In Search of the Perfect Investment

We had our own founding father. He read us the Declaration of Independence at our July 4 party.

The Economist is calling it Amexit — when America left Great Britain. If there’s a lesson, it’s that Brexit may take a long time — several years — before financial markets “normalize.” Here’s the Economist’s chart of many, many years ago.

And the Economist’s story of the chart:

BRITAIN’S decision to leave the European Union has sent shockwaves across the financial community. On June 24th, the day after the referendum, shares in Britain’s FTSE 100 stock index fell by 3% and the pound hit a 31-year low against the dollar. London’s status as Europe’s financial capital is now under question and many fear Britain’s role in the world has been permanently diminished.

Difficult divorces are not new in Albion. The Kingdom of Great Britain saw a different kind of Brexit 240 years ago: the American revolution. On July 4th, 1776 America’s newly-formed Continental Congress ratified the Declaration of Independence, formally separating ties with the British crown. While the geopolitical consequences of Amexit are clear, relatively little attention has been paid to the economic ramifications.

Wars as it turns out can be costly: trade flows to and from Britain slowed and government debt rose from 106% of GDP to over 150% by the end of the war. Investors were worried: yields on consols (government bonds with no expiration date) shot up two percentage points, while share prices fell and would not recover until five years after the war. Breaking up is hard to do.

Meantime gold is booming.

BSV and TLT are up, as interest rates continue to fall. The Bank of England just dropped its rates. Business Insider this morning reported,

“The BOE’s Financial Policy Committee cut its countercyclical capital buffer for UK banks to zero from 0.50%, according to the latest Financial Stability Report, which was released Tuesday. The committee says the buffer will remain in place for at least the next year as the UK economy deals with “uncertainty” following the vote for a British exit from the European Union, or Brexit.”

For now, this is a short-term market. Ideal for day traders. Interesting how Verizon continues to rise. It’s still yielding over 4%.

Our messed up “Health” system.

I am over 65. I am on Medicare. It’s the best our government offers. I am also on AARP Suplemental Insurance, which is provided by United Health (UNH) and (allegedly) covers the rest. Allegedly. I am also on Medicare prescription drug insurance, which I can’t get off and costs more per month than I spend on drugs.

I am also semi-intelligent. I now wish to state: I’ve given up on trying to understand what it all means for my survival going forward.

I cannot understand the paperwork they send me. I cannot understand the bills they send. Sometimes I should pay them. Sometimes I shouldn’t. Who knows? I cannot understand what they reimburse or why. I cannot understand why one month the government pays for my $36 eye drops; the next month it doesn’t. I’ve even spent hours on the phone with them — only to be told that I’m “on the wrong plan.” And I could change it — but not right now.

Now what? Three things:

1. Put some money aside in my own Health Fund.

2. Sign up for a concierge service. Some doctors and some hospitals offer a deal where you get better (and instant) service if you pay more now. Prices vary all over the map. You might even get a tax deduction if you make a “concierge” contribution to your local hospital.

3. Stay healthy. Lose weight. Do exercise. Sleep more. Stress less. The usual stuff.

What money buys

This is the Hermès Rose Sheherezade Porosus Crocodile Birkin handbag. It costs $65,000. It is the most expensive production handbag in the world. It’s made from farmed Crocodiles. Women buy it to impress. I’ve never seen one. I hear they’re popular. To buy yourself one, click here.

Nice logic.

Harry Newton who will not bore you with any of the many photos of granddaughter Sophie, who visited this long weekend. Well, maybe just one. They’re a joy.