Dear Financial Voice Reader,
At the recent Bengal’s Pride Awards, as often happens, someone came up to me to tell me how much they enjoy my columns in the paper and read every one…the political ones not the financial ones!
Is anyone here? I hope so. Because this past week, we had our regular Investment Committee meeting of Chatham House. Now, Chatham House, also known as the Royal Institute for International Affairs is an important think tank whose patron is HM Queen. So, it matters what we on the Investment Committee think and do with the funds entrusted to us.
My views, and I have expressed these before is, aside from a quasi-Trustee role such as this one, I advocate for people using index trackers because they save costs of human fund managers who normally benchmark themselves against such indices and fail to beat them consistently anyway.
And my second advocacy, linked to the first is American stocks. You may say, what about the tech collapse and the credit crunch. Well, over most 5 year periods, it is rare for UK companies represented by the FTSE 100 to outperform the US markets – and if they ever do, then definitely expect that to be short-lived.
Why American companies outperform – meaning, they make their shareholders richers than UK ones is a problem to do with access to capital, markets and productivity. But, one thing is for sure, whereas a Brit used to say they made their riches through owning property, an American used to say it with the stock market.
The American still can with stocks. The Brit, no longer with property. Of course, one complication is currency. If you expect the Pound to plummet next year, because of Brexit being hard, then the conversion is in your favour anyway.
So is this unpatriotic. No, the very first column I wrote for the Financial Times in 1999, said exactly this in the opening sentence – ie I’m selling all my UK stocks and buying US ones. You have to look after your returns. Charity begins at home. Anyway, your profits will be taxed in the UK anyway on hour gains – so that’s patriotic; the more profits, then the more tax you will pay.
Alpesh B Patel
For a free online trading course visit www.alpeshpatel.com
