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The idiot is, of course, idiot

There are, however, other good reasons for this move. In particular, UK pension funds have almost given up investing in the shares of UK companies now. In a little more than two decades such shares have fallen from half of portfolios to just 4% whilst holdings of bonds by such funds now exceeds 70% of their value. UK investors are just no longer interested in what UK companies, and companies more generally, do.

He’s measuring only defined benefit pensions funds. Near all of which are closed to new members, most of which are in run off. When a pension fund is only looking to pay out pensions, not save for them to be paid out in the future, then bonds are indeed a likely investment. Plus, obviously, the G Brown changes which forced them to do this.

From this oversight he then builds another one of his tosser theories:

Although, if I am candid, I think it more than that. They are no longer interested in equities because unlike the more ideologically driven US markets they have seen through what the modern company does.

No, because by looking only at defined benefit he’s completely missed the defined contribution funds which are the vast majority of pensions currently being built rather than pensions currently being paid out.

Yes, this man is indeed paid to be an economics professor at a British university.

12 thoughts on “The idiot is, of course, idiot”

  1. Even ignoring the Brownian rules for defined benefit pensions, why should a beneficiary give a toss about how they’re invested? Income is guaranteed. The only part of the pensions market invested heavily in bonds is the part where the end-user has absolutely no interest in how it’s invested!

  2. I am liking this gem:

    The FT suggests there are a number of reasons, of which “the prospect of a government willing to spend hundreds of billions of dollars on infrastructure” is one that apparently appeals to investment bankers. How very odd you might say that they so like public money, except for the fact that the opinion is wholly logical: the foundation of market success is always the quality and quantity of government spending in modern economies.

    So Biden is spending like a drunken sailor with minimal oversight of what’s being pissed up the wall and they are looking to get some of the runoff from that? How daft of them – maybe they need to invest in bonds offering 1% at a time of 10% inflation?

    This is even better:

    The UK private sector has no interest in the future. Their purpose is to turn debt into dividends. That is it. Starmer might want to stop that. Unless he does his ideas about the private sector are wholly misplaced.

    This comes after a shit sandwich of 6 definitions which would shame an undergraduate and provide concrete proof that either A: someone took his accountancy exams for him or B: he is suffering from mental degradation and inability to think coherently.

    Additionally the contention that he wants to nationalise, without compensation, vast swathes of the economy is confirmed. What an odious, evil piece of crap he is.

  3. “this man is indeed paid to be an economics professor at a British university.”

    Be fair, he is at least economical with the truth.

  4. Jeremy Henrickson

    What are the chances of this getting through Spud’s censorship?

    How can you keep getting this wrong, despite having this pointed our to you time and time again?

    Defined Benefit (DB) pension schemes were previously the main investors of private individuals’ pension investments. While these were still open to new members and to new accrual, a significant allocation was made to equities, as this asset class has historically had the best long-term returns over any 5-year+ period.

    As DB schemes in the private sector have closed to new members / new accrual, and therefore become cashflow negative , they have needed to focus on managing the liabilities as they mature. This has resulted in increasing allocations to government bonds (and corporate bonds) to match the pension promises to the members.

    In contrast, as DB schemes have closed, private individuals have been directing their pension savings into defined contribution (DC) schemes, the vast majority will be in equity investment, probably 100% in equities in the early life of the individuals and then potentially reducing over time as retirement approaches.

    If you only look at the (declining) DB schemes above and ignore the (growing) DC schemes, then you will continue to draw the wrong conclusions.

  5. “He’s completely missed the defined contribution funds which are the vast majority of pensions currently being built rather than pensions currently being paid out.”

    Oh no he hasn’t missed them at all. He’s got his bulging little piggy eyes on them so doesn’t want them to be seen as pensions. To him thats not pension assets at all, it ‘wealth’ that should be taxed into oblivion. Or forcibly placed into ‘investments’ of his choosing.

  6. As Jim says – spot on as ever. One definition you won’t see on TRUK

    BRIGAND – The meaning of BRIGAND is one who lives by plunder usually as a member of a band :

    But it sums him up to a tee – he wants to steal your wealth for his own pet obsessions

  7. Interestingly a state run along Spud’s principles is facing problems:

    children are reportedly being secretly dropped off at orphanages by desperate parents unable to feed them, amid chronic food shortages in the reclusive state.

    The practice is said to be fuelled by the belief that orphanages are receiving supplies of food and medicine donated by the international community, despite restrictive Covid-19 policies that have severely hampered the flow of overseas aid.

    “Women who are starving to death are secretly leaving their children … at night or in the early morning, and then they disappear with no trace,”

    He is shameless….

  8. Bloke in North Dorset

    Plus, obviously, the G Brown changes which forced them to do this.

    I’m willing to bet good money that not only did he cheer Brown’s move but also that he labelled anyone who pointed out these would be the consequences as neo liberals, right wing and possibly even fascist.

  9. Why should we take lectures on pensions from a 64 year old whose financial position is so poor he has to appeal for donations on his blog despite having various lucrative grants, consultancies and a part time professorship?

  10. He has no clue. UK Bonds are cheap (to issue) with low yields in the UK. But no-one wants UK equities in volume.

    Older people (via Pension schemes and insurers like my employer) have loads to invest in excess of the supply so bond yields are low. Younger people have spent it all on housing and have a low savings rate so equity demand is low, which means the cost to issue equity is high (and share prices which management need to raise to get paid £££ are therefore low).

    That’s a sign of the age of the people investing and the relative attractiveness of the UK for companies. It’s also a sign the UK is gradually bleeding to death with a large state burden on a slow growth private sector.

  11. You made it through the censor barrier Jeremy, but apparently you missed the point.
    It’s an interesting technique the Spud has – like the point of a long jump is to jump a long way and if you criticise the run up you’re missing the point.

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