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The Financial Ironmonger Blog No 1/2018

The Financial Ironmonger Blog No 1/2018

Every week our guest blogger, David Oakes of Mosaic Money Management (aka The Financial Ironmonger), shares with us his take on some of the major UK and overseas macro and political events that shaped the previous week.

Please be reminded the value of investments, and the income from them, may fall or rise. The views expressed in this article are those of the author at the date of publication and not necessarily those of Chelverton Asset Management Limited or Mosaic Money Management. The contents of this article are not intended as investment or tax advice and will not be updated after publication unless otherwise stated.


The National Health Service is in crisis again, apparently. For those readers who are unfamiliar with the model, it is the only health service in the world that is free at the point of entry, and as with any other product that is free, it is impossible to satisfy demand, leading to a gross waste of resources. Imagine if Starbucks gave away free cappuccinos; most would end up half drunk, at best, in a bin.

Crisis is therefore the wrong description, implying that this was somehow unforeseen, whereas it has been blindingly obvious, for as long as I can remember, that the system would eventually collapse under the weight of expectations. The politicians’ answer has always been to throw more money at it, palliative care rather than the surgical reform needed. How it got in to this state is a long, and complex, question, but it is always a high priority for voters, and therefore a political football.

Medical science has advanced beyond recognition in the seventy years since the NHS started, so treatments are more complex, and expensive. These advances mean that people live longer, which we all want to do, but only in good health. Before the Great Recession, local councils were responsible for the care of the elderly, but budget cuts have inadvertently forced this cost on to the NHS, jamming up the system at the same time.

At the other end, the young have a sense of entitlement, thereby using resource that could be better deployed. No amount of education will persuade people to respect a system that is free; indeed it is thought that £1bn a year is lost because people fail to turn up to appointments. The obvious answer is to make a charge, refundable when you turn up. There should also be a charge for self- inflicted admission, such as drunks on Friday evenings.

Beyond that, there needs to be a much wider discussion across political parties about the future shape of the whole thing, now thought to be the second largest employer in the world, at circa 1.6mn people, which is totally unsustainable. The chances of that are somewhat south of zero. So, you can predict that NHS crisis will be the headline this time next year, unless it really does grind to a halt, which would probably cause the government to fall, such is the political toxicity surrounding it.

Meanwhile, the Prime Minister is widely reported to be contemplating a reshuffle next week of her cabinet, having lost three ministers before Christmas, although none of them qualified as Wise Men. Nor are the backbenches full of them, either. There is not a lot of talent out there, whether you be a Coach, or a Manager; there is no money, and she lacks a majority. A referee without a whistle sums up her plight.

Equity markets, meanwhile, have reached record highs, in many parts of the globe. Some find this understandable, others not. I tend to the former camp, albeit with reservations. Whilst registrations of hybrids and pure electric vehicles in Norway has now exceeded 50% of all new sales, it cannot be extrapolated globally. India, the fifth largest economy in the world, lacks basic sanitation, let alone roads suitable for existing cars.

Any sort of shift will take a long time, not least evidenced by Tesla announcing another production delay; one of my New Year predictions that has come true, already. But, you can see where the trend is going.

On Monday, I should take delivery of this new book detailing the chaotic first months of the Trump presidency, which promises to be a good read. It would appear that his operation is like no others gone before, but the market clearly approves, with Wall Street up 40% since the election. It is not clear what is going to bring this astonishing run to an end, but it will be something that few have spotted.

One possibility is the end of the reign of the Castro brothers, in charge of Cuba since 1959, which is scheduled for April 19th. The regime has always had external assistance, first from the Russians until they went bust in 1991, and more recently from the Venezuelans, who have now suffered the same fate.

It is unclear who is going to take over, whether the people will demand that a capitalist system be adopted, (as happened in Eastern Europe), or just perhaps a newly emboldened Russia will see a strategic opportunity to reassert influence. They have form in filling vacuums, which would surely halt this bull run.


David joined Manchester stockbroker Henry Cooke, Lumsden in 1977 and after becoming a member of the London Stock Exchange in 1984 held a number of senior positions within the firm including Managing Director of the in-house fund management company and member of the Executive Committee.

After senior appointments at Cazenove Fund Management and latterly Mercater Capital Management, David joined Mosaic Money Management in 2013. He has successfully managed private client and fund portfolios for over thirty years and has particular expertise in providing a multi manager service to his loyal client base.

The Financial Ironmonger is a hat-tip to Ironmonger Lane, the location of Chelverton’s London office.