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MoneyWeek Issue 1021

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MoneyWeek is a weekly magazine that enables you to become a better-informed, smarter investor and enjoy the rewards of managing your money with confidence. 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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United Kingdom
Dennis Publishing UK
51 Issues

in this issue

3 min.
from the editor-in-chief...

There isn’t much obvious upside to the Covid debacle. But perhaps there will be a long-term silver lining, in the form of a push for reform of the government machine. We have turned to the state to protect us in a most extraordinary way, note John Micklethwait and Adrian Wooldridge in their latest book, The Wake Up Call. We have given up “our most cherished liberties”, including the right to leave our own homes. Terrified on the one hand of death, and on the other, economic ruin, we have allowed the state to regulate – and finance – our every move. “The silver lining to the coronavirus debacle is that it might lead to government reform” This could have been nice for those who went into politics to control others: the whole thing…

1 min.
mirror, signal, ehm...?

Once a learner driver has paid £23 to take their driving theory test, they are told that they should revise for at least 20 hours before taking it, says Holly Bancroft in The Mail on Sunday. “But it would seem some candidates don’t even manage to open the highway code.” Last year, 279 learners got every one of the 50 questions wrong – incredible given that some answers “only require common sense”, and even guessing at random should give a score of about 12 out of 50 (there are four possible answers for each question). The Driving Standards Agency said that of the 1.9 million people who took the test, just over a million scored 43 or above to pass first time. Those who failed might want to remember that…

1 min.
help us to celebrate 20 years of moneyweek

The first issue of MoneyWeek came out on 4 November 2000. Back then, the iPhone didn’t exist. No one had heard of shale oil – the biggest energy story looming on the horizon was the threat of “peak oil”. As for bitcoin – we were all still struggling to wrap our heads around the idea of paying for purely digital goods, let alone using a purely digital currency. Britain was thinking of joining the euro, which wasn’t yet in circulation. The Bank of England interest rate was 6% – imagine trying to pay your mortgage at that rate today. Chancellor Gordon Brown was in the process of selling off half of Britain’s gold reserves at an average price of about $275 an ounce – a bargain (for the buyers). Amazon’s market cap…

2 min.
european markets deserve a second look

A surge in coronavirus cases in Europe means that talk of a swift recovery is now a “summer memory”, says Peter Goodman in The New York Times. French prime minister Jean Castex this week acknowledged that “the second wave is here”, as governments across the continent tightened restrictions. Spain has declared a state of emergency in Madrid and instituted a partial lockdown there. Economic gloom is spreading. France now expects activity to remain stuck at 95% of pre-pandemic levels for the rest of the year. Spanish business sentiment hit a four-month low last month. The pan-European Europe Stoxx 600 index is down 11% so far this year. The changing of the guard The common investment “trope” is that Europe is full of “old economy” firms while the US races ahead with technology, says…

2 min.
us stocks have a spring in their step

US stocks enjoyed their best week in three months last week, with the S&P 500 advancing 3.8% despite deadlock in Washington over a new stimulus bill. On Monday, the Nasdaq index had its best day since April. The rising odds of a clear victory for Joe Biden and a Democratic blue wave (see cover story) have raised hopes of a post-election stimulus binge. The new mood is especially evident in the Vix index, the “so-called stock market fear gauge”, says Randall Forsyth in Barron’s. It has retreated below 25 from almost 30 earlier this month. That comes despite the fact that Biden is proposing a rise in capital-gains tax. JPMorgan strategist Nikolaos Panigirtzoglou notes that previous hikes in 1986 and 2012 delivered a roughly 5% hit to American stocks. Perhaps even more…

1 min.
our shunned stocks are a buy

The UK stockmarket’s performance relative to the global average over the past 12 months has been “the worst in over 40 years”, says a Morgan Stanley note. A bungled pandemic response and ongoing Brexit uncertainty aren’t helping. Yet the key issue is the FTSE’s sector mix. This has been the year of the technology stock, but out of 15 major world markets, only Australia and Switzerland have a lower technology weighting than the UK. Our indices are heavy on unfashionable commodities and financial stocks. The FTSE 250 is down by 18% so far this year, while the FTSE 100 has shed 21%. The FTSE 100’s cyclical sectoral composition – “consumer discretionary, energy, materials and financials” – means it is badly hit when the economy tanks but also poised to outperform when…