Its Not Harry

Comment and opinion for retail investors in the UK

Education

YAP – Reaping what they sow

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Yesterday’s big market sell off was hardly a surprise. With an economic incompetent (to put it mildly) and his sycophants interfering big time in global trade and discharging the whole magazine of his revolver into the foot of the USA, it was eventually going to get through to investors, however MAGA they might be, that there coud well be a recession in the USA.

It has become fashionable to suggest that the markets are permanently propped up by the huge sums in index tracking ETFs and funds and also the personal wealth of the billionaire set. A further argument in favour of the market being a one way bet is that asset allocation decisions are more commonly made by algorithms than by humans these days. Those are valid arguments, in my opinion, but they have an extension: when entities (be they people or machines) are in control of very large amounts of money in the equity markets, if they are triggered to a negative inflection point, the sell off will be dramatic.

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YAP – Boomerang Economics?

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The last few weeks have certainly been tumultuous in terms of utterances from the USA’s leadership and global reaction to that.

One thing that I have noticed is that the announcements from the Trump camp seem to have achieved something quite unexpected (although perhaps not so surprising with hindsight). There has been a complete rotation, still ongoing, in investors’ valuations of global stock markets by region. Look at this data:

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Deep Dive – March 2025

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Generative AI – Implications for Investors

A discussion with a subscriber recently prompted me to think that investors ought to be thinking now about the real long-term implications of the release into general use of what is loosely called generative AI – software like Chat GPT, Apple Intelligence, Gemini and DeepSeek.

Introduction

The shorthand AI is actually unhelpful because the word intelligence has always been the subject of controversy and debate and even Wikipedia’s opening lines under the heading of Intelligence point out that the definition is wide and has for over a century been a subject of professional debate amongst psychologists rather than philologists. 

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YAP – a quiz

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I have included quizzes before and this one again is designed to test your expert understanding of the workings of investment markets. As most of my readers are quite experienced, the questions are in the main not the sort one can answer with multiple choice box ticking!

In fact, the answers are more of the ‘short essay’ type in most cases, not that I expect you to actually write them out! I recommend thinking about what you know and deciding how confident you are that you have got to grips with the relevant topic.

I also have no intention of writing out the answers, but will publish a video with reasonably in depth explanations in about a week’s time, so get thinking!

I hope you won’t just use Google or AI, but if you are really stuck, that will still help you learn.

The Questions

  1. List 5 of the main high level asset types available to UK retail investors and the type of legal instruments that could be used to buy them
  2. Explain in brief terms 3 different ways of diversifying investment risk and give examples for each one.
  3. A media company trading in the USA was listed on the NASDAQ in 2017 and is valued by the market at 300 billion USD. It has a P/E of 41 and pays a dividend at 0.3%. Is this a growth or value stock?
  4. Another company listed in the UK mid-250 was spun out of a bigger group 3 years ago, although its business has existed for decades. Its P/E ratio is 11.2 and it pays a dividend of 3.8%. It is thought to be a takeover target with US interest in the public domain. What IA sectors would perhaps include funds that would own this share?
  5. What do AUM or FUM mean? Why is that data relevant if you are reading an opinion from a fund manager about the prospects for the market sector in which they invest?
  6. Why are investment trusts (IT’s) more likely to be more risky than OEICs, by absolute certain operation of UK law? Have you heard of SABA?
  7. Why might selecting investments in the IA sectors Emerging Markets and Asia Pacific ex-Japan offer very little diversification?
  8. Why do growth equity funds fall more in value than high dividend value funds when interest rates rise?
  9. List 3 reasons why an investor mnight see some merit in investing in a muti-asset, passive tracker fund (eg Vanguard Lifestrategy) instead of running their own portfolio?
  10. Now list as many disadvantages as you can think of that would need to be understood before taking such a decision.