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What a ghastly shite eh? One who claims to welcome constructive criticism so often

Anton Newcombe says:
November 24 2023 at 9:28 am
The rise in gilt ownership is purely down to valuation as rising interest rates have forced prices down making now a much more attractive entry point. Short dated gilts currently yield 5% and if you buy low coupon gilts the bulk of the return will be as capital gain and this is especially attractive for private investors as capital gains on gilts are tax free.

When gilt yields were sub 1% they represented very poor value and were mainly owned by pension fund managers who were forced to own them for regulatory purposes. Buying gilts around that time, even as recent as 2020 would have been a poor investment.

So the rise in interest rates has led to gilt prices falling sharply hence making them more attractive to buy now. The ending of QE and emergence of QT has led to price falls across all maturities where long dated yields touched 5% and again they were attractive for private investors to buy.

So guilts are much more attractive now than they have been compared to equities. As interest rates fall and gilt prices rise this will become less so as gilts can only offer you a finite amount of return.

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Richard Murphy says:
November 24 2023 at 10:35 am
You so totally miss the point. It’s quite scary really.

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Anton Newcombe says:
November 24 2023 at 11:52 am
“You so totally miss the point. It’s quite scary really.”

What point do i miss? Do you think people want to invest in gilts irrespective of value? Do you think those who bought a few years ago are happy sitting on 20-59% losses? But that loss is tempered by the fact they made losses on govt gilts? of course not… it’s about value.

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Richard Murphy says:
November 24 2023 at 1:01 pm
You still miss the point

If yoy really think people are as rational as you imply then youy do not understand why they save as they do

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Anton Newcombe says:
November 24 2023 at 1:57 pm
“If yoy really think people are as rational as you imply then youy do not understand why they save as they do”

Yes i agree many high street savers through inertia do not behave entirely rationally. But the increased buying of gilts through the platforms like HL and AJ Bell is rationally motivated by he value offered by gilts post the fall in prices after the rise in interest rates and the end of QE /start of QT. It will reverse when the value has been extracted.

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Richard Murphy says:
November 24 2023 at 5:17 pm
You still don’t get it

I suggest you go and play elsewhere where your ‘talents’ might be appreciated

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16 thoughts on “What a ghastly shite eh? One who claims to welcome constructive criticism so often”

  1. Anton is switched on and knows what he is talking about, Murphy doesn’t and is motivated solely by the “ Big State”…that dialogue shows up his knowledge just isn’t there

  2. What’s so lovely about Murphy is the way he starts off many of his critical comments with “Respectfully,” and then proceeds to be outright disrespectful and insulting.

    Truly a vile, repellent fascist. One has to wonder if he’s like this in person. If so, it’s amazing he’s not beaten up regularly.

  3. The Other Bloke in Italy

    Occasionally, someone writes in to ask why our good host has such a down on Murphy.

    I guess this exchange perfectly explains the Why.

    If Anton goes round and gives Murphy a kicking, it would be fair and reasonable.

  4. I wonder if his pension and savings are in gilts, and he has taken a big hit. Obviously, he can’t ever admit he made a mistake, so he is in complete denial.

  5. And people still Do ask why he received a ban from Every pubwatch pub in Downham Market? Imagine being a landlord subjected to this kind of harangue by someone utterly incapable of yielding an inch or admiring ignorance.. He is just ghastly and I do hope there is a Javier Milei style figure who starts doing some of things his fantastical flights of fancy sometimes theorise the U.K. is on the verge of…

  6. If Anton goes round and gives Murphy a kicking

    In a purely academic sense that’s precisely what he’s just done. Spud’s comments are the equivalent of a bloodied loser looking up from the canvas and proclaiming “I won”.

  7. Is Spud implying he has some access to what constitutes “rationality” and therefore should commandeer everyone’s capital for their own benefit?

  8. In deference to him he has the kernel of a point – there are people who save with the local post office or put their money in premium bonds regardless of far more attractive interest rates if they shopped around. They are the kind of doctrinaire socialist who insist socialism failed because it wasn’t ‘real socialism’ – the problem is he thinks there’s Millions of them when in fact they’re a small and dying minority.

  9. “there are people who save with the local post office or put their money in premium bonds regardless of far more attractive interest rates if they shopped around. ”

    Yes but is that irrational? Yes you might be able to get better rates if you shopped around, and moved your money from A to B all the time, but what if you’re someone who hates paperwork? Would it not be rational to forgo X in extra interest for the simplicity of sticking it in the Post Office or NS&I and leaving it there? Equally, is not being someone suspicious of higher rates not rational – by definition they imply higher risk. Yes I know you are covered up to £85k, but even then you could have to wait to get your money back if a bank collapsed. So putting it in a safe and secure but lower yielding institution is not totally irrational either. Equally pure laziness is rational – you value the ability to do something else (or nothing at all) over dealing with financial institutions. We don’t say that someone who decides to work less hours in return for more leisure time is being irrational, so why say that someone who prefers to do nothing than deal with finances is being so?

  10. Quite so, Jim. I keep some ‘quick access’ money in Premium Bonds, which give me a decent return (less than inflation, of course) and a (very) outside chance of winning a million. For those who want to concentrate 24×7 on adjusting their portfolios, I say good luck to ’em, but I can find better uses for my time.

  11. Is he saying that people want government gilts because they’re irrational – therefore government should (in this particular case) indulge in their irrationality by making gilts available for easy purchase by irrational people?

  12. People like government guilts because they are low (zero) risk. Comparable bonds have a better rate to compensate for the higher risk. The less risk averse you are the more likely you will avoid gilts and go for the better rate of corporate bonds or shares. Risk or return, it’s the buyers choice. Murphy would probably argue that the government bonds should have a better rate to make them more attractive and ignore that this would mean the the corporate bonds would set an even higher rate to make people buy them.

  13. Bloke in North Dorset

    “ Murphy would probably argue that the government bonds should have a better rate to make them more attractive and ignore that this would mean the the corporate bonds would set an even higher rate to make people buy them.”

    Spud doesn’t do 2nd and higher order effects.

  14. Jim,

    I think that your description of the reason many people park their money in one place and never or rarely move it is spot on. They have better things to do with their time than stay current with the vagaries of the financial markets.

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