Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Plato, I fully understand your skepticism regarding my remarks, however Adam Smith, the poster boy of free market capitalism acknowledged that capitalists would always attempt to fix prices if ever they were in company, against the interest of the general public, regardless of it being an occasion of pleasure or diversion i.e. whenever possible they would get their heads together to price fix at an artificially high level. Currently in the UK there is approximately the same amount of developed residential land as golf clubs, roughly 2%.
Property developers land bank their assets to create artificial scarcity.
Markets are inefficient because Tesla has a market Cap of 1600 PE and people drink and smoke although it kills them. Disclosure I own BATS and IMBS.
Efficient markets are BS. Do we all watch Strictly? No. Why? Because it is Carp. The common denominator does not suit all tastes.
Less regulation leads to more house building....eureka.
Markets work wonderfully as long as there is competition....there's the rub.
I have read your discussion. My understanding is that the crisis was caused not by the stupidity of politicians, who desired to manipulate the market, but as a result of policies founded on the assumption by central bankers that the international financial markets were self-correcting mechanisms allocating resources efficiently if allowed to function without constraint. Following financial deregulation globally the ingredients were all in place. Alan Greenspan was an ideologue, a personal friend of Ayn Rand, who believed in efficient markets as an article of faith. When he encouraged excessive risk taking and underwrote losses following the dotcom collapse and 911, the future became inevitable. Collectively, driven by naked self-interest, the bankers, hedge funds, financiers, brokers and the whole cast of crooked, greedy, unconscionable shysters brought the system down via moral hazard, rather like drowning people swamping a life boat. The bottom line is that human nature and efficient markets are not necessarily compatible. Greenspan admitted his error and confusion when he testified on Capitol Hill in the enquiry into the GFC. At one time along with Larry Summer and Rubin he was feted as the saviour of the world. Not in hindsight it would appear.
LTI, I checked myself and by year end the share price had dropped to below £4. It might have taken a beating since 2017 but it is still at an 8X multiple and when you consider dividends the performance is incredible. Better than gold or property. I calculated that, in round numbers, a £100,000 investment would have realised £1,000,000 if you cashed out at recent highs at an annual dividend of over £60,000. Let us hope that Lloyds can emulate BATS performance in the years to come.
LTI, that is precisely my point. If you look at BATS over the past 10 years and don't take income into account you conclude that the share price is disappointing since it is approximately where it was in 2011. If you include dividends and apply a compound rate of 2% the income is substantial. Factor in payments throughout the pandemic and you have a solid performance that cannot be judged on share price alone. I bet you wish you had purchased more in hindsight!
Despite the notional differences between capital and income, especially for taxation purposes, it is entirely reasonable to combine the two for a total return enabling meaningful comparisons between yield and growth stocks. If you hold a share such as BATS for a decade and moan about capital value depreciation, you should also account for accrued income and compound interest for balance. Tesla or Amazon are an entirely different proposition. To add another layer of complexity you should also adjust for inflation and taxation if you are comparing to an asset that does not suffer tax e.g. your main home of a vintage wrist watch. As ever the Devil is in the detail and context is critical. GLA
Bananaman, I agree entirely and am a holder of DLG, IMB, BATS, GSK and MKS based on the PE ratio. There is a bias against old technology value stocks in favour of momentum narrative stocks such as Tesla. Moreover, the distaste for the FTSE following Brexit is reflected in the disconnect between the FTSE and Dow/NASDAQ. If a crisis in Europe emerges there is a compelling argument that UK value stocks will see exceptional relative price increases. Reality may strike!
Volcano, there are very few other places to stash your money. Property, gold, crypto, negative yielding bonds are all punchy. There isn't enough room under the mattress to stash all the fiat currency being printed. The ex President of Afghanistan even left suitcases full of dollars on the runway at Hamid Karzai International Airport because there was not enough room on the plane!
Falkland, investing is a fickle occupation. I have also been following M&S where I originally paid approx. £2.20. Boy did it take a hammering. I thought it was a good bet for recovery for the following reasons: reduction in competition due to failure of competitors (last man standing), possible PE target, good brand acquisitions, problems associated with supply in fast fashion, good management (Archie Norman), ability to reduce rents due to reduced High Street demand, good property portfolio, tie up with Ocado, strong food business, possible restoration of dividend, very low PE relatively, ability to remain open during pandemic and the target audience of 40 years plus to be big spenders on reopening. Regardless of the rationale, it really took competitive interest in Morrisons and the short sellers getting spanked to move the needle. Now there are a loads of buy notes being issued. It is easy to predict the future when it is in the past! So much ex poste facto self- congratulatory pabulum and spurious intellectualisation circulated by market commentators it makes you sick. For every winner there is a loser. Sorry for your losses Falky.
The notorious Brown Bottom that occurred around the Millennium was much lower than the level you suggest. "The UK eventually sold about 395 tons of gold over 17 auctions from July 1999 to March 2002, at an average price of about US$275 per ounce, raising approximately US$3.5 billion." Wikipedia.
Sam, no apology required. Apropos Mrs May's term as Home Secretary, I concur. Really disgraceful and sewed the seeds of the Windrush scandal. I see the news from Afghanistan and suspect that many of Britain's erstwhile allies will be left to fend for themselves while being denied UK visas.
Sam, I may be wrong. I was not aware of May financially exploiting her former position. I acknowledge that this remark was not researched and bow to your greater knowledge if I am mistaken. Even Vince Cable had a sinecure at a financial institution. I mourn for the loss of political decency and detachment.
Do you take your socks off to count to twenty? The issue relates to both numerator and denominator. The the net figure of share in issue is key. Try filling the bath tub with the plug out and look at second and third order consequences rather than imagining that the world is flat.
LTI, That is totally BS and designed to cause offence. If you are worth it and produce the goods fair play. If you are mediocre and manipulate the metrics to enrich yourself then I object. You seem determined to characterise me as some species of communist yet what I really advocate is a free and fair market which rewards hard work and ability. By contrast, you approve of Cameron and Blair abusing their positions for personal benefit. Brown, May, and Major behaved with far greater dignity and decorum.
TFE, I appreciate the repetitive nature of this argument but object to being characterised as a newbie. I have contributed to this board over the past couple of years and followed it for years before that. Moreover, I have been a business and personal account holder of Lloyds for over 40 years and a shareholder for at least 25. I only joined the debate when I felt that the opinions being voiced were errant nonsense. Longevity is not a virtue unless you are a pier.
My objection to Buy Backs is founded on fact rather than principle. Executive pay has ballooned in the past 40 years. Much of the increase has been via shares and options in the risible notion that shareholder and executive values, once aligned, will improve decision making. In practice, the policy has lead to short-termism and self-interest which now blights the western financial model.
Most rank and file Lloyds employees would prefer direct payment over share incentives since the shares have performed so poorly in recent years. A friend, who was a middle manager at Halifax, quotes numerous cases of colleagues who put in every penny they could into Lloyds shares only to find themselves facing retirement in penury.
The real beneficiaries of Buy Backs recently are senior executives who ramp share prices to exercise their options then immediately waltz off to another handsomely rewarded job elsewhere a la our very own Antonio. At the very least there should be a claw back provision or time delay. However, when GS tried to squeeze money out of their previous COO Gary Cohn he fought tooth and nail to avoid doing the honourable thing.
Total carp, if the company issues shares equivalent to those retired in order to reward managers. It is a method to recycle dividends into the pockets of directors. Moreover, if incentives become misaligned the whole system creaks. Buy backs only make sense in privatisations. Execs goose the numbers to maximise personal rewards in order to sell their shares at the high water mark in the short-term. The company, the long-term shareholders (aka owners), staff, stakeholders, and ultimately society are all screwed in the name of short-term smash and grab shareholder value maximisation BS. Even Jack Welch conceded that the policy was 'the dumbest idea in the world ever'.
Agreed entirely. Anybody who thinks that share buy backs are a good strategy take a look at Boeing prior to Covid. Don't issue more shares and don't get high on your own supply!
You said it. At last we agree.
They would if she had been PM and had the Chancellor on speed dial. This free market meritocracy you imagine is fantasy.
Who makes and amends those laws? Parliament marks its own homework. There are further investigations into what Cameron knew and whether his actions and statements were reasonable an honest. Watch this space.
Are you two related? The letter and spirit of the law are conflicted. If ex PMs can sell their wares to the highest bidders and lobby on behalf of city financiers, tech, pharmaceutical companies, miners et al, where do we draw the line? People will be attracted to politics for what they can earn post retirement a la the USA, a species of after the fact bribe. Result; the executive is enthralled to the City. Quis custodiet ipsos custodes then? What an horrendous prospect. BTW Cameron admitted that his behaviour was poorly conceived and there are moves afoot to ban such self-serving avaricious malfeasance in future. His tone in the 50 odd texts was bullying and chummy. Textbook old boys network.