This blog gives you the latest topical news plus some informal comments on them from ShareSoc’s directors and other contributors. These are the personal comments of the authors and not necessarily the considered views of ShareSoc. The writers may hold shares in the companies mentioned. You can add your own comments on the blog posts, but note that ShareSoc reserves the right to remove or edit comments where they are inappropriate or defamatory.

Warren Buffett and FCA Review of RDR & FAMR

There was an interesting article on the career of Warren Buffett in the last FT Weekend magazine. It was a wide-ranging interview with the renowned investor who became one of the richest persons in the world by making investments which consistently outperformed the markets over the last 50 years. At age 88 he still claims to be having fun by working at investment.

But in the last ten years he has fallen behind the S&P index. The reason is primarily because he has to look now for enormous deals to soak up the $112 billion in cash the Berkshire Hathaway fund holds and there are not many such opportunities now available. In addition he has to compete with leveraged private equity funds who currently have access to very low cost money and who are willing to pay high prices for good assets.

The last paragraph of the article contains the usual pithy and wise quote from Buffett as to why investors enjoy the game: “If you played golf and you hit a hole in one on every hole, nobody would play golf, it’s no fun. You’ve got to hit a few in the rough and then get out of the rough….That makes it interesting”.

The Financial Conduct Authority (FCA) yesterday published a call for comments on the Retail Distribution Review (RDR) and the Financial Advice Market Review (FAMR) – see: https://www.fca.org.uk/publication/call-for-input/call-for-input-evaluation-rdr-famr.pdf .

They would like some input from consumers on how the past changes to regulations on advice to consumers and how advisors are remunerated have worked out. Do you consider financial advice is accessible and affordable? If you have views on this subject, please let the FCA have them.

Other news from the FCA is that “dawn raids” as part of investigations is at a ten year high at 25 last year. It also has more investigations open at the end of the year, at 504 which is a 20% increase on the prior year. This suggests that enforcement action is increasing which is surely what is required. There are way too many financial frauds and abuses in the modern world.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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