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Holly's Blog: Stirling & guilt in global markets

5 July, 2019

*Some quality journalism at the BBC seen yesterday as they lead with breaking news about a Scottish City and feelings of remorse.*

Yes, the pound fell on Mark Carney’s rather gloomy comments about global trade angst and a potential no-deal Brexit. Across the board, things are frankly a little weird in financial markets at the moment.

US shares and bond prices have both gone up this week which is naughty, rule-breaking behaviour. They are not supposed to both go up at the same time. So what’s going on?

The Federal Reserve meet later today in the US (rather selfishly after I write this blog) and people are expecting an interest rate cut. This expectation will boost shares. Why? Well, cheaper money = more money borrowed and put into factories and businesses and employment = good for companies. And consumers borrow more and spend more too. Whoopee. But at the same time people are a bit spooked about global growth prospects – and when people get nervous, the institutional investors’ equivalent of cash under the mattress is to buy boring old safe Government bonds. So these bonds get a boost too.

The Dow Jones Industrial index in the US (30 mega stocks) reached an all-time high this week. The FTSE 100 is up about 6% in a month. Italy’s stock market is up 10% since early June.

I feel like we’re about half an hour into a scary film and the sound editors have just started that spooky music very quietly in the background. This doesn’t mean I will leap into action or advocate anyone changes course. Because the Psycho moment could be next month or it could be next year or indeed more distant. I know too many people who put off investing because they were waiting for the next crash. Missing out on years of bull markets.

The Hargreaves Lansdown spring clean starts

My Lindsell Train global equity fund holding – a concentrated mixed bag of big global brands – is up 12% over 3 months.

Hargreaves Lansdown confirmed today they have removed the Lindsell Train UK and Global funds from their recommended list. Nothing to do with performance but governance. As a stock picker, Nick Train likes the FTSE100-listed Hargreaves Lansdown and this stock makes up 8.6% of his current UK share fund. But of course Hargreaves Lansdown has been badly burned by holding the suspended Woodford fund on its recommended list. So someone has put on the corporate marigolds and is not taking any chances. Although Nick Train is not going to be daft enough to risk his performance or reputation by toadying up to any one distributor or ‘sales outlet’, this was always a relationship which was open to scrutiny and whispers from detractors. So it makes total sense to make this disconnect.

Hargreaves Lansdown told me this morning that the discount negotiated on these two funds will remain/there is no change for now. So it’s business as usual for investors and customers.

Thanks to all of you who helped us build a picture in our survey 2 weeks ago about what Best Buy lists mean to you. 70% of you use them, although 45% say this is as a sense check only, whereas 25% of you rely on them to pick funds. But trust has been severely dented and a quarter of you had confidence of less than 3 out of 10 about these lists. The average confidence level that these lists would help people generate better returns than going it alone was 4.4 out of 10. Ouch.

I do use them. But like many of you, I do have a look across a few and look for consensus. Far from perfect but in a busy world it’s sometimes all I can manage.

Have a great weekend everyone – enjoy the sunshine!