Bonds over stocks?

Bloomberg’s Gadfly section has a good article on Jeremy Siegel and his views on market valuations.

Definitely worth a read, as it takes a look at the CAPE Ratio and the impact of GAAP reporting vs using operating earnings.

But what I found most surprising was the below chart. I don’t find the case for holding bonds today compelling, but I didn’t know they had until very recently been outperforming US stocks since 2000.

Source: Bloomberg

Obviously the start and end date of any indexed chart can profoundly change the “story”, but I found the chart interesting nonetheless. 

Pret A Wage Slaves

Behind the scenes FT article on Pret A Manger and Greggs here.

This caught my eye:

A defining part of Pret’s identity is migrant labour. In March 2017, Pret’s director of human resources told the House of Lords economic affairs select committee that just one in 50 of the applicants for jobs at Pret is British. Some 65 per cent of those working at Pret in the UK are EU migrants. Brexit may change polyglot Pret. But today it stands for an open, international Britain.

Why would only 1 in 50 applicants be British? Well, read about the lives of the immigrant workers and you’ll find out:

  • Salary of just over 300 GBP a week
  • 40 hours a week
  • 5am start times (or earlier)
  • Long commutes from affordable housing to work

Best summed up by Valeria:

“Tell you the truth,” Valeria says, “at Pret they are not paying you great money. Just the money you need in London to survive.”

The market must go down from here, right?

There are some crazy valuations out there at the moment, and I’m an unashamed a member of the “this can’t last” crowd.

However, I also know the chances of me timing the correction and subsequent recovery are slim-to-none.

So I’ve been building a diversified portfolio, which will hopefully provide both exposure to future growth and some protection if the music stops.

Jeffrey Kleintop from Charles Schwab wrote some commentary a few weeks ago which I found comforting.

His key takeaways were: Continue reading