This week in MoneyWeek magazine, Dan Denning examines the mess the world’s central banks have got us in, Matthew Partridge asks if you should be shorting shares, and Matthew Lynn looks at the way corporate bullies are misusing intellectual property law.
Plus, there’s the British drinks maker doing very well out of Ramadan, a look at discounted investment trusts, and the stamp duty trap for buy-to-let landlords.
If you want to know more, read on, but for the full story, take out a subscription to the magazine now.
Central banks’ slow-motion train crash
Ever since the financial crisis, central banks have been desperate to boost economic growth. They’ve thrown everything they’ve got at the problem, but nothing seems to have worked. All they’ve done, says Dan Denning, is to set up a future disaster by reducing interest rates to unprecedented levels. “With more than half of all global government bonds – around $10trn – on negative yields” says Dan,” the seeds have been planted for a devastating bond market wipe out.”
We’re approaching the endgame, he says. And it won’t be pretty. But rates can only go so low, so what might be next in the central bank’s medicine cupboard? Be warned, says Dan: “Central banks won’t shrug their shoulders and move on. They’ll get ever more radical.”
If you want to know how radical, you could look to Japan. “It’s been at the forefront of unconventional economic policies ever since its bubble popped in 1989”, says Dan. There are three things to watch out for: “helicopter money”, negative deposit rates on our savings, and cash that expires. Any of these things is possible. Best be prepared.
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Intellectual property and corporate bullying
This week, Matthew Lynn sets his sights on corporate bullying. Want to say thanks for something? Better watch out – you might get sued, he says. Global megabank Citi says it owns “thank you”, apparently, and is suing AT&T for thanking its customers in its latest marketing campaign. They’re not the first. Apple at one point wanted exclusive use of the word “Pod”, and BP once wanted to trade mark a specific shade of green.
“This is bonkers”, says Matthew. “Intellectual property law is now being used as a way to entrench the dominance of big corporations and keep new ideas out of the market”.
“It’s a form of bullying – and like any bullying, it needs to be resisted.”
Should you short stocks?
Shorting stocks, as you may well be aware, is the practice of borrowing shares and selling them, with the intention of buying them back at a lower price, thus making a packet of money. In the popular imagination, people who short stocks are evil villains, profiting from the misery of others. It’s a perfectly legitimate technique, says Matthew Partridge on his investment strategy page. But it is risky: “you could lose far more than the initial value of your position”.
If you’re the devil-may-care type, it’s something you might consider taking advantage of. Matthew looks at the process of shorting a share, and points out some of the dangers, and how to minimise the risk.
Vimto’s curious appeal
Vimto, says Alex Williams on his Share tips pages, is a “purple fizzy drink most popular among teenagers and grannies in the north of England” made by Merseyside-based Nichols Plc. It’s also remarkably popular in the Middle East, where it’s been sold for almost a century. It’s especially sought after during Ramadan, when it’s marketed as the ideal thing to pep you up after a day of fasting.
But does all that make Nichols a buy? Find out, plus get our round-up of the best share tips from the rest of the press, take out a subscription to the magazine now.
Toxic air, discounted investment trusts and a stamp-duty trap for landlords
Simon Wilson explains how the air we breathe is not only bad for our health, it’s also costing us a fortune, and looks at how we could clean it up. Sarah Moore looks at investment trusts, and notes that a lot of them are trading below the value of their assets. That might sound like an ideal way to pick up a bargain, but, Sarah warns, it’s important to know why they’re trading at a discount. On her funds page, she outlines some ways you can find out.
And on his investing in property page, Matthew Partridge investigates “an anomaly that could catch out buy-to let landlords who rent rather than own their main residence”.
All that, plus plenty more, including the best houses you can buy for £500,000, and Matthew Jukes’ wine of the week; plus, in travel this week, Chris Carter heads off into the wilderness in search of Siberian tigers and wild bison.
If you want to know what else there is, take out a subscription to the magazine now.