If you click on the picture it should grow bigger to help you see the detail.
So how do various Governments shape-up on their Levels of Spending?
As with all the Pictures here I have created them using Microsoft Paint and I find it unbelievably difficult to use and I suspect much of this is because in a former life I did all such Image creation using Microsoft Powerpoint which I found superb and very intuitive. Paint could most definitely never be called ‘intuitive’ !!
If you click on the picture it should grow bigger to help you see the detail.
More implications of the Different Levels of State Spending
When the level of State Spending gets to very high proportions of a Nation’s GDP, there can initially be some benefits and in fact, back in the early 1920s when Communism in the USSR got started, the Economic Figures coming out were far superior to other Countries for a period of time (of course, that is assuming that the Figures were correct - it was very much a huge part of the Propaganda of the Commies to exaggerate how successful they were when in fact that was far from the truth). This initial boost comes because State organisation of various Industries (in the USSR they grouped Production into particular geographical regions - for example Shoe making would be done in one particular Town or whatever and Kitchen Utensils would be made in another Town) and the simple fact of concentrating production in this way was highly efficient for a while, through efficiencies from factors like labour specialism (Division of Labour), centralised purchasing and ease of logistics, etc.
It’s pretty darned rare for me to write a Blog about Macroeconomics but with all the Brexit turmoil and the fears of a Labour Government run by Jezza Corbyn and his Marxist buddies, I thought it was a good time to write a Blog about a very simple Economic Concept that I suspect very few People really understand and it might make Readers think about what the various Political shenanigans might really mean for Economic Growth and how our Society is managed (or mis-managed most of the time !!). And of course that could impact on our Investments.
I guess it is from being one of ‘Thatcher’s Babies’ that my interest in Economics was first ignited and back in those days in the late 1970s and for most of the 1980s the Economic Debate was very much at the forefront and it is only in more recent times in the ‘Goldilocks’ years (‘not too hot and not too cold‘) of the 1990s and up to the Credit Crunch in 2008 that Economics rarely seems to get much proper coverage in the Media and I wouldn’t be surprised if many People just latch onto Left Wing and Right Wing Politicians on the basis of them being ‘Nasty’ Individuals or ‘Nice’ ones. Of course it really is not that simple and Political choices along the lines of ‘Left’ or ‘Right’ imply very different ways to organise Society and the Economic Structure and the Freedom or not of the Individual. Hopefully this Blog will help explain in a very simple way what the Political slants of Left and Right really mean in terms of a National Economy.
I picked this up in Tesco and was intrigued because the tagline at the top said ‘The life of Britain’s most decorated Cold War Spy and Head of MI6, Sir Maurice Oldfield’ and from reading the back it seemed that he was a pretty important player in UK Foreign Policy and he had been involved in things like the Cuban Missile Crisis and is believed to have helped keep Britain out of the Vietnam War. He was also influential with the Thatcher government and I was a bit surprised that I had not really heard of him although I suppose by the very nature of a Spy Chief he would not have had a hugely public profile but it appears that he was actually the first Head of MI6 to be ‘outed’ (in more ways that one as you will see if you read the book !!) and widely known to the Public with some unintended appearances in Daily Tabloids. I guess I was simply too young.
I have found it very useful creating this Blog Series because it puts down in Black & White what the true likely Costs of ‘Moving into Cash’ are and then the exercise of relating this to Portfolio Size has been highly revealing and has essentially indicated that unless your Portfolio is over at least £100k then it really isn’t worth the bother - and arguably when you consider the hassle and timing issues of doing it, the whole thing might not make sense unless your Portfolio is worth over £300K or so - it is obviously for Readers to run the Numbers and see how it would work out for their own Portfolios in the same way that I have done. And of course it is very much a personal preference thing and related to how comfortable you feel about perceived Risk at any point in time.
As often happens when I work through these big ‘Blog Series’ things, I tend to bash out a Draft and slowly over time I go over it and over it and refine and tweak and invariably they get longer rather than shorter. I am sure the idea of Proof-Reading and refining is to summarise and condense more but I am clearly pretty hopeless at that !!
I guess my logic is that I tend to need to clarify points so adding yet more text achieves this in the best way. As a result of this tweaking I have decided that it would be more appropriate to split what remains of the Blogs into two so we now have 6 Parts in total - but this one perhaps needs Readers to turn their Brains on and think about what I am scribbling, especially in the first section on Probability stuff, so maybe it is for the best that it is shorter. The Final Part will be in essence a Conclusion but there is actually quite a lot in it.
This is a book I finished reading many Weeks ago but I have not had a chance to write anything about it before now and shove it in the Bookshop. So finally I have got around to it and you should be able to find both the Book and the Film in the ‘Non-Finance Books’ page.
You may have seen (or at least heard of) the recent film based on this Book and it is about a US Navy Seal who was the Special Forces Sniper with the most Kills in US history - taking the record off some guy in the Vietnam War (as an aside, I am sure I saw something on TV recently which was saying that a Finnish Bloke actually has the outright record from when the Russians invaded Finland in World War 2 - he used to hide in the snow and stuff).
I am starting this Blog with a heavy heart because my Performance in 2018 was very poor (and that of my Portfolio for that matter !!). I am sure Readers can imagine how it goes where after a good Year I am enthusiastic and eager to get this Blog written but in rubbish Years it truly is a chore that I would rather not have to do !!
But of course that is silly talk and it is vitally important to stay calm and robotic and like I say on so many other aspects of Investing it is crucial to just go about the same things Day in and Day out and of course Week in and Week out and by the same manner, Year in Year out. So I will try to stay focused on the task and just get the information down on the page in a thorough and comprehensive way as I always do every Year. After all, it is just Numbers…….
A continuing mantra you will hear and read from me is around the value that talking to other experienced Private Investors and Traders can provide. In addition, I find this is widely under-appreciated and it is probably the biggest source of Learning that I undertake these days. Indeed, undertaking the TPI Podcasts venture and being able to discuss countless aspects of Investing with someone as talented and successful as @Conkers3 is a huge help to my thinking with regards to how I go about things.
This can be on different levels - probably the main focus for me is to hear the techniques and methods other Investors use and these discussions bring ideas for potential ways in which I can tweak how I go about things in order to improve my Results. On another level, and probably of less interest to me, are the views of other Investors with regards to which Stocks they are invested in and what their take on certain Stocks is. Of course this can be hugely dangerous because it is immensely ‘Noisy’ Information and I won’t just listen to any old Tom, Dick or Fred and there are only a limited group of Investors who I do take notice of on particular Stocks and I perk my Ears up when they give an opinion. Screening out less useful opinions is of course difficult and it is only over time with experience that you can find out who is worth listening to and who just adds to your Noise levels - yet again a situation where there are few alternatives (if any) to actually going through the motions and doing your ‘time’ in the Markets.
I hope you have enjoyed the festive period with your families and taken the time off to relax. Due to the pressures the stock market puts on us, and certainly if you’re an investor, it can add stress to our lives as global equities take a tumble.
That said, next year is another year. Another year to build on the lessons of 2018, improving our strategies and refining our stock selection processes. The beauty of compounding is that both money and knowledge compound and so every year we have a bigger advantage than the year before.
Extreme volatility often signifies a potential peak. We saw this in February, with the Dow plunging, only to recover and make new highs. However, there can be no doubt over the past few months that we are in rocky waters. The last week has been nothing short of a rout. I don’t believe that anybody can predict a recession (I’m certainly not clever enough to) and think that the only people who claim they can are either 1) lying, or 2) selling something - but managing risk is something that we can all do. We have had a brilliant bull market for the past decade – whilst nobody knows the top we can say with absolute certainty we are always one day closer to it. Headwinds such as interest rates and Brexit may not be resolved for a while, and though there is always something to be scared of, we are seeing significant changes in price action. Being prepared is the best defence.
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