No Monkey Business: a no nonsense clearing in the personal finance jungle

Looking for No Monkey Business Limited?

You have been directed here but you may be looking for our business website. No Monkey Business Limited is an FSA-authorised financial planning and wealth management firm for wealthy individuals and their families, putting into practice the ideas in my book. The business site aims to communicate clearly the benefits for clients of our simple proposition: the highest standards of technical excellence (as enjoyed by institutional investors) delivered with no separate agenda, no hype and no hidden costs. I would love to be able to deliver this to retail investors at all levels of wealth but that is something for the future.
admin on 03.09.08 @ 10:56 AM GMT [link]

Thursday, July 24th

Calling the bear market: how did we do?

We are not economists but we need to rely to some extent on economic insights in order to advise families on finance or manage their portfolios. Sometimes, economics are not necessary and all the information is in asset valuations. Not this time: seeing this bear market coming was all about economics. So how did we do? Pretty well, actually. Because we share our views with blog readers, our record can be scrutinised. In this post, I have linked some of Stuart’s past blog items to examine our record, starting with our investment strategy as we spelled it out in October 2006.
Joe Clark on 07.24.08 @ 09:46 AM GMT [">more..]

Saturday, July 12th

A leader takes his leave

The passing of Sir John Templeton will give many professional and knowledgable private investors pause, as he was truly one of the giants on whose shoulders they have stood. He was humble enough to make the same attribution of his success to giants before him.

To those of us with the task in the '70s and '80s of persuading conservative pension-fund trustees in North America to invest internationally, John Templeton was one of the best proof statements of the rewards that come from a global sense of opportunism. And for those who resisted the developing truism that country bets were more important than company bets, he was a handy renegade. As an early exponent of country allocation in portfolio construction, I found his contrary statements in no sense inconvenient. His performance was 'explained' (after the event) by country allocation even if the size of the country bets was solely explained (before the event) by the number of cheap securities he found available. Either approach could have led to the investment he famously made in Japan in the '50s. But very few foreign investors made it.
Stuart Fowler on 07.12.08 @ 11:27 AM GMT [">link]

Saturday, July 5th

Updating real house prices

The Nationwide house price index through June shows a decline of about 7% from the peak last autumn. This is being reported as a significant correction but viewed from the perspective of the long history of house prices relative to general inflation, it is only another small step in the market's four-year defiance of gravity since deflated house prices first peaked relative to their long term trend. Without the oxygen of credit, prices have held up remarkably well but market psychology has changed far more than prices yet indicate. The bear market is about to begin in earnest.

We update in this post our series for the trend of real house prices since 1957, based on the Nationwide data for the 'average house' and the Retail Price Index. Earlier posts (search: "real house prices") explained the significance of the data series as a proxy for fundamental value and as a predictor of future holding-period returns. Real returns matter to occupiers if they are substituting for their own financial asset holdings and they matter if they are borrowing to finance property purchases. They can either rent property or rent money. The relative cost of each will determine whether they build or destroy wealth in real terms. High real property prices in a world in which capital is getting expensive spell real wealth destruction.
Stuart Fowler on 07.05.08 @ 07:50 PM GMT [">more..]

Sunday, June 15th

High public spending: Brown's 'scorched-earth policy'?

In a scary but thoughtful article Spectator political editor Fraser Nelson suggests Gordon Brown, having lost his legacy as a prudent chancellor will spend, spend, spend and leave David Cameron with the bill. 'Unencumbered by the need to win an election, Mr Brown can spend the next two long years focusing on his legacy - health spending, education spending and international aid at the highest levels in British history and, best of all, much of it slapped on a credit-card bill that will be posted to a Conservative government'.

Ultimately the bond market is the only check on a profligate government between elections. It works as a check by jacking up the rates at which it is prepared to lend new money, even if it imposes losses on current debt. Nelson believes Brown knows this and will try to get round it be relying on private finance initiatives, where the bill takes the form of excessive equity-type contract payments rather than debt interest. Who will discipline this sort of 'stealth profligacy'?
Stuart Fowler on 06.15.08 @ 07:51 PM GMT [">link]

Monday, June 9th

Making pension planning safer

In a FTfm article in the 'Talking Head' series of May 19 three authors of a paper presented to a recent World Bank conference in Washington DC likened the current state of defined contribution pension planning to the early stages of airplane design, when poorly understood technology led to crashes. They contrasted it with the present state of planning plane journeys, when safe outcomes are largely assured by the underlying engineering and the focus is on choices the travellers themselves make that best suit their preferences.

Ten years ago, similar observations led us to build a model that integrated the planning, accumulation and decumulation phases of personal pensions - the three phases that Messrs Blake, Curtis and Dowd liken to take-off, cruising and landing. We had our own aborted take-offs commercialising the model but for several years it has been used to plan and manage the capital of private clients assigned to a goal with "defined outcomes", the commonest goal being retirement spending.

Follow this link to our 'Feedback' article in FTfm today to see our observations on how technology changes the customer experience of both journey planning and journey management and what technology aspects are mission critical. (If you are not registered with ft.com you will need to do so. It's free for a trial.)

Stuart Fowler on 06.09.08 @ 05:47 PM GMT [">link]

Wednesday, May 21st

Bull, bear or something different?

Investors who thought the credit crisis spelt a certain bear market must be wondering why the UK stock market is only 5% below its peak last year and 15% above the low reached at the time of the rescue of US broker-dealer Bear Stearns. Other major markets invite the same surprise. Apart from a reminder that market timing is far less obvious than private investors naively believe, what has occurred so far may be a specific warning that asset markets for many years may defy analysis, as the full significance of the debt problems is hard to take in and the profile and duration of the rehabilitation is poorly predictable. In this analysis, we should not take it for granted that the business cycle will describe a clear trend of either growth or decline; or that the equity and property markets will describe a clear bull or bear trend. After all, one of the lessons from Japan's lost decade is that the darkest hour was just before another false dawn.

This may make it a trader's market. It may also be a market for a systematic, agnostic long-term approach, adding to risky assets as prices fall and selling as prices rise, but always keeping the exposure consistent with the agreed tolerance of long-term real outcomes. Both have the virtue of a discipline and discipline may be the key to avoiding being whipsawed. Thinking about what whipsawing really means, remember that one symptom is that missing the best ten days in a period as long as 40 years would have cost you half the equity return premium over cash. Failed market timing really does hurt.
Stuart Fowler on 05.21.08 @ 09:18 AM GMT [">link]

Thursday, April 17th

Japan as object lesson: does culture make a difference?

We explored in a recent paper the idea that Japan’s dire experience in the 1990s is a warning of the fate in store for over-borrowed western economies. The idea has continued to gain ground in the US and in the UK (for instance in a series of FT letters). These comments tend to focus on policy errors supposedly made by Japan that western governments and central banks are less likely to make. In this brief item I question whether these were really errors or a reflection of Japan’s culture. Depending on how long it now takes for the gung-ho anglo-saxon economies to restore sound financing, and what price they pay in long-run inflation, this cultural difference does not invalidate comparisons. Indeed, history may even judge Japan’s conservative financial culture to have served it in better stead over the long term.
Stuart Fowler on 04.17.08 @ 07:14 PM GMT [">more..]

nomonkeybusiness.org

a no-nonsense clearing in
the personal finance jungle

By whom

For whom

Business connections

Looking for No Monkey Business Limited?

Calling the bear market: how did we do?

A leader takes his leave

Updating real house prices

High public spending: Brown's 'scorched-earth policy'?

Making pension planning safer

Bull, bear or something different?

Japan as object lesson: does culture make a difference?

Topical Index:

External Links:

<>July 2008
S	M	T	W	T	F	S
		1	2	3	4	5
6	7	8	9	10	11	12
13	14	15	16	17	18	19
20	21	22	23	24	25	26
27	28	29	30	31

nomonkeybusiness.org

a no-nonsense clearing in the personal finance jungle

By whom

For whom

Business connections

Looking for No Monkey Business Limited?

Calling the bear market: how did we do?

A leader takes his leave

Updating real house prices

High public spending: Brown's 'scorched-earth policy'?

Making pension planning safer

Bull, bear or something different?

Japan as object lesson: does culture make a difference?

Topical Index:

External Links:

a no-nonsense clearing in
the personal finance jungle