The housing green paper: more shoddy work on the foundations 
‘No nonsense thinking’ is exciting because it leads to practical ideas about living your life which bring tangible rewards. The UK’s conventional wisdom that owning your own home will bring greater rewards than renting or leasing is a good example of how slavery to an idea can lead on to slavery to a bank or a job and damage life goals requiring money that may have even greater value, such as learning new skills, family-raising and retirement saving.
The belief that it always pays to get on the ladder owes much to the notion that structural shortages in supply, explained by planning restrictions, have the predictable effect of pushing the bottom rung inexorably higher. If true, it has huge differences in implication compared with a cyclical view based on the supply of money and credit. A monetary view of inflation-adjusted house prices means affordability problems are mainly created by loose money and solved by tight money, leaving the underlying trend broadly in line with real incomes. This is exactly what we think the evidence supports (search the site for 'house prices'). The Government’s new green paper (as reported today) repeats the shallow assumptions about causation, focused on net new construction and planning issues, made by earlier reports it commissioned. This is unfortunate not just for policy outcomes but also for the priority to disabuse the public’s mistaken beliefs about debt-financed property ownership before even more damage is done.
Stuart Fowler on 07.24.07 @ 06:43 PM GMT [">link]
Star fund managers in the doghouse - again
It’s time for the latest annual lambasting of dog funds by fund broker Bestinvest. Don’t you just love the irony of this? Or are you a gullible victim?
Each year Bestinvest post a list of active fund managers who have significantly underperformed their benchmark over the last three years: the so-called ‘dog funds’. The list often includes past ‘star’ fund managers. The latest list of dogs apparently includes a notably large number of past stars. There is nothing odd about this. No Monkey Business readers (search the site for ‘active management’ or ‘performance’) will know the evidence that beating the market by enough to make up the Cost Wedge requires big bets. Big bets mean big periods of underperformance. It is only with hindsight that you know whether a current dog is a star going through a bad patch (and ‘sticking to his last’) or really a dog. It is a sad proof of investors’ gullibility that Bestinvest can rub their noses in it with an annual survey that makes the same point, safe in the knowledge that few people willl draw the right conclusions. Broking actively-managed funds may well be a good business but investing in them piles up problems of regret (and reselection effort) and destroys long-run wealth outcomes through wasted costs.
Stuart Fowler on 07.24.07 @ 06:31 PM GMT [">link]
Kids’ stuff
Mainly for professionals 
Showing off
