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MoneyWeek Issue 943

There's a reason MoneyWeek is Britain's best-selling financial magazine. We exist to help you ground your portfolio so that it keeps your money safe during rough patches and growing in the good times. We don't just look at how to maximise your returns and limit your losses, we also like to look at how you can keep more of the money you've made. Week-in, week-out we'll guide you through the financial world as it changes, alerting you to all the opportunities to profit and dangers to avoid, as they appear. Income strategies, rising-star companies, the best funds and trusts, clever ways to preserve your wealth during market turmoil... you will get the best ideas from the sharpest financial minds and investing professionals in Britain.

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51 Issues


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from the editor-in-chief...

“More than 80% of the companies listing in the US last year were making a loss” Next month sees the flotation of ride-sharing firm Uber (see page 7). It expects to be valued at around $100bn. It has never made a profit. It has little obvious prospect of ever making a profit. It has lost about $8bn since it launched. Should you buy shares in it? Sounds like a silly question, I know, but the truth is that it isn’t considered remotely risqué to buy into loss-making firms when they list. Snap, which lost $1.3bn last year, floated two years ago on a valuation of $24bn. Lyft, which lost $911m last year, listed in March at a valuation of $25bn. Pinterest was set to list this week with a possible price of…

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it wasn’t all bad…

Astronomers unveiled what was once thought to be almost impossible – an image of a black hole. “This image is going to be in all future astronomy textbooks… just wow,” the University of Surrey’s Jim Al-Khalili wrote on Twitter. The image is really of the black hole’s “shadow”. Because black holes trap light, they are, in fact, invisible. The reddish ring, the “event horizon” of super-accelerated particles, is “the boundary beyond which our understanding of physics breaks down”, says The Times. Capturing the image was no mean feat. Since the black hole in the galaxy M87 is so far away, a telescope the size of Earth would have been needed to view it. So astronomers combined eight radiotelescopes, combining the data using complex computer algorithms to produce the single image.…

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emerging markets bounce back

Last year emerging market stocks fell by nearly a quarter. But in 2019 it has been a different story. The benchmark MSCI Emerging Markets Index has gained 13%. Chalk it up to “a new liquidity environment”, say Will Denyer and Udith Sikand of Gavekal Research. “Tighter US dollar liquidity made 2018 a terrible year for risk assets.” When US interest rates are rising and the dollar is strong, money tends to flow out of traditionally risky assets, such as emerging markets, and into US securities with rising yields. But for now, the market is expecting “abundant liquidity” for the rest of the year, given that the US Federal Reserve has paused interest-rate hikes and is set to pause its quantitative tightening (QT, the reversal of its money-printing programme). The European Central…

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trump’s next trade tit-for-tat

World trade volumes fell by 1.8% in the first quarter compared with the previous three months, according to figures from the Dutch government. The sudden loss in trade momentum has been almost as severe as the aftermath of the 2001 dotcom bubble when trade volumes slid by 2.2%, says Tom Rees in The Daily Telegraph. And while the trade war between the US and China may now be settled in negotiations, a new trade dispute is looming over the global economy. US president Donald Trump is taking on Europe. In response to a dispute over aircraft subsidies, Trump’s administration has drafted a list of tariffs on $11bn-worth of European goods, and is also considering new levies on European cars. American fans of “fine European swordfish steaks, cotton sweaters, jams, and…

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silver will hitch a ride on gold

While gold has been rallying over the last six months, silver’s performance has been underwhelming. But this could soon change. “As investors’ appetite for gold improves, silver might share in the yellow metal’s prosperity,” says Myra P Saefong on Barron’s. Silver, like gold, is a monetary metal, deemed a safe haven and store of value. It tends to mimic gold’s movements but is typically more volatile as the market is smaller. One “real risk” is inflation. says WIll Denyer of Gavekal Research. Investors are looking the other way thanks to the recent growth scare. But the outlook is improving and given the extremely tight labour market and rising wages, there is a danger that US “inflation and inflation expectations rebound to levels that are too high for comfort”. That would raise…

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“Many... UK investors will have been blindsided by two key developments: one being the peak of the Japanese stock market back in 1989 and its subsequent collapse; the second being the inability of financial journalists to cover its more recent recovery objectively… A third development that won’t have helped will have been the widespread view that the Japanese are getting older by the second and pretty soon will have died off entirely…. But… things change. By dint of having entered a calamitous deflationary depression 20 years before the rest of the world, the Japanese had a head start. Japanese companies, and not least their banks, learned something… Investors and index compilers, not so much. So, labouring under the false belief that Japan was a basket case, investors have largely missed…