory tariffsifthe British government does notreconsider. Rome Italy in crisis…again: Senators from thefar-right League partyvoted to put theirown leader,MatteoSalvini,on trialoncharges of kidnapping immigrants by holding them onboardships during histimeasco-deputy primeminister. It’s all part of hisplan, apparently. “Bydemanding to be putontrial…Salviniisseeking to portrayhimself as apatriotic martyr, prosecuted by Italy’s... establishmentfor trying to protectthe nation againstillegal immigration,”saysGiovanniLegorano in TheWall Street Journal. Thetrial must be confirmedbyavote of the wholesenatenextmonth.Salvini (pictured)was in governmentfromJune 2018 until September2019. Meanwhile, hisco-deputyprime ministerfromhis time in office,the populist left-wingFive Star Movement’sLuigi Di Maio,isstepping down as partyleaderfollowingacollapse in support. Di Maio is nowthe foreignministerinacoalition with thecentre-leftDemocraticParty.The government is living on borrowed time,saysFerdinandoGiugliano on Bloomberg. On Sunday,aregionalelectioncould well “showjusthow much that experimentisfailing” and usher in thereturnofSalvinitopower. Theway we live now: recyclinggraves So much forthe deadresting in peace. objects, thetrust will drop theattempt Highgate’s eastcemetery,resting place for25years.The processwon’t result in of Karl Marx,GeorgeMichael and the removalof“GreatVictorian Michael Faraday,iscrowded and headstones”, says Dr IanDungavell,the sufficiently soughtafter to prompt the trust’schief executive,asthey area FriendsofHighgate CemeteryTrust to source of income. “Highgate is avery look into reopening andreusing certain strange cemeteryinthatwemakehalf graves,saysJamie Doward in The of ourmoney from visitorscomingto Observer.Abill authorisingthe trustto see us…Itwould be suicidal [to “disturb andreinter human remains in remove]the heritage... people come to graves in ordertoincreasethe spacefor see.” Thecemeteryhas 53,000 graves furtherinternments in such graves” holding 170,000 people.It’slikely to run s

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M oneyWeek 24 January2020 News 11

Oslo Government on brink of Victoria Klesty on Reuters. whichhas thencontinued collapse: After six yearsas Solbergwillremainin to govern”. “Jensen’sexit, part of Norwegianprime office as head of a alongwithsix other minister Erna Solberg’s minoritythree-party Progress ministers,leaves coalition government,the coalition consisting of her Solbergwithastringof right-wing ProgressParty Conservatives, thecentre- poststofill,includingthat hasquit. Financeminister rightLiberal partyand the of oiland energy minister andleaderofthe partySiv ChristianDemocrats. to oversee western Jensen took the step Although most Norwegian Europe’s biggestoil and followingacabinet administrationssince the gasindustry,”add Solsvik decision to bringhomea 1970shavebeenminority andKlesty. Thenew woman suspectedof governments, including financeminister will be affiliation to Islamic Solberg’sbetween 2013 running the world’slargest Progress Party leader Siv Jensen Stateand hertwo children, and2019, neverhas a sovereignwealthfund, has ditched the coalition sayTerje Solsvikand party“left acoalition with assets of $1.1trn.

Wuhan Newvirus rattles markets: The deathtollfroma mysteriousflu-like coronavirusin Chinarose to 17 from nine on Wednesdayasthe number of reported casesrose beyond 300 and spread overseas. The outbreak, whichoriginated in thecentral ChinesecityofWuhan, hasoccurredjustbefore thisweekend’s LunarNew Year holiday,when 400 million Chineseare expectedtotravel, note Se YoungLee andLusha Zhang on Reuters. Authoritieshaveconfirmed it hasspread throughhuman contact. Thenewshas also “sentshivers through financialmarkets as investorsrecalled thefallout from China’ssevereacute respiratory syndrome (Sars) outbreak” in 2003,which killed nearly 800people. Hong Kong’s Hang Seng indexfellby almost 3% on Tuesday, itsworst one- dayshowing thisyear. Accordingtoone estimate,Sars“docked apercentage pointfromChina’s economic growth anderased up to $18bnintravel, tourism andretail salesinAsia”,say Lisa Jucca andKaren Kwok on Breakingviews. Riyadh Beijing Cyberattack 2018,his phone GDP growthfallstto29-yearlow: China’seconomy grew at on Jeff Bezos: began“sending itslowestratesince 1990 last year,say DonWeinlandand Amazon CEOJeff unusuallylarge SunYuinthe FinancialTimes.GDP rose by 6.1%,revealing Bezos’(pictured) volumesofdata”. an economygrappling with weak consumer spending, mobile phoneis Theprince’spotential rising unemploymentand ripples from thetrade warwith believed to have been involvement,which theUS. GDPfigures come just twodaysafter Chinaand hacked by CrownPrince he denies, couldthwarthis theUSsignedatradeagreement that left in placetariffs on Mohammed binSalmanof effortstoluremoreWestern hundreds of billions of dollarsworth of goods(seepage4). SaudiArabia, says TheNew investorstoSaudi Arabia,says However, despite all thechatter about asharp slowdown, York Times. Aforensic analysis StephanieKirchgaessnerinThe growth of around 6% ayearis“perfectlynormal” given suggests that thecyberattack Guardian. Theinvestigation will thecurrent levelofdevelopment of theChineseeconomy, occurred afterhereceiveda raise“difficultquestions”for the as Yuwa Hedrick-Wongpointsout in Forbes.Aseconomies videocontainingmalware from kingdom abouthow US tabloid maturetheycan’t keep growingatlightning speeds. aWhatsAppaccount apparently theNationalEnquirergot hold Hedrick-Wongaddsthatthe tradewar’s impact on the used by theprince. Thefilewas of intimate detailsabout Bezos’ Chineseeconomy hasbeen“marginal”, with overall sent afterthe pair exchanged privatelifeinearly 2019.Bezos Chineseexports slipping by a“minuscule”0.03%. numbersduringatrip to theUSby wasprobably targeted because Adrop in exportstothe US hasbeenmadeupbyarise in theprince, where he metseveral he ownedThe Washington Post, salestoEuropeand Asia.China’s nominalannualGDP CEOs in thehopeofattracting in whichSaudi journalist Jamal stands at $14.2trn anditisgrowing by $1.36trn ayear. investment to thekingdom.After Khashoggi criticised theregime. America’sGDP is $20.5trn and it is expandingby$0.7trn Bezos receivedthe videoinMay He wasmurderedlast year. ayear. moneyweek.com 24 January2020 MoneyWeek 12 Briefing The coming crisis at the BBC The national broadcaster’s chief has quit ahead of what promises to be years of turmoil and conflict with ahostile government. Will the licence fee survive? Simon Wilson reports Whyisthe BBC inthe news? This week Tony Hall (Lord Hall of Birkenhead) announced he’d be stepping down as director-general of the BBC in the summer, after seven years in charge. Hall is a former director of BBC News who was wooed back to the corporation in 2013 to steady the ship in the wake of the Jimmy Savile scandal and related unhappy conniptions. The ultimate BBC insider and safe pair of hands, Hall had been expected to stay on until 2022, the corporation’s centenary year. But this week he announced that he’s standing down to let a new leader get settled before what will also be a crucial year in terms of the BBC’s funding settlement. (And, it has been widely speculated, before the BBC’s current chairman, David Clementi, leaves next year and the government gets to install a new chairman and thereby influence the choice

of the next DG.) Either way, Hall’s decision Tony Hall: farewell to a safe pair of hands BC has inevitably set off a whole new round ©B of debate about how the corporation is non-payment and a possible shift to a it’s the only model that guarantees the funded, and whether the licence-fee model – subscription model. This week Downing BBC’s universality (offering something a fixed levy of £154.50 paid by 25,752,560 Street let it be known that it wants a say for everyone) and political independence. UK households – is sustainable. over who succeeds Hall; more ideologically And second, the licence fee model means driven Tories are proclaiming an existential that – rather than crowding out commercial Whyinevitably? crisis at what they see as a bastion of public- rivals – the state-funded BBC acts as risk Because the licence fee and its future is sector, market-stifling privilege. capital for the UK creative sector, allowing already a pressing political issue, and Hall it to support emerging talent and invest for is leaving in order to let another general An existential crisis? the long-term. Tony Hall wrote earlier this prepare for a looming battle. The BBC’s The BBC does seem to be facing a turbulent month in the Financial Times that every current royal charter, last renegotiated moment. Back in October, even before pound spent by the BBC generates £2 for the between the BBC and the Conservative the Tory sabre-rattling started, an Ofcom UK economy. Hall argues the licence fee is government in 2016, runs until 2027. report had warned that the BBC “may crucial to the BBC’s role as a creative risk- Until a mid-term review in 2022, the fee not be sustainable in its current form, if taker and leader, and underpins its role in will continue increasing with inflation it fails to regain younger audiences”. And projecting the UK’s soft power globally. (it currently raises abut £3.6bn a year, even for hardened veterans who have been or around three-quarters of total BBC tracking the BBC for 30 years, it’s hard to What are the alternatives? revenue). But from then on, its level is up remember a “worse or more dangerous Funding the national broadcaster out for grabs – and the debate over the licence time for the broadcaster”, says Emily of general taxation (as they do in many fee’s whole future is certain to intensify in Bell in The Guardian. Competition from similar European countries) would be the run-up to charter renegotiation. The new technologies are changing audience fairer than the current poll tax, but would basic question is whether a compulsory behaviour and diluting the BBC’s appeal, make the corporation far more politically levy to fund the “Transform it into asubscriber- and morale has exposed and dependent on the government BBC–ineffectapoll been“sapped of theday.Moredesirable,say many tax–isanoutrageous owned mutual alongthe lines by adamaging critics, wouldbeafundingmodel based anachronismin of the National Trust” series of payand on voluntarysubscriptions.InOctober, amulti-channel discrimination cases”. apaper by academic Philip Boothfor the worldwherelarge numbers(andamajority Andnow it facesa“hostilegovernmentthat InstituteofEconomicAffairs proposed an of younger viewers) don’twatch BBC is sensingthat, perhapsfor thefirst time, interesting“third way” –not privatisation, programmes.And it’s aquestionthat’s thereare no votestobelostineroding the buttransformingthe BBCintoasubscriber- becomingincreasinglypoliticised. fundingand thepower of theBBC”. ownedmutualalong thelines of the National Trust. Technology hasmadeany Howso? Is therestill acasefor alicence fee? argument foracompulsory TV licence Last July,the BBC’sdecisiontostop When alicence feewas firstintroducedin null andvoid, he says,and argues fora subsidisingfreelicencesfor roughlytwo- 1923,the rationalewas clear.Therewas newmodel where households caneither thirdsofpensioners (about four million no waytoregulateorrestrictwho could stop receivingcertain BBCservicesorsign people) caused astorm of angerfrom receive thesignalbeing broadcast, so up to becomemember-owners of anew politicians.Then, in therun-uptothe fundingthe nascentnationalbroadcaster National Broadcasting Trust. It couldhave Decemberelection, BorisJohnson (who by atax on everyone buying aradio set differentialrates forthe youngand theold, last year dubbed it the“Brexit Bashing made sense.But that’s no longer thecase for those watching on single or multiple Corporation”)and theculturesecretary, and(arguably)hasn’tbeensince the1980s. devices, andsoon. It wouldprotect theBBC NickyMorgan, made clear that an overhaul Thesedays, in theage of streamingand from politicalinterferenceand encourage of BBCfunding is on theConservatives’ Netflix,the defence of thelicence feerests competitionand diversityofprovision.And agenda –includingdecriminalisation of on more subtle arguments.First,that no one wouldgotojail fornot subscribing.

MoneyWeek 24 January2020 moneyweek.com

14 Investmentstrategy Get set for ten lean years Guru watch Martin Gilbert, Forecasts for the next decade could Forecast returns vice chairman, Annualised real returns in US dollar terms Standard Life be too bearish, but the 2020s are 8% Aberdeen unlikely to be as simple as the 2010s The biggest 6% problem for many attendees at the World Economic Cris SholtoHeaton 4% Investmentcolumnist Forum in Davos is where to put their money, Martin Gilbert, the outgoing vice It didn’t matter too much what you invested 2% chairman of fund manager US Standard Life Aberdeen, tells in over the past decade. Most assets delivered equities US Internatonal bonds bonds CNBC. Slow growth and low strong returns. The MSCI World index of global 0% EM interest rates mean that equities had a gross total return around 12% EM Internatonal equities wealthy individuals are per year in sterling terms (gross total return bonds -2% equities struggling to find attractive means including reinvested dividends but not investments, just like the rest allowing for the cost of taxes that some countries of us – but they have options deduct from dividends). The S&P UK Gilt Bond -4% that smaller investors lack. index of British government bonds managed High net-worth individuals around 5.5% per year, with bonds with longer and large funds are maturities doing better because they started -6% continuing to shift out of on higher yields. UK commercial property has GMO (over7years) Research affiliates(over 10 years) publicly listed investments returned around 9% per year, according to the The two firms use different models, but both and into private holdings in MSCI UK Monthly Property index. assume that extreme valuations are likely to Obviously things have got steadily tougher revert back towards historical averages. This for cash as interest rates dwindle, and emerging may not happen as quickly as you’d expect: market stocks failed to beat less risky developed GMO’s team was consistently wrong in its ones (6% per year for the MSCI forecasts for US equities in the Emerging Markets index in “At least there is one 2010s because both valuations sterling terms). But if your asset class that offers and margins have remained portfolio was well diversified very high. It may well be too between assets and countries, some opportunities” pessimistic again. But even you’d normally have done fairly well – your Research Affiliates’ less pessimistic model does individual choices didn’t matter that much. not produce returns in any asset class that are close to what we’ve seen over the last ten years. Thebullmust run out ofbreath Both expect a big difference between the best That very satisfactory situation is unlikely to and worst asset classes, with emerging-market sectors such as real estate r ea d t 2 0s We e d bu st ks om g ( e so ag 4) Th ’s el ul and various forms of be ep te in he 02 . ’v ha a ll oc c in top se al p e . at h pf infrastructure, from student market running for more than a decade almost for investors – at least there is one asset class housing to airports. everywhere. Most assets are significantly that offers some opportunities. But there are Nonetheless, Gilbert says that more expensive than they were in 2010. While few investors who would be comfortable having valuations in most assets still markets often rise far beyond what looks most of their assets in emerging markets. So the look “reasonable” to him and rational, it’s difficult to see how such a broad- wider conclusion for anybody who wants to keep only government bonds seem based bull market can last until 2030. a prudently diversified portfolio is that we must too expensive. The chart above shows long-term estimates expect a much leaner decade – and prepare to Gilbert will leave Standard for various asset classes from the US investment save more (or spend less) to make our long-term Life Aberdeen – created ma ger GM an Re ar A ili es fin cia pl s rk n at nv on t. through the merger of na s O d se ch ff at . an l an wo i th e ir men Aberdeen Asset Management, which he Frontier markets are co-founded in 1983, and I wish I knew what an emerging market developing economies that Standard Life – later this year. was, butI’m too embarrassed to ask havenot yetreached He hasalreadytaken on anew emergingstatus. MSCI role as non-executive “Emerging market”isavery the size andliquidityoflocal includes 28 countriesinits chairman of Revolut, the broadtermused to describe financialmarkets,orissuesof frontier index. Whilesomeof fintech start-up that recently countriesthatare becoming accessibility, transparency and these countriesare much completedanew fundraising wealthierand more stability forforeign investors. poorer than thoseinthe roundvaluingitat$5bn economically advanced,but are Some of these criteria maybe emergingmarkets index, (£3.8bn).Firms such as not yetclassed as developed subjective, andfirms maycome otherssuchasVietnam are Revolut–which specialises in economies. It wasoriginally to differentconclusions. classed as frontier markets areassuchascurrency coined by Antoinevan Agtmael, Forexample,MSCIincludes onlybecause of restrictions exchange but is expectedto thenaneconomist at the World 26 emerging marketsinits main on foreigninvestors. offerawiderrange of Bank,in1981asawayof emerging-market index. Most WealthyHongKongand services in future –are setfor drawinginvestors’ attention to aremiddle andlow-income Singaporeare classed as strong growth,Gilbert tells aset of promising fast-growing countries, such as China, India developed by allproviders, Scottish Business Insider. stockmarkets such as Brazil, andBrazil.But the list also although theperformance of Thereshould be bigprofit Indiaand SouthKorea,and was includes wealthiercountries, theirmarkets is often closely marginsinbanking forthem quicklyembraced by the such as SouthKorea (which linked to the performanceof to seize, sincethey are investmentindustry. rival indexproviderFTSE their emerging neighbours. starting from scratchwithout Thedefinition of an classifiesasadeveloped Conversely,the oil-rich Gulf the overheads of existing emergingmarketisnot solely market)and Taiwan, whichare states areall classed as banks–although increasing

relatedtoacountry’s levelof as wealthyasmanyEuropean emerging or frontier due scrutiny from regulatorswill os economicdevelopment.Index developed countriesinterms of to lower size or liquidity in ot soon bringadded costs. kph oc

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Voted Wealth Manager of the Year 2019 byreadersof the Financial Times and InvestorsChronicle.

Foracomplimentaryreviewofyour investments, email [email protected] today. 16 City view Cronyism is strangling Russia Its vast population and wealth of resources should be boosting growth. There’sone man holding it back restrictions on their ability to operate Matthew Lynn abroad and investment into the country has City columnist been limited. It is hard to see that Russia has gained anything from this, nor was it Considering its massive potential, investors defending itself from any potential threats. should be getting behind the most forgotten The economy has paid a heavy price. of the Brics (Brazil, Russia, India, China and Second, cronyism prevents entrepreneurs South Africa) – Russia. To some degree they seizing opportunities and building new have been. Over 2019, Russia’s was the best- companies. Putin operates by dividing up the performing major stockmarket in the world, country’s oil and mineral wealth among a rising by 39%, just slightly ahead of Greece. few favoured companies and oligarchs, all of The recovery in oil prices, a gradual thawing whom owe their loyalty to the regime rather of tensions with the West, and some cuts in than to their customers and shareholders. interest rates, all combined to push equity Other businesses operate only with the prices higher. toleration of local officials. There have been attempts to stimulate entrepreneurship Thewrongkindofreforms and create science parks, but they have In normal circumstances, you might expect amounted to nothing. A country that was political reform to accelerate that – and for a leader in technology – the Soviet Union investors to pile back in. In the last week, was the first to put a man into space – has President Vladimir Putin unveiled sweeping failed to produce a single internet or biotech changes to the constitution (see page 9). If business of any note. Nor are there any they had been about making the system Russian brands any of us have ever heard of. more democratic, strengthening the rule of Putin’s suffocating system of kickbacks and law and encouraging a more diverse range of cronies has stifled the economy. parties to flourish, it would have been widely Putin: the biggest barrier to growth Finally, the president’s nationalist welcomed. Instead, it seemed more like part conservatism prevents reforms being made. of a plan to keep Putin in power after his Russian manufacturing, design, technology The oil and gas industry could be broken latest term as president expires. And that is or media companies of any significance they up to make it more competitive. Markets the real issue. The autocratic president, with are keeping themselves well hidden. Russia could be made more competitive. The banks his icy grip on power, is the biggest barrier to could have been the next China. Instead, it is could be opened up to more competition and growth in Russia. turning into the new Argentina. encouraged to lend more to small businesses. It is now 20 years since Putin emerged Government contracts could be put out as the dominant force in Russian politics. Threebig errors to wider tender to create new firms, and Over that time, former communist states There are three ways Putin has crippled restricted professions forced to allow new such as Poland, the Czech Republic and the Russian economy. First, geopolitical players to come into the market. All of that Hungary have grown rapidly. Still nominally meddling. The Russian leader’s aggression should kick-start growth and expansion, as communist countries such as China and towards the West and his territorial it has in other countries. But Putin is only Vietnam have boomed. By contrast, Russia ambitions have created tensions with the interested in stability, military strength and has stagnated. Its growth has been pitiful, countries that should be Russia’s biggest shoring up his own power. its population has started to shrink, and trade partners. Sanctions were first imposed Russia remains an economy with huge it remains dominated by oil and mining, in 2014 during the crisis in Ukraine and potential. But it won’t really flourish until with its leading companies controlled by have only been partially lifted since. Putin has finally left the stage. Don’t hold a handful of oligarchs. If there are any Russian companies and banks have faced your breath. Who’s getting what Nice work if you can get it The 57 minutesittookSweden’s l Radiopresenter Sarah roseby17% in Octoberto East andAfricaenergyand JoannaLarsson to become the Montague confirmedshe £350,000,while another 14% naturalresources division. firsttennisplayertoloseat won£400,000in rise is proposed from this Kirk successfully argued this year’s AustralianOpen compensation last year,not October.Hereceived that he hadbeenmade wasenoughtimefor herto the £1mwidelyreported, £915,000,including redundant viaa make more moneythanmost from theBBC,reports BBC bonuses, last year. restructuringofthe Australiansearn in ayear, News. In 2018,Montague Shareholderswillalsovote business becauseofhis age says Andrew Heathcoteon said shewas “incandescent on reducing pension (hewas 55), with no prior Bloomberg. TheAustralian with rage”when shefound contributionsfor the chief warning, in favour of a Open “rewards itsloserslikeno outthather £133,000 annual financeofficer andchief colleague whowas younger, other”contest.Despitefailing to salaryfor presenting The executive officerroles to reportsMetro.Kirkhad progressbeyondthe firstround, Larsson WorldAtOne waslessthan 10%from17% and25% worked at the American (pictured) and127 other playerswillget that of herco-workers. respectively.Other staff bank for26years.In2014, he A$90,000 (£47,300). Collectively, they will receive6%. Countryside earned£937,313; hispay receiveA$11m of theA$71m on offerat l Advisory groupISS has Properties completed5,733 droppedto£534,613by2016 thetournament. The averageAustralian urgedshareholders in homeslastyearand banked owingtolower performance earnsA$1,633.80aweek as of lastMay, housebuilder Countryside £234.4minprofits. marks.Kirksaid this had accordingtothe Australian Bureauof Properties to reject a been undeserved,but the Statistics.Other tennis tournaments £100,000 payriseintwo l Atribunalhas ruledin tribunal ruledthe pay were similarly generous to theirfirst-

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Thecity-ownedOceanParktheme park in Hong Kong maysoonreceive Money talks HongKong’s a$1.4bnpublicbailout,saysWilliam Pesek. Theparkisheavilyindebted; tourist numbershavecrashed. Butitalsoneeds “fresh leadership”. “Goodgenes and malaise is alot of Itssituation is “revealing”atabroader level. Hong Kong regularly tops money.” deep-rooted thelistoffreesteconomies,but “onlywhenyou look at it with thehelpof Actressand afunhouse mirror”.Yes,itenjoys“lowtaxes,unfetteredcapital flows, social duty-freeports,easeofdoing business andstrongruleoflaw”. Butitis activist WilliamPesek also an “oligarch-led economydominated by apropertymarketrigged for Jane Fonda Nikkei AsianReview maximumvalue.The currency is pegged,decisionmakingisopaque… (pictured), andits leader is chosen by –and increasingly beholdento–Beijing”.Asit 82,explains didduringthe 1997-1998Asian crisis,HongKongisonceagain turning the secretof to bailouts,treatingsymptomsratherthancauses. Theproteststhathave her beauty, quotedonFacebook rocked Hong Kong sinceMarch last year are“as much about inequality as democracy”.Ifnarrowing therich-poordividerequires higher taxes, then “IfIexplain it to you, so be it.Hedge-fundmanager Kyle Bass hasbeenshortingHongKong’s youwouldjustthink currency andisnow warning of a“full-fledged bankingcrisis”.Hyperbole? we’reall mad, in terms Maybe. Butthe trials facedbyOcean Park are“notsomeanomaly”. of,why wouldanyone spendthatkind of money to go racing?” TheFlyberescuedealflies in thefaceofthe Tory party’shistoric dislike Britishfemale racing Flybe bail- of government meddling,saysRachelCunliffe.Therehas beenageneral driver JamieChadwick on the staggering out makes backlashagainst thedecision; British Airwayshas filed acomplaint amount of money with theEuropeanCommissionand MichaelO’Leary hascalled fora involved in motorsports, no sense similar“taxbreak”for all airlines.Sowhy were therules bent?“Regional quotedinThe Observer connectivity.” Nowthatthe Tories arethe partyof“anywhere outside theM25”, lettingFlybe,the short-haulairline,fail, wasn’t an option. “It’sabout nevergoing RachelCunliffe However, prioritising theconnectivityofarelatively small groupofpeople back to thes***hole City AM over “curbing public spending,cutting taxes, promotingcompetition or that is poverty. To living movingtowards agreener economy” (short-haulflights areone of the off£60 amonth. most pollutingforms of travel)isa“riskyand short-termist waytorun a Where existenceis just survival.Now I’m country”.Letting Flybegobustwould have been “disastrous”for those afreeman,Ineverwant that rely on it,but “smarter andmoreviabletransport optionswould to go back.” have emerged”.Iftheydidn’t, thegovernmentcould have designeda Rapper BigNarstie more sustainableinvestmentpackage.Facingthe headwindswedo, our on what keepshim hungry government should be “takingdecisions to maximise productivity and forsuccess,quotedin long-termeconomicsustainability,not handingout cash in apanic”. TheGuardian

“I hadthe chance to buya We should be pleasedthatsomanyAfrican headsofstate areattending one-bedroom flat in Britain’s Chiswickfor £280,000, theinaugural UK-Africainvestmentsummit, but 15 is a“farcry”fromthe butdeclined, partly bid to woo nearly 50 who“flockedtothe 2018 China-Africa summit where President becausebackthenI Xi Jinpingdispensed$60bn in investmentpledges”, says theFinancial couldbuy afarm in Africa Times. TheUKcannot, of course,“matchChina’s firepower”,but the Cumbriafor that kind of disparityisrevealing.While theFrenchpresident Emmanuel Macron has money–itseemed visited16African countriessince 2017,Theresa May’sthree-nation tour extortionate.Two years Editorial in 2018 wasthe first visitbyaBritish primeministerinfive years. It’s not later, theflatsoldfor Financial Times surprising there is “genuine interest”inhow Britain“intendstosharpen its £560,000.I’llkickmyself commercialoffering”.Six of the15fastest-growingeconomies in theworld foreveroverthat.” TV presenterHelen areinAfrica; by 2040,morethan25% of theglobal population will be Skeltonlaments the African. TherevampedCDC,the UK’s developmentfinance institution, is worst financial decision righttoinvestfor areturninAfrican businesses that arecreatingjobs. sheevermade, quotedin More canbedone to extend finance to Britishbusinessesinvesting in TheSundayTelegraph Africa.Nevertheless, “a sense of realism is in order”.Between them, Africa’s 54 countrieshaveacombined outputsimilar to France’s.Africais “[Filmdirector Martin] “not goingtosecurethe UK’s economic future just yet”. Scorsese wasright [whenhesaidthatthe success of afranchise suchasthose based The world is Theescalatingdemandfor sand is deeply worrying,saysThe Economist. on theMarvelcomics Theworld uses nearly 50 billion tonnes of sand andgravelayear, double meantthatnew storiesare running thequantityofadecade ago. Demand is highestinAsia. Chinaused notbeing told]. Butthe more cementbetween 2011 and2013 than Americadid in thewhole problemisn’t Marveland out of sand of the20thcentury. Demand from theglobal construction industry theproblemisn’t Netflix. is expectedtodoubleoverthe next40years. No wonder theprice of The problem is the sand is “rocketing”.Contrarytopopular perception, sand –atleast the concentrationof Editorial desirablecoarsesandshapedbywater –isnot limitless. Extraction from ownership. Bigfinanciers The Economist coastlinesand rivers is surging, at aheavy environmentalcost. Removing have takenover everything.The onlyfilms sand “deprivesfishofplacestolive, feed andspawn”. An estimated that getmade are thebig 90%ofthe sedimentthatonceflowedthrough theMekong, Yangtze movies,becausethe andGangesrivers is trappedbehinddamsortaken by miners, robbing financiers demand 10% deltas of fertility andthe “replenishment that counters coastalerosion”. of theircapital. As sealevelsrise, saltwater is surginguprivers andcausing cropstofail. It’s stupefying.”

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MoneyWeek 24 January2020 moneyweek.com Best of the blogs 19 We must build Sir Roger Scruton: philosopher of beauty better homes conservativehome.com problem is not just one SirRoger Scruton, whodiedlast of knocking up more cheap, week,was notjustaphilosopher ugly sheds for folk to live in. of conservatism,but also of We should consider the wider beauty.Itistobehoped that role of what we build and where hisargument–thatthe pursuit and how it affects wellbeing of beauty is acentral part of and prosperity. “Too few of humanlifeand that we have England’s town centres are forgottenthe importance of places where anyone would continuingtocreateit–will choose to be.” How then can we my find practical expressioninthe expect them to prosper? la government’s BuildingBetter “Successful towns are first ©A Building Beautiful Commission, and last a place where people are as a result less popular and developments should seek not which Scrutonchaired. The wish to come to meet, to less valuable places than most just to minimise harm, but also Commission’sinterim report, converse, to buy and sell and to of our historic towns”. to make existing places better, publishedlast year,argues be amused in the process.” Too We need a new framework. encouraging the redevelopment that theaim of government many instead are humming not “Great weight” should be put of supermarkets and retail parks policy should be to have the with people, but cars; filled not on beauty and “place making” into mixed developments of production of beauty as a with beautiful buildings and in the planning system. We need homes, shops and businesses “controlling aim”,saysNicholas amusements, but ugly office to permit a greater range of connected by public transport. Boys Smith, theco-chairofthe blocks and car parks. This small firms, self-built properties, This is, ultimately, the only body. Allnew buildings, places has a predictable effect on our community land trusts and politically viable way to build andsettlements “can, indeed physical and mental health – other market entrants to act as the houses that the younger should,bebeautiful”. on how much we walk, how developers. In striving to meet generation so desperately needs. many neighbours we know, housing targets, the aim should “It’s a question of social justice Anew framework how tense our commute is. be to build real settlements too. Rich people experience Thedebateoverour housing The “sort of places we’ve been and walkable mixed-use places more beauty than poorer crisis hasbeentoo narrow.The making for the past 70 years for all our daily needs. New people. And benefit from it.” How Labour Have we passed“peak growth”? could win again project-syndicate.org unherd.com The final figures are not yet in, but it looks as though the decade just ended will turn in a GDP growth After its crushing election defeat figure of around 3.5% per year, says Jim O’Neill. That’s not bad – it’s higher than the 3.3% of the last month, the Labour Party 1980s and 1990s – but it should have been better considering the growth in the size of the global “faces the most titanic of workforce and of productivity. The omens for the coming decade do not look so positive. Growth in struggles to reestablish itself as e in e rk rc i pe i a th po la on of ap G ma , al an ot r y un ie a serious political force”, says th Ch es wo fo e s ak ng nd e pu ti s J an, er ny It y d he ke co tr s Paul Embery. If Labour is serious are ageing and in decline. The EU’s growth potential is likely to remain unfulfilled without a boost about winning power in the to productivity. Brazil and Russia look likely to continue to rely too heavily on commodity prices for future, it must reconnect with growth. And it’s difficult to see how the US can turn in above-average growth, especially as a recession the millions of working-class is overdue. The outlook for India is more hopeful – with the right mix of reforms, it could easily achieve voters who have abandoned it. annual growth of 8%-10%. Sadly, the government seems more preoccupied with culture wars. That Jeremy Corbyn was right to leaves Africa. As a region, Africa’s GDP is close to that of India. “If enough of its major economies can demand the end of austerity achievestrong growth,the effectswill be felt more broadly. Therise of Africa seemsbothdesirable and andarticulateaneconomic inevitable.Whether thecontinent candrive global GDPgrowthwill be akey question in the2020s.” alternative to neoliberalism. But“it isn’t just the economy, stupid”.Voters want cultural Thetroubleis, “societal threateninggrowth. If growth is securitytoo.Thatmeans Labour The greenery collapse andmass death” threatened,countries getpoorer must talk much more aboutthe seemsequallylikelyifwestop –and thepooreryou are, the dignityofwork, thefamilyasthe bedrockofacivilised society, the that kills burningfossilfuels toosoon. less youcan afford to care about valueofcommunity andlaw and It is just notpossible to switch theenvironment. Asignificant order. It must end the“crackpot” ftalphaville.ft.com to renewables (a switch that part of theconsumption growth talk of open bordersand Theworld’slargest fund wouldinitselfcostagreat deal that hasput fossil-fueluse on a understand that rapidand large- manager,BlackRock,is in carbon emissions)without continuingupwardtrend is the scalemovements of people can offloading $500minshares powerconsumedbytechnology. causedisruption in hard- from firmsthatgenerate 25%or Don’tmakeextinction more likely Activistshavenot yetgot round pressed communities. It should more of revenuefromthermal to condemning thisasmuch promote thenation stateasthe coal.Thathasn’tplacated as they do flying–and that’s best form of democratic government andasabulwark greenactivists,saysIzabella perhapsjustaswellgiventhat againstglobalisation.And it Kaminska. Extinction Rebellion thegloballogistics that feed the must learntosee patriotism for huffed that it wasn’t enough and worldrelyonit. “Meeting the what it is:“agenuine love of s warned of “societalcollapse and ge climatechallenge is essential. country”.These arenot “Tory a mass death” if moreisnot done Im Butkillingthe patienttocure issues”. They areimportant to ty et voters acrossthe spectrum.

to stop climatechange. ©G thedisease is hardly optimal.” moneyweek.com 24 January2020 MoneyWeek 20 Funds Stick with Scottish Mortgage The technology-focused fund should continue to benefit from long-term trends in the sector focused on short-term profits... MaxKing Investment columnist Economic and scientific insights are [crucial] so we also build relationships fter five years in which the with [academics]”. Ainvestment return of the technology-focused Scottish Findingnew ideas Mortgage Investment Trust Investing in unquoted (LSE: SMT) was nearly double companies “helps us that of the FTSE All-World understand emerging index, relative performance technologies before they slowed in 2019. In the first nine come to market”. These 44 months an investment return of holdings account for 21% of “only” 16.7% lagged both the the portfolio and are mostly FTSE All-World index and the small. Several holdings bought average for the global IT sector. as unlisted are now quoted, Many believed that high- notably Spotify and Lyft. growth companies had become You & Mr Jones is “the world’s overvalued and criticism first brandtech company”: an mounted of the low tax paid by agency “that uses technology to the US technology titans, their create marketing better, faster dominant market positions and and cheaper”. their lack of regulation. SMT Amazon’s retail division flourished in 2019 There are also several was increasing its exposure unlisted strategic investments. to private equity, yet doubts is extremelydifficult to Amazon remainsSMT’s Zipline designs, builds and have grown about some of the competewiththemasthey largestholding at 8.8% of the operates drones for delivering valuations of these companies. ownthe consumer relationship £9bn portfolio. It hasbeen medical products. ByteDance, andare commoditisingthe held,likemorethanaquarter formed by ex-Baidu employees, Optimismhas dwindled supply chain.” of theportfolio,for over a is a Chinese technology James Anderson and Tom “I’m notsureifitwould decade.The top-ten holdings company with 800 million Slater, SMT’s managers at be badfor Amazon to be split accountfor half theportfolio, daily users of a content Baillie Gifford, accept the into two,”saysAnderson, but24of85stockshavebeen platform including the video- change of mood. “There was “while regulationfreezes the ownedfor less than twoyears. sharing service TikTok. utopian optimism ten years competitive environment, Annual turnoverisjust6%, A strong end to 2019, helped ago,” says Slater, “but now it is increasing thedominance of butthe team is notcomplacent. by a doubling of Tesla’s share apparent that technology and bigcompanies.The danger Baidu, theChinese online price, meant that SMT’s total related services can be used is that they lose their search company, wassold return in 2019 was 25%, ahead for good and bad.” Still, “the dynamism thereby.” because “it hasn’t managed of both the world index and rise of the online monopolists NotAmazon, however, to expand away from itscore its sector. And this year has and the emergence of China as where growth in theretail business”. Food-delivery started well. “The underlying a technology superpower are division deceleratedto10% groupGrubhub hasgonetoo. trend of disruption to the investment features of the in 2018,but reaccelerated AndersonsaysthatBaillie established businesses is likely last ten years” and the pace to 20%in2019asbetteruse Gifford’skey competitive to continue,” says Slater. of change will continue. “The of itsdatabase enableditto advantageisthat“we build With ongoing charges of just power of these monopolies offer free next-daydeliveryto long-termrelationships 0.37% per annum, SMT is the continues to increase and it primecustomers. with companies andare not way to invest in the upside. Woodford watch Short positions... BlackRock goes green Oneofthe smaller fundspreviously n A“darling” of the hedge-fundindustry n BlackRock, theworld’slargest runbydisgraced stockpicker came spectacularly unstucklastyear, fund manager, hasannounced Neil Woodford is settoreopenin sayNishantKumar andJavierBlason that it will “put sustainability at February, says BenMartininThe Bloomberg. London-based Northlander theheart of itsinvestment Times. Administrator Link Fund CommodityAdvisors, which decisions”,saysJoanna Solutionstoldinvestorstrapped in the concentrates on the energy sector, PartridgeinThe Guardian. £257mIncomeFocus Fund whose plungedby50.6%.Assetsunder Thepolicyshift will include portfolioAberdeen Standard managementatthe fund runbyUlf Ek sellingthermal coal producers. Investmentshas been overhauling shrank to $310mfrom$500m at the end BlackRockmanages£5.3trn of that it expects to lift thefreeze on of 2018.The declinemarkedthe first assets andhas holdings in majoroil trading no later than next month. annual loss sincethe fund’s inception in producers such as BP,Shell andExxonMobil. Thefundhas been suspended since 2012.Northlander generateddouble- The firm hasrepeatedlybeenaccusedof mid-October when it got caughtinthe digitreturns everyyearfrom2013to hypocrisy by environmental campaigners for panicasWoodford’s biggest vehicle, 2018,includinganimpressive53.6% “routinely voting against”motionsthatwould the £3bn Equity Income fund, return in 2018.The fund profited direct boards to take action on climatechange. collapsed in June. That fund,now handsomelyfromamajor bet on the BlackRock’sbossLarry Fink (pictured) told knownasthe LF Equity Income fund, priceofEuropeancarbon-emissions executivesthatclimatechange is altering suffered anotherwritedown of the allowancesrising. It hasnow howinvestors viewthe futureofcompanies. valueofits unquotedcompanies late s ge

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MoneyWeek 24 January2020 moneyweek.com Pensions 23

Pass on your pension Pensioners set to lose £3,500 a year The 2015 reforms make it easier for you to ensure your heirs avoid IHT Approximately 11,000 pensionerswillsee their DavidProsser statepension declinebyup Business columnist to £70aweek following benefitchangesintroduced a decade ago. ill thenew Conservative Thoseaffectedcurrently Wgovernment’s first receivethe “adult Budget on 11 Marchabolish dependants’ addition”, inheritance tax(IHT)? whichwas once payableto hundredsofthousands of Chancellor SajidJavid said in pensionerswithspouses Septemberthathewas mulling underthe statepension age, significant reforms, butthere but financiallydependenton were no firm proposals in the statepension recipient. theConservatives’ election Thebenefit, knownas manifestoand he hasgone AdultDependencyIncrease quietonthe matter. (ADI), wasabolished for Thegood news,however, anyone claiming their pension from April2010

is that thepension system now s

ge onwards. However, offersagolden opportunity a Im pensionersreceiving the ty to cut, or even wipe out,a Chancellor Sajid Javid has gone quiet on IHT reform et cash priortothatdatewere potentialliability.Since the ©G promised it would be pensionfreedom reforms canwithdrawthe moneyinone andlifetimesavings –the more payablefor ten further years. of 2015,pensionshave go or as regular income,withno you’ll be able to pass on with no Thenatureofthe benefit, becomeakey inheritance- income taxorcapital-gains tax inheritance-tax consequences. onlypayable to couples taxplanningtool. to pay. If youdie afterage 75, Do,however,check theterms whereone partnerisbelow therules areslightlydifferent. of your pension. Some older state-pension age, means Themainrules Your beneficiaries will pay plansinclude clausesrequiring relatively fewpeoplestill receiveit. This is primarilybecause,while income taxattheirmarginal savers to buyanannuity or However,aFreedomof pensionassetsbequeathedto rate on moneytheytakeout of come with other conditions that Information request that your heirs have always been thefund, butthere will still be reduce theireffectiveness from wasmadebyinsurer Royal exempt from IHTinmost no IHTtopay. an IHTperspective.Final-salary London hasrevealedthat circumstances, thereforms Thereforms make pensions pensionschemes also have less 11,000 pensionerswill be make it much easiertopass on reallyusefulfor families’ freedom in thisregard. affected by the complete such assets. financialplanning. Youcan pass Finally, it couldbeworth abolition of ADIinApril. You’re nowentitledtopass pensions wealth down to your exploitingpensionstowork Theupshotisthatsome on anyunspent moneyinyour children –and they canpass it around IHTinanother of thesepensionerswill lose more than £3,500 of pensionfund–that is anycash on to theirown children if they way. Youare entitled to set annual income. you’ve notspent on an annuity choose nottouse it. up pensionplans foryour TheDepartmentfor Work or drawndownasincome–to Forthese reasons, it makes children,payinginupto andPensionshas confirmed thebeneficiaries of your choice. sensefor anyone worried about £3,600 of contributionsayear the change will go ahead If youdie before your 75th inheritance taxtoconsider includingtax relief even for as planned, although it birthday,yourbeneficiaries making full useofpension non-taxpayers. This canbea says that some couples will receive your pensionfund saving.The more youshift useful waytoprovide them with may be able to recoup their with no taximplicationsatall. into apension plan –subjectto moneyand reduce thesizeof losses by claiming means- There’snoIHT dueand they rules on annual contributions your estate for IHTpurposes. tested benefits. Tax tip of the week What to declareonyourtax return Ataxpayerwho hasfilledinaself- If you’re completing your areentitledtoafurther 20% mistake. Theother side of assessment form is obligedtopay the 2018-2019self-assessment and25% respectively; this thecoinisthatanyone tax bill that results, howeversmall, says tax return overthe next few relief canonlybeclaimed by exceedingtheir annual theTax Tips andAdvicenewsletter. days, don’tforgettodeclare declaringyourcontributions pension contribution However,HMRC will occasionally issue your pensioncontributions. on your annual taxreturn, allowance must declarethis tax calculationsknown as P800s. Taxpayersroutinely omit so if youdon’t providethis on theirtax return. The Insteadofaskingsomeone to fill in a vital pensionsdatafrom information –oryou don’t allowance is usually£40,000 self-assessmentform, HMRC decides their tax returns,forfeiting make areturn–you won’t or your annual income,if based on the information it haswhether valuabletax relief or getit. Around 250,000 this is lower,though some someoneinarelatively straightforward underpayingtax. taxpayers make this higher earnersget asmaller tax situation hasoverpaid or underpaid. Higher-ratetaxpayers are allowance,which may be as “Itthenpolitelyasks”you to payany most at risk of missingout. little as £10,000. moneyyou owe. P800sare “often If youmakeregular If you’ve gone overyour inaccurate”socheck them andsend contributionstoaprivate allowance –and it’s your HMRC therightfigures if need be.Itis pension, such as a responsibility to check–you obligedtoadjustthe P800.The debt is stakeholder or personal must tellHMRC. You’ll then not enforceable, however.Ifyou refuse plan, your provider will payatax charge. Failingto to payyou will be sent aself-assessment automatically claimbasic- declarethisinformation form or the taxwill be collectedthrough rate income-tax relief on meansyou’ll be paying too an adjustment of your tax code.Ifyou your behalf,reducingthe little tax, so interest and

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additional-ratetaxpayers ©i errorcomes to light. moneyweek.com 24 January2020 MoneyWeek 24 Cover story Howtoplaythe galloping growth of thegaming sector Digitalgames have become so popularthatthe market is nowbiggerthanboththe television-streamingand film industries.Yet yearsofexpansion stilllie ahead, so buyinnow,saysMatthew Partridge

Videoorcomputer games, once aniche pursuitfor Theshifttowards digitaldelivery geeks, have becomefirmlyentrenchedineverydaylife. Notonlyare morepeoplebuyingvideo games, but the Accordingtothe marketresearchfirmSavanta,86% waygames areboughthas also changeddramatically of peopleinthe UK have played at least one in thepast over thepastfew years, says Walter PriceofAllianz year.These gamesare so prominentnow that they Global Investors. Therehas been ashift from copies of have beguntoset theculturalagenda. gamesonDVDstodigital downloads. “Inthe recent past,itwas usualfor computer games Thestruggle of many bricks-and-mortarretailers to be basedonfilms.However,now you’re starting to such as theAmericanchain GameStop, whichsaw seeit’sgoing in theother directionwithfilmsand itssales fall by 25%year-on-yearinthe final quarter TV showsbased around computer gamesand of 2019,and thefactthatmanyofthe newest games Hollywood starsattending games-industry events,” consoles (the computer hardware used forgames)have says Rob Leane, gameseditoratDen of Geek. no optical DVD/Blu-ray drive, show that thedaysof Little wonder,then, that theglobal gamesmarket physical distributionmay be numbered. “isnow larger than television,televisionstreaming, Themovetodigital downloads maybebad news themovie industry anddigital music”, says Katen for thoseworking in gamesstores, butitwill benefit Patel, co-manager of JP Morgan’s UK Smaller gamescompanies in twomainways, says DavidLeahy CompaniesFund, Smaller CompaniesInvestment of assetmanagersGresham House. Trustand MidCap Investment Trust. By removing theneedtoburndiscs,package Theglobalmarketwas worth$130bnin2018 them andthenshipthem to retailers, themoveto andisgrowing so fast that it couldbeoncourse digitalwillreduceproductionand distributioncosts. to hit$300bnby2025, accordingtoconsultancy Cuttingout storeswill alsoallow gamescompanies to GlobalData.Savanta estimatesthat40% of Britons keep agreater sliceoftheirrevenue.While Steam, one nowspend more than £100ongames everyyear. of themajor online stores, still chargesafee of 20%, With an arrayoflisted firmspoisedtobenefit,the thisismuchlessthanthe amount demandedby investment case is compelling. high-streetretailers. s ge Themarket’s explosive growth Anew businessmodel a Im ty

Thereare severalreasons forthe market’sexplosive Therise of digitaldownloads is also leadingtomore et growth, says Patel. Oneis“thesignificant fundamentalchanges.Inthe past,companies focused ©G technological advances”thathaveenabled a“much- on one-off salesofagame. However, many companies improved user experience”, delivering smoother, arenow experimentingwiththe idea of “games as more detailed graphics andmorecomplex games. aservice”. This meansthatplayers don’t just buya By contrast,while other sourcesofentertainment game,but also keep acquiringnew content(called such as television andmusic mayhaveseensome DLC, or downloadablecontent) andelements of a incrementalimprovements (largertelevisions and game as it is developed. more convenient ways of downloadingsongs,for Notonlydoesthisgivegames producersan instance), thecoreexperiencehas remained thesame. additional revenuestream, but also “effectively Thegrowing socialacceptance of gameshas also smoothsthe revenueprofileofagame”, says beencrucial. When Patelwas growingup, gaming Leahy, improvingthe quality of earnings andthe wasstillregardedasonlysuitablefor children and predictability of gamescompanies’revenue. therewas ageneralfeeling that toomuchgamingwas Theremay be some even moredramaticchanges harmfulfor children.Heremembers that parents just around thecorner.Leahy notesthatMicrosoft, tended to encouragetheirchildren“to put down the Amazon,Appleand Google areall investingheavilyin video-gamescontroller andgooutside”. However, services that allow peopletoplaygames viaaninternet havinggrown up with games, today’sparents “are connection withouthavingtouse aconsole,withall much more relaxedabout lettingtheiroffspring play”. processing tasksbeing carried by aremoteserver. What’s more,theyare likely to be gamers themselves, Notonlywould this make gaming much less hassle, “withhalf of gamers over 35”. butitcould also lead to abidding warbetween rival Another factor that will help keep theindustry services forexclusive content(as hashappenedin growingfor at leastanother decade is thelarge television), whichcould greatlybenefit thecompanies “The market increase in salesinemergingmarkets,especiallyin that develop andpublish thegames. Asia.Not only is theexpanding middle classspending extends moneyonconsolesand computers, but thosecountries Developments in onlinegaming beyond arealsoremovingrestrictionsonwhatwas previously Themovetonew formsofdistribution hasbeen seen as aharmful Westernimport. accompaniedbychangesinthe nature of online children and Even China, whichhas been traditionallyhostileto gaming. Ithas gone from beingasolitary activity teenagers; computer games, hastaken stepstoeaserestrictions. to becoming onewhere many gamers“nowplay... Whileevery game still needstobeofficiallyapproved together”, as John Griffithsoftechnologyconsultancy half of today’s andthere arerestrictionsonlate-nightonlinegaming SpicyMango points out. gamersare by children,Beijing finallydropped along-standing Online gaming is particularlypopularwiththose banoncomputer consoles in 2015,openingupa whoenjoy first-person shooters (games where theuser over 35” “hugemarket” to theindustry. is put in theshoes of someonetryingtoshoot other

MoneyWeek 24 January2020 moneyweek.com At e-sports events people watch gamers take each other on people).Thisgenre hasbenefited from the“explosive Gamingonthe go “The growth”inthe speedofinternetconnections, Smartphoneshavebeenanother keyelement of the which hasenabled peopletoplaytogether without shiftonline. Dependingonhow youmeasure it, popularity experiencing anylag in theaction. betweenathird andahalf of revenuenow comes of online Online modeshavealsobecome“major from mobile gaming.The trendhas played a moneyspinners” forgames publishers. Some games, particularly importantroleinbroadeningthe gaminghas such as Fortnite arebased on a“freemium”model demographics of theindustry. created a wherethe original game is free to play,but youneedto In thepast theonlypeoplewho played gameswere payadditionalmoneyfor upgrades andsubscriptions. those “who identified as gamersand most people demandfor Others, such as FIFA Ultimate Team,force youto don’t”,saysDavid Amor,directorofgamestudio e-sports” buythe underlyinggameand then also charge youfor MAGInteractive.However,whenpeoplestarted to additional upgrades. buysmartphones they “found themselves with apiece Although theupgradesare nominallyvoluntary of hardware in theirpockets that couldplaythe latest, purchases, in that it is possibletocompletethe game high-qualitymobilegames,all of which arefree”. without them,acquiring them usuallyallowsplayers Thegames that Amor’s studio produceare “loved to progress throughthe game much more quicklyand by all ages”, buttheyare particularly targeted at 40 to gain alarge advantageoverother competitors. 60-year-old women. This is clearly a“long way” from Thepopularityofonlinegaminghas also created the“traditionaldemographic”ofyoung men in their ademandfor e-sports,where peoplewatch thebest teensorearly 20s. Amor also thinks that it proves that gamers play against each other.Someofthe major “everyoneenjoys playinggames if youput theright tournaments have proved so popularthat“they’ve game in frontofthem”. endedupfilling stadiums of 15,000 people” Despite thefactthatnearlyeveryoneindeveloped says Griffiths. However, most peoplewatch e-sports countriesnow hassmartphones,Amorisconfident viaonlineplatforms such as Twitch (owned by that mobile gaming will continue to grow by around Amazon)and YouTube(ownedbyGoogle),although 10%ayearworldwide. Part of thesurge will stem Microsofthas also been making ahugeeffort from thosewho alreadyplayonmobilephones to lure some of thebest-knowngamersonother continuingtodownloadnew games. platforms to itsown service, Mixer. Oneofthe big Therollout of fifth-generation(5G)mobile attractionsofe-sportsfor advertisers is that it helps networks bodes wellinthiscontext.Faster internet them reachyounger men,“whichhas been adifficult connectionsand download speeds implyshorter lags demographicfor them”, especiallysince traditional mediahas less appeal foryoung men. Continued on page 26 moneyweek.com 24 January2020 MoneyWeek 26 Cover story

Continued from page 25 betweenauser’s input andthe result of that action on screen,which will create ahigher-quality experience forthe more complicatedgames.However,there should also be asurge in demandfromnew smartphone users in emerging markets,especiallySoutheast Asia,India, theMiddleEastand northAfrica. Virtualand augmented reality:new applications Oneinterestingtechnologythatcould spur future growth within theindustryisvirtual reality (VR), which involvesusing headsets andspecialcontrollers to enable peopletoimmerse themselvesdirectlyinthe action rather than having to stareatascreen. Of course,the basic idea behindVRisn’t new: it’s beenaroundsince the1990s.Evenwiththe latest advances,“consumer take-up of VR tech hasperhaps notliveduptothe initial hype”, admits Alan Moss, partner at Harbottle&Lewis, alaw firm that deals Facebook bought headset maker Oculus for $2bn in 2014 with media, entertainmentand technology companies. However, thismay be about to change as the Astrongstructuralgrowthstory “Expect “onceprohibitive” priceofVRheadsetshas already Patelreckons thisisanauspicioustimetobuy gaming a surge in fallen significantlyand is “likelytodrop further”. stocks giventhe structural growth outlook. He also At thesametime, thesize, weight andcomplexity thinks theindustryis“followingthe same trendas demand of headsets,which have also been majorbarriersto TV,withhigh-qualitycontent continuing to grow... from new adoption,havebeenimproved, making thetechnology in value”.The companieswith“strong intellectual “more accessiblefor themass market”. Andseveral property”, such as awell-knownseriesofgames based smartphone bignames remain committedtothe technology. around acharacter or concept, “will... standout and users in Chief amongthemisFacebook, whichboughtVR be able to negotiatebettermarginswithdistributors”. headsetmaker Oculus in 2014 for$2bnand hassince Thecompanies that make videogames aren’t emerging invested more moneyinit. theonlyonesthatwill benefitfromthe boominthe markets” Of course,not everyone is convincedbyVR’s gaming industry.There areplentyoflisted companies potential. JP Morgan’sKaten Patelthinks it “remains “operating as asupport services networkfor the to be seen howsuccessful this format of gaming will industry”. Theseincludethe developers whohelp become: thedisplay lagineventhe latest headsets smaller companiesturnconceptsintoanactual inducesmotionsicknessinmanyusers. game,but also thosewho provideconcept art(the Amore promisingavenuemay be augmented illustrations that become characters or features of the reality (AR), where computer graphics are game), or local advice when gamesare releasedinto superimposed onto real-lifepictures. Themobile- internationalmarkets.Suchservicesare particularly phone game Pokémon GO demonstratedthe potential importantgiventhe increasingly global nature of of thistechnologywhenitgenerated$950m in global theindustryand thestronggrowthinrevenue from revenuein2016. consumersinemergingmarkets. The stocks to buy now One video-games company FarmVille, CEO Frank Gibeau in part by a very strong until 2025. Moving to digital that is worth investing in is the has managed to turn the firm back catalogue. sales and providing additional American firm Take-Two around by finding new hit If you think that Team17 is downloadable content has Interactive Software (Nasdaq: games, notably Empires & just too pricy, then consider “created additional revenue TTWO). Take-Two benefits Puzzles. With revenue Sumo Group (Aim: SUMO). streams, increased the quality from owning a series of doubling over the last three Sumo performs a similar of earnings and materially “strong franchises”: games years and the firm consistently function to Team17 in that it improved profit margins”, with adevotedfan base willing profitable since2017, the2020 both creates itsown games helpingearningsmorethan to buythe latest version and price/earnings (p/e)ratio of 25 from scratch andalsohelps double over the last three upgrades,saysWalter Priceof looksreasonable. selected thirdparties to bring years. Yetittradesataslight Allianz Technology Trust. OneBritishdeveloper theirgames to the market. discounttoits peersona2021 Thebest-knownofTake- worthlooking at is Team17 Notable franchises include p/eof17.9. Two’sgames arebasketball (Aim:TM17),bestknown for the Hitman (action-adventure), An indirect beneficiaryof simulation NBA2K,urban the Worms franchise. Not only Forza Horizon (racing) and thegames boom will be action-adventure series does it develop itsown LittleBigPlanet (puzzle) series Keywords Studios (Aim: Grand TheftAuto andWestern- games,but it also provides a of games. Even though KWS).Keywordsprovides themed RedDeadRedemption. publishingplatformfor other Sumo’srevenue hasdoubled technicalsupport forvideo- Despite nearly tripling sales developers. since2015, it is on just 25 times gamestudios,offering between 2013 and2019and Team17 has“averystrong 2020 earnings. everything from artservicesto boasting a17% return on trackrecordofidentifying DavidLeahy of Gresham supportfor players. It employs equity,Take-Twoisstill on potentially successful games, Housethinksthatone of the more than 6,000 people areasonable 26 times andthen... helpingbring bigwinners from themove around theworld andserves 2020 earnings. these...tomarket,”saysKaten from physical to digital 23 of the top25games Another games developer Patel. It selectsonlyafraction retailingwill be Codemasters companiesand nine of the top- Pricelikes forits franchises is of thethousandsofproposals Group (Aim:CDM).Generally ten mobile-games publishers Zynga (Nasdaq: ZNGA).Zynga it receives.WhileTeam17’s regardedasthe “globalmarket by revenue, including focusesonmobilegames. shares arepricedaggressively leader”inracinggames,ithas Electronic Arts,SquareEnix Although it ranintotrouble on a2020p/e of 37,revenue builta“faithful audience” andNintendo. Saleshave sevenyears ago when gamers hasrisen nearly sixfold in forits annual FormulaOne quintupled since2015, more begantotireofits originalhit the last four years, helped titles, whichithas alicence for than justifying a2020p/e of 29.

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or call 0330 333 3434 Offer code P2001NY1 28 Analysis Beware the binary options trading scam merchants Despitethe regulator’s best efforts, social media is stillinfested withfinancial conartists hunting forpotential victims. Trader Michael Taylor explains howtospotand avoidthem On 29 March last year theUK’sfinancialwatchdog, theFinancialConduct Authority(FCA),bannedthe sale,marketing anddistribution of binary optionsto all retail customers. It’s astepinthe rightdirection. Butunfortunatelythe binary-options bubblecontinues to brew. Unless more decisive action is taken,more andmorepeopleare goingtobecleaned out of their savingsbyunscrupulousoperators. Abinaryoptionissimilar to anormal(“vanilla”) option,whereyou payapremiumfor theoptiontobuy or sell an instrument atafixed price(theexercise price –see boxbelow foradetailedexplanation). Profits or losses on vanillaoptions canbesmall or large, depending on thedifference betweenthe “exercise” priceand theprice of theunderlyingasset. Unlikenormaloptions,however,binaryoptions do notfluctuateinvalue.Either theoptionis“in the money” on expiry –inwhich case it pays out –orit isn’t, in whichcaseitexpires worthless. Becauseof thisbinarynature, many shysters seeanopportunity Nice plane – but is it really his? in selling binary optionsthatare highly unlikely to endupinthe money. They gettocollect thehefty annual basis, this16-year-old’s returnfor theyear premiums,but neverhavetopay out. wouldbe39,900%.Thatwould literallymakehim thebesttraderofall time. So howdid a16-year-old Don’t be suckered by wild success stories school kidlearn howtooutsmartthe best mindsand Themedia is part of theproblem.Journalists, machines on theplanet, just by watching YouTube particularly those workingatonlinecontentmills, “If you’re not videos?Asnobodyasked him,sadly we’llnever know. aresodesperate forcontent that might“go viral” and a successful Therewas also theveryrecent exampleofGurvin garner lots of hits that they’requite willingtorun a Singh, a20-year-old medicalstudent in Plymouthwho storywithaclick-bait headline without doingmuch currency claimedtobemakingsix figuresamonth from foreign (ifany)backgroundresearch. Take therecent tale trader, the exchange trading. Onemajor newspaperreportedthis of a16-year-old “self-taught currency trader”, who month that more than 1,000investors were sucked apparently turned£150 into £60,000inlessthana next best in by Singh’sInstagram account, which showed him year.Thisdubioussuccess storywas widely shared thing is to posingindesigner clotheswithexpensive cars at plush on socialmedia withoutmanyquestions beingasked. holiday resorts. Those whosignedupfor hisservices Yetifwetakethose returns andcalculate them on an fake it” foundthattheir tradingaccountswereemptied on ChristmasEve andthe FCAhas addedhim to its warninglistofunauthorisedtraders (after thefact, What is an option? unfortunately).But what thepaper doesn’tmention Aput optiongives the sell at 90p costs5p.You Thepriceofan in this particular pieceisthatSingh’s “success”was holder theright (but not buyablockof1,000 optionisdetermined by firstreportedonits ownwebsite in breathless, no- the obligation) to sellan options at acost of £50 anumber of factors, questions-asked fashion, in November,justamonth asset–thatis, ashare– (5p x1,000). If the includingthe volatility beforeitall went horriblywrong. for an agreedpriceon sharesfallto70p,you of theprice of the This aggravates me because, as agenuine trader,I or beforeagiven date. wouldmakeaprofit of underlyingasset work hard to make profitsand Iknowwhatittakes. Whenyou buy aput £150 ((90p –70p –5p) x (optionsonmore Ialsodon’t like to seepeoplebeing conned.SoIwant option, you pay afee 1,000). However,ifthe volatileassets will be (premium) to the seller shares go up –to120p, pricier).Sooption to unpack thisstory foryou,sothatyou don’tend up (“writer”)ofthe option. say–you would justlet prices tend to rise fallingfor one of thesescams or somethingsimilar. Youcan use putoptions the option expire. during marketturmoil. to betonthe priceofan In that case, you lose The length of time Howdoesthe binary-optionsscamwork? asset falling.Your yourpremium of £50 beforeanoption Thereisareason whysomanygentlemen (it’susually potentialloss is limited but nothing more. expires is also men) in theirearly 20snow apparently ownprivate to the premium paid. A“call” option is important –options jets,luxurycarsand slick watches. It just maynot SayAcmeWidgets is similar,but gives the thatexpire further out be becausethey’ve crackedthe financialmarkets as trading at 100p ashare right to buyanasset at intothe futureare they claim. As CharlieMunger,WarrenBuffett’s andaput optionto an agreed price. moreexpensive. business partner,putsit: “Showmethe incentive

MoneyWeek 24 January2020 moneyweek.com Analysis 29

“Unprofitable £20 for new clients – they’re offering hundreds. I know traders can they do, because I’ve been offered it. be very ThePiedPipers offoreignexchange profitable If you’re not a successful trader, the next best thing is to fake it. A quick Google search reveals that you can indeed for rent a Lamborghini Huracan for four days at a price unscrupulous of £2,500. This is fairly steep – but you can rent a Lamborghini Gallardo for two days for £1,590. Two brokers” days is more than enough for a wannabe forex guru to take hundreds of snaps in different outfits, parking in fancy residential estates that they don’t live in and overall giving the impression over several months that they really do own a six-figure supercar. And of course, there are plenty of places to hunt down a cheap, out-of-season stay at a luxurious five-star hotel, where they can do exactly the same. Then they just pop it all on social media and wait for eager punters to line up to sign up with their “exclusive broker”. Many brokers offer demo accounts, in which case the “guru” can just repeatedly put on ten trades in a row, come out with winners, then screenshot it and post it on Instagram. If even that is too difficult a task, then it’s a simple matter to fake the picture instead using image manipulation software and post that. With “evidence” of their success sorted out, the trader then promotes their wares with promises of “signals” that have 90% success rates, alongside key phrases such as “no risk” and “guaranteed profit”. Most informed investors realise that if a magic money-making machine did exist it would be owned by a private hedge fund, never to see the light of day. So anyone who actually believes that a 20-year-old student could pull this off is ideal bait – inexperienced,

s naive and potentially desperate. ge a The scam also succeeds because of how victims feel Im ty

et when they finally realise they’ve been suckered. Most ©G don’t tell anyone because they feel foolish and want to save face. But also, they know (or rapidly learn) that andIwill show youthe outcome”. There aremany there is very little the police can do. The banning of the reputable financial-tradingfirms andbrokerages out sale of binary options was a step in the right direction. there. However, many –onesthatIwoulddescribe as But now the traders of Instagram simply give away “bucketshops” –are notsoreputable.Spread-betting their “signals” to trade these options for free. And firmstypicallymaketheirmoneyonthe spread(the many bucket-shop brokers are overseas – often they’re gapbetween thebuyingprice andthe selling price) and not even doing anything illegal in the country in which thecommissionpaidbytheirclients.Sotheirbusiness they operate (although equally often the traders in modeldoesnot benefitfromlosingtraders. question will imply that the bucket shop is a reputable However, many brokersknowthatalosing trader UK-based and regulated institution, or lie flat out). canbeveryprofitable–for them.Ifyou know that There are even operators who will manipulate 90%oftraderswill lose all of theirmoneywithin six the punter’s account in order to make them believe months, what do youdo? Simply take theother side of they are winning and then call on them to deposit thetrade.WhenJohnnyPunterbuys, thebrokersells. more money. Then, when the client finally wishes to AndwhenJohnnyPunterwishestocover hislosses, withdraw, the company goes cold and refers them to thebrokerbuysand collects theprofit. thesmall print, in whichitsaysthatthe client must Unprofitable tradersare so profitablefor many a tradethrough an impossible amount of moneyjust bucket shop that they will payhandsomeintroduction to be allowed to withdraw.Other brokersallow the fees fornew traders. Thereinliesthe incentive. affiliate to widen thespread to maximisetheir own It doesn’tmatterifyou’reactuallymakingany money commissionand increase losses fortheirclients.We from your trading–ifyou canget even a£20 incentive look at ways to avoidbeing scammedinthe box forevery trader whosigns up with theminimum below, but in short, as always –ifitlooks toogoodto deposit of afew hundredpounds, then youonlyneed be true, it is. to signup1,000 peopleamonth to make £20,000. Andthe reality is that thesebrokers aren’t offeringjust FormorefromMichael,see shiftingshares.com.

Howtoavoid beingscammed Stickwiththe UK: ensure any Watchfor fakes: manyofthese passes bothtests,don’t assume people don’t disclose huge brokeryou use is UK regulated. firmshaveaname that sounds it’slegitimate. conflicts of interest. And sticktowell-known names – vaguelylikeaCity institution. onlinereviewscan be faked. Checkout fca.org.uk/scamsmart Hang up on cold callers: assume Traders aren’t fashionmodels: forwarnings and checkwith thatall cold callsare scams. Beware people who post more Avoid“signals”:magic money- CompaniesHouse to see if a pictures of their lifestyle than of making machines do notexist. company exists.But even if it What’s in it forthem? Very often theiractual trading. moneyweek.com 24 January2020 MoneyWeek 30 Trading

How my tips Catch this coach company have fared It hasbeenanother National Express has expanded into promising markets abroad and looks cheap mixedfortnightfor my tips.Mylongs didwell, US school buses are a lucrative sector with five outofmyseven Matthew Partridge positionsappreciating. Senior writer Bellwayrose in value from 3,894p to 4,055p, ometimes thebestopportunitiescomein Bausch Health Ssectorsthatsound desperatelydull. Take Companieswentup busesand coaches, probably theleast exciting from $28.66 to $30.45, Volkswagen advanced form of transportastheyare slower than planes from €176 to €182 and andrailways andlackthe high-techglamour of International ridesharingservices. However, they areideal Consolidated Airlines forshort andmid-lengthjourneyssince they are Groupclimbed from cheap, whiletheyare also more environmentally 615p to 657p. friendly than some other forms of transport. Taylor Wimpey rose Andasfar as operatorsare concerned, they don’t from 194p to 214p.The requiremuchcapital investment. Oneofthe most onlydisappointments attractive coachcompanies is National Express wereSafestore, which fell from 785p to 777p, (LSE:NEX). andDSSmith,which was National Express is bestknown forits intercity down from 380pto357p. coachservicesinBritain,where it accounts for made severalinvestments lastyear, notably the Theprofits 60%ofthe scheduledcoach-service market; it also purchase of a60% stakeinAmerica’s WeDriveU. outweighed the losses, operates local busesoutside London.Inrecent WeDriveUfocusesonthe fast-growing with theoverall gains years, however, it hasmoved stealthily into other employers’shuttle market, with companies, rising from £5,060 markets.Itnow gets 40%ofits revenuefromthe universities and hospitals eager to help their to £6,254. United States,withthe UK only in third place workers,students andpatientsovercome Thebad news, behind Spain.Similarly,itgetshalfits revenuefrom increasingly crowdedroads andpoorpublic- however, is that allofmy six shorttipsalsorose. contract services,notably thelucrative market for transportservices. AlreadyWeDriveUhas Thedigitalcurrency operatingschoolbuses in theUS. This expansion contractswithanarray of technology firms, bitcoinrose from $7,869 hasenabled it to grow itsrevenue at an annual rate includingNetflix,StanfordResearchParkand to $8,659,streaming of 7.1% andits earnings pershare by 11.4%ayear LinkedIn.Asoflast September, it hadseven serviceNetflix went up over thepastfive years. million passengersayear, from $336 to $339. “WeDriveU has contracts up from 6.1millionatthe Ridesharingnetwork Ahighlyprofitable with techfirms suchas endof2018, andhas plans Uber advanced from operation forfurther expansioninthe $32.26 to $35.13,retailer Whilethe barrierstoentry Netflix and LinkedIn” coming year. Wayfairincreased from $95to$107and social forpotential rivals in busservices arelow, Despite thesestronggrowthprospects and networkTwitter wentup National Express hasabove-average profit proven record of success, National Express isn’t from $31.64 to $34.22. margins, whichshould notonlyhelpprotect it that expensive. It is on 12.9 times2020earnings, Eventhe shareprice from anycompetition but also seeitgainmarket with adividendyield of 3.5%.Momentum of tobacco company share. National Expressalsoboastsastrongreturn investorswill alsolikethe fact that theshare price Philip Morris on capitalexpenditureofaround12.4%.This is very closetoits 52-weekhigh. Isuggest you International increased, enablesittogeneratelarge amountsofcashflow go long at thecurrent priceof473pat£8per 1p from $85to$88.69. that canbereturnedtoshareholdersinthe form of (comparedwithIGIndex’s minimum of £1 per Overall, my shorttips adividendand used to expand thebusinessfurther 1p).Set astop-lossof353p, giving youpotential arenow making aloss of £610,downfroma throughintelligent acquisitions.NationalExpress downside of £960. profit of £694 afortnight ago,which balances outthe gains from the Tradingtechniques... buyshare buybacks long positions. SinceNetflix,which Companiesare increasingly months,you would make a Irecommended six returningcash to shareholders market-beating return on monthsago,ismaking by buying backshares rather your investment. Evenifyou alossof£348, Isuggest than paying dividends. US firms waitedfor amonth after the that younow cover spent$900bn on buybacksin announcement youwould still the position.I’m also 2018 alone. Buybacks bolster beat theindex. goingtocut thelevel theshareprice andraise TwoSigma also foundthat at whichyou cover earnings pershare, even if a the stocks of firmsthatbuy back bitcointo$9,000 – company’sunderlyingprofits shares tend to do badlyinthe down from $14,000. aren’t growing, sincethere will sixmonths before the buyback Investorsshouldalso be fewer shares on the market. announcement,withthe consider adjustingthe However,criticsofthis positive effect forshareholders optimumtimetobuy onemonth stop loss on Bausch practiceargue that dividends in both the shortand medium before thenews. Someone HealthCompanies to $27 give shareholdersmorechoice term. Astudy by the investment buyingsix months before the from $26. overwhatthey candowiththeir firm TwoSigmacovering 9,698 buyback announcement and Counting this week’s money. They canuse themoney buyback announcementsin sellingonthe daywould have tip, this leaves me with to purchaseshares if they want firmsinAmerica’s Russell3,000 laggedthe market by 3%.This eightlongtipsand five to,while firmsriskwasting indexbetween 1January1998 suggeststhatfirms oftenuse shorts,which is abit moneyiftheir shares are and30April 2019 foundthatif buybacksasadefensive unbalanced. So expect

alreadyovervalued. youboughtimmediately after measure andtosignaltothe to see some more short os ot

Despite the criticismofshare theannouncementand held market that they thinkthattheir tips in the next couple kph oc

buybacks, they seem to havea onto thesharefor up to six shares areundervalued. ofcolumns. St ©i

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©The Telegraph 2020 Profile 33 The unlikely lads who made a billion Fred and Peter Done made their fortune building a network of betting shops. Their latest ploy, making money treating gambling addiction, has not gone down well. Jane Lewis reports

The latest money-spinning “Fred Done once told of idea of the billionaire being stabbed five times by brothers behind high-street an angry punter who had bookmaker Betfred has got lost £50 on a horse ridden by them into hot water, says The Lester Piggott.” Guardian. Fred and Peter Done, who grew up “in the Living in the limelight slums of Salford” and opened While Fred Done has carved their first betting shop in himself a role as Betfred’s 1967 funded by a win on showman, the “numbers England’s 1966 World Cup man” of the duo has victory, have been making always been Peter, says the millions from a business that Manchester Evening News. treats public-sector staff for He got his start “adding health problems – including up the ledgers in the credit “gambling addiction”. office”, without a calculator, because he was too young k oc

Big money’smean streak st to work in the shop. He er tt

The brothers’ latest cash hu Fred Done: a natural showman describes this “natural gift cow, consultancy firm ©S for maths” as like riding a Health Assured, has dozens “Now worth acombined £1.25bn, the Dones bike. “After 35 years, I’ve still of contracts with NHS trusts, not lost it,” he grins. “If I ask enabling the Dones to pocket haven’tlost their ingrained Salfordmodesty any of my guys to come into some £5.2m in dividends from and are known for their local philanthropy” a meeting with me, they have the business over the past three got to know their numbers.” years. That might be described as “cynical”, betting shops may be axed, “due to the The relationship between the two says the Daily Mail. Or, to quote Labour new government cap on fixed-odds betting brothers remains close. “Fred is brilliant MP Angela Eagle, “an awful conflict of terminals”. Despite Betfred’s “poor form”, in the limelight,” says Peter. “He does interest”. NHS mental health chief Claire their consultancy giant Peninsula (Health Betfred TV every Saturday morning from Murdoch is certainly on the warpath, this Assured’s parent) is “flourishing”. Founded the shops and that’s the highlight of the week describing the Dones’ ownership by Peter Done, 72, in 1983, it turned over week.” Indeed, the siblings are so close of addiction services as “hypocrisy and a record £270m last year with nearly 40% that they claim rarely to have arguments. tokenism”. She has written to all Britain’s of sales overseas. The company remains “Anything that I want to do in Peninsula gambling firms, including Betfred, urging entirely owned by the siblings’ trusts. he just says ‘do it’ and I’m the same.” them to improve their practices. The brothers have come a long way Although now worth a combined £1.25bn, It’s easy to see why the Dones are from their humble upbringing in a two-up, the Dones haven’t lost their “ingrained branching into consultancy, says The two-down in Ordsall where they slept “four Salford modesty” and are known for their Times. The original centre of their empire, siblings to a room”, says The Guardian. local philanthropy. They remain “a pair of Betfred, is an ailing beast – having chalked “They both left school at 15 without unlikely lads who prove anything is possible up losses of £18.1m and £43.8m in the qualifications after working in their father’s with the right mindset and determination”, past two years. In March, Fred Done, illegal bookmaking business”, and building says the Evening News. It will be interesting 76, warned that up to 500 of the group’s their 1,650-shop network hasn’t been easy. to see how they get out of this latest fix. Great frauds in history… Agha Hasan Abedi’sdodgy bank Agha HasanAbedi wasborn in regulation-lightLuxembourg. loansand followingaPonzi-like before,dodgedextradition.He in Lucknow,India, in By 1991,BCCI would strategy of taking in new money died in Pakistan in 1995.Abu 1922,and went on to have417 officesin to payoff existing depositors. Dhabiand the rest of BCCI’s graduatefrom 73 countries. shareholderswerewiped out, Lucknow What happened next? notwithstanding an University before What wasthe scam? Regulators,impressed with unsuccessful attempt to suethe taking up aposition To allappearances, BCCI’s apparent success, took a Bank of Englandfor negligence. at HabibBank. BCCI wasa hands-off approach initially. The Depositors got 90%oftheir FollowingIndian legitimate bank. Bank of England, forexample, moneybackby2012. By that independence, then Later investigations, didnot actwhendiscrepancies time,however,inflation had partition in 1947,Abedi however,revealedthatit werediscovered in the accounts shrunk the value of the movedtonewly didbusinesswithawhole of itsoptions-trading business. recovered moneybyhalf. independent Pakistan andin host of dubious figures, When evidenceemerged of 1959 foundedUnitedBankLtd. including IraqidespotSaddam illegal activities andBCCI made Lessonsfor investors When that wasnationalised in Hussein,international terrorist movestotakeoveraUSbank, Seek thesafest home possible 1972 he movedonand setup AbuNidal andvarious however,the US authorities foryoursavings andavoid Bank of Credit andCommerce criminals. Lossesfrom werepromptedtoact.ByJuly institutionswithpoor International (BCCI), starting up currency speculation andbad 1991 regulatorshad shut the reputations. Well before its with moneyfromBankof loanstovarious business bank down,forcing it into collapse,BCCIwas knownin America(whichsold itsshares in figuresinthe MiddleEast bankruptcy,owing $20bn. Most bankingcircles as “Bankof k 1980)and the ruler of AbuDhabi pushed thebankinto of BCCI’s major executiveswere Crooks andCriminals oc st

er (inthe UAE). Abedi based the insolvency.BCCItried to cover jailed;Abedi,who nominally International”. Considersuch tt hu bank in London,but registered it this up by inventingphoney relinquishedcontrol the year talk astraw in the wind. ©S moneyweek.com 24 January2020 MoneyWeek WINE CLUB UPTO 20% Welcome 2020 with these classy wines OFF

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2018 Camaleo, Alvarinho, Minho, 2018 Laurence de Veyrac, Viognier, 2018 Bourgogne Pinot Noir, Les Portugal Sélection Parcellaire, Pays d’Oc, Brûlis, Domaine de Mauperthuis, £14.95 As the years pass,Ifall deeper £11.95 France £19.95 France £11.95 in love with the Alvarinho grape £9.95 Icannot believe the value here; £16.50 Itasted two red wines from at the sametimeastiring of the this is ahighly complex wine this estate and Iliked both of overly perfumed,inexpensive with amodest and engaging them.Les Brûlis got the nod Spanish versions,where this approach on the palate. The because it was so attacking grape is called Albariño. Viognier perfume is bright and and energetic on the nose and Camaleo is apure style which accurate, yet not too tropical or palate (if you’re keen to taste the flows across the palate calming imposing, making it ajoy.Gentle other one, it’sthe 2017 Grande every single tastebud with its floral fennel and wildflower notes mingle with Réserve). This young, sonorous red has tones. With more depth of fruit than a crystalline honey touches and unripe true fruits-of-the-forest notes on both the traditionalVinho Verde, thisisathrilling peach skin. This beguiling white is akin to nose and palate. Even though it is aslim, wine with an awful lot of class. See if asummerstroll through the Languedoc slinky-hipped red it still packs apunch you can spot the Chameleon on the label countryside. Simply gorgeous with fresh of flavour that many red Burgundies can change colour when thewine is the right fish and seafood dishes, particularly if only dream of. I’m often disappointed by temperature to drink. Imissed this – you’re using aromatic veg, garlic, scented fighting-priced Pinot Noir,but thiswine perhaps Iwas too thirsty! herbs or saffron in your recipe. is asplendid discovery. CASE PRICE:£143 —saving£36.40 CASE PRICE:£119 —saving£24.40 CASE PRICE:£198 —saving £41.40

2018 Winter, Riesling Trocken, 2017 Chianti Rufina, Cedro, Fattoria 2016 Mas Brunet, Cuvée du Mazet, Rheinhessen, Germany Lavacchio, Tuscany, Italy Languedoc, France “Trocken” means “dry” and Iattended awedding at this £16.00 £17. 00 £13.95 Iamahugefan of this estate and £13.50 this is aprecise and invigorating £13.50 property last year and it is a £11.50 its utterly delicious wines. Situated Riesling. Unlike so many trockens truly beautiful set up. The wines around 40 minutes north of out there that seem to load fruit are what Iaffectionately call Montpellier,Mas Brunet makes juice notes into the mid-palate, “gluggers” -not tooheavy or Côtes-du-Rhône-shaped wines but this wine has crunchy acidity that chewy.Youthful, buoyant and with more lift and vivacity than underpins the lime juice theme, refreshing, this fresh Sangiovese you might have thought possible meaning it’sdry and raspy on is red fruit themed with crisp from this style. With amere the finish. Winter is designed forultra- acidity on its finish. There is alight 13% alcohol on board, and made from modern cuisine –sushi and sashimi, Thai dusting of tannin here, but it is largely Carignan, Cinsault, Grenache, Mourvèdre fresh spring rolls, Pad Thai with loads of overtaken by the ebullient fruit. It’sa and Syrah, Cuvée du Mazetisapolished, lime juice squeezed on top, coconut milk good all-day red, as Ifound out while spicy,medium-weight red with afaint whiff themed curries and spicy squid and prawn standing under their magnificent cedar of woodsmoke in among theheady red and dishes. This is avital wine in your fridge! tree, which features on thelabel! black fruit flavours. It is the definitive red CASE PRICE:£162 —saving£30 CASE PRICE:£162 —saving£42 wine for all palates and occasions. CASE PRICE:£138 —saving £29.40

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Te rms&Conditions: Offerends 31 January2020. Free delivery on all orders of 6bottles of wine or more, otherwise £12.50 +VAT.Orders placed before noon will normally be dispatched within 48 hours. Payment can be made by credit or debit card online or overthe phone. Travel 35 Holidays that won’t pile on the pounds Abreak needn’t mean breaking those NewYear resolutions. Nicole Garcia Merida reports

olidays can take a toll on Hyour health – all that extra food and lazing around – but things don’t have to be that way. Villa rental company The Thinking Traveller and leading wellness brand Bodyism have teamed up to make sure that not a single day of your holiday need go by without your having checked in with a personal trainer, says Nicole Mowbray in The Daily Telegraph. Bodyism is the “wellness expert to the stars”, training everyone from David Beckham to Pippa Middleton, and The Thinking Traveller offers “exceptional, exclusive villas around the Mediterranean”. The collaboration enables clients to book a Bodyism personal trainer to take with them to one of the Bodyism signature organise your days out. And A Bodyism trainer costs £2,500 any of the luxury villas for the classes… In the afternoon, although the trainers are per week. Their flights, food duration of their holiday. we had stretching sessions or on hand every day to offer and drink, transfers, plus The experience is entirely a massage,” says Mowbray. nutritional advice, “they won’t accommodation costs (unless bespoke: guests pick a villa Thinking Traveller’s properties be policing what you do or don’t they stay at your villa) are extra. and a trainer who suits their come with their own local eat or drink each day”. So, fill Most villas are suitable for needs. “Days begin with either concierge who can help you your boots, then burn it off? training, but check first. dawn yoga, circuit training or explore the local area and Sounds like a plan. See thethinkingtraveller.com

Tai Chi in the Surrey countryside Cardio drumming classes in Mexico Grayshott took home the award for best La Puerta is “widely acknowledged as one of the best spas in the wellness retreat in England in 2019 for world”, says Suzannah Ramsdale in the Evening Standard. the third year running. The countryside The weekly schedule is packed from 6am to 8pm every spa, located in Surrey, is situated in 47 day, but “it’s perfectly acceptable to spend an entire day acres of grounds and surrounded by snoozing” by the pools. There are 325 fitness classes 700 acres of “peaceful National Trust to choose from during a typical week, so it might be a countryside”, says Roshina Jowaheer in good idea to try as many as possible. They range from Good Housekeeping. Expect therapeutic yoga and pilates to hip-hop classes to boxing. There are treatments, healthy spa cuisine and an also the more unconventional “lively cardio drumming extensive range of fitness classes. The class” and trampoline sessions. Guided meditation, sound Spa has a swimming pool, tennis courts, therapy and yoga philosophy are also available most days. a gym and exercise classes including Spa treatments, though not included in the package, are pilates, yoga, and Tai Chi. Guests worth the investment. “I opted for an 80-minute facial using are also able to book into nutritional the ranch’s own skincare line, La Puerta Core Essentials, and evaluations, personal training sessions and I’mstill seeing thebenefitsweeks later,”saysRamsdale. There are acupuncture. Grayshottisknown around over 25-milesoftrailsaroundthe ranchand sunrisehikes are“life- theworld for itsapproachtoaddressingthe affirming”.Much of thefresh food is sourcedfromthe ranch’s organicfarm. consequencesofmodernlifethrough good FitnessWeekrates rangefrom£2,890to£4,560per person.See rancholapuerta.com guthealth–anexpertteamofspecialistsis always on hand to advise. “It’s all bathrobes andcomfy slippers Areset for worn-out serfs balance“andfengshui fitnessclasses”,includinga –until dinner,” says TheDailyTelegraph. Forall their“gratuitous theirminds,bodies, “Zen boot camp”obstacle That’s whenyou learn that “healthy perks”,SiliconValley andsouls”. Theresortis course,mountainbiking eating canbefullofflavour”and needn’t employees still haven’t sprawledacross16acres sessions andhikes alongthe be bland. Thefood quitefigured out awork- of forest andsurrounded coast. Mealsare organic is largelysourced lifebalance.Theymight by “towering, 50-foot- andnutrientdense,and locally–lookout want to checkintoCanyon plus redwood trees” all ingredientsare sourced for thefree-range RanchWoodside,where andhas 38 guestrooms. from within a25mile chicken breast with overworkedtechies canput Thereare twosignature radius.Nowonder that roast fennel andthe their“gruelling80-hour- retreats to choosefrom: fatigued tech workers flock Thai prawn andred plus weeks” behind them. Connectand Recharge. to Woodside in droves. mullet curry, which A45-minute drive from ARechargeretreat lasts Roomscostfrom$899per are“divine”. Two SanFrancisco, Woodside threedaysand includes night,including allmeals. nightsfrom£465. See aims to help those who sunrise meditation and Seecanyonranch.com/ grayshottspa.com strugglewithwork-life “somewhatunorthodox woodside moneyweek.com 24 January2020 MoneyWeek 36 Property

This week: properties with equestrian facilities –from aresidential estate in Cheshire currently run as aprofession

Ibworth House, Ibworth, Hampshire. Hougham Manor, Hougham, Grantham, A Regency-style house completed in 2015 Lincolnshire. A Grade II-listed manor dating overlooking 28.1 acres of grounds with six back to the time of William the Conqueror loose boxes, stables and pastureland. It has with the River Witham flowing through its Georgian-style sash windows and a home 30 acres of parkland. The equestrian facilities cinema. 8 beds, 6 baths, 3 receps, study, 2-bed include two stable blocks, an American barn cottage, barn, tennis court, swimming pool, and a manège. 6 beds, 4 baths, 2 receps, woodland. £7.5m Savills 01635-277705. indoor pool. £2m Savills 01522-508908.

BloomfieldsFarm, Cowlinge,Suffolk. Aperiod farmhouse with equestrian facilities setaroundastable yard with an outdoor manège, fenced post andrail paddocks, 16 boxesand afive-bayhorse walker.Ithas exposed wall and ceiling timbers, open fireplaces andalarge kitchenwithan Aga. 6beds, 3baths,4receps, outbuildingwithtwo flats, pool andpoolhouse,tenniscourt, gardens, 15 acres. £1.85m Knight Frank01279-213340.

MoneyWeek 24 January2020 moneyweek.com Property 37 alshowjumping and liveryyard, to aconverted barn in Worcestershire with top-quality dressage facilities

Pangfield Farm, Stanford Dingley, Berkshire. A 128-acre residential farm with an 18th-century house, three cottages and a range of equestrian facilities that include stables, 23 horse boxes, a horse walker, a wash box, an indoor school, an outdoor manège, and a 2.5 furlong all-weather gallop. The house has flagstone floors and open fireplaces. 7 beds, 4 baths, 3 receps, breakfast kitchen, conservatory, cellar, gardens, listed barn, woodland. £6.5m Carter Jonas 01635-263010.

Peasebrook Farm, Broadway, Worcestershire. A converted barn with a top-quality dressage facility with 23 stables and an all-weather turnout pen. It has a 47-foot reception room with a vaulted ceiling and an inglenook fireplace. 3 beds, 2 baths, 40.64 acres. £2.25m Strutt & Parker 01608-650502.

Colmer Farm Stud, Marshwood, Bridport, Dorset. A Grade II-listed farmhouse and a modern, thee-bedroom house. The farmhouse is split into two semi-detached, three- bedroom houses, one half of which dates from the 1400s and both of which have exposed beams and wood-burning stoves. The equestrian facilities include a stable yard with 24 stables, two covered yards, paddocks andpastureand 56.14acres.£1.85mStrutt & Parker01392-215631.

WinstitchenFarm, Simonsbath, Minehead, Somerset. Atraditional 1840sfarmhouse in Exmoor National Park with atwo- CrumleighHeath Farm,Little bedroomcottage andarange Leigh, Cheshire. Aresidential and of traditionalstables complete equestrian estate with an 1850s with tack andstorage roomsset farmhouse andaseparate,gated around ayard. Thehouse has entrance to acourtyard with 79 exposed stone walls, wood- stables, vetand farrier areas, an indoor burningstoves, adrawing room arenaand twooutdoor arenas,and a with French doorsleading onto 3-bedroomflatand grooms’bedsit, thegardenand afarmhouse currentlyrun as aprofessionalshow kitchenwithanAga. 4beds, 4 jumpingand livery yard.4beds, baths, recep, paddocks,5.98 4baths,5receps,94acres.£2.5m acres. £850,000 Pritchard& JacksonProperty 01948-666695. Company01608-801030.

moneyweek.com 24 January2020 MoneyWeek 38 Cars Porsche comes to its senses The sports-car maker has brought back its six-cylinder engines. That’s good news. Chris Carter reports

f you’ve read anything in the automotive corners will see it rev to 7,800 rpm and the sounds should “More flat-six Iof the internet in recent years, you’ll probably be downright delightful, thanks to a standard have seen some diatribe about the “rumbly four- sports exhaust system from Porsche, complete Porsches in the cylinder turbo engines, which have proved with a GT4-like twin tailpipe finish,” world can only barely more economical than the says Sean Szymkowski on CNET’s glorious naturally aspirated flat- Road Show. Inside, the cabin be considered a sixes… turfed out of Porsche’s has “Alcantara trim all over, good thing” mid-engined sports cars”, specifically covering the centre says Stephen Dobie in Top seat sections, wheel rim Gear. Happily, the German and centre console”. A seven- carmaker has come to its inch touchscreen is also senses, says Bradley Brownell on hand for your on Jalopnik. “If you don’t “infotainment” needs. quite want to pony up the We’re guessing you money for a Boxster Spyder probably want one of these or Cayman GT4,” you can cars, says Matt Robinson now opt for a GTS version of the on carthrottle.com. “That’s 718 Boxster and Cayman models, understandable,” but the premium which have four-litre, flat-six engines. over the 718 Boxster S and 718 “Oh baby, this is good news.” Cayman S is much “bigger this time than Indeed, more flat-six Porsches “in the world it was with the last GTS cars.” For the 4.0-litre can only and wholly be considered a good thing”, models, expect to pay £64,088 for the Cayman says Pistonheads.com . “Wringing the engine out and £65,949 for the Boxster.

Wine of theweek: asuper-smoothand mesmerisingshiraz hectares)was wipedoout, paartofthe worldwill grow back 2013 Paracombe, Matthew Jukes Shiraz,Adelaide Hills, Wine columnist alongwith84homes, sttrongerand more resilient. South Australia including severalhistoric With this in mind,pleasecheck £20, cotswold buildings.Fundraising for ouut my 100BestAustralian Wines wineimports.com; Thewildfires in Australia have those affected is taking Reeport, on my website, foragreat £21, ozwines.co.uk been devastatingand place, as well as muchh seelection of Hillswines andalso indiscriminateoverthe past few needed initiativesto mmy featured wine this week –an months andhaveled to tragic loss drivemonies into inncredible, fullymature, super- of life,propertyand businesses,as localfireservices. ssmooth andmesmerising shiraz. well as of ancientforests and We canhelp, here in Slippery,heady,luxurious and wildlife. It is the most destructive the UK,bybuying ccomplete,thiswineand itssilky, wildfire season Australiahas ever theirprecious wines. mellifluous, unoaked2017 seen. It is hardtotry to understand If we allmakean cchardonnay (£19)sibling will be theimpactthese fireshavehad in effort to keep this ssure to placethisregioninyour my world, the wine trade. economygoing,as heartforever. Some of the most saddening best as we can, then losses havebeeninthe idyllic replanting and MatthewJukes is awinnerofthe AdelaideHills. On 20 December rebuilding will follow International Wine &Spirit alone, onethird of the region’s andwecan hope Competition’s Communicator of wine production (morethan1,000 that this beautiful the Year (matthewjukes.com)

MoneyWeek 24 January2020 moneyweek.com Collectables 39 The $68 trillion inheritance The £1 worth £1m A rare 22-carat gold sovereign from 1937, Averyvaluable torch is being passed to anewgeneration. Chris Carter reports with a face value of £1, has become the first t first sight, “Connect, BTS” British coin to sell for Amight look like a colourful £1m. The coin (pictured) play on words based on a crude bears the face of King acronym – something akin to the Edward VIII, despite successful “FCUK” employed Edward having by fashion brand French abdicated in favour of his brother, George VI, Connection, perhaps. It is, in the previous year. fact, a series of contemporary Edward had also art projects launched last week broken with convention by South Korean “K-pop” in being depicted facing sensation BTS. (The acronym left, as he preferred his apparently stands for “Bangtan left profile to his right. Sonyeondan”, which translates Since the reign of as the “Bulletproof Boy Scouts” Charles II in the 17th in English, in case you were century, monarchs had traditionally faced in wondering.) The boy band from The boy band changing the world through art the opposite direction Seoul know a thing or two about to their immediate attracting the attention of young predecessors, says people. Their latest album, Map while Argentinian artist Tomás 2018 Gucci released its “Gucci Kevin Peachey on the of the Soul: 7, sold 3.42 million Saraceno’s Fly with Aerocene Hallucination” range inspired BBC. But “Edward VIII copies in pre-orders in a week, Pacha will float aperson into by Old Masters, while that same was quite a vain according to their record label, the heavens, aboard a balloon year Sotheby’s hung four of its character”, explains and it’s not even out for another powered only by “the sun and paintings at Victoria Beckham’s Chris Barker, from the month. BTS have decided to use the air we breathe”. Mayfair boutique. Royal Mint Museum. that popularity to entice their None of this is surprising. young fans into the world of art. A tasteful baseball cap In 2016 the “Millennial” As part of the project, the The Old Masters market is also generation (those in their 20s group is funding 22 artists in going after a younger audience. and 30s) became the largest five cities to produce artworks On Monday, Sotheby’s launched cohort in the US labour market, with the power to “change a collection of streetwear through numbering 56 million, according the world”. “Instead of people Highsnobiety, a brand better to research from the Pew thinking that art is different or known as purveyors of “skater” Research Centre think tank. complex, focusing on your own culture. The hoodies (£105), While “the majority of collectors experiences and emotions will T-shirts (£55) and baseball caps are [still] baby-boomers”, as art make this a great experience,” (£40) are emblazoned with adviser Heather Flow told Owing to Edward’s band member Jin said at the the Sotheby’s logo and works Artnet News last summer, abdication, the trial launch of the initiative via video from the venerable auction “they will soon transfer their coin, of which six link to the Serpentine Galleries house’s January Old Masters wealth, and their collections, were made, never in London. The gallery is playing sale, such as A Sea-Nymph by to their millennial kids”. went into mass host to Catharsis – a “virtual Ginevra Cantofoli and Allegory When they do, “it will be production. Edward forest” created by Danish artist of Abundance and Charity. the largest wealth transfer in asked for a set of the Jakob Kudsk Steensen, as part Selfridges will also be hosting world history, with estimates coins, but his brother refused. Four of the of Connect, BTS. British artist a pop-up store that will sell of the impending inheritance coins ended up in Antony Gormley will wind the range. ranging up to $68trn”, says museums, with the 11 miles of aluminium tubing Sotheby’s is in good Brian Boucher on Artnet News. remaining ones held around New York as part of company with its latest Auctioneers, galleries and privately. The Royal his contribution to the project, commercial endeavours. In dealers are standing by. Mint sourced one of the latter from theUS, whereithad goneafter Auctions being sold for £516,000 Going… Gone… in 2014.“When the Love letters, photographs and Memorabiliafromthe livesof opportunitycame mementoesthathad belongedto Jackie andJohnF.Kennedy went along,Ifelt Icouldnot NobelPrize-winning author on sale with RR Auction in turn it down.Itwas a John Steinbeckand hiswife Boston,Massachusetts,this once in alifetime Elaine areheadingfor an online week.The lots included opportunity,”saysthe sale with NewJersey-based photographs, campaign posters, present anonymous CuratedEstates Auctions on journalentries,speeches,oil buyer. “I’m awarethat 27 February. Theitems includea paintings, andtwo postcards, [£1m]isalot of money lock of hisbabyhairand a says PavelBarter in TheSunday foracoin, but if Idid not telegram from John F. Kennedy Times. John F. Kennedy, thena secure it now, I’dnot (see right) invitingSteinbeck senator, sent the postcardsin getthe chance again.” (pictured)tohis presidential 1955 from hisholiday in Irelandto The most expensive inauguration.Abin in theshape GraceBurke,who worked as a coin in the world of an elephant’sfootand a secretary in hisBostonoffice. remainsthe “flowing hummingbirdwrapped in thread andplacedina One read:“It is agreat place, Ireland, but in hair”silver dollar, miniatureleather coffin craftedbySteinbeck are Januaryitisascold as an Irishlandlord’s heart”. whichwas thefirst coin s amongthe odderitems.Anearlier sale of Thepostcards werevaluedat$6,000 each; ahand- to be struck by theUS age

Im Steinbeck’sbelongingsfetched $154,216 with written statementofhis intentiontorun forthe Mint in 1794.Itsoldfor ty et HeritageAuctionsinOctober. presidency wasexpectedtosellfor $200,000. $10m in January2013. ©G moneyweek.com 24 January2020 MoneyWeek 40 Blowing it Lonely astronaut, peacenik, seeks similar Japanese tycoon Yusaku Maezawa has ahighly unusual first date planned ly me to the Moon “Fand let me play among the stars,” crooned Frank Sinatra back in 1964. Little did Ol’ Blue Eyes suspect that half a century later lonely and confused Japanese billionaires would be taking “Maezawaisan such poetic advice literally. avid modern-art Yusaku Maezawa, an online retail magnate, has made a collector who public plea for a girlfriend bought aBasquiat to keep him company when he boards a rocket to the painting at moon, as Richard Lloyd Sotheby’sfor Parry reports in The Times. Maezawa is in line to become $110.5m in 2017” the first paying passenger to travel on Elon Musk’s SpaceX project. He wants a female companion so that my the pair can “shout our love What’s your name chuck, and where do you come from? la and world peace from outer ©A space”. The lucky lady will be selected via A prototype version of the Starship rocket, them happier”. The winners will be selected an online reality show and will have to be which will power SpaceX, recently blew its at random from those who retweeted “single, 20 or older, interested in space and top during a pressure test, forcing Musk and Maezawa’s Twitter post and “the impact of someone who wishes for world peace”. his team to go back to the drawing board. the money will be tracked through surveys”. Every Miss World there has ever been would Even if they sort that problem out the small Maezawa, who has an estimated net seem to be an ideal candidate. matter of “how to keep people safe and worth of $3.6bn, seems to be a very busy It’s easy to “feel bad” for Maezawa, alive during space voyages” will remain. man, says Elizabeth Paton in The New York says Harmon Leon on Observer.com. The SpaceX’s estimate that it could be flying Times. Despite believing in the desirability poor chap just “feels lonely after breaking to the moon as early as 2022 seems to be of a “world devoid of money”, he loves to up with his girlfriend”. Still, it’s not that wildly optimistic. shop, “be it on a new interior for his private difficult to see how “a blind date to the jet designed by the luxury label Hermès Moon” could end up going badly wrong. Maezawa splashes the cash or a vast collection of sports cars”. He is Most people feel let down if they travel You’d think there would be enough going also an “avid” modern-art collector who from one part of a large city to another for on on Earth to occupy Maezawa’s attention, bought a Basquiat painting at Sotheby’s for a Tinder date only to find “no chemistry”. says Justin McCurry in The Guardian. $110.5m in 2017 and has plans to build an Imagine how much worse you’d feel if you Maezawa’s SpaceX announcement was art museum in Chiba, his hometown. travelled the 238,900 miles from Earth to just one in a series of “eye-catching” With all those earthly delights to enjoy, why the moon and left empty handed. tweets. Earlier this month the Japanese rush into the barren void of deep space with So all in all, it’s probably just as well tycoon “promised to give one million yen only a blind date for company? that it’s likely to be quite some time before (roughly £7,000) each to 1,000 of his seven anyone is shot into deep space with Musk’s million Twitter followers as part of a ‘social company, says Loren Grush on The Verge. experiment’ to see if the cash would make Tabloid money… Islington kale-muchers will still rule the Beeb l Twoyears and£1.5m in legal fees later, it l Therich, as F. ScottFitzgerald l Not so longago,Ithoughtthat seemstelevision presenter AntMcParrtlin ssaid, aredifferent from youand me, “withoutAuntie… naked andhis ex-wife,LisaArmstrong,have ssays Jennifer Selway in the Sunday commercialismwould take over finally come to an “amicable”settlemment EExpress. “Their worldisone giant and, soon, we’d endupwith over their£50mfortune,saysAmandaa ssleepoverwhere celebs,freeloading television like they hadinItaly or Platellinthe Daily Mail.McPartlin ppoliticians andthatmysterious Spain”,saysJeremyClarksonin (pictured) said he wouldgenerously ccommunity of anonymous TheSun.But sincethen, Sky give Armstrong a“staggering” £31m bbillionairespasstheir homes around Atlantic,Netflix andAmazonhave –“more than thehalfany wife is due likeparcels.” If youhaveseveral come along andthey have made by law, plus the£5m family home”. hhomes, whynot lend oneout?Ifyou brilliantprogrammes. What has Thisisthe houseinwhich “she had hhavestaff,you don’thavetoworry the BBC come up with?A stoodbyhim throughyears of drug aaboutclean towels andchanging the skateboardingduckonTheOne andalcoholdependencyand rehab”. ssheets.TonyBlairwas knownas Show. Nowthe Beeb has Armstrong is entitled to feel angry. ““the scrounger”bythe Italian press announced two-thirds of itsstaff “Yet Iwish shehadn’trespondedto fforstaying so oftenatthe estate of will be based outsideofLondonby Ant’sclaim that they hadsettled with a PPrince Girolamo Strozzi, amember 2027.But so what?All thedecisions social-media retort sayingitwas ‘a load oof an old bankingfamily. In most will stillbemadeinIslington, “over of nonsense’.”(Herside says it will be ccases, nobody mentionsanything aplate of nuclear-free,vegetarian more like £20m.) Armstrong canstandd sso vulgar as money. Youwould peacekale”.The BBC needstostart on herown twofeet. “Timetoshowit aassume theguest would payfor any making TV people actually want to k girl.Twitterisnot your revenge, your bbreakages. Butthenagain, “the rich watch–and “not just Twitter people oc st er futurelifeis.” aaredifferent to us”. in aShoreditchjuice bar”. tt hu ©S

MoneyWeek 24 January2020 moneyweek.com Crossword 41

Bridge by Andrew Robson TimMoorey’sQuick Crossword No.983 AbottleofTaylor’sLate Bottled Vintage will be given to ForkingWest thesenderofthe firstcorrect solution opened on 3Feb 2020.Answers to MoneyWeek’s QuickCrossword Theheroofthisweek’s dealisEngland internationalAndrew No.983,31-32 Alfred Place, London,WC1E7DP. McIntosh,originally from the northofScotland(whoknew from the name?). 12345 67

Dealer South Bothvulnerable Q5 A 8 9 KJ972 QJ1075 J109872 N 63 543 KQJ982 10 11 12 A4 WE 10653 K2 S 4

AK4 13 14 15 16 1076 Q8 A9863 17 18 19 20 The bidding South West North East 1NT 2♠* 3NT** pass pass pass 21 22 *Marginal, vulnerable. ** Nervous aboutboth majors, butFiveofaMinorissomany tricks to win. 23 24 Had West divinedtolead aHeart,declarer would havehad to hope Clubs provided allfivetricks–no good here. However,not blessed Across cluesare mildly crypticwhereas downclues arestraight with second sight, West naturallyled aSpade. Declarercounted five toptricks. Theproblem with winning the ACROSS DOWN QueenofSpadesand runningthe QueenofClubs is that West may 1 Confessitafter madpartying(5) 1 Requested(5) winthe King andfindthe Heartswitch. This wouldhold declarer to 4 Join endofqueue forcase(7) 2 Food from heaven (5) eighttricks–withnotimetomakeaDiamondtrick.Leading to the 8 Jumper appropriate forunofficial 3 Farm vehicle(7) QueenofDiamondsisabetter play,succeedingwhen the ten of court? (8) 5 Be unfaithful to apartner (3-4) Diamonds fallsinthree rounds (giving declarer four tricks in the suit), 9 Awfulhouses left bare (4) 6 Relating to surrounding with the Clubfinesse in reserve. 10 Traded wood on time (5) influence,eg, sound(7) Best,however,isto putWest(whom youplace with the Aceof 12 Rodisone to sack member (7) 7 Extremelyfunny (9) Diamonds forhis bid) in aforkbywinning the Spadeleadinhand 13 Youcan havesnowindoors 11 Letoff (9) andleading the eightofDiamonds (key play). SayWestrises with withoutit(4,9) 14 Hazards(7) the AcetoswitchtoaHeart.You winthe Ace, cross to the Queenof 17 Accordingtosomecockneys, 15 Raise to higher position (7) Diamonds,backtothe QueenofSpades,cash the King-Knave-nine twoofuswanderabout (7) 16 Substanceprescribed as a 18 Collectone million with dope (5) control, giving no therapeutic of Diamonds andreturntoyourhandwiththe AceofClubs to cash 21 Nakedanimal heard (4) effect (7) your remaining top Spadefor your ninthtrick. 22 Anicegal possibly (8) 19 Nimble (5) If West ducksthe Diamond(as happenedinpractice),you win 23 Spotsfaultylease in short 20 Tremble(5) dummy’spicture andrun the QueenofClubs. Youdonot mind losing manuscript (7) the finessetoWest’sKing, foryou canwin theHeart switch, unblock 24 Having alot to lose?(5) the QueenofSpades andcross to your four winning Clubsand top Spade. Nine tricks made. Name Forall Andrew’s booksand flippers –includinghis newhardback Address TheNextLevel –see andrewrobson.co.uk ! Sudoku983 Solutionsto981 To complete MoneyWeek’s Across 1 Decaf reversal 4 Greens twodefinitions 9 Chapeau 10 Bugle bugle 17Sudoku, fill in thesquares 11 Eke hidden 12 Relation anagram 15 Springchicken 17 Pedestal anagram 893in the grid so that everyrow 18 Sue twodefinitions 20 Agent agent 22 Opulent anagram 23 Entrée andcolumn andeachofthe hidden 24 Synod homophoneofsin odd. Down 1 Decrease 2 Cease 3 Free-range 5 Rib 6 Eggyolk 7 Sled 8 Publication 13 Trialruns 14 Unseated 543 8nine 3x3 squarescontain all 16 Re-elect 18 Stern 19 Yale 21 Tee. the digits from onetonine. 43 2Theanswer to last week’s 91puzzle is below. Thewinner of MoneyWeekQuick Crossword No.981 is: Sheila GoodmanofLancashire. 89 719623548 TimMooreyisauthorofHow To CrackCryptic Crosswords, 723 publishedbyHarperCollins, and runs crossword 568914327 workshops (TimMoorey.info). 17243587916 Taylor’s,afamily firm for325 years, is dedicated 14981372654 to theproduction of thehighestquality ports. 456198273 Late BottledVintage is maturedinwood forfour to six years. Theageing processproduces ahigh- MoneyWeekisavailable to visually 327465189 impaired readersfromRNIBNational quality, immediatelydrinkable wine with along, TalkingNewspapers andMagazines 635741892 elegantfinish; ruby red in colour, with ahintof in audio or etext. 172839465 morellocherries on the nose,and cassis, plumsand Fordetails, call 0303-123 9999, blackberrytotaste. Tryitwithgoat’scheeseora or visit RNIB.org.uk. 894256731 chocolatefondant. moneyweek.com 24 January2020 MoneyWeek 42 Last word

Editor-in-chief: Merryn SomersetWebb Executive editor: John Stepek Getoffthe Tesla bandwagon Editor: Andrew VanSickle Markets editor: Alexander Rankine Comment editor: Stuart Watkins Politics editor: Emily Hohler Tesla burns moneyand yet its stock soars. It’sanartefactofthe bubble economy Digital editor: BenJudge Wealtheditor: ChrisCarter Senior writer: Matthew Partridge Editorial assistant &writer: Bill Bonner Nicole Garcia Merida Columnist Contributors: BillBonner, Ruth Jackson-Kirby, Max King, Jane Lewis, Matthew Lynn, DavidProsser, DavidStevenson, Simon Wilson haresinthe twomostvaluable Sloss-making companies have Art director: Kevin Cook-Fielding Picture editor: Natasha Langan soared over thepastthree months, Chiefsub-editor: Joanna Gibbs with electric-car makerTesla’s stock Founder: Jolyon Connell doubling andGeneralElectric up 44%. At thebeginning of aboom, Senior account manager: Joe Teal (020-3890 3933) investorsare sceptical.Theypart Groupadvertising director: with theirmoneyreluctantly,almost Caroline Fenner(020-38903841) Chiefcustomer officer: grudgingly,carefully lookingfor Abi Spooner value. As theboomcontinues,they Publisher: KerinO’Connor Chiefexecutiveofficer: graduallyforgetall about value. James Tye

They want themoversand the s Subscriptions & ge shakers. They don’tcarehow much a Customer Services: Im

Tesla boss Elon Musk: the more he loses, the more attractive he seems ty Te l: 0330-333 9688 they cost so long as they go up. et (8:30am-7pmMondayto Take Tesla, for example. It’s a ©G Friday, and 10am-3pm on companythatwouldn’tlast long effect.The larger they get, themore Tesla, we suspect, will turnout Saturdays, UK time). Email:subscriptions@ in anormalstockmarket. Butat of an advantagetheyhave. ButTesla to be an artefact of thebubbleof moneyweek.co.uk thebubble-endofalong, Fed- is morelikeWeWork, thedoomed 2009-2020. Likethe marketitself, Web: MoneyWeek.com/ contact-us fuelledboom, it’s afavourite. The “tech” start-up that rentsout office it dependsonregular infusions of Post: MoneyWeek more it loses, themore investors space. It gets no networkeffector fake money.And likethe whole subscriptions,Rockwood House, Perrymount Road, want apiece of theaction. Tesla first-moveradvantage because car stockmarket, it is financiallyfragile. Haywards Heath,West is nowworth more than General buyers,likeoffice-space renters, do SinceTesla makesnoprofits,it Sussex, RH16 3DH. Subscription costs: £109.95a Motorsand “Tesla is providing agreat theirhomework reliesoninvestors whoare willing year (credit card/cheque/ Ford combined. andlookfor the to keep losing money. That money direct debit), £129 in Europe Investorsbid servicetoestablished bestdeal. masochismwillcometoanabrupt andROW £147. up Teslamore Teslawill endwhenthe marketgoes down. MoneyWeek magazine is an carmakers at huge cost” unregulated product. than 100% over neverbea Thebig companiesmove Information in the magazine thelast threemonths, to amarket one-stop shop forelectriccars. because investorsdon’t bother with is forgeneral information only and is not intended to capitalisation of $95bn. Butitisproviding agreat service research.Theyjustwanttobe“in be relied uponbyindividual YetTesla sold only 368,000 to more establishedcarmakers. themarket” with big-name stocks readers in making (or not making) specificinvestment vehicleslast year.Fordalone sold At huge cost,itistesting themarket. that go up. Andthe cheapest, easiest decisions.Appropriate 2.9millioninthe US andanother Thebiggerplayers should have no waytodothatistobuy an index independent adviceshould be obtained beforemaking threemillioninChina. Of course, troublebuildingelectriccarsand fund–which buys themostpopular anysuchdecision. thebet investorsare making is that capturingmarketshare when they stocks,driving theirpricesupeven MoneyWeek Ltd andits staff do not accept liability forany Teslawill be theAmazonorGoogle seeitisworth doing.Theywillhave higher.Then, even thehard-bitten losssufferedbyreadersasa of theelectric-car world–with such more dealersand more options. old valueinvestors have to buy the resultofany investment abig lead on thecompetition that Andthey’ll be able quicklytocopy bignames,too –justtokeepup. decision. theotherswon’t be able to catchup. andsurpass anytechnological This partyhas to endsometime. Editorial queries:Our staff areunable to respond to It’s abad bet. Google andAmazon innovationsTesla makes. More When it does,the partygoers will personal investment both benefit from thenetwork importantly, they’llmakemoney. wish they hadleftearlier. queries as MoneyWeek is not authorised to provide individual The bottom line investment advice. MoneyWeek,31-32Alfred £210m Howmuch on 31 January. Thebell fora3%stake.Upto €840.8m How Place, LondonWC1E7DP Te l: 020-38904060.Email: Chineseproperty hasbeensilencedwhile 10,000 vans ayearwill be much FC Barcelona [email protected]. billionaire Cheung Chung extensive renovation made at its“microfactory” made in revenues last Kiuhas agreed to payfor worksare carried out. in Banbury, Oxfordrdshshirire. seaseasosonmn, makingitthe MoneyWeek is published by MoneyWeek Ltd. 2-8a RutlandGate, which highestt-earningclub MoneyWeek Ltdisa would makethe 45-room £130bn Theestimated $120bn Thevalueof forthe firsttimein subsidiary of Dennis mansion overlookingHyde cost so fartoBritainfrom global consumer theannn ual Publishing Ltd,31-32Alfred Place,London,WC1E 7DP. Park in London themost “untethering” itseconomy spendingon “Fooo tballMoney Phone: 020-3890 3890. expensive houseinBritain. from theother members of mobile-phone Leae gue”, Therecordiscurrently theG7ahead of Brexit, apps last year, coc mpiledby ©Dennis Publishing held by Park Place, a accordingtoBloomberg with China aca countancy Limited2019. All 300-year-old country Economics.Anadditional accounting for firm Deloitte. rights reserved. houseinBerkshire, which £70bnwillhavebeen half of that sum. Arch rival MoneyWeekand MoneyMorning are sold for£140m in 2011. addedtothe bill by the end Advertising Real Madrid registeredtrade marks. of theyear. spending came second Neitherthe whole of this £500,000 Thecostof broughtin with publication nor anypartof it maybereproduced, installingatemporary €3bn Thevalue of another £190bn, €757.3m, and stored in aretrievalsystem flooratthe Palace of British-based electric-van accordingtoApp MaM nchester or transmittedinany form Westminster before Big start-up Arrival followinga Annie. Theindustry Uniti ed wasthird or by anymeans without thewritten permission of Bencan chimetomarkthe €100minvestment from trackerforecasts the with€h 711.5m. s thepublishers. age moment Britainleavesthe SouthKoreancarmakers market to be wortth Fiveoe fthe topten Im ©MoneyWeek2020 ty IISSN: 1472-2062 European Union at 11pm Hyundaiand Kiainreturn $380bn in 2020. were Englishclubs. et •ABC,Jan –Jun 2018:43,933 ©G

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