Mr Bloom
By chance a client of mine linked me to some of your YouTube outbursts. May I say that I agree with you 100% about FSA & in particular RDR. If I may, however, pick you up on a minor point. It is NOT only IFA’s that are being targeted in regard to FSA & RDR.
I am a 6th generation stockbroker who has endured the marvels of regulation and in fact like some others I know been on the receiving end of FSA directives that on numerous occasions have impacted on the way that I handle clients. Unfortunately thanks to some underhand planning by larger competitors and trade bodies that were initially set up by the ‘old’ established stockbrokers (I’m referring to the CISI.org) to protect our interests and more importantly those of investors, these same bodies now insist that older more experienced personnel should undertake an orwellian examination process that will drive many of us to despair and perhaps extinction. In effect we are NOT only being dictated to by non-practitioners, people who in many cases don’t have the faintest idea about anything financial, but our valuable franchises are under threat with no exit plans in place. Why should anyone purchase a client bank when they can await RDR and simply ride in and steal goodwill? This in my view what has been the main thrust of RDR. Many of the existing HNW wealth managers simply have nowhere to turn to for new business so by influencing FSA and the quangoes into stereotyping us and pidgeon-holing us it’s relatively easy to target the private unassuming stockbrokers who manage true independent bespoke portfolios (note fees have only been introduced relatively recently by many of us) and give advice daily on exchange products (this is a very different universe to the more detailed advisory commitments made by IFA’s).
I have by my desk a cellophaned telephone directory entitled (cost £150) “Private Client Investment Advice & Management” written by CISI and split into 4 modules;-
1 Financial Advice Within a Regulated Environment (why should it be any different to financial advice outside a regulated environment i.e prior to 1986?)
2. Investment Taxation (not the universe of stockbrokers but usually accountants & tax advisers)
3. Financial Markets (Pertinent to what we do but I doubt the topic could be defined in such a small volume)
4. Trusts and Trustees (again like investment taxation very useful but in this instance more pertinent to solicitors)
As you can gather I have no intention whatsoever of proceeding further with FSA/CISI’s little game.
It’s interesting to note that since ‘Big Bang’ banks have moved into our domain and that many of our other core clients, firms of solicitors mainly, have formulated investment management FSA regulated firms. The crossover of trustees and partners and legal executives versus investment management in these firms surely compounds potential conflicts of interest but because it’s supported by legal boffins no-one thinks twice about the long-term ramifications. The same thing occurs daily in the investment banks with hedge funds et al and again the conflicts are ignored. Yet when it comes to true independence as exemplified by IFAs and private stockbrokers the FSA wants to kill us off and prevent many of us from even giving advice. This is the sovietisation of markets and something needs to be done about it. Is it any wonder that FSA (& its forerunner) has presided over the closure of over 200 private client stockbroking firms since 1986 many of whom have been targeted by the regulators. The LSE has stood back and watched this horror story unfold too. It’s time the UK had its own independent exchange run and owned by its members with a regulatory universe consigned to the dustbin; investors protection can better be governed by simple insurance products in my opinion.
I’d be happy to discuss these topics further. Please pass on my regards to Nigel Farage. Keep up the fight!
Richard Hoblyn FCSISkype: richardhoblyn
Thursday 18 November 2010
Tuesday 9 November 2010
Review 3Q 2010 4th October 2010
Tim Geithner acknowledged at a conference in Washington last week that “we saved the financial system, but lost the country doing it”.
As the debate about the ‘double-dip’ rages on both sides of the Atlantic there are millions of Americans and possible Europeans who have little comfort in knowing that job prospects appear pretty bleak despite the billions thrown at the banking system alongside liquidity injections across many industries including Detroit. As Yves Smith of the populist blog “Naked Capitalism” has observed that by saving the banks all that has transpired is that bankers have reworked the balance sheets and rehedged the risk only to be rewarded by obscene bonuses based on spurious profits funded ultimately by taxpayers. Smith like many others feels that had a sharp correction or jolt ensued then the recovery prospects today would be more meaningful and possibly stronger. Although it’s clear that there are now some ‘green shoots’ the reality is that many small businesses (SME’s) are sludging around in the mud rather like the golf fans at the Ryder Cup this weekend. From a markets perspective are stocks cheap or expensive? Ditto bonds? I think the case for single digit p/e’s is getting stronger all the time and the irresistible rise in Gold suggests that many others too feel that historically stable currencies and markets could be in for a fright very soon. Further QE this quarter will not deflect from Gold’s rise either. The deflationary/inflationary debate is already twisting and turning but in this regard I think that certain areas such as global property prices are likely to continue to deflate whilst food prices (soft & agri-commodities) and precious and earth metals prices inflate. It really is a complicated world out there and the US China trade and currency saga appears to be nearing conclusion too.
Many emerging markets are still showing signs of genuine growth and the finals frontiers markets too (eg sub-saharan Africa) provide a relatively safe haven for growth orientated investors although regular liquidity issues are likely to be flagged from time to time. The recent beligerance of the Ugandans over Heritage’s supposed CGT liability does show, however, that risks are associated with emerging markets. Despite the ongoing saga at least Heritage had its $1.4billion payment honoured by Tullow and with the £1 Special Dividend having been received by Heritage shareholders the other annoyance is that the book costs for Heritage investors have not been adjusted downwards accordingly making the book/value ratio appear out of kilter. Elsewhere Dana has been acquired by KNOC (the Koreans) and BP continue to realign themselves to a more non-US focused exploration universe. In a world where the buzzword is ‘regulation’ who could have imagined after Dudley’s indignation with the russians a few years ago that TNK-BP would today be the staple business in BP’s universe?
In UK DaveCam speaks of growth opportunities and the ‘big society’ but in reality it appears to be an excuse for ‘big business’ to scalp the individual, the self-employed and the SME. The timely comments at the Conservative Party conference regarding deficits and tax solutions seems to be at loggerheads with freeing up the economy allowing for entrepreneurs and hard-working individuals to trade freely. Certainly experienced stockbrokers and IFA’s are not too amused by the super-regulators’s current offering called the Retail Distribution Review which is sending us all back to school. There was a time in UK when qualifications were voluntary. Not today it seems! It’s pretty galling that after the banks appalling behaviour before during and after the credit crunch that the very same banks should be the major beneficiaries of the RDR monstrosity. True independence is finally getting smoked out after hanging on grimly since ‘Big Bang’ and this does not bode well for market stability, liquidity and small and microcap investment as every stockbroker and investor is coralled into a ‘wealth management’ and collectives category. Is it any wonder that this avalanche of intent is rolling down at breakneck speed as not a single board member of FSA appears to have any experience of bespoke financial investing and advice? Nor much else for that matter.
The one stable story yet again has been ‘Gold’ against the ongoing threat to the Euro, £ and US$ and the yellow metal is testing resistance at below $1332 (now circa 1320) so I’m still actively bullish on gold shares and think that an overweight strategy in precious metals and oils should be maintained. I continue to hold BP post-gulf spill and cum the reintroduction of its dividend policy 1Q 2010 and Royal Dutch Shell ‘B’ (6% yield), and Canadian miner Yamana Gold, FTSE100 gold miners Randgold and African Barrick, Petropavlovsk, Centamin, Norseman, Newmont Mining and ASA (US listed closed-end fund focusing on precious metals) buying them on the dips. UK equities such as British Land, GlaxoSmithKline, Sainsbury, Burberry (a 1350p takeover target has been mooted), Foreign & Colonial Asset and Tullett Prebon can still be bought whilst Soco (on Vietnam oil news), Salamander Energy, Heritage Oil (likely to remain steady for a while pending news on its kurdish fields) and Hardy Oil and Gas (takeover candidate?) appear attractive for appreciation in the oil sector. Oakley Capital (OCL: 70% assets in cash, c.16% discount NAV) and Ashmore Global Opportunities Trust (AGOL) are interesting plays in the trusts sector although I am still very cautious on the equity market generally as I see valuations and expectations being too high. For those requiring income there is a case for ½ units in Henderson Far East (HFEL: 3.8% yield), Schroders Oriental Income (SOI: 3.7% yield) and the new JP Morgan Global Emerging Markets Income Trust (JEMI: prospective 3-4%). It remains to be seen if Mr Geithner’s comments above do indeed leave the US financial system stronger but the future for many other americans looks very uncertain. It may not be just the US golfers who have to return home with their tails between their legs. Time is running out for Geithner as Obama’s presidency fizzles out ahead of mid-term elections. The ConDem coalition around Downing Street needs a similar tonic too although unlike the Republicans and The Tea Party organization I can’t see Red Ed making any real headway as his schoolboy brother is confined to the back benches. What the anglos need is action and leadership but on this front the current crop of politico-marketing men lack real zip and imagination.
As the debate about the ‘double-dip’ rages on both sides of the Atlantic there are millions of Americans and possible Europeans who have little comfort in knowing that job prospects appear pretty bleak despite the billions thrown at the banking system alongside liquidity injections across many industries including Detroit. As Yves Smith of the populist blog “Naked Capitalism” has observed that by saving the banks all that has transpired is that bankers have reworked the balance sheets and rehedged the risk only to be rewarded by obscene bonuses based on spurious profits funded ultimately by taxpayers. Smith like many others feels that had a sharp correction or jolt ensued then the recovery prospects today would be more meaningful and possibly stronger. Although it’s clear that there are now some ‘green shoots’ the reality is that many small businesses (SME’s) are sludging around in the mud rather like the golf fans at the Ryder Cup this weekend. From a markets perspective are stocks cheap or expensive? Ditto bonds? I think the case for single digit p/e’s is getting stronger all the time and the irresistible rise in Gold suggests that many others too feel that historically stable currencies and markets could be in for a fright very soon. Further QE this quarter will not deflect from Gold’s rise either. The deflationary/inflationary debate is already twisting and turning but in this regard I think that certain areas such as global property prices are likely to continue to deflate whilst food prices (soft & agri-commodities) and precious and earth metals prices inflate. It really is a complicated world out there and the US China trade and currency saga appears to be nearing conclusion too.
Many emerging markets are still showing signs of genuine growth and the finals frontiers markets too (eg sub-saharan Africa) provide a relatively safe haven for growth orientated investors although regular liquidity issues are likely to be flagged from time to time. The recent beligerance of the Ugandans over Heritage’s supposed CGT liability does show, however, that risks are associated with emerging markets. Despite the ongoing saga at least Heritage had its $1.4billion payment honoured by Tullow and with the £1 Special Dividend having been received by Heritage shareholders the other annoyance is that the book costs for Heritage investors have not been adjusted downwards accordingly making the book/value ratio appear out of kilter. Elsewhere Dana has been acquired by KNOC (the Koreans) and BP continue to realign themselves to a more non-US focused exploration universe. In a world where the buzzword is ‘regulation’ who could have imagined after Dudley’s indignation with the russians a few years ago that TNK-BP would today be the staple business in BP’s universe?
In UK DaveCam speaks of growth opportunities and the ‘big society’ but in reality it appears to be an excuse for ‘big business’ to scalp the individual, the self-employed and the SME. The timely comments at the Conservative Party conference regarding deficits and tax solutions seems to be at loggerheads with freeing up the economy allowing for entrepreneurs and hard-working individuals to trade freely. Certainly experienced stockbrokers and IFA’s are not too amused by the super-regulators’s current offering called the Retail Distribution Review which is sending us all back to school. There was a time in UK when qualifications were voluntary. Not today it seems! It’s pretty galling that after the banks appalling behaviour before during and after the credit crunch that the very same banks should be the major beneficiaries of the RDR monstrosity. True independence is finally getting smoked out after hanging on grimly since ‘Big Bang’ and this does not bode well for market stability, liquidity and small and microcap investment as every stockbroker and investor is coralled into a ‘wealth management’ and collectives category. Is it any wonder that this avalanche of intent is rolling down at breakneck speed as not a single board member of FSA appears to have any experience of bespoke financial investing and advice? Nor much else for that matter.
The one stable story yet again has been ‘Gold’ against the ongoing threat to the Euro, £ and US$ and the yellow metal is testing resistance at below $1332 (now circa 1320) so I’m still actively bullish on gold shares and think that an overweight strategy in precious metals and oils should be maintained. I continue to hold BP post-gulf spill and cum the reintroduction of its dividend policy 1Q 2010 and Royal Dutch Shell ‘B’ (6% yield), and Canadian miner Yamana Gold, FTSE100 gold miners Randgold and African Barrick, Petropavlovsk, Centamin, Norseman, Newmont Mining and ASA (US listed closed-end fund focusing on precious metals) buying them on the dips. UK equities such as British Land, GlaxoSmithKline, Sainsbury, Burberry (a 1350p takeover target has been mooted), Foreign & Colonial Asset and Tullett Prebon can still be bought whilst Soco (on Vietnam oil news), Salamander Energy, Heritage Oil (likely to remain steady for a while pending news on its kurdish fields) and Hardy Oil and Gas (takeover candidate?) appear attractive for appreciation in the oil sector. Oakley Capital (OCL: 70% assets in cash, c.16% discount NAV) and Ashmore Global Opportunities Trust (AGOL) are interesting plays in the trusts sector although I am still very cautious on the equity market generally as I see valuations and expectations being too high. For those requiring income there is a case for ½ units in Henderson Far East (HFEL: 3.8% yield), Schroders Oriental Income (SOI: 3.7% yield) and the new JP Morgan Global Emerging Markets Income Trust (JEMI: prospective 3-4%). It remains to be seen if Mr Geithner’s comments above do indeed leave the US financial system stronger but the future for many other americans looks very uncertain. It may not be just the US golfers who have to return home with their tails between their legs. Time is running out for Geithner as Obama’s presidency fizzles out ahead of mid-term elections. The ConDem coalition around Downing Street needs a similar tonic too although unlike the Republicans and The Tea Party organization I can’t see Red Ed making any real headway as his schoolboy brother is confined to the back benches. What the anglos need is action and leadership but on this front the current crop of politico-marketing men lack real zip and imagination.
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