Thank you for the article food for thought. I do however, believe the lack of pension funds investing in the UK market is a real problem whether it be throughit be direct, trusts or EFTs
Yes that's a very good point. I shared something from Goldman on this recently in which they said they saw little change to UK valuations absent major reforms to promote a UK domestic investor base (https://www.gspublishing.com/content/research/en/reports/2024/12/13/bcb99822-b919-47e7-99d3-755181123bc2.html). The government is making a lot of noise around this but it's hard to see anything really major happening; especially as you're fighting the global tsunami wave of funds still going into the top US stocks. I feel the US market needs to crash before there's some reset of fund flows, but that won't be pretty for anyone.
Great substack, Vicky - will follow with interest! Still can’t help but think UK markets will continue to lag US, but look forward to the individual picks. Smaller UK listed software companies seem massively underpriced vs peers, and keep getting delisted by PE. I wish I had more time to look at them properly!
Hey Tom, great to hear from you and thanks for taking a look! To be fair, I’m not sure I would pick the UK market vs the US long term given the sector mix. But i think the UK is a better buy than before — especially if you can find the right firms. Good tip on software, thanks.
There is another reason to pick individual stocks beyond psychic rewards if you are an individual investor - you can manage your taxes efficiently. By harvesting short-term losses, you can offset a certain amount of taxable ordinary income. And if you have other capital invested in active strategies such as mutual funds or hedge funds, short (or long-term) losses can be used to offset gains incurred in those strategies. Always be mindful of wash-sale rules when taking losses.
This is spot on. For me, the only way to have an edge is getting deep into some companies or markets, which also means picking a small number. It's funny that I was listening to an earnings call and the analysts knew less about the company than I do. But then, they probably look at far more than the half dozen companies that I like.
Thank you for the article food for thought. I do however, believe the lack of pension funds investing in the UK market is a real problem whether it be throughit be direct, trusts or EFTs
Yes that's a very good point. I shared something from Goldman on this recently in which they said they saw little change to UK valuations absent major reforms to promote a UK domestic investor base (https://www.gspublishing.com/content/research/en/reports/2024/12/13/bcb99822-b919-47e7-99d3-755181123bc2.html). The government is making a lot of noise around this but it's hard to see anything really major happening; especially as you're fighting the global tsunami wave of funds still going into the top US stocks. I feel the US market needs to crash before there's some reset of fund flows, but that won't be pretty for anyone.
The government has the power to request pension funds to invest UK equities, I suspect the coupon rate on bonds is attractive to risk averse investors
Great substack, Vicky - will follow with interest! Still can’t help but think UK markets will continue to lag US, but look forward to the individual picks. Smaller UK listed software companies seem massively underpriced vs peers, and keep getting delisted by PE. I wish I had more time to look at them properly!
Hey Tom, great to hear from you and thanks for taking a look! To be fair, I’m not sure I would pick the UK market vs the US long term given the sector mix. But i think the UK is a better buy than before — especially if you can find the right firms. Good tip on software, thanks.
There is another reason to pick individual stocks beyond psychic rewards if you are an individual investor - you can manage your taxes efficiently. By harvesting short-term losses, you can offset a certain amount of taxable ordinary income. And if you have other capital invested in active strategies such as mutual funds or hedge funds, short (or long-term) losses can be used to offset gains incurred in those strategies. Always be mindful of wash-sale rules when taking losses.
Looking forward to seeing your portfolio choices!
Great point, thanks Alec!
This is spot on. For me, the only way to have an edge is getting deep into some companies or markets, which also means picking a small number. It's funny that I was listening to an earnings call and the analysts knew less about the company than I do. But then, they probably look at far more than the half dozen companies that I like.