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Said on here before I don’t think I would begrudge paying a few P more in tax providing things would get better on the whole, and proving the £50k threshold was raised why was there such outrage at the thought of it?
Purely because it would’ve broken their manifesto?
Income Tax rise ditched on 15:28 - Nov 14 by StokieBlue
Isn't it fairly easy to make an argument that the correlation within the sector is already approaching 1? The nature of the deals being done between the companies are fairly circular with funding being passed around more than once increasing the leverage and correlated risk.
If you look at your energy recommendations that implies cross sector correlation is already increasing and the longer it goes on the greater that will become.
There is certainly a risk of something much larger than a "correction" occuring.
SB
It’s a good question but I don’t think so.
In industry jargon, we’ve gone from mag 7 to the mag 4 effectively which tells you something.
And of late we’ve had stocks like GOOGL, AAPL and NVDA go one way while META, MSFT. Have been smoked.
Amazon in particular has gone absolutely nowhere this year, so you are seeing quite a lot of dispersion among stocks in the same sector.
The mention of power and utilities was in relation to playing the AI theme. More broadly, as part of a well diversified portfolio, we are currently overweight emerging markets and Europe. But - given the index weighting’s and earnings growth - you absolutely have to own some US tech and AI even if you’re underweight vs. the marker.
And that’s only in our equity “buckets” we of course also own bonds and commodities etc.
And there is always a risk of something “very bad” happening but if you can time that you are a far better man than me - which wouldn’t be hard!
[Post edited 20 Nov 8:47]
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Income Tax rise ditched on 17:33 - Nov 14 with 1009 views
Income Tax rise ditched on 09:55 - Nov 14 by ElderGrizzly
Governments have always leaked policy to test the reaction. That's nothing new.
The fact Labour are doing it at a time where they are perceived to have no political compass is silly from them.
I worked on Finance Bills in the 1980s and 1990s and that wasn't the case then.
Everything then was marked "Budget-Secret" on the basis that everything was either market sensitive or behaviour sensitive. Indeed, I remember one colleague, when there was a leak, having her mail tampered with, presumably to see whether she was the source.
From recollection, things changed either at the end of the Major government or early in the Blair government, and governments themselves began to leak, with Budget-Secret disappearing.
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Income Tax rise ditched on 17:52 - Nov 14 with 949 views
Income Tax rise ditched on 08:16 - Nov 14 by nrb1985
Where's all the trillions from scrapping the non dom scheme though?!
I jest of course.
Why are they scrapping the exit tax as well? Even people from my world thought that was fair and reasonable!
On the growth subject, what I always land on is the massive structural issues in the UK and Europe in terms demographics, sluggish growth etc etc simply cannot be solved by people that have to think in 5 year election cycles. Swansea blues GIF above sums it up perfectly.
Maybe AI will be the saviour (I think it will) but that's also not without it's problems to put it mildly.
[Post edited 14 Nov 8:20]
Taken as such, although the money putatively raised from the non-dom changes was never that great in the scheme of things, and was effectively tinkering at the edges.
As you say, scrapping the exit charge is a curious one because I understand the UK is out on a limb as a developed nation in not having one.
As regards growth, the measures they envisaged were always likely to take more than one electoral cycle to kick in which to me called into question their view that in the interim growth would do the trick to fund public services and the like.
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Income Tax rise ditched on 07:33 - Nov 15 with 841 views
Income Tax rise ditched on 08:49 - Nov 14 by homer_123
"...the unemployment rate is rising but corporate profits are rising too."
And therein lies our biggest issue - 'SHOW ME THE MONEY'!
Now, whilst making money and profit is not a bad thing and shouldn't be - it is in the way the world is setup at the moment. In that social mobility is moving backwards at a pace, the cohort that 'have' is now much smaller than it has ever been and yet control more wealth than ever.
The cold, hard reality from a political standpoint is that those with wealth now have an unhealthy sway on the geopolitical agenda.
I'm not sure that AI is any kind of solution to the situation we have put ourselves in. Well, there is one things it might do......
Freezing tax thresholds or even reducing them has two fold issues. 1) It is raising taxes despite what anyone says and 2) It hits low paid and pensioners who receive a little above the current threshold of £12,570. As a pensioner I would rather they just gave Winter Fuel Payments to those genuinely in need of them and drop the Triple Lock for an annual RPI increase on the State Pension. The backlash of removing the WFP would of course be that why should pensioners lose this benefit when there are millions getting money for doing absolutely nothing and whilst I am aware many pensioners aren't working they have paid into the system and many like myself pay quite a bit of income tax even though in my mid seventies.
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Income Tax rise ditched on 10:37 - Nov 15 with 725 views
Income Tax rise ditched on 10:11 - Nov 15 by OldFart71
Freezing tax thresholds or even reducing them has two fold issues. 1) It is raising taxes despite what anyone says and 2) It hits low paid and pensioners who receive a little above the current threshold of £12,570. As a pensioner I would rather they just gave Winter Fuel Payments to those genuinely in need of them and drop the Triple Lock for an annual RPI increase on the State Pension. The backlash of removing the WFP would of course be that why should pensioners lose this benefit when there are millions getting money for doing absolutely nothing and whilst I am aware many pensioners aren't working they have paid into the system and many like myself pay quite a bit of income tax even though in my mid seventies.
Pensioners who pay quite a bit of tax have to consider themselves fortunate.
Income Tax rise ditched on 17:32 - Nov 14 by nrb1985
It’s a good question but I don’t think so.
In industry jargon, we’ve gone from mag 7 to the mag 4 effectively which tells you something.
And of late we’ve had stocks like GOOGL, AAPL and NVDA go one way while META, MSFT. Have been smoked.
Amazon in particular has gone absolutely nowhere this year, so you are seeing quite a lot of dispersion among stocks in the same sector.
The mention of power and utilities was in relation to playing the AI theme. More broadly, as part of a well diversified portfolio, we are currently overweight emerging markets and Europe. But - given the index weighting’s and earnings growth - you absolutely have to own some US tech and AI even if you’re underweight vs. the marker.
And that’s only in our equity “buckets” we of course also own bonds and commodities etc.
And there is always a risk of something “very bad” happening but if you can time that you are a far better man than me - which wouldn’t be hard!
[Post edited 20 Nov 8:47]
Sorry for the delay in replying.
I think from your post you're looking at this as a portfolio manager where diversification will offer some protection. I think in reality it needs to be looked at from outside that lens and with regards to the real economy.
The S&P moved below it's 50 MA for the first time in nearly 150 days yesterday. The tech companies are issuing debt at a record rate to fund the trillions of investment required and that investment itself is circular. The tech companies look like they are doing fine but in reality quite a lot of the money is recycled between them.
Defaults on things like car loans are at their highest point in 20 years and housing would be likely to follow that.
The worry is that the tech companies are highly correlated to each other and probably highly correlated to other sectors which hasn't been considered. In 2008 one of the issues was the underestimation of that correlation, let's hope we aren't going down the same route.
So whilst things might be fine, there is definitely scope for something to pop. Whether that would break your 20% figure for a crash is open for debate but it could.
SB
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Income Tax rise ditched on 12:04 - Nov 18 with 444 views
Income Tax rise ditched on 09:04 - Nov 14 by Pinewoodblue
Perfect response.
The original idea was add 2p in the £ to income tax and take 2p in the £ off National Insurance. In other words, for anyone under pension age and in standard tax bracket no increase at all.
It would have meant an overall tax/NI increase for two groups of people Pensioners and higher earners. Hitting pensioners wouldn’t be seen as a Socialist thing to do. Making high earners pay more would be seen by the majority as fair. Could have solved it by increasing tax codes for pensioners by a modest amount.
Think I read somewhere that the extra revenue raised would be in excess of £5B. That Money still needs to be raised and Council Tax will no doubt be seen as an easy target. The problem with that is it disproportionately hits lower earners.
Labour will be swept away in May elections and many councils will fall into the hands of those not equipped to run them.
Starmer is gutless and Reeves isn’t fit to be Chancellor. .
Did they even ask any pensioners?
Have said a few times that paying a 1 or even 2p rise in income tax would be a helluva lot cheaper than paying an average of £2K annually for basic dentistry - check-ups, cleaning, fillings.
Why the rest of the body classifies as eligible for NHS attention, but teeth & regular assistance with toenails you can't reach don't, is baffling.
(sorry if mentioned before, stupidly busy, no time to read entire thread, started posting while on hold to the DVLA for 30 mins ...).
Income Tax rise ditched on 12:43 - Nov 14 by LutherBlissett
"Valuations aren't excessive."
Nvidia's market cap is over 16% of US GDP and that's not excessive?
No, bubbles do not repeat themselves but they do often rhyme. Would you advise your clients to get in right now, at the top? A strong bull market is one thing, hubris is another.
Income Tax rise ditched on 08:33 - Nov 20 by Pinewoodblue
Presumably as part of a balanced portfolio.
Absolutely, and as I said earlier in the thread - at a very high level we see better risk reward in China tech vs. US tech in the near term (next 12 months)
But we still own a good slug of US tech in our portfolios - and will continue to do so until the numbers don't make sense.
If you have something growing earnings at 60%+ pa though, vs. a broader market at ~10%, then you can't claim valuations are excessive or the premium isn't justified like Luther did.
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Income Tax rise ditched on 09:03 - Nov 20 with 270 views
Income Tax rise ditched on 08:29 - Nov 18 by StokieBlue
Sorry for the delay in replying.
I think from your post you're looking at this as a portfolio manager where diversification will offer some protection. I think in reality it needs to be looked at from outside that lens and with regards to the real economy.
The S&P moved below it's 50 MA for the first time in nearly 150 days yesterday. The tech companies are issuing debt at a record rate to fund the trillions of investment required and that investment itself is circular. The tech companies look like they are doing fine but in reality quite a lot of the money is recycled between them.
Defaults on things like car loans are at their highest point in 20 years and housing would be likely to follow that.
The worry is that the tech companies are highly correlated to each other and probably highly correlated to other sectors which hasn't been considered. In 2008 one of the issues was the underestimation of that correlation, let's hope we aren't going down the same route.
So whilst things might be fine, there is definitely scope for something to pop. Whether that would break your 20% figure for a crash is open for debate but it could.
SB
Sorry I missed your reply.
Some quick observations:
- The stock market is not the real economy and the dominance of the tech stocks in the index now means that's more the case than ever before. So an economic downturn, which we have been seeing in the US, is unlikely to have much of a read through - or at least less than it did.
- Auto loans are a tiny part of the economy and people have been banging the drum on this for about 10 years. At an aggregate level, household balance sheets in the US are in reasonable health.
- The debt you mentioned that's being issued is certainly something to watch but the debt being issued by META and AMZN in the last couple of weeks isn't even a footnote on their balance sheet. They are still insanely cash positive and generating trillions pa in free cash flow.
- Comparisons to 2008 IMO are folly, given that I don't believe excessive leverage is being created in the system - as per above. Better comparison would be with dot.com era and I've laid out my rationale in thread as to why (imo) we aren't in a bubble per se and valuations aren't excessive - not when you have NVDA growing earnings at 60%+.
And don't forget, even if you are right, this is only a problem if you genuinely believe these companies will receive no RoI on their investment what so ever.
I think more likely there's every chance at least one of these "hyperscalers" ends up being the "my space" or the "blackberry" of its time but as a base case I believe at least one or two of these companies will see pretty phenomenal returns from the AI spend.
Equally likely I think is that the eventual leader in this space is a company nobody has ever heard of and is yet to be formed or even conceived of.
[Post edited 20 Nov 9:10]
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Income Tax rise ditched on 09:07 - Nov 20 with 257 views
Income Tax rise ditched on 08:39 - Nov 20 by nrb1985
Absolutely, and as I said earlier in the thread - at a very high level we see better risk reward in China tech vs. US tech in the near term (next 12 months)
But we still own a good slug of US tech in our portfolios - and will continue to do so until the numbers don't make sense.
If you have something growing earnings at 60%+ pa though, vs. a broader market at ~10%, then you can't claim valuations are excessive or the premium isn't justified like Luther did.
If you’re old enough to remember the 2000 bubble then you’ll know that there were some spectacular losers among those valued highly just months before. I expect the same scenario in the current bubble (and it is a bubble). Whilst Nvidia are powering ahead, others are struggling to monetise AI and if it becomes as mainstream as some are predicting that will be even more difficult as competition suppresses prices. Add in the interconnected elements and you have echoes of the 2008 crash. So if you can pick the winners, that’s great, but there will be an awful lot of losers when the bubble bursts -and it will.
Edit, one further point a fund manager once told me that crashes happen when those in the market weren’t old enough to remember the last one. The last one was 2008, 17 years ago.
[Post edited 20 Nov 9:09]
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Income Tax rise ditched on 09:13 - Nov 20 with 247 views
Income Tax rise ditched on 09:07 - Nov 20 by bluefunk
If you’re old enough to remember the 2000 bubble then you’ll know that there were some spectacular losers among those valued highly just months before. I expect the same scenario in the current bubble (and it is a bubble). Whilst Nvidia are powering ahead, others are struggling to monetise AI and if it becomes as mainstream as some are predicting that will be even more difficult as competition suppresses prices. Add in the interconnected elements and you have echoes of the 2008 crash. So if you can pick the winners, that’s great, but there will be an awful lot of losers when the bubble bursts -and it will.
Edit, one further point a fund manager once told me that crashes happen when those in the market weren’t old enough to remember the last one. The last one was 2008, 17 years ago.
[Post edited 20 Nov 9:09]
I disagree with pretty much everything you said but re the crashes - 2020 and 2022 don't count then?
Also - plenty of people did well in 2008 and remember that crash vividly today. That doesn't mean that translates into any kind of future success..
Both were the result of the Covid effect, so no they don’t count, this is a bubble caused by over exuberant valuations and supported by inter connections. What happens to Nvidia’s valuation if their large investments in several other firms (OpenAI, etc) goes south?. Finer minds than mine are having doubts about this. As I said, if you can pick winners, then great, some will win and win big.
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Income Tax rise ditched on 09:36 - Nov 20 with 198 views
Income Tax rise ditched on 09:29 - Nov 20 by bluefunk
Well you would disagree wouldn’t you.
Both were the result of the Covid effect, so no they don’t count, this is a bubble caused by over exuberant valuations and supported by inter connections. What happens to Nvidia’s valuation if their large investments in several other firms (OpenAI, etc) goes south?. Finer minds than mine are having doubts about this. As I said, if you can pick winners, then great, some will win and win big.
I do disagree, correct, but the difference is, I've laid out in this thread plenty of rationale and facts as to why that is. You on the other hand have offered none but do appear to have your own opinions confused with fact.
The fact you think valuations are anything like the dot.com bubble (they're about half of that) and you also believe the 2022 crash was covid related would also suggest Mr. Funk you aren't a very well informed gentleman but you are one who is absolutely convinced of their own opinion.
Lovely to meet you, wish you a pleasant (and funky) day.
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