In this week’s MoneyWeek magazine, why it’s time to buy bank stocks again; a tale of cryptocurrency woe; and the first retail bond from a P2P platform.
Plus, why “smart-beta” funds may not be so smart after all; how retailers should change to combat the threat from the online behemoths; and where next for house prices?
All that, plus our usual news, views and share tips. Why not sign up now?
Why you should buy big banks
Regular contributor Jonathan Compton’s taking a bit of a risk in this week’s cover story, he says. Banks have been out of favour for the last ten years after they almost brought the global financial system to its knees. Everyone seems to hate them. They became “the whipping boys of politicians and the public” with their incompetent executives getting “lottery-sized payoffs”, and nobody really being brought to account for the havoc they wrought.
So why would anybody invest in them? Oddly, one reason is “the failure by politicians to enforce a key promise” – that no bank would ever become “too big to fail” again. “In every developed country”, says Jonathan, the big banks have just got bigger. The “never again” promises have been replaced with “complex rules to strengthen bank capital, thus reducing the chances of collapse”. Another reason is that “banking has changed for the better” – governance has improved and customer satisfaction has shot up. It’s now “hard to see” how British banks and some foreign banks can “fail to boost profits considerably”. Why not sign up now.
Beware the cryptocurrency con men
There is an awful lot of hype flying around about cryptocurrencies at the moment. Bitcoin is the most well known, obviously, but there are now thousands of crypto-coins out there, and speculators are making wild claims for them. I saw evidence of this in my inbox recently: a promise to show me how to turn a few pounds into “a massive fortune” if only I’d jump on to the cryptocurrency bandwagon. But, says John Carter, most of these cryptocurrencies are wildly volatile and, while it’s possible that you could make a 300% gain in a day, you’re much more likely to see your money evaporate altogether in mere seconds. John recently bought into the hype, but soon found himself duped by a “dump and pump” scheme. It’s a sobering tale that everyone with dreams of becoming a crypto-millionaire really should read. Why not sign up now.
Should you buy this P2P retail bond?
There are lots of alternative finance platforms around these days, says David C Stevenson. Many of them have issued “dreadful-looking minibonds”. But the week saw the launch of a fully-fledged retail bond, listed on the London Stock Exchange, from P2P property platform LendInvest. It offers a yield (“coupon”, in the jargon) of 5.25% and matures in August 2022. There’s no doubt it’s risky – P2P lending is, after all – but is it worth buying? Why not sign up now.
Not-so-smart beta, a retailers’ survival guide, and what’s next for house prices?
There’s been an explosion of “smart-beta” funds recently, says John Stepek on his analysis page. These are funds that aim to outperform passive funds using sometimes complex rules. The trouble is, says John, many of them just don’t work.
Retailers need a “radical rethink” if they want to survive, says Matthew Lynn. The current merger craze might “paper over the cracks”, but it’s “not a long-term fix”. What they need to do is “reinvent themselves for a world where most shopping will be done over the internet”. Matthew has some suggestions for where they can start.
Everyone loves talking about house prices. And after three months of falls, the Nationwide’s latest figures indicate a 1% rise in prices for June, bringing the annual rate of price inflation up to 3.1%. But that figure masks plenty of regional variation. This week, Sarah Moore examines where the market will go from here. Why not sign up now.
There’s plenty more, of course. I look at the latest crop of robo-advisers – this time, the robots are here to help you get a mortgage. Max King looks at investing in “tortoises” in Asia – companies that are slow moving but long-lived. Emma Lunn looks at the advantages of merging your business and personal phone into one with a dual-Sim handset, and David Prosser looks at the government’s decision to bring forward the increase in the retirement age from 67 to 68.
All that, and digests on the news, markets, politics and economics, plus our usual round-up of the best share tips from around the rest of the UK’s press. Why not sign up now?