URGENT: next week, for the first time ever, we’re putting out a dedicated “forecasts” issue of MoneyWeek magazine. 2017 could represent a major turning point for the global financial system, and we’ve asked all our experts for their views on what it means for everything from bonds to gold to global stockmarkets. If you want to know how to survive and profit from the dramatic political shift we’ve seen this year, and the even more dramatic changes to come, you need this information. Subscribe now to make sure that you get your copy.
This week, however, we’re looking at executive fat cats, asking if they’re really worth the outlandish sums they get paid. Plus, Merryn talks to economist Diana Choyleva on what really caused the financial crisis and how the “post-Trump” era will unfold. And Matthew Partridge asks: which performs best, value investing or growth investing?
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Why fatcat CEOs are bad news for shareholders
Pay for chief executives “has been soaring for years now”, says Richard Beddard in this week’s cover story. The gap between CEO pay and the average worker’s pay has tripled since the 1990s, with a the average FTSE 100 CEO trousering £6m a year – 150 times more than the people who work for him (it’s usually a him).
Now, that might seem outrageous if you’re one of those lowly paid workers, but does it matter to investors? “After all”, says Richard, “if a CEO makes good money for the shareholders, then you could argue that they are worth every penny they get”.
But do extortionately paid execs really provide any extra value to shareholders? Well… probably not. In fact, there is some evidence to suggest that high pay may even be bad for businesses, and by extension shareholders. A study by index provider MSCI found that “ the more a company paid its CEO, the less well it did”.
So if that is, in fact true, how can you use that knowledge to your advantage? Richard explains how to find a well-run company that doesn’t waste its shareholders’ money lining its top brass’s pockets. In fact, he’s picked four sensibly structured companies to invest in now. Subscribe now to make sure that you get your copy.
The unravelling of globalisation
In her interview this week, our editor in chief, Merryn Somerset Webb, talks to Diana Choyleva of Enodo Economics. Globalisation has improved the living standards of millions of people around the world, but an unstoppable backlash is building with the rise of “localism”. The trouble with globalisation is the “fundamental clash” between the needs of a global market, “national sovereignty and identity”, and the democratic system.
Brexit, says Diana, is the “the first major nail in the globalisation coffin”. The election of Trump the second. We are entering “a very difficult economic and political time”. It’s not a particularly uplifting read, but it’s an important on, and a very interesting one.
Could you back the next Uber?
Crowdfunding is all the rage these days. Every street-corner microbrewery, hip new fashion brand and smartphone-based “disruptive” techno-gizmo seems keen to tap in to the wallet of the crowd to get their business off the ground. The potential rewards are huge. Just think how much you’d make if that niche business you backed turned out to be “The Uber of [insert old-world business here]”.
It’s certainly a nice little earner for startups. But what about investors? How many of these companies have returned anything at all, let alone the untold millions starry-eyed investors dream of? Subscribe now to make sure that you get your copy.
Value or growth: which is best?
You may have heard of the terms “value investing” and “growth investing”. If you’ve been reading your Money Mornings, you will have, anyway. But if you haven’t, here’s a quick primer: value investing involves finding “cheap” or undervalued stocks that are trading on low multiples of earnings. You buy them in the hope they will rise in price. Growth investing involves buying companies that, while they may not be cheap, are rapidly growing their earnings.
So, which philosophy should you follow? Well, that’s obviously up to you. But Matthew Partridge finds out which one has tended to do better in the past, and picks the best way to take advantage. Subscribe now to make sure that you get your copy.
Share tips, property, pensions and more
As well as all that, we have our usual round up of the week’s best share tips and a few more from professional fund manager Nicholas Price. Sarah Moore looks at how some unfortunate property investors seem to have saddled themselves with leases that could, in theory, bankrupt them; Max King looks at investing in the insurance industry; and David C Stevenson looks at the scandal of high pensions exit fees.
That, plus all the week’s financial news, and five pages of travel, toys – including three pages of Christmas gifts – wine, and property for sale. Subscribe now to make sure that you get your copy?