For debt, read ‘bonds’, because that is all they are. For assets read ‘equities’, because that is what you own when you hold ‘a piece of the equity’. These two claims on other people are the basic building blocks of asset allocation for long-term savers. Clear distinctions about how each behaves are essential for using them sensibly.
read more Commentary by Stuart FowlerThe Pensions Secretary has come out in favour of the Turner Commission’s recommendation to exclude competition between existing insurance company and bank brands for consumers’ semi-compulsory pension contributions when the new ‘national’ pensions scheme is introduced. If you do not believe governments are better organisers than private firms or better allocators of resources than public [...]
read more Commentary by Stuart FowlerThe FT didn’t publish my letter challenging John Kay’s article rubbishing attempts to model and forecast house prices. Last Wednesday it reported on its front page a research report by Morgan Stanley economist Professor David Miles, author of a report on housing finance for the government, headlined “Housing bust ‘likely in the next few years’”.
read more Commentary by Stuart FowlerWe wrote (from No Monkey Business Limited, as financial advisers who do make forecasts of house prices) to the Financial Times letters editor, as follows, in response to an article by economist John Kay rubbishing attempts to forecast house prices. The technical basis for forecasting house prices referred to in the letter, using regression analysis of long time series data for average prices deflated by general inflation, is not new to this site. It is not a perfect model but it makes a lot more sense than blindly assuming that house prices are somehow immune from laws affecting other asset prices.
read more Commentary by Stuart FowlerST has a story today on life companies ‘offering commissions of up to 20% to advisers who sell their pension plans in a blatant bid for business post A-Day’. The article addresses a question left out in the piece last week on trail commissions. Who is at fault: the provider offering the incentive, the adviser taking it, or both? The article quotes spokesmen for each.
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