Yes Paul, I understand that we buy at the market price. But UK exploration and production co's here in the UK would be making profits and paying corporation tax rather than us buying from abroad. We buy in half of our gas from overseas. We earn nothing on that gas but if it was coming out of the North Sea, straight to the UK we would earn corporation tax on it and employ more people which would reduce benefits and bring in income tax and VAT on what they spend.
If you think the consumer is genuinely paying market prices for oil, gas and therefore electricity then why are we paying massively more for electricity than anywhere else in the developed world, by a country mile, when we have our own north sea gas? It's because we are relying on green energy from wind and solar and when the wind doesn't blow and the sun doesn't shine we buy from abroad at premium prices.
The government promises to pay green energy cos a set price to make it worth their while investing in wind and solar. These co's would make huge losses if the gov never did that. The cost of those subsidies goes on the price of gas and electricity from fossil fuels and comes out of the pocket of the consumer and businesses. If that never happened, fossil fuels would be way lower in price, people would have more cash in their pocket, businesses in the UK would be far more competitive and we'd save these grotesque subsidies.
If we were to frack for gas we could become totally self sufficient in gas. We would be earning revenue on that gas. We have been buying gas in. This week, when we were at capacity, a call went out to buy in gas at any price. Apparently at one point it was £5.50 per Kwh when consumers normally pay 27p per Kwh. That is just ridiculous. We will all be paying for that, we will all be poorer for it, just because we won't extract our own gas and earn revenue from it but we will still burn gas because we have to and we are paying other countries to supply it and get richer for it.
It is the economics of mad men and even if we got to net zero, our atmosphere we breathe would be no different because that is a global atmosphere, we cannot put a barrier up and just breathe British air. The atmosphere won't be one jot cooler either because China and India are increasing use of coal. It's all very righteous and moral to do all this to save the planet but we won't, we'll just get extremely poor and won't be be able to afford to pay for things like pensioners winter fuel allowance -- oops, we have already done that.
Yes saw that. I see Starmer wants us to be the world leaders in AI, a massively energy intensive business. Business pays 3.5 times the cost of US energy, here in the UK - what AI business is going to find the UK the most attractive? It's a complete joke.
seems to have been a lot of over reaction to retail recently, GRG, PETS, CARD, DNLM etc among others. I dunno why, it may have been like MKS today. If a mention of tougher consumer market (who is surprised by that with NI and minimum wage rises announced in Sept) or anything other than out and out euphoria the punters seem to panic. GRG rating had got a bit heavy and in a tough market this may have been the last straw, Retailers will likely trade on lower multiples but I suspect they will be passing on costs created by the government and numerous people will have higher wages so the scope for retailers to be oversold looks good.
Agree, definitely. Just like in summer 2022, the markets rolled over when everyone thought socks were cheap - look at Aim since then!
I always look on stock on an individual case. I had Menzies, Cardfactory Shoezone and Crestchick that year and that helped turn a decent performance in a tough market. With the FTSE250.
Every market has winners and losers and as things change I try to weight towards what are likely to be the winners, an example is that I'm looking more favourably towards those with US sales or exporters to the US as the weak £ will help them, while a weak £ will likely hurt retailers who bring in a lot of overseas products.
Some of these may get caught up in profit taking but they will likely bounce the hardest on news.
They might be talking about QE but it might just be talk. If that steadies markets then just talking may be enough. The US has only given back about 5%, that's a normal, healthy pull back.
You do realise that had you sold half your MKS the shares would have opened up 10% on results day don't you? :-)
I also think Reeves has to do a big U-Turn or be thrown under the bus by Starmer when he blames her. It's a mess that I think will end Starmer's term before the missus gets the Christmas back out.
Thank you for your post. your poem choice and your analysis of the current government are profound. Inept Government combined with inflation will make for a challenging investment climate. A guid and healthy new year to you and family
Thanks Richard as ever. The big chill this week extended to markets.
Our illustrious chancellor is going to be boxed in soon for stimulus measures. She needs to get to grips with public spending starting with pensions and bloated public sector which full of woke roles. Not sure current government are going to address any of this.
I think we’re all in for challenging times and really appreciate you sharing your thoughts on substack. Keep up the great work. ASUNCION
Thanks for your incite Richard . Terry Smith’s annual letter speaks about concentration risk and ETF buying . He mentions 40% of the DAX rise last year was from one stock . SAP.
I'm like the next person, who likes to be positive. I also appreciate Richards observations, wise counsel and eye for value.
However as investors we must look at both types of glasses, the one that is half full and the one that is half empty, too.
Most of all, we must watch out for the glass in the face.
On whether UK smallcaps are cheap (which they seem to be in relative terms) we must also consider whether they are cheap for a reason or, to the glass-in-the-face scenario, whether they are sniffing out serious trouble ahead.
The government run the country - and they affect your's and everyone's shares.
If you don't have a view on what the government are doing you are investing with one eye closed.
Yes Paul, I understand that we buy at the market price. But UK exploration and production co's here in the UK would be making profits and paying corporation tax rather than us buying from abroad. We buy in half of our gas from overseas. We earn nothing on that gas but if it was coming out of the North Sea, straight to the UK we would earn corporation tax on it and employ more people which would reduce benefits and bring in income tax and VAT on what they spend.
If you think the consumer is genuinely paying market prices for oil, gas and therefore electricity then why are we paying massively more for electricity than anywhere else in the developed world, by a country mile, when we have our own north sea gas? It's because we are relying on green energy from wind and solar and when the wind doesn't blow and the sun doesn't shine we buy from abroad at premium prices.
The government promises to pay green energy cos a set price to make it worth their while investing in wind and solar. These co's would make huge losses if the gov never did that. The cost of those subsidies goes on the price of gas and electricity from fossil fuels and comes out of the pocket of the consumer and businesses. If that never happened, fossil fuels would be way lower in price, people would have more cash in their pocket, businesses in the UK would be far more competitive and we'd save these grotesque subsidies.
If we were to frack for gas we could become totally self sufficient in gas. We would be earning revenue on that gas. We have been buying gas in. This week, when we were at capacity, a call went out to buy in gas at any price. Apparently at one point it was £5.50 per Kwh when consumers normally pay 27p per Kwh. That is just ridiculous. We will all be paying for that, we will all be poorer for it, just because we won't extract our own gas and earn revenue from it but we will still burn gas because we have to and we are paying other countries to supply it and get richer for it.
It is the economics of mad men and even if we got to net zero, our atmosphere we breathe would be no different because that is a global atmosphere, we cannot put a barrier up and just breathe British air. The atmosphere won't be one jot cooler either because China and India are increasing use of coal. It's all very righteous and moral to do all this to save the planet but we won't, we'll just get extremely poor and won't be be able to afford to pay for things like pensioners winter fuel allowance -- oops, we have already done that.
All the best
Richard
CR,
Apparently last week the UK was warned by the gas companies that at one stage we only had 1 weeks supply of gas left in storage!
No Fracking need to produce more of our own gas then……………?
Thanks for all your thoughts and comments!
Graham.
Yes saw that. I see Starmer wants us to be the world leaders in AI, a massively energy intensive business. Business pays 3.5 times the cost of US energy, here in the UK - what AI business is going to find the UK the most attractive? It's a complete joke.
seems to have been a lot of over reaction to retail recently, GRG, PETS, CARD, DNLM etc among others. I dunno why, it may have been like MKS today. If a mention of tougher consumer market (who is surprised by that with NI and minimum wage rises announced in Sept) or anything other than out and out euphoria the punters seem to panic. GRG rating had got a bit heavy and in a tough market this may have been the last straw, Retailers will likely trade on lower multiples but I suspect they will be passing on costs created by the government and numerous people will have higher wages so the scope for retailers to be oversold looks good.
I'd watch forecasts and see where they go.
Agree, definitely. Just like in summer 2022, the markets rolled over when everyone thought socks were cheap - look at Aim since then!
I always look on stock on an individual case. I had Menzies, Cardfactory Shoezone and Crestchick that year and that helped turn a decent performance in a tough market. With the FTSE250.
Every market has winners and losers and as things change I try to weight towards what are likely to be the winners, an example is that I'm looking more favourably towards those with US sales or exporters to the US as the weak £ will help them, while a weak £ will likely hurt retailers who bring in a lot of overseas products.
Some of these may get caught up in profit taking but they will likely bounce the hardest on news.
An 'exceedingly good' reply Jas.
Thank you
They might be talking about QE but it might just be talk. If that steadies markets then just talking may be enough. The US has only given back about 5%, that's a normal, healthy pull back.
You do realise that had you sold half your MKS the shares would have opened up 10% on results day don't you? :-)
Actually I didn’t realise that as I’ve been starting work when the market opens so have missed everything this week and all the ups and downs
A pleasure
Thanks Michael, I think you are likely right.
I also think Reeves has to do a big U-Turn or be thrown under the bus by Starmer when he blames her. It's a mess that I think will end Starmer's term before the missus gets the Christmas back out.
Not sure Stammer understands the economy, seems to be lack of competitent replacements amongst Labour MPs
Thank you John, and a healthy and happy 2025 to you and your family.
Cheers, that's very interesting, I have wondered why the Dax was such rouge index by the look of it.
Thank you Gary
Hoots Mon!
Thank you John
Thank you for your post. your poem choice and your analysis of the current government are profound. Inept Government combined with inflation will make for a challenging investment climate. A guid and healthy new year to you and family
Thanks Richard as ever. The big chill this week extended to markets.
Our illustrious chancellor is going to be boxed in soon for stimulus measures. She needs to get to grips with public spending starting with pensions and bloated public sector which full of woke roles. Not sure current government are going to address any of this.
I think we’re all in for challenging times and really appreciate you sharing your thoughts on substack. Keep up the great work. ASUNCION
Thanks for your incite Richard . Terry Smith’s annual letter speaks about concentration risk and ETF buying . He mentions 40% of the DAX rise last year was from one stock . SAP.
Darren
I'm like the next person, who likes to be positive. I also appreciate Richards observations, wise counsel and eye for value.
However as investors we must look at both types of glasses, the one that is half full and the one that is half empty, too.
Most of all, we must watch out for the glass in the face.
On whether UK smallcaps are cheap (which they seem to be in relative terms) we must also consider whether they are cheap for a reason or, to the glass-in-the-face scenario, whether they are sniffing out serious trouble ahead.
This chart:
https://x.com/WizardofWindsor/status/1878043119368687819?t=HKE-Jl2ToiDZqlJivUbJjA&s=19