TV, the Moron Premium and Nul Points

This week has been a bit mad. On Tuesday night, I headed to ITV Studios to take part in the live Martin Lewis Money Show (available on catch-up at ITVX). I could talk about Stocks & Shares ISAs in my sleep, but the stakes are higher when there are a few million people watching and you have to remember a) not to swear and b) not to fall off a rather uncomfortable stool!

We also launched our new ISA & Pension Finder tool, an investing matchmaking service which suggests what we think are the best three ISAs or pensions for you to consider. Martin asked me about costs a lot and I shared some fee-free platforms (Trading 212, Freetrade and Lightyear came to mind). If you like your brands a bit more established, Scottish Widows charge no admin fee and just £5 per trade.

I also think it’s important to say that price is not the be all and end all. Our tool will serve up the cheapies for those who think price is the most important factor. But also surface other providers for those who prioritise customer service, ready-made ISAs, humans on the phones or the best journeys for beginners.

Please share it with friends or family if you think it’s helpful. We rely a lot on our readers helping to spread the word, so thanks in advance.

Volatility Vultures amidst Westminster Wobbles

This week has been Chaos Central in Blighty.

Bond

markets are watching the Burnham versus Starmer face-off with some trepidation. Why? Everyone’s worried that a new (potentially) spendthrift Chancellor might be in the wings, shouting whoopee and writing cheques which we can’t afford, so people think lending to the UK Government is a riskier bet and demand more in return for doing this. Traders call this the ‘moron risk premium’. The extra ‘interest’ demanded when markets think a loose cannon is in charge of the purse.

And before anyone shouts at me for perceived political bias, I refer you back to Liz Truss’ mini-Budget in 2022. Traders don’t care about blue, red or green. They just care about money.

Higher bond yields are not just the stuff of Economics textbooks. They matter. It’s a waste of money (the Government spends more on interest, not services), it keeps interest rates higher, makes it more likely that mortgages stay higher for longer and it does for growth what men wearing black socks and sandals with shorts does for passion. Kills it.

Amazingly enough, despite all the jockeying for position, the FTSE 100

has only fallen marginally this week, although under the bonnet, there are signs that we get Nul Points in the financial Eurovision.

Short sellers are out in force. These are people who think prices are going to fall. Imagine your favourite wine is £15 a bottle. You think it’s going to get discounted. So, you borrow the wine from Tesco, sell it to your neighbour for £15, watch it fall to £10, buy it at Tesco for a tenner and then return it. You’ve made a fiver from something falling in price. But it’s risky – if the wine goes up to £20 you’re stuffed. Short selling is selling something you don’t yet own, in anticipation of being able to buy it in the future at a lower price and return it.

Traders are short selling the pound. That’s a thumbs down. And also, UK banks. Lloyds and NatWest are more domestically focussed than a bank like HSBC, for example, and they’re first in the firing line if the domestic economy hits the skids. If you want to know what’s really going on in the UK, don’t ask a politician. Look at the bond markets, the pound, the FTSE and bank stocks. Money doesn’t lie and is a very good mirror.

But what has done the best over the last three months?

Global markets remain volatile and I confess to some naughty day trading with my favourite, the Korean Kospi, which bounces up and down like an AI-fuelled tennis ball. This is with a very small amount of money and it’s glorified gambling – not recommended – just an itch I have to scratch with things that move around by 5% a day pretty frequently. If any of our more experienced readers trade, I think it’s always sensible to protect yourself with stop losses and limit orders.

Looking to other, less bonkers markets and sectors, we’ve published an updated comparison of major sectors’ performance to the MSCI World index to the end of April.

Any guesses as to the best performing sector over the last 5 years? Energy – up 173% compared to Technology which is up 130%. The MSCI World Index (a basket of the world’s largest 1,300+ companies) is up 74%. As for the best performing funds over the last 3 months, they include gasoline, semiconductors and space innovators.

So – ending where I started – this is why a key takeout for beginners watching Martin Lewis was that starting with a single fund or Exchange Traded Fund, which copies and tracks the MSCI World index, is a very easy and sensible thing to do. As long as you don’t have expensive debt to prioritise paying off, your timeframes are 5 years plus and you know it will jump around like a drunk grasshopper at times, so won’t panic sell in a wobble. Our best-selling fund lists will show you the most popular index funds and global Exchange Traded Funds last month.

Have a great weekend, everyone. Might be a touch hormonal at ours. We’re one week into GCSEs and A Levels. It’s going to be a looooong month!

Holly