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Issue 950

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.

United Kingdom
Dennis Publishing UK
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51 Issues


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from the editor-in-chief...

“Public markets are the best way to create participatory and democratic capitalism” Between 2000 and 2018 the number of private equity-backed companies in the US rose from around 2,000 to more like 8,000. At the same time the number of publicly listed companies fell from 7,000 to more like 4,000. The listed firms are still worth more than ten times the private-equity backed ones (being rather bigger). But you get the idea. These days, if you want to be in the growth game you need to be invested in private markets. That’s why every pension-fund manager you talk to is muttering about getting into private infrastructure, property and bit more private equity. It’s why more and more retail funds are looking to add some unlisted companies to their portfolios (if you want…

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loser of the week

De La Rue, which designs and manufactures 7.3 billion of the world’s banknotes every year, has taken an £18.1m hit in its accounts because of “outstanding accounts receivable” from the Central Bank of Venezuela, which is “currently unable to transfer funds due to non-UK related sanctions”. Venezuela – where inflation hit 130,000% last year, had previously been a “very good” customer, said chief executive Martin Sutherland. Helen Willis, De La Rue’s chief financial officer, added that “they really do want to pay that debt”. It’s been a bad year for De La Rue, which also lost the contract to print post-Brexit British passports to a Franco-Dutch company, and has seen profits fall by 74% and the share price by 30%. Good week for: An anonymous Edinburgh family could be quids in after…

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trump turns his guns on mexico

Donald Trump’s trade policies display “all the finesse of an elephant attempting embroidery”, says The Economist. Locked in an impasse with China, the White House has now also initiated a major trade escalation with Mexico. America’s neighbour and largest trading partner has until 10 June to clamp down on the flow of migrants into the United States or face tariffs of 5% on all imports. The levy could eventually rise to 25%. The move surprised markets, which had thought that US-Mexican disputes had been settled. Mexico’s peso slid to five-month lows against the US dollar. America’s S&P 500 has had its second-worst May since the 1960s, losing almost 7%. The Trump administration has also ended India’s special trade status, which had eliminated some tariffs on Indian imports, although the impact is…

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nowhere to hide from the trade war

A few weeks ago, “I suggested Mexico as a haven from the trade war”, says John Authers on Bloomberg. But the abrupt targeting of Mexico shows that there may not be any reliable sanctuaries from Trump’s tariffs. Ironically, the US and China may be less badly affected than elsewhere by their own trade war, says Tom Holland of Gavekal Research. US exports account for just 12% of GDP and there is room for the Fed to cut rates in the case of a slowdown. China also enjoys similar “policy room” for manoeuvre. By contrast, about 45% of Europe’s GDP comes from exports, leaving the continent’s economies exposed to a global trade slowdown. Interest rates are already negative. Japanese and European carmakers earned a reprieve from Trump on new car tariffs last…

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the flight into dodgy debt

German bond yields are down to all-time lows as market turmoil causes investors to pile into fixed income, no matter how overpriced. The yield on the benchmark ten-year bond touched –0.219% on Monday, with investors apparently unperturbed by the negative yield. Bond yields move inversely to prices, so when yields fall – even below zero – that still implies a capital gain for bond holders. Bond bullishness was not limited to Europe’s most rock-solid country. Investors have even been lapping up Italian debt, notes Nikou Asgari in the Financial Times. Rome issued €4.6bn of bonds last week, with “demand for the five-year bond” at its highest level since August last year. Ten-year Italian yields hit a two month-low of 2.48% this week. Yet Rome’s borrowings have reached an eye-watering €2.4trn, or 132%…

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“On 31 May, 1999… Barron’s... was warning about market risks, especially in the technology sector… Over the next few years, Amazon’s stock would drop 95%, eventually falling to below $6 in 2001… [yet] Amazon has [also] risen 4,606% since Barron’s published [that] column, with an annualised average return of 21.1% — about quadruple what the S&P 500 returned over the same period… [So] anytime some company is said to be ‘the next Amazon’ (or Apple or Microsoft), keep in mind that most people would be unable to withstand the sort of pain and wealth destruction that goes along with investing early, even if the ups and downs are temporary. Only if investors can withstand the subsequent drawdown – in Amazon’s case, 83% in 2000; 73% in 2001; 41% in 2004;…