WEBVTT - Should Commodities Still Have a Place in Your Portfolio? 0:00:03.120 --> 0:00:18.280 Bloomberg Audio Studios, Podcasts, radio news. Welcome to Merin Talks 0:00:18.320 --> 0:00:21.120 Your Money, the personal finance edition of Meren Talks Money. 0:00:21.320 --> 0:00:22.520 In these bonus. 0:00:22.160 --> 0:00:24.599 Podcasts, we talk about the best strategies for making the 0:00:24.680 --> 0:00:27.600 most of your money. I'm Maren sums Up Web Bloomberg 0:00:27.680 --> 0:00:30.840 UK Wealth Editor at Large and with me senior reporter 0:00:30.920 --> 0:00:32.720 and author of the Money Dishilled newsletter. 0:00:32.960 --> 0:00:35.080 John Steppeck back from holiday for a change. 0:00:35.120 --> 0:00:38.919 Hi John, Yes, and a bike, bike for once, bike 0:00:39.000 --> 0:00:39.840 for this week only. 0:00:40.320 --> 0:00:42.760 This man never stops going on many breaks away next 0:00:42.760 --> 0:00:43.400 week too. 0:00:43.640 --> 0:00:46.680 Well, I tell me, I havn't to say, did you okay? 0:00:46.720 --> 0:00:48.280 Fair enough? Fair enough? 0:00:48.600 --> 0:00:48.800 Right? 0:00:48.800 --> 0:00:50.320 Listen while you've been away. 0:00:51.000 --> 0:00:53.199 The questions from listeners, they just keep coming in. We've 0:00:53.200 --> 0:00:55.520 got a little bit of a backlog of questions and 0:00:55.560 --> 0:00:57.760 comments from our listeners that I think we really do 0:00:57.920 --> 0:01:00.000 want to get through because they're kind of interesting. 0:01:00.080 --> 0:01:03.800 I think, Yeah. I mean, the readers are a thoughtful bunch, 0:01:03.840 --> 0:01:06.280 and I would expect nothing less from people with such 0:01:06.360 --> 0:01:07.320 excellent taste. 0:01:07.600 --> 0:01:09.520 I know, and what I particularly like about them is 0:01:09.520 --> 0:01:12.880 that mostly they agree with us, and that's a big positive. Remember, 0:01:12.920 --> 0:01:14.960 if you email us, we're likely to answer your question. 0:01:15.040 --> 0:01:17.160 If somehow they're hints in it that you're already. 0:01:16.800 --> 0:01:19.559 On our side with most stuff, we're good with that, right. 0:01:20.520 --> 0:01:24.720 The first one is exactly in that vein. It's from Jonathan. 0:01:25.319 --> 0:01:27.840 He enjoys listening to our show. That's great, Jonathan, keep 0:01:27.840 --> 0:01:30.480 telling us that, and he wonders if we think it's 0:01:30.520 --> 0:01:33.000 a good idea to be overweighting commodity stocks At the moment, 0:01:33.080 --> 0:01:35.959 I am torn between the idea that tariffs will cause 0:01:35.959 --> 0:01:39.279 prices to increase globally as countries work to reshource supply chains, 0:01:39.720 --> 0:01:42.520 or that the possibility of an imminent stock market crashed 0:01:42.560 --> 0:01:45.560 you the twenty first century equivalent of smooth Horley. 0:01:45.400 --> 0:01:47.080 Will cause all stocks to collapse. 0:01:47.120 --> 0:01:50.160 While Jonathan, you may be overthinking which one is more likely, 0:01:50.400 --> 0:01:52.200 or is it better just to buy gold and wait 0:01:52.240 --> 0:01:54.600 for it or to blow over? Now, the first thing 0:01:54.600 --> 0:01:56.120 to say is that John and I we do not 0:01:56.400 --> 0:01:59.440 give advice. This is not an advice podcast. I'm the 0:01:59.560 --> 0:02:02.880 hard best find any advice podcast siseely, so we cannot 0:02:02.880 --> 0:02:06.720 tell you exactly what you should or shouldn't do. Obviously, 0:02:06.720 --> 0:02:08.200 we're keen on gold. We like everyone to have a 0:02:08.200 --> 0:02:10.359 little gold on their portfolio. You know, this is the 0:02:10.680 --> 0:02:13.359 apocalypse hedge, and given that you never know when the 0:02:13.360 --> 0:02:17.240 apocalypse might come, you might as well have some Otherwise, 0:02:17.320 --> 0:02:19.720 I think I would say, please go back and listen 0:02:19.760 --> 0:02:22.720 to our podcast with Ed Conway, which while it's not 0:02:22.760 --> 0:02:27.639 necessarily about investment in commodities, it's a really good overview 0:02:27.960 --> 0:02:31.600 of what makes this market tick. And then I would 0:02:31.639 --> 0:02:33.640 say that we are going to be doing in the 0:02:33.760 --> 0:02:37.919 very near future a full podcast on commodity investing itself. 0:02:37.960 --> 0:02:41.160 So that is there do both of those things. 0:02:41.400 --> 0:02:43.840 The other thing to say that is that in general, 0:02:43.960 --> 0:02:48.680 it is true that commodities have a great record as 0:02:48.720 --> 0:02:53.519 a diversifier and as a protector against inflation. So if 0:02:53.520 --> 0:02:57.359 you look back at that period before say two thousand 0:02:57.360 --> 0:03:01.800 and seven, commodities had a pretty good positive annualized for return. 0:03:02.160 --> 0:03:04.600 Post that, when we moved into our low inflation era, 0:03:04.800 --> 0:03:08.160 you will see that commodities had a pretty lousy annual 0:03:08.200 --> 0:03:10.920 return negative actually from two thousand and seven that decade on. 0:03:11.280 --> 0:03:13.959 So it used to be that everybody had commodities in 0:03:14.000 --> 0:03:14.639 their portfolio. 0:03:14.800 --> 0:03:15.640 Was expected. 0:03:15.680 --> 0:03:19.040 Along with longer the equities, bonds, commodities, you have them 0:03:19.040 --> 0:03:22.359 in there as your diversify your inflation protector. That idea 0:03:22.360 --> 0:03:25.359 has fallen fallen away over the last ten fifteen years 0:03:25.480 --> 0:03:27.960 or so, largely thanks to the appalling return that you 0:03:28.040 --> 0:03:30.720 have got from commodities. We are now moving into a 0:03:30.760 --> 0:03:34.120 new era. So it is exactly the right question to ask, 0:03:34.200 --> 0:03:36.400 should you now have commodities in your portfolio? 0:03:37.160 --> 0:03:38.000 John? What do you think? 0:03:39.040 --> 0:03:39.280 Yeah? 0:03:39.360 --> 0:03:41.480 I think. I think The other point to make is 0:03:41.480 --> 0:03:47.920 that obviously there are deferences between commodity stocks and commodities themselves. 0:03:47.960 --> 0:03:49.840 I mean, as you can see from the gold mains 0:03:49.880 --> 0:03:53.200 and gold for example. And also I would be really, 0:03:53.320 --> 0:03:56.040 ever so slightly really threatened too much about the micro 0:03:56.280 --> 0:03:59.960 pictures when it comes to your or in portfolio space 0:04:00.040 --> 0:04:03.440 efically so so the question of you know, whats going 0:04:03.440 --> 0:04:06.240 to lease inflation or are they going to cause an 0:04:06.320 --> 0:04:09.440 actual stock market crash? I mean, they may not actually 0:04:09.640 --> 0:04:12.760 do either of those things. And even if they do 0:04:12.760 --> 0:04:15.840 do one or other of those things, you don't necessarily 0:04:15.880 --> 0:04:18.240 know how you should be positioned for betting on it. 0:04:19.040 --> 0:04:21.880 But I think then the longer run, like think these 0:04:21.880 --> 0:04:23.640 things through. And also if you're going to look at 0:04:24.120 --> 0:04:28.480 like mining stocks or energy stocks, then considered their valuation 0:04:28.680 --> 0:04:31.880 relative to their history rather than is there going to 0:04:31.880 --> 0:04:33.760 be inflation or is there going to be a massive 0:04:33.800 --> 0:04:37.120 disinflationary crash. I think that's that's what I'm getting, that 0:04:37.200 --> 0:04:39.920 look focused on the stocks and the business rather than 0:04:40.480 --> 0:04:42.120 you know what's going to happen in the future. 0:04:43.000 --> 0:04:44.960 And the other thing I think it's really important today 0:04:45.040 --> 0:04:48.760 about commodity prices enhanced by extension, maybe about mine, is 0:04:49.160 --> 0:04:55.520 that just because commodity prices are rising and doesn't necessarily 0:04:55.560 --> 0:04:57.440 mean that they will keep rising or stay high. 0:04:57.520 --> 0:04:59.760 One of the things we always saying commodities is it 0:04:59.760 --> 0:05:00.520 this solution to. 0:05:00.560 --> 0:05:04.840 High prices is high prices, because high high prices incentivize 0:05:04.839 --> 0:05:07.440 increased supply, and you get increased supply, and then of 0:05:07.440 --> 0:05:11.800 course your prices come down to very very cyclical business to. 0:05:11.800 --> 0:05:14.320 Be there is an argument, is an argument. 0:05:14.360 --> 0:05:17.320 I've made it myself that high prices may not be 0:05:17.360 --> 0:05:19.760 the solution to high prices in quite the same way 0:05:19.760 --> 0:05:22.800 in the current environment because of the environmental movement and 0:05:23.080 --> 0:05:24.800 very very hard to open a new mind. 0:05:24.800 --> 0:05:26.360 Now used to be relatively easy. 0:05:26.400 --> 0:05:27.560 You want to dig a hole on the ground, you 0:05:27.560 --> 0:05:29.440 dig at all on the ground, But these days you 0:05:29.440 --> 0:05:30.760 want to diget on the whole the grounds you've got 0:05:30.800 --> 0:05:33.400 to ask an awful lot of people for permission first, 0:05:33.640 --> 0:05:36.279 So the amount of time it takes to get permission 0:05:36.279 --> 0:05:38.159 to open a new mind is moved from you know, 0:05:38.240 --> 0:05:41.520 maybe a few months a year or two into many, many, 0:05:41.560 --> 0:05:45.120 many years. So it's quite so easy to say high 0:05:45.160 --> 0:05:48.039 prices will incentifize supply and bring down high prices as 0:05:48.120 --> 0:05:49.880 it used to be. And also, of course, on the 0:05:50.000 --> 0:05:53.160 other side, you have rising demand for all sorts of 0:05:53.720 --> 0:05:56.440 metals and commodity products in a way that you didn't 0:05:56.480 --> 0:05:58.240 previously because of the energy transition. 0:05:58.360 --> 0:06:00.760 So basically my point is there is so much. 0:06:00.640 --> 0:06:03.000 Going on in this secture that we're having a dedicated 0:06:03.000 --> 0:06:05.640 podcast to it for it, and you will get that 0:06:05.720 --> 0:06:08.680 podcast relatively soon, so hang on for that. But as 0:06:08.720 --> 0:06:11.839 I say, well, maybe our answers aren't ideal. Great question 0:06:12.000 --> 0:06:14.800 and the right question to be answering right now, right 0:06:15.080 --> 0:06:19.040 The next one is really easy, actually, and it's one 0:06:19.080 --> 0:06:20.520 that is asked quite a lot at the moment. 0:06:20.560 --> 0:06:22.560 I'm marry just a thought at the start of the. 0:06:22.480 --> 0:06:24.760 Industrial Revolution, I wonder if people would have questioned the 0:06:24.800 --> 0:06:28.200 wisdom of investing in steam powered machines, very expensive, dangers, 0:06:28.360 --> 0:06:31.080 unreliable at the time, assuming the world will have to 0:06:31.160 --> 0:06:33.760 change away from fossil fuels, and assuming again that the 0:06:33.760 --> 0:06:36.640 solution will be electricity from renewables coupled with hydro the 0:06:36.680 --> 0:06:40.039 storage and nuclear for base load. Is there a parallel 0:06:40.080 --> 0:06:43.559 here with the start of the Industrial Revolution? Will early 0:06:43.600 --> 0:06:47.200 adopters be in stronger positions later on? Now we really 0:06:47.240 --> 0:06:49.480 interestedly hear John's answer to this in a minute that 0:06:49.680 --> 0:06:52.160 the answer is no, No, I don't think so. This 0:06:52.200 --> 0:06:56.360 is completely different to the Industrial Revolution. The Industrial Revolution 0:06:56.480 --> 0:06:59.960 was more of a moving forward thing. It wasn't government mandate, 0:07:00.320 --> 0:07:04.120 it was market driven, no subsidies here and no forcing 0:07:04.120 --> 0:07:08.960 of anyone into anything, simply a natural progression of technology. Now, 0:07:09.320 --> 0:07:11.640 what we're doing here is completely the opposite. As we've 0:07:11.640 --> 0:07:14.360 said several times on this podcast, this is an example 0:07:14.400 --> 0:07:16.720 of something that we have never done before in history, 0:07:16.960 --> 0:07:19.680 moving from a very dense and efficient form of energy 0:07:19.800 --> 0:07:23.120 to a much less dense and less efficient form of energy. 0:07:23.280 --> 0:07:26.720 So there is no certainty that anything that we're doing 0:07:26.800 --> 0:07:29.400 right now is putting us on the right course with 0:07:29.520 --> 0:07:32.040 renewables and with the mix that we're using, etc. So 0:07:32.360 --> 0:07:34.480 my own guess for what it's worth is that the 0:07:34.800 --> 0:07:37.560 late adopters are more likely to be the winners than 0:07:37.600 --> 0:07:39.960 the early adopters. Let someone else spend the money to 0:07:40.000 --> 0:07:42.560 figure all this out, which is one of the reasons, 0:07:42.560 --> 0:07:45.160 by the way, that I think zero or our short 0:07:45.160 --> 0:07:48.040 time erme on net zero might be something of a disaster. 0:07:48.400 --> 0:07:50.880 I suspect that's not the answer you expected. John. If 0:07:50.880 --> 0:07:54.720 you've got a different one, possibly a more popular one, can. 0:07:54.720 --> 0:07:59.400 Of going by the way technology wise, that may be 0:07:59.720 --> 0:08:01.400 fain might think that that's what we have to do 0:08:01.440 --> 0:08:03.800 in order to save the planet, et cetera, et cetera. 0:08:04.080 --> 0:08:06.320 That's not the point. And the other thing is that 0:08:07.040 --> 0:08:10.960 renewables aren't like kind of oil or whatever, and that 0:08:11.280 --> 0:08:13.000 you're not saying the big chunk of windows same as 0:08:13.000 --> 0:08:14.720 you're sitting in the big chunket oil that you can 0:08:14.760 --> 0:08:17.360 then flog to someone else. There's no kind of scarcity 0:08:17.440 --> 0:08:20.920 value there all of that sort of stuff. We also 0:08:21.000 --> 0:08:25.600 keep talking about this the sense that we will have 0:08:26.080 --> 0:08:29.000 enough energy to replace where we are at current levels. 0:08:29.040 --> 0:08:32.600 But what we really need is energy abundance. And so 0:08:33.240 --> 0:08:34.719 even if you could get to the point where we 0:08:34.760 --> 0:08:37.640 can generate all of the electricity that we need currently 0:08:38.000 --> 0:08:41.040 from renewables without the grid breaking down, et cetera, et cetera, 0:08:41.080 --> 0:08:42.880 et cetera. What you want to get to is a 0:08:42.880 --> 0:08:45.080 point where we actually don't need to worry at all 0:08:45.600 --> 0:08:49.720 about how we're generating electricity or the cost of it, 0:08:49.760 --> 0:08:52.160 because there's so much of it that we're going to 0:08:52.600 --> 0:08:55.160 have enough to do whatever we want to do, and 0:08:55.200 --> 0:08:59.120 we're probably not going to get there with renewables, right. 0:08:59.120 --> 0:09:01.920 The one I would say is, say you living somewhere 0:09:02.000 --> 0:09:04.920 like the kind of village in a very deprived part 0:09:05.000 --> 0:09:08.080 of the world, like in the Middle Lake kind of Africa, somewhere, 0:09:08.520 --> 0:09:11.640 and you start creating grids from scratch as opposed to 0:09:11.720 --> 0:09:15.560 trying to adapt existing ones, and your standard eleven is 0:09:15.600 --> 0:09:18.720 currently very low. Anyway, I can see how that could 0:09:18.800 --> 0:09:23.280 possibly be a more interesting area where the technology is 0:09:23.280 --> 0:09:26.560 being adapted, where you can leap frog in a certain thing, 0:09:26.640 --> 0:09:31.240 because perhaps if you started with decentralized grids, then solar 0:09:31.360 --> 0:09:33.520 in a very sunny country, then solar for example, would 0:09:33.520 --> 0:09:36.920 be a much more feasible solution. So that's where I 0:09:36.920 --> 0:09:39.280 would find it more interesting to look on the basis 0:09:39.280 --> 0:09:41.560 of this question. But long story short, the answers. 0:09:41.200 --> 0:09:43.839 No, yep, okay, good, Well we agree on no, then 0:09:44.240 --> 0:09:45.400 I recommend them. 0:09:45.679 --> 0:09:48.040 I'd recommend going back and again listening to the podcast 0:09:48.120 --> 0:09:50.840 we did recently on nuclear because I think Jake, one 0:09:50.880 --> 0:09:53.880 of our guests from a Blue Energy, was incredibly compelling 0:09:53.880 --> 0:09:55.920 on this. He was very clear when he said, look, 0:09:56.040 --> 0:09:59.160 we've got to stop this hairshirt nonsense. What we really 0:09:59.240 --> 0:10:02.080 want to hear the go must be more energy, and 0:10:02.120 --> 0:10:04.920 we should be using more energy because that's where prosperity 0:10:04.960 --> 0:10:07.840 comes from. And we have to find a way to 0:10:07.960 --> 0:10:11.760 have more access to energy all the time, constant abundance, 0:10:12.080 --> 0:10:13.880 not to constantly be talking about how we need to 0:10:13.880 --> 0:10:14.600 restrict our. 0:10:14.600 --> 0:10:15.319 Use of energy. 0:10:15.440 --> 0:10:16.760 And that's what I mean when I say, you know, 0:10:16.920 --> 0:10:19.120 we can what John just said, I'm repeating you, John, 0:10:19.160 --> 0:10:20.760 but you're so clever I can I can repeat it right. 0:10:21.360 --> 0:10:23.679 So when I say that, maybe we are going down 0:10:23.720 --> 0:10:25.880 the wrong path with the mix that we're trying to 0:10:25.880 --> 0:10:28.040 find at the moment, it's a mix, and when we 0:10:28.080 --> 0:10:30.520 talk about it, we're talking about reducing our energy use, 0:10:30.600 --> 0:10:33.680 constraining our energy used. And in an ideal world, when 0:10:33.800 --> 0:10:37.079 we wanted to better living standards, be richer, be more innovative, 0:10:37.200 --> 0:10:38.600 more active, we would. 0:10:38.400 --> 0:10:40.199 Be looking for somewhere to have more energy. 0:10:40.360 --> 0:10:44.600 Thank you Mike for getting in touch onwards wealth taxes. 0:10:44.920 --> 0:10:47.800 You asked listeners to contact you about wealth taxes that 0:10:47.880 --> 0:10:50.320 we had overlooked, and we thought we got a pretty 0:10:50.360 --> 0:10:51.040 good list, but. 0:10:51.040 --> 0:10:52.240 There are always more. 0:10:53.040 --> 0:10:56.400 And this one is isn't inflation the real wealth tax? 0:10:56.440 --> 0:10:58.400 And as I will immediately say that, the answer to 0:10:58.400 --> 0:11:00.000 that is yes. And we have talked about this quite 0:11:00.120 --> 0:11:02.120 a lot, which is why we talk about capital gains tax. 0:11:02.160 --> 0:11:03.920 Of course it's being a wealth tax because in the 0:11:04.000 --> 0:11:06.920 end it's only taxing inflation, and inflation. 0:11:06.920 --> 0:11:09.040 Itself works like a wealth tax. 0:11:09.080 --> 0:11:13.320 So and our questioner here, Jeff, elaborates, if ordinary working 0:11:13.360 --> 0:11:16.920 people get ten percent higher wages and RPI raises ten percent, 0:11:17.000 --> 0:11:20.720 rises ten percent, then isn't your store of wealth? Even 0:11:20.760 --> 0:11:23.000 in uset's very hard to value, like private companies are 0:11:23.120 --> 0:11:25.560 worth ten percent less. And by the way, debt divided 0:11:25.559 --> 0:11:28.959 by nominal GDP folls ten percent, house prices become ten percent. 0:11:28.760 --> 0:11:30.280 More affordable personally. 0:11:30.280 --> 0:11:32.319 Goal has been the most obvious way to hedge inflation, 0:11:32.600 --> 0:11:34.599 and Goal coins is CGT free, so it doesn't The 0:11:34.679 --> 0:11:37.040 surge in gold from two thousand dollars to three thousand 0:11:37.080 --> 0:11:38.679 dollars indicative inflation ahead. 0:11:38.920 --> 0:11:41.240 God, there's lots of questions in here. If inflation heres. 0:11:41.080 --> 0:11:43.040 Ten percent of the courses of labor government, how many 0:11:43.120 --> 0:11:46.360 labor voters would complain quite a lot, I think surely 0:11:46.559 --> 0:11:52.480 poor Rachel's obvious choice is inflation. Now again, we've talked 0:11:52.480 --> 0:11:55.200 about this a lot on the podcast over the last 0:11:55.200 --> 0:11:59.520 few years, because classic financial oppression is exactly that, to 0:11:59.559 --> 0:12:03.440 make sure that inflation is higher than interest rates. So 0:12:03.960 --> 0:12:07.480 gradually the value of our public debt and private debt 0:12:07.760 --> 0:12:11.680 is eroded, but at no obvious cost to the government. 0:12:11.720 --> 0:12:14.640 But of course the obvious cost is to individuals whose 0:12:14.679 --> 0:12:18.560 wealth and effective income faults. So the answer to that 0:12:18.840 --> 0:12:20.320 is yes. I mean, there are a few days to 0:12:20.360 --> 0:12:22.719 deal with very very high levels of debt. You can 0:12:22.800 --> 0:12:26.000 create a great GDP growth so it becomes a smaller 0:12:26.000 --> 0:12:29.800 part of your GDP. Naturally, hands up. Who sees that's 0:12:29.800 --> 0:12:32.560 happening over the next four or five years, John has 0:12:32.640 --> 0:12:33.360 not put. 0:12:33.200 --> 0:12:35.720 A hand up. You can do that. Otherwise, you can 0:12:35.720 --> 0:12:37.320 find a way to default on it. 0:12:37.480 --> 0:12:40.400 Somehow, and you can have a real default where you 0:12:40.440 --> 0:12:41.920 simply say, Dad, do you know what, just not going 0:12:42.000 --> 0:12:44.680 to pay anymore. You can default on your promises. And 0:12:44.679 --> 0:12:46.760 this is what Russell Napier, one of our regular guests, 0:12:46.760 --> 0:12:49.160 talks about a lot. It is a kind of default. 0:12:49.200 --> 0:12:52.360 If you default on your promises to your electorate. I 0:12:52.920 --> 0:12:56.320 no more pensions, no more winter fuel payment, less welfare 0:12:56.360 --> 0:12:59.520 than you were expecting. Oh no new roads, no new reservoirs, etc. 0:13:00.080 --> 0:13:02.719 That that is a type of default of that. 0:13:03.160 --> 0:13:06.880 And the easiest default is default via inflation. So you 0:13:06.920 --> 0:13:08.920 simply make the debt that you have to pay people 0:13:08.920 --> 0:13:11.760 back worthless. So is it the obvious way out for 0:13:11.960 --> 0:13:13.319 nearly all Western economies. 0:13:13.480 --> 0:13:17.320 Absolutely yeah, I mean, but but I suppose the things 0:13:17.320 --> 0:13:20.920 that inflation does have to be higher than interest right slow, 0:13:20.960 --> 0:13:24.000 and at the moment that's actually not the case, which 0:13:24.400 --> 0:13:27.080 obviously does then beg the questionable. So what is the 0:13:27.120 --> 0:13:29.680 next step going to be? Given the I mean, right now, 0:13:29.840 --> 0:13:34.400 this very weak. We are seeing an element of panic 0:13:35.760 --> 0:13:38.200 or you know us very slow panic creeping into government 0:13:38.280 --> 0:13:41.960 bond markets across the world, and so Moodies is downgraded 0:13:42.440 --> 0:13:47.040 the US Treasury bonds from TRIPAA to one notch beneath that, 0:13:47.160 --> 0:13:48.960 and I mean, on the one hand, it's not a 0:13:48.960 --> 0:13:51.520 big deal. On the other hand, it's actually very clear 0:13:51.559 --> 0:13:55.720 Segal that actually the government debt is no longer anywhere 0:13:55.720 --> 0:13:58.839 regarded as a safe haven. And then you know, in 0:13:58.920 --> 0:14:04.680 this solution is potentially that they start printing money again 0:14:04.800 --> 0:14:07.200 to try and suppress long term bin yields or something 0:14:07.240 --> 0:14:10.080 along those lanes. But yeah, we all have to see 0:14:10.080 --> 0:14:13.360 what happens. But I think that inflation is the WEO 0:14:13.800 --> 0:14:16.200 and that's what they'll go for. 0:14:16.480 --> 0:14:17.960 Brilliant question there from Jeff. 0:14:18.760 --> 0:14:20.880 This is an interesting question, this one, isn't it. 0:14:20.880 --> 0:14:22.480 It is the next one that's really interesting. 0:14:22.480 --> 0:14:25.760 But I'd actually say, John, this is the most depressing 0:14:26.040 --> 0:14:30.480 question I think I have ever received in our higher 0:14:30.680 --> 0:14:34.240 history of working together, which now is heading towards two decades, 0:14:34.320 --> 0:14:38.400 and say that this question is the one that makes 0:14:38.440 --> 0:14:42.560 me feel more than ever that we have made an 0:14:42.640 --> 0:14:48.080 absolute mess of our tax system, of our society, of 0:14:48.200 --> 0:14:52.520 our feelings of ambition. Everything's absolutely miserable. And I don't 0:14:52.520 --> 0:14:55.800 think I'm overegging this. So here we go. I am 0:14:55.840 --> 0:14:58.080 thirty five years old and earn around one hundred thousand 0:14:58.080 --> 0:14:58.600 pounds a year. 0:14:58.640 --> 0:14:59.120 Well done. 0:14:59.200 --> 0:15:01.480 I am married with very young daughter, as well done. 0:15:01.600 --> 0:15:04.080 My wife doesn't work, so after tax, pension and rent, 0:15:04.160 --> 0:15:07.560 that salary doesn't afford a particularly lavish lifestyle. We have 0:15:07.560 --> 0:15:10.040 a decent amount of savings term seent physical gold allocation 0:15:10.080 --> 0:15:13.120 hooray twenty percent, gosh, seventy percent equities, so we are 0:15:13.160 --> 0:15:17.240 financially secure. Again, well done. This person sounds like they're 0:15:17.240 --> 0:15:20.080 doing really, really well. You read that first paragraph and 0:15:20.160 --> 0:15:22.920 you're like, way, hey, go you right, so here we 0:15:22.960 --> 0:15:24.360 are here we get to the bid that makes me 0:15:24.440 --> 0:15:26.800 just so sad. I'm out a bit for a cross 0:15:26.800 --> 0:15:28.920 worlds where I'm having doubts about continuing to work so 0:15:28.920 --> 0:15:31.680 as long hours. He works at a peebacked company. Yeah, 0:15:31.760 --> 0:15:35.480 we know about those. Listen to past podcasts on some 0:15:35.520 --> 0:15:38.680 of our feelings set anyway, on my current career two directory, 0:15:38.720 --> 0:15:40.960 I would expect I could increase my earnings to maybe 0:15:40.960 --> 0:15:43.320 one hundred and fifty thousand pounds after a few years. 0:15:43.360 --> 0:15:43.800 Not bad. 0:15:44.080 --> 0:15:47.280 But equally, I'm sure I don't have the right talent 0:15:47.400 --> 0:15:50.000 or abilities to get to the very top and earn 0:15:50.040 --> 0:15:54.360 the big bucks self knowledge. Also well done. Alternatively, I 0:15:54.400 --> 0:15:57.520 am confident I could move to a new job, rest 0:15:57.600 --> 0:16:01.360 on my laurels, never leave past five pm, and likely 0:16:01.440 --> 0:16:04.600 earn sixty thousand pounds or seventy thousand pounds. 0:16:04.720 --> 0:16:05.200 Do you know what? 0:16:05.240 --> 0:16:07.280 There's a job in the public sector just waiting for 0:16:07.320 --> 0:16:11.560 this man, so onwards. My question is, with all this 0:16:11.760 --> 0:16:14.440 noise about the dreaded tax cliff at one hundred thousand pounds, 0:16:14.440 --> 0:16:18.080 and particularly with young kids, does it make more sense 0:16:18.480 --> 0:16:25.120 financial sense to just give up and host everyone? See 0:16:25.160 --> 0:16:28.880 why I'm feeling a little low here, because the answer 0:16:29.880 --> 0:16:34.840 is probably yes, isn't it, John Nice? 0:16:35.840 --> 0:16:37.640 Yes, isn't it? 0:16:38.080 --> 0:16:41.120 Isn't it? Are you sure if you live in a 0:16:41.200 --> 0:16:45.560 world where every time you turn around your taxed, when 0:16:45.600 --> 0:16:48.440 you're near that cliff edge, and you've written about this before, 0:16:48.520 --> 0:16:50.640 go back and find John stuff on this where you 0:16:50.760 --> 0:16:52.920 near that cliff edge where a raise might actually mean 0:16:52.960 --> 0:16:55.720 your take home pay falls falls. 0:16:56.160 --> 0:16:57.320 When you're looking around. 0:16:57.120 --> 0:16:59.680 To you and you're seeing what your tax money is spent on, 0:17:00.040 --> 0:17:02.280 and you'd like to spend some more time with your children, 0:17:02.560 --> 0:17:05.200 and you're fed up with working for a pe company 0:17:05.240 --> 0:17:08.960 that you know took your company over and now ripping 0:17:09.000 --> 0:17:11.880 out the costs, planning to list it with masses of debt, 0:17:11.920 --> 0:17:14.600 et cetera. And you're looking around you at lots of 0:17:14.600 --> 0:17:16.800 people who maybe it don't work that much, people who 0:17:16.800 --> 0:17:19.000 work from home every day people all this kind of stuff. 0:17:19.000 --> 0:17:21.280 You're look around, you go, what am I doing? I'm 0:17:21.320 --> 0:17:22.000 the idiot here. 0:17:22.560 --> 0:17:28.480 Maybe I'll just stop and coast And so the incentives, 0:17:29.119 --> 0:17:33.280 the incentives financial incentives suggest that maybe that's not the 0:17:33.280 --> 0:17:35.280 worst idea, And you and I would. 0:17:35.080 --> 0:17:38.440 Say, well, where's your ambition? What about your future? Maybe 0:17:38.440 --> 0:17:38.880 you're wrong. 0:17:38.960 --> 0:17:40.600 Maybe you will just get to one hundred and fifty, 0:17:40.600 --> 0:17:42.639 and maybe you'll get to two hundred, maybe you'll be CEO. 0:17:42.920 --> 0:17:44.159 Maybe this is usually. 0:17:43.920 --> 0:17:46.200 Satisfying, and maybe it's true that just this bit of 0:17:46.280 --> 0:17:48.320 the beginning here with young kids and hard work on 0:17:48.400 --> 0:17:50.960 long hours, et cetera, this is a tough bit of life, 0:17:51.040 --> 0:17:52.880 you know, work on through, push on through, and it'll 0:17:52.920 --> 0:17:55.480 be great on the other side. I mean, maybe we 0:17:55.800 --> 0:17:57.280 could say that, but are we right? 0:17:58.560 --> 0:18:00.520 Well, I ta your point. The tea has. I understand 0:18:00.520 --> 0:18:03.520 how he feels. I've sort of been in a fairly 0:18:03.560 --> 0:18:07.680 similar position. But well, first things first, So the tax 0:18:07.680 --> 0:18:10.199 cliff one hundred thousand pounds, It really is important to 0:18:10.359 --> 0:18:13.919 understand a few things about that. You only lose money 0:18:14.280 --> 0:18:18.240 if you lose your free childcare. Now, this chap has 0:18:18.240 --> 0:18:20.520 pointed out his wife doesn't work, so presumably she's looking 0:18:20.560 --> 0:18:23.879 after the kids, so they're not presumably paying for childcare. 0:18:24.359 --> 0:18:26.840 If from assumption there is wrong, then yeah, the one hundred 0:18:26.840 --> 0:18:30.240 thousand cliff really matters. But as it stands, once he 0:18:30.280 --> 0:18:31.920 earns over one hundred thousand pounds, he's going to be 0:18:31.960 --> 0:18:34.560 paying away between Yeah, I mean, he's only going to 0:18:34.560 --> 0:18:37.240 be earning between thirty and forty pounds for every pound 0:18:37.280 --> 0:18:40.240 he takes home up until he gets one hundred and 0:18:40.280 --> 0:18:43.000 twenty five thousand pounds. But the thing to do with 0:18:43.000 --> 0:18:45.200 that then is presumably the company he works for all 0:18:45.200 --> 0:18:48.119 of her salary sacrifice, so she ram the rest of that, 0:18:48.160 --> 0:18:50.840 and he's pension to stay below the one hundred thousand 0:18:50.840 --> 0:18:53.399 pounds mark. Saying is I'm assuming he can afford that 0:18:53.440 --> 0:18:57.919 if he's planning the coast for proper sort of discussion this, 0:18:58.000 --> 0:19:01.160 I need to know what is kind of plan b boys, 0:19:01.160 --> 0:19:03.520 It's like, so why do you want to coast? You know, 0:19:03.600 --> 0:19:05.520 why do you want to you know? Is it spend 0:19:05.520 --> 0:19:07.920 more time with your young kids? But then yeah, I 0:19:07.920 --> 0:19:10.800 can completely understand that, but also, your daughter is only 0:19:10.800 --> 0:19:13.840 going to be young for the next five to ten years. 0:19:13.920 --> 0:19:16.440 You know, how long are you going to be a 0:19:16.600 --> 0:19:18.800 home for and then you're kind of, you know, whatever 0:19:18.800 --> 0:19:21.520 you turn fifty, you're sort of sitting there going, I say, 0:19:21.760 --> 0:19:26.399