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John The Pessimist

Hpc Cognoscenti Challenge

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We're well into the Summer Silly Season (Gaza, Ukraine & Portugal aside). So here is a challenge for the combined HPC punditry.....

Houses are over priced (HPC article of faith #1).

QE & ZIRP are devaluing £ (HPC article of faith #2).

Disposable incomes are being squeezed, so Joe Public is increasingly only spending on the essentials.

The search for yield is driving equities to new found & possibly bubbly highs.

Utility (gas, electricity & water) shares are a potential store of wealth (not really an optional spend), assuming no new technologies suddenly appear.

How would HPC's great & wise invest in utilities without sharing the proceeds with the city spivs that created the mess in the first place?

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We're well into the Summer Silly Season (Gaza, Ukraine & Portugal aside). So here is a challenge for the combined HPC punditry.....

Houses are over priced (HPC article of faith #1).

QE & ZIRP are devaluing £ (HPC article of faith #2).

Disposable incomes are being squeezed, so Joe Public is increasingly only spending on the essentials.

The search for yield is driving equities to new found & possibly bubbly highs.

Utility (gas, electricity & water) shares are a potential store of wealth (not really an optional spend), assuming no new technologies suddenly appear.

How would HPC's great & wise invest in utilities without sharing the proceeds with the city spivs that created the mess in the first place?

Shale gas...fuel cells and bio diesel.

As far as i can tell...the only think keeping up energy prices are the same people keeping up house prices!

Id keep your money in your pocket.

Edited by TheCountOfNowhere

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Just go ahead and invest in utilities. They're not the same as the bankers. Though they do use a lot of debt (to take advantage of the tax benefits, bearing in mind they can get some of the lowest interest rates in the market).

If you want something more interesting, invest in renewable energy. The best renewable for the UK is the tides around us, though the technology to harness them being less mature than others makes individual projects high risk. I have investments in the Swansea Tidal Lagoon (with juicy EIS tax breaks), and in Atlantis Resources who are harnessing the tides in the Pentland Firth.

Share prices don't look bubbly to me. Bear in mind the £ has been much devalued since the FTSE first reached current £ levels, and in real terms it's somewhere in the ballpark of half its bubbly peak of 15 years ago.

And disposable incomes are still close to an all-time high. They only ever[1] appeared higher when they included lots of Ponzi debt.

[1] unless perhaps briefly in the later 1990s.

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Don't ask anyone - ever - on any public chat forum - for investment advice.

That's my advice - and its proven correct on a daily basis :)

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Just be aware of the regulatory and political risk of utes. Like all things, I'm happy to hold them only as part of a diversified equity portfolio.

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Share prices don't look bubbly to me. Bear in mind the £ has been much devalued since the FTSE first reached current £ levels, and in real terms it's somewhere in the ballpark of half its bubbly peak of 15 years ago.

I'd pretty much agree with that. Shares aren't particularly cheap at the moment, but neither are they crazily overvalued. And there are some sectors, like miners, that have taken a pounding so you can still find some real value.

Take Antofagasta for example, it's the lowest cost producer of copper so it's still very profitable even at today's subdued copper prices, it has vast proven reserves of copper at similarly low production costs, the share price is significantly depressed because of China worries, and it pays a generous dividend and has an established history and policy of returning money to shareholders.

If China upgrades its electrical power system then Antofagasta will fly, if it doesn't Antofagasta will keep churning out dividends at way higher levels than you'll get from a deposit account, if inflation ever becomes an issue you're invested in something just one step removed from precious metals, and the only significant risk is political upheaval in Chile.

That's a risk/reward profile that works for me and I could list a dozen more.

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Just be aware of the regulatory and political risk of utes. Like all things, I'm happy to hold them only as part of a diversified equity portfolio.

Agreed.

Take away the big gift from the public to the hedge funds (aka statutory price freeze) and Labour's proposals to shake them up are not without merit. Hopefully if they get in they'll show flexibility and listen to reason so reforms become a net positive. But I expect change to happen regardless of whether government forces it.

FWIW, I'm overweight in developing countries, and in the UK I'm overweight in small companies. Places where risk is higher, but where there's the best potential for growth in a diversified portfolio.

[edit] adding a link to explain why a price freeze is a gift to hedge funds.

Edited by porca misèria

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