Hrkn to .. The Financial Outlook for Personal Investors

Russ Mould of A J Bell explains that private investor interest in gilts has soared of late, now that they provide a good interest rate and are relatively risk-free, providing that they are held to maturity. They are reckoning, presumably, that inflation will not rise although some of the Budget measures have yet to have their effect, while oil and international food prices are currently rising. Russ points out that the weaker pound is a potential pressure valve for the UK, with UK assets more attractive to overseas buyers. He is concerned, though, that the primary purpose of the UK stock market, to raise capital for businesses, is of far less importance than the secondary, trading, function. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Neil Shah of Edison Group discusses the latest bid for a UK company, Team Internet, which he discussed here recently as trading at a discount to its international peers. He points out that UK companies are vulnerable to takeover; the worry is that the UK market will keep shrinking, although he feels that value investing will return. With activist Saba Capital trying to replace the boards of 7 investment trusts, he feels that private investors must exercise their voting rights. Details are here on the AIC website. https://tinyurl.com/3ad9np9u. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Russ Mould of A J Bell reckons the most significant number of 2024 was 193, the number of global interest rate cuts. For the most part, markets got what they wanted last year. But at the end, bond yields were telling a different message, one which equity markets didn't believe. As for the UK market, yes it's shrinking in terms of listings but it is relatively cheap despite a decent yield, lots of buybacks and M&A activity. Looking at the top 10 performers is yet another sign that investors should always consider what is unloved and he reminds us that 2/3 of FTSE100 earnings come from overseas. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Contrarian that he is, Russ Mould of A J Bell was surprised that 2024 turned out pretty much as consensus had it, though few predicted the surge in Bitcoin. Looking ahead to 2025, he wonders what might knock growth and inflation off the rails. He recommends keeping an eye on government debt (growing scarily), world trade flows and tariffs, the dollar (a trade surplus would starve the world of its reserve currency), oil and food prices (important for inflation) and the Magnificent Seven (now so large that they will affect so much else). Learn more about your ad choices. Visit podcastchoices.com/adchoices

Neil Shah of Edison Group highlights research claiming there may be a generational opportunity in the UK market, extremely cheap against other markets, particularly the US. The tide in sentiment may be turning and American investors are already looking to the UK to diversify and reduce downside risk. The company highlights 20 stocks in the report. https://tinyurl.com/56sj3h4u. Neil also returns to 4imprint. It is US based, where the promotional products market is highly fragmented. Through marketing efficiency, they are growing market share. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Russ Mould of A J Bell discusses the Bloomberg piece pointing out that 45 firms have left the UK market this year through mergers and acquisitions. But is it such a bad thing that almost £50bn has gone to investors or that UK assets are both cheap and desired? It's true that the number of companies quoted in the UK has halved in 30 years but the decline has been true in the US and Australia too. We have too few tech and growth companies and too much stodge but the real problems have come from cheap debt – making riskier shares less attractive – and unduly tightened reporting requirements, making listing more laborious. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Neil Shah of Edison Group discusses two companies he feels might be of interest to private investors. Focusrite, with a global market, has two divisions: content creation sells hardware and software while audio reproduction is driven by live music. Despite a torrid year or so they are investing in new product lines, have sound management and a good long-term record. Accsys Technologies has a technique to give softwoods the durability of hardwood for sustainable construction. While demand is never an issue, they were hit by delays with production. They've started to open up the US market, however, and their first half results were really positive. Although still only at breakeven, they seem now to have things right and are a company on the turn. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Russ Mould of A J Bell points out that supposedly risk-free 10-year gilts and corresponding instruments have risen despite interest rate cuts from central banks. At the same time, equities have been generally strong. In the US, the 10-year Treasury is now equal to the earnings yield on the S&P 500. Investors might be taking the extra risk anticipating upside potential but it could be seen as an early warning sign. In the UK, the earnings yield is double the 10-year gilt yield, making the domestic market look cheap, explaining all the takeover activity. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Neil Shah of Edison Group says that since the Trump victory, Tesla's shares have added $300 billion. The market is betting that US policy will be supportive of Elon Musk and his company, which could benefit from a more protectionist approach. Although the fundamentals are challenging (the PE is 90-100), it relatively cheap compared to some AI stocks. In the UK, shares in Dowlais Group (spun out of GKN) rose on their trading update. As well as metallurgy, they are in the automotive components business and benefit from EVs as well as old-style vehicles. The forward PE is only 5 or so and the company should come increasingly into focus. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Russ Mould of A J Bell explains that US markets are strong in the wake of Trump's victory from a sense of relief that Harris didn't win. Trump wants to boost American growth, perhaps using tariffs, while at the same time wanting a weaker dollar. As the world's reserve currency, the strength of the dollar is of massive important. Russ discusses the Triffin Dilemma, which explains why the world needs a weak dollar and a continuing US trade deficit. Gold, he says, weaker on the stronger dollar, will be the ultimate tell. Learn more about your ad choices. Visit podcastchoices.com/adchoices