ISSUE 135 - August 2026 (Published September)

Overview

There is a phrase that most HindeSight Letter readers will have heard and all serious investors should understand:

Margin of safety.

It is normally associated with legendary investor Benjamin Graham, the ‘father’ of value investing. Don’t pay a price for an investment that requires everything to go right. Allow for the possibility that your assumptions are wrong, events change or, heaven forbid, you simply make a mistake.

But margin of safety is a much bigger idea than investing. Companies need one. Families need one and countries most certainly need one.

As always with HindeSight letters, there is a history lesson, this month with an English adventurer, 70,000 rubber seeds and a steamship sailing out of the Amazon 150 years ago.

In 1876, a 29-year-old Englishman named Henry Wickham boarded the SS Amazonas in Brazil carrying an extraordinary cargo. The Amazonas was a relatively new steamship of around 1,000 tons, built in Sunderland in 1874 and operating the Liverpool–Amazon route. And the cargo? Some 70,000 seeds of Hevea brasiliensis — the Amazonian rubber tree. This was no leisurely botanical expedition for young ‘Harry’ as he was more commonly known and while there was no actual law in Brazil at the time preventing export, it does seem there was more than a bit of customs argy-bargy and ‘negotiation’.

Rubber seeds rapidly lose their viability. Wickham had gathered them around the Tapajós and Santarém region of Brazil and they needed to reach Britain quickly. The Amazonas travelled downriver, cleared Brazilian customs at Pará and crossed the Atlantic, arriving in Liverpool on 10 June 1876. Wickham himself hurried ahead via Le Havre and arranged for a train to meet the ship so that his precious cargo could be rushed directly to the Royal Botanic Gardens at Kew.

Of those roughly 70,000 seeds, fewer than 2,500 successfully germinated. It didn’t matter. It was enough.

The seedlings were distributed through Britain’s extraordinary botanical and imperial network, initially to Ceylon and Singapore and subsequently into Malaya, which, with the recent Pangkor Treaty of 1874, saw Britain establish the Resident system and direct involvement of the Malay states.

Malaya proved almost perfect for Harry’s seeds. Heat, rainfall, humidity and suitable soils. With existing plantations, British capital, shipping, banks and Singapore sitting nearby as one of the great commercial ports of Asia. Brazil’s near monopoly on latex and rubber was shot and I’m not certain they have ever forgiven us.

Then came the motor car. The pneumatic tyre transformed demand for rubber and, by the early twentieth century, Malaya was becoming the centre of the world’s plantation-rubber industry. The extraordinary thing is that Britain hadn’t sat down in 1876 with some brilliant fifty-year strategic plan.

Nobody said: “One day Europe will fight an industrialised world war, so we’d better secure an independent rubber supply.” Arguably, Britain had done something much more valuable. While the plan was economic at heart, it had created optionality or, a term I like, capacity, or a strategic margin of safety, before it knew precisely why it would need one.

And then, forty years later among many other things, it surprisingly came in very handy in a bartering deal.

By 1914, Europe was at war and the new industrial warfare with armaments capable of far greater ranges than before exposed a rather embarrassing problem.

Britain needed high-quality optical glass, binoculars, telescopic sights and other precision optical equipment but we had been left behind in this increasingly important world. While Germany had spent decades building arguably the world’s finest optical industry, with Zeiss binoculars and rifle scopes leading the way, at the outbreak of war, Britain was reduced to launching an appeal in the contemporary newspapers for the general public to donate field-glasses or stalking-glasses of any magnification, even opera glasses with the promise of return after hostilities had ended.

The appeal’s success was largely due to the appeal’s initiator, Lord Roberts, better known as Field Marshal Frederick Sleigh Roberts, 1^st Earl Roberts (1832-1914), one of the most famous British soldiers of the Victorian era, having won the Victoria Cross during the Indian Rebellion of 1857. Some 26,000 pairs of binoculars were ultimately received by 1916, but far fewer in the early, urgent days of the war with even King George V and Queen Mary contributing several pairs each. Sadly, only two months after launching the appeal, Lord Roberts, at a sprightly 82 years of age, crossed to France to visit Indian troops, contracted pneumonia and died at St Omer in November 1914 with his daughter continuing the scheme onwards.

Germany, however, had a problem of its own. The Royal Navy’s blockade was cutting it off from natural rubber. Britain and its Empire had rubber. Germany had optics. The position became sufficiently desperate that the two enemies entered negotiations through neutral Switzerland over the extraordinary possibility of exchanging German optical equipment for British-controlled rubber. Two countries busy killing one another on an industrial scale were simultaneously discussing whether to supply one another with the materials required to do it more effectively.

Why they didn’t simply agree to stop the bloody war while they were at it is perhaps best left to historians but the poor decisions of politicians and vested interests back then were probably not much different to today’s shambles.

But underneath the absurdity lies an important lesson. Britain had something Germany desperately needed and vice versa. Britain therefore had choices. It had leverage. It had resilience.

It had a margin of safety.

For much of its modern history Britain accumulated strategic margins of safety almost everywhere. Industrial capacity, coal and energy, a global trading network and the world’s pre-eminent financial centre. It once had scientific and technological leadership, an all-powerful Navy and substantial Armed Forces. On D-Day, June 6^th 1944, four out of five of the 4,000 landing craft and ships that stormed the Normandy beaches were British, despite what the Hollywood movies suggest.

We have had the strongest of international alliances, historically, and another buffer which is often overlooked-economic growth. Growth is a wonderful solvent for political problems. A growing economy allows wages to rise while corporate profits rise. It allows tax revenues to increase without necessarily increasing tax rates. It makes debt easier to carry because the denominator — national income — keeps expanding and it allows governments to spend more without every additional pound requiring somebody else to receive less.

Most importantly, growth allows mistakes to be absorbed.

Britain did not need every decision to be correct because it possessed enough spare capacity to absorb mistakes. That is what a margin of safety really is. The ability to be wrong without the consequences becoming catastrophic.

Which, of course, brings us to the uncomfortable question in the UK in 2026. Not whether Britain is rich, it is still a wealthy nation after all. Not whether Britain can borrow, it plainly can with fully functioning capital markets despite higher rates. And not whether the government could increase taxes again as our newly unelected left-wing Prime Minister no doubt plans to do in the next budget. It still can, sort of.

But the question is different now: how much unused capacity remains? And that is where the numbers become uncomfortable.

As always, the charts invariably tell the story better than words and the selection below with the 1990-2030 range does an excellent job at getting the point across, at least in my opinion. When we look at margins of safety, it really doesn’t matter whether we are comparing country finances or personal but let’s go through the basics of:

· Taxation margin

· Growth margin

· Debt level margin

· Borrowing margin

In order for the state to provide the services it has pledged or is responsible for, to the electorate, it must firstly raise the finances in the form of taxation to do so. That tax collection, mainly raised from the private sector must pay for all the salaries and expenses of public sector workers, from police, council workers to NHS or armed forces PLUS all the welfare benefits to pensioners, the unemployed and the people with ‘anxiety’. As you can imagine, that is a fair chunk of change these days, forecast to be a nose-bleed 39% of GDP in the next few years, if we are lucky!

Source: The Telegraph, ONS

The problem, which should be no surprise to anyone, apart from a politician, (Jonathan Brash—Seriously, where do they get these guys from???) is that if you keep raising the tax burden on people and businesses, you get lower growth rates. Remember the line from before, “Growth allows mistakes to be absorbed”.

“Public sector workers use their income to pay FOR the private sector. The state is one of the biggest procurers of the private sector. It wouldn’t exist without taxpayers. People creating the divide between public and private genuinely don’t understand how an economy works”.

· Jonathan Brash, Labour MP for Hartlepool

The glory days of 3-5% growth rates enjoyed in the 1990s aren’t coming back any time soon, if ever. Today, we will be very lucky to crawl along at 1-2% for a multitude of reasons not least the real, inflation-adjusted tax revenues and % tax burden that has surged. We do well to remember that raising the percentage taken from the economy is not the same thing as growing the economy from which the tax is taken. So with that spluttering weak growth, we have to look to borrowing to balance the books and we have done that in spades, to keep paying those bills. Debt/GDP ratios have soared across the developed world with the UK’s debt rising from 22% of GDP in 1990 to 95% expected very soon. The last straw for many countries was the huge borrowing need for COVID-19, but that may well have been the last hurrah. Not to mention that debt, personal or government, is no longer being funded at the ‘margin of safety’ of almost zero rates for much of the last decade but now climbing steadily back to 5-6% levels with inflation continuing to structurally embed itself in the system. And don’t listen to the clowns that it’s all to do with this war or that war. It’s the debt that is one of the main drivers of inflation and arguably has to keep doing so to help ease that debt mountain of electorate promises and support. Unfortunately, the person in the street feels inflation just like more taxation, especially private sector workers whose wage rises are much more constrained by business growth than public sector inflation-busting wage growth of late.

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The next pandemic, war, banking crisis or other event doesn’t begin with UK debt at 22% of GDP, it starts at close to 100%, a level that historically has never been optimal! Of course, maybe we can still borrow if the markets will let us, but that margin of safety is a far different starting point.

So with the taxation burden approaching 40%, government spending taking up 44% of national income, the ‘credit-card’ limit of debt/GDP almost tapped out at 100% and growth collapsing under the dead weight of reality, but the state has made far too many promises and the chance of having the capacity to keep them all will make the 1000-1 outsider at Newmarket look like a great bet. The vulnerability is obvious.

The welfare system supports millions of people, some nine million people are currently economically inactive, which of course does include students, carers, early retirees and others who can’t simply be described as welfare dependants. More than six million more people work in the public sector. It is not just a case of stating that an increasingly large collection of claims ultimately has to be supported by the productive economy but to fully understand that all these people are ‘at-risk’ and their margin of safety to continue to benefit from the state’s promise to do so is declining fast.

Whether this comes from such straightforward measures as reductions in public sector expenditure, means-tested pensions and changes to the triple lock, arithmetic and capacity will eventually force the decisions. Unfortunately, ‘kicking-the-can’ down the road is the standard modus operandi in politics such that we do have to be prepared for a disaster scenario in scale and timing, and while it may be gradual and already in play, I fear the cliff-drop moment.

Of course, the contrast with defence and geopolitical or strategic margins of safety is particularly striking. At the end of the Cold War, Britain spent around 4% of GDP on defence, today it is a little more than half that and the promises for increase seem all too hollow despite the changing world order for the worse. Unfortunately, the 30-year peace dividend after the Soviet Union disappeared and NATO expanded was spent with other promises to the electorate and now we are rediscovering the cost of rebuilding that capacity. We have written before about how the ‘implicit social contract’ between a state and its citizens has become increasingly strained. We used to work hard, pay our taxes and see the state provide the ‘cover’ we had paid for. But now, the state wants many of its citizens to work harder, pay more taxes but it can only provide far less in terms of national defence, a working police and judicial system and basic healthcare, let alone keep the roads pothole free.

Down in deepest East Sussex, road closures and diversions are not simple affairs often leaving you to drive miles in ever-increasing circles to circumvent. So apologies if you do feel like I have taken the long road to get to the conclusion.

When the state has less margin, you need more. And that finally brings us back to investing. The greatest financial mistakes generally occur when we construct our affairs on the assumption that nothing goes wrong;

· The mortgage works — provided income continues.

· The portfolio works — provided markets rise.

· The retirement plan works — provided inflation behaves.

· Government finances work — provided bond markets remain accommodating.

· The geopolitical system works — provided alliances hold.

A margin of safety changes the question. Instead of asking: “How much can I make?” We should occasionally ask: “What happens if I’m wrong?”

That seemingly small change produces a very different portfolio. Cash is no longer merely an underperforming asset. It is optionality. Low leverage is no longer necessarily inefficient. It is resilience. Diversification isn’t an admission that we don’t know which investment will perform best. It is recognition that we cannot know.

· Financially strong companies with durable cash flows and dividends become more attractive.

· Assets outside a single country or currency become more valuable.

· And then there is one peculiar asset mankind has returned to for thousands of years whenever confidence in governments, currencies and financial systems has been tested.

Of course, these headings belong in the Investment Insights section later on.

There is no such phrase as “The Wickham Principle”. I just made it up. Henry Wickham could never have imagined that forty years after his voyage a British officer might peer across a Flanders battlefield through German optics while Germany desperately sought rubber produced from trees descended from seeds Wickham had carried out of Brazil.

History rarely moves in straight lines. Decisions taken decades earlier create options nobody knew would one day be necessary. Britain once accumulated enormous reserves of industrial, financial, military and geopolitical resilience. Some remain. Others have diminished. That doesn’t mean catastrophe is inevitable. Quite the opposite. A margin of safety exists precisely because catastrophe is not predictable.

For households and investors, therefore, perhaps the lesson from Wickham is surprisingly simple. Don’t rely entirely upon somebody else’s margin of safety. Build some of your own, while markets are functioning, while income is still coming in. Build it before the crisis. Build it before you know why you are going to need it.

Because by the time everybody discovers what the indispensable commodity is —

It is usually too late to plant the trees.

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Investment Insights

After that rather long-winded Overview section this month on ‘Margin of Safety’, I thought it only worth reminding ourselves of our favourite portfolio, which we publish every month in the Insights section, as the year-to-date “Permanent Portfolio”. The Permanent Portfolio is principally associated with American investment writer Harry Browne (1933–2006). He developed the idea in the late 1970s/early 1980s to have a portfolio that he believed didn’t depend upon correctly forecasting future economic conditions or events. It has often been called the ‘Cockroach Portfolio’, with reference to their alleged ability to survive nuclear war.

The classic Harry Browne portfolio was beautifully simple, with equal allocations across four basic asset classes. Ben Davies and I started The Hinde Gold Fund at Hinde Capital in 2006, strangely coinciding with Harry’s demise, but his legacy for us was very useful in trying to convince investors that gold was one of the legendary asset classes for wealth and purchasing power protection. It wasn’t that easy then, with Gordon Brown, ex-Chancellor, having dumped most of the UK’s gold reserves a few years earlier at an average price of £180/ounce and alienating investors’ thinking. For us, gold had always been that asset class with a 5,000-year margin-of-safety history. With the current gold price near £3,500/ounce, that’s an almost 20-fold increase, making the opportunity loss on those ‘gallant’ gold sales some £44bn! Just think what the government could do with that in the coffers now — give more to foreign aid perhaps, or provide more benefits for ADHD sufferers, maybe even with a little left over for defence of the realm. As timing goes, it was legendarily poor and incredibly naïve for any historian.

As the return table below shows, following Harry’s advice over the last 20 years, with just yearly rebalancing, you avoid a lot of the scary drawdowns when certain asset classes really suffer, such as the 30% drop in equities in 2008 or the horrendous repricing of long-dated fixed income in 2022, losing 40%. With an annualised 6.73% return over the period, and a worst yearly drawdown of -6.8%, it’s hard to argue against its merit as an investment base case. We hope to have highlighted in this monthly letter over much of that period that the addition of more value, ‘cheap’, strong dividend-paying equities or equities in different markets and varying the duration of the fixed-income investments can improve on this already strong return.

Anyway, back to the present. The year-to-date Permanent Portfolio is registering a small 3.18% gain, with strong gains in the equities and weakness in long-dated fixed income but arguably, much better than what seems to be going on in the London housing market, long a bastion of wealth protection —No longer!

If you ever need to be reminded why you have to hold a real asset like gold in your portfolio, the increasing level of debt in the world is pretty key. A recent headline was that ‘The US national debt is sprinting toward $40 trillion, up $450 billion since July 1st at a run rate of $15bn per day — every day!’ It is no surprise that long rates from Japan to the US continue to rise. While equity markets, especially in the US, seem impervious to a much higher cost of global capital, CURRENTLY, historically this hasn’t worked out so well for business growth, and we should be on guard as the bond market regime shift comes more into focus.

And as usual, some charts and visuals that interested me this month below.

HINDESIGHT PORTFOLIO UPDATE (AUGUST 2025)

Premium subscribers would have seen The HindeSight Portfolio added Harbour Energy (HBR) on 3 August 2026 at 236p as it displayed many of the characteristics our model scans for in a value investment: a depressed valuation, an attractive dividend yield, substantial free cash-flow generation and the potential for that cash flow to support both debt reduction and shareholder returns. Harbour had already generated $1.1 billion of free cash flow in 2025, despite lower commodity prices, while its new distribution policy targeted returning 45–75% of annual free cash flow to shareholders, including a base dividend of 16.10 cents per share, equating to 6.4% yield. At the same time, the shares appeared inexpensive relative to the scale of the underlying business and its cash-generating ability, while the acquisition strategy had created a much larger and more geographically diversified producer. For HindeSight, this combination of low valuation, high income, strong cash generation and identifiable potential catalysts provides the theoretical margin of safety our model tracks—recognising, of course, that Harbour remains exposed to oil and gas prices and was carrying elevated debt following its acquisitions.

Have a look at the full Portfolio #1 below.

The Hindesight Letter August 2026 (1)

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ISSUE 134 - July 2026 (Published August)

OVERVIEW

Nothing Happens… Until Suddenly It Does

“The longer you can look back, the farther you can look forward.”
— Winston Churchill

We made our regular family sojourn to Spain recently, fortunately nowhere near the tragedies of the wildfire outbreaks. As usual, we spent some time in Tarragona which is always a delight, despite the somewhat oppressive 36° C. The early establishment of Tarraco, as it was known during Roman times, became the capital and gateway for the Roman control of the Iberian Peninsula and the amphitheatre and many incredible arches remain to be enjoyed to the current day. The Vila Romana Els Munts on the outskirts of the city, graced by Hadrian himself is one of the best preserved examples of a Roman villa and bath house, only discovered in 1970 when the land was being developed. But, the great Via Augusta always grabs my thoughts. The 930-mile road route, whose construction was ordered by Emperor Augustus stretched from Cadiz in the south to the Pyrenees, linking up to routes in Gaul that led all the way to Rome itself. It was built around 5 B.C and only took five years to complete with many parts being still visible and functioning today. It can only be compared with increasingly farcical projects such as the 100-mile HS2 rail route from London to Birmingham, (who actually wants to go there??) which was supposed to have opened this year, but is now looking like 2040!

Historians have spent centuries arguing about when the Roman Empire actually fell.

Some point to AD 410, when Alaric and the Visigoths entered Rome. Others prefer AD 476, when the last Western Roman Emperor, Romulus Augustulus, was deposed. There are even those who argue that the Eastern Roman Empire survived for another thousand years until Constantinople finally fell in 1453.

They’re all correct but they’re all wrong. Rome did not collapse on a particular day, empires never do.

Long before the barbarians breached the city walls, something far more important had already begun. The Roman silver coin, the denarius, had been repeatedly debased to finance government spending. Taxation became steadily heavier. Bureaucracy became steadily larger. Productive citizens found themselves carrying an ever-greater burden while political leaders promised more than the economy could realistically provide. Trade became less profitable. Investment slowed. Wealth became concentrated in fewer hands. Confidence gradually ebbed away. Sound familiar?

None of these developments made dramatic headlines.

No Roman citizen woke one morning and declared, “Today, the Empire begins to decline.”

Life simply carried on, markets opened, merchants traded, taxes were collected, senators debated. Most people believed tomorrow would look much like yesterday. Nothing happened.

Until, suddenly it did.

History has an irritating habit of working that way. The events that appear sudden are usually decades in the making.

That thought came back to me recently after receiving an email from a long-standing subscriber who suggested that my writings in the HindeSight Letter had too much political prejudice and I should focus more on investment. I have to admit, I could understand why he may have thought that. Over the past year we’ve discussed defence spending, taxation, energy policy, the NHS, regulation, welfare, borrowing and Britain’s deteriorating public finances. Read individually, some editions could easily be mistaken for political commentary.

But they aren’t. Or, at least, they were never intended to be. Perhaps this month is therefore a good opportunity to explain what HindeSight has always been about. It isn’t about politics. It isn’t about politicians and it certainly isn’t about telling readers how they should vote.

It is, and always has been, about one thing. To try to educate and inform readers about investment and the preservation and creation of wealth. Politics only appears because governments and their policies so often determine the rules under which wealth is either made easier or harder, created or destroyed. But, of course I am British and naturally prone to those great English wits-Sarcasm and Irony, which can sound like a rant at times, I admit. But, trench humour may be the best way of keeping sane with insanity all around us especially with current policies.

Taxation, regulation, monetary policy, borrowing, energy costs, property rights. To the majority of UK politicians, (most who have never worked in the private sector) these are ideological choices.

To investors they are simply incentives. And incentives determine where capital chooses to live. That last word is the important one. Capital. Capital has no passport. It has no emotions and doesn’t watch Question Time or care who occupies Number 10.

It simply asks one question. “Where am I likely to earn the best risk-adjusted return?”

For centuries that single question has shaped the rise and fall of cities, industries and nations.

It explains why Venice yielded to Amsterdam, why Amsterdam eventually yielded to London. Why New York overtook London, why manufacturing migrated eastwards and why Singapore flourished. And why investors ignore incentives at their peril.

Source: S&P Global

One of the reasons I often begin these letters with stories from history is because history remains the greatest investment textbook ever written.

Every debt crisis, every inflationary episode, every speculative bubble, every currency collapse, every commodity boom, every period of national decline and every budget tax. Someone has already lived through it. The names may change as does the technology but human behaviour rarely does. History doesn’t repeat itself precisely, but incentives always rhyme.

Source: ONS, Adam Smith Institute

Source: Institute for Economic Affairs

During my career I have also noticed something else, major change rarely announces itself. Countries don’t become poorer because of one budget, nor do businesses relocate because of one tax increase. Entrepreneurs don’t emigrate because of one regulation and currencies don’t lose purchasing power because of one poor decision.

Instead… one extra tax, another regulation, higher borrowing, rising energy costs, lower productivity and slightly weaker investment and another company decides not to expand or hire new staff. Another entrepreneur decides to leave and another overseas investor quietly decides to look elsewhere. I had an discussion/disagreement with a chap at a network event recently who told me that “all the talk of people leaving the country was media rubbish”. I could only respond that he was moving in the wrong circles, maybe in the public sector. In the last 18 months, I know several people personally who have left already or have re-domiciled, know of dozens who have or are planning to leave and I don’t get out anywhere near as much as I used to when I slouched around London for 30 years.

Individually, every decision appears almost insignificant, collectively, they alter the direction of travel.

Nothing happens, Until suddenly it does.

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Which brings me to BP.

Today (Aug 1st), the company announced its intention to dispose of its remaining North Sea oil and gas business. Most newspapers so far have reported it as just another corporate transaction.

But, they are missing the point.

BP has been synonymous with the North Sea for more than sixty years. It helped create one of Britain’s greatest industrial success stories, generating employment, tax revenues, exports and energy security that successive governments relied upon for generations. Companies like BP do not quietly walk away from sixty years of investment because of one Finance Bill.

They leave because the economics have gradually changed, because incentives have gradually changed. Because capital has gradually reached a different conclusion. Because an effective tax rate of 78% just doesn’t make the effort worthwhile.

BP isn’t really the story, BP is the evidence. The same pattern appears elsewhere. Successful entrepreneurs are relocating overseas. Private companies choose to expand elsewhere. Listed businesses disappear from the London market. At last count, we have had 11 FTSE companies taken out of UK circulation, the last few being very well-known such as EasyJet, Tate & Lyle and Rotork. Even as I write this today, yet another FTSE company, DCC Energy, a £5.75bn energy company has agreed to a private equity takeover.

BP employs 14,000 people in the UK and has had its headquarters here for over a century but no one should be surprised in the coming years to see them scale down, change their listing and move their headquarters to the US where they are better treated.

Highly skilled people increasingly see their future beyond Britain’s shores. While each headline looks different, the underlying cause is remarkably similar. Capital is voting. Not in a ballot box, with its feet-everything is connected. Tax influences behaviour, behaviour influences investment, investment influences productivity, productivity determines living standards, living standards influence politics, politics changes tax. Round and round the wheel turns.

That is why HindeSight occasionally sounds political. Not because politics is the destination, but because it is one of the roads that capital travels. If, at times, these pages have sounded more political than I intended, then perhaps that is my fault rather than yours. I have probably concentrated too much on the symptoms and not enough on the underlying diagnosis. One of my overriding beliefs in life is to learn from mistakes and experience. The often misattributed quote to Einstein, “The definition of insanity is repeating the same thing over again and expecting a different result” has always made sense. ie. If it was a sh*t idea the first time, it probably still is! Just like invading Russia in late June and expecting a good result, it doesn’t happen. (Napoleon-1812), (Hitler-1941).

A current policy example of this would be the recently mooted tax change to raise Capital Gains tax from 19-28% up to the same level as income tax, 20-45% by many new members of the government. Of course, like most policies this has been tried before, by no less than the quite legendary UK Chancellor, Nigel Lawson in 1988. His equalisation of Capital Gains tax and Income Tax was comparatively seen as quite fair and reasonable, but mainly because it included an indexation allowance for inflation. You were only getting taxed on the real gain on capital, not a gain as a result of continued currency debasement and inflation. But, it didn’t work particularly well, tax receipts were far less than expected, so it was ditched in time.

If you asked your friendly AI companion what policy historically has got the highest inflation adjusted tax receipts, you get the table below. Of course, the current potential policy is (5) with the weakest receipts expected. As capital gains tax receipts are only 2% of the total HMRC take, compared to 36% for income tax, a logical person would question why so much air time. I’m afraid, it’s all part of the age-old socialist manifesto, “Tax the working and entrepreneurial rich to provide welfare for benefits for the unemployed”. And those who have CAPITAL must by definition be rich, no? But, the crux of the matter is that capital is just investment and without invested capital being welcomed and treated fairly, it will go elsewhere and all the benefits such as employment and ancillary spending go with it. It’s not rocket science, but you do need to know your history and understand what works and what doesn’t.

So let me end with a reminder of why this letter exists.

HindeSight is not published to predict elections, it is not written to support governments and any criticism of their policies is purely to highlight the challenges those policies will have on investment and wealth creation. It exists to help readers recognise long-term trends before they become obvious to everyone else.

History whispers long before it shouts. Our job as investors is to hear the whisper.

Because by the time everyone finally hears the bang...

...the opportunity has usually passed.

The HindeSight Letter has never been about politics. It has always been about investment wealth preservation.

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INVESTMENT INSIGHTS

Last week, we heard Jamie Dimon say he wouldn’t buy stocks or Treasuries at current prices. This is not Mark Mahaffey, some random ex-city guy who rants/writes a newsletter, this is the long-time CEO of JP Morgan, the largest bank in the world by market capitalisation. The two main asset classes of most portfolios and Jamie has his hands down on both! Of course, it’s easy to look at very well-known charts from Hussman and understand sky-high equity valuations compared to all history or marvel at the amount of leverage around with the whopping levels of margin debt but it’s still quite a statement.

Source: Hussmanmarketcomment

In fixed income, at least we seemingly have better ‘value’ than in the last few years as long-term debt yields 5-6% in UK and US. But the problem is that inflation looks very stubborn and who can blame it with the soaring money supply amid fiscal indebtedness everywhere you look. Governments just don’t have the income to satisfy their ridiculous level of promised spending buying off the electorate and now their ‘credit card’ is tapped out and the debt interest is eating into the pie too. Talk about “between Scylla and Charybdis” for any policy makers. At some juncture of tipping point, rising interest rates will bring the house down in style as it has done historically.

US Treasury 20-year yield, 1-year

Source: Marketwatch.com

Source: US Treasury Bulletin

Source: Simon White, The Macroscope, Bloomberg

Our permanent portfolio is up a mere 1% this year, with gold and long bonds negating the performance of the UK equity indices. Apart from the constant presence of overseas bargain hunters looking for ‘cheap’ UK stocks, we are benefitting from steeper yield curves, (banks) and oil and commodity rises helping their associated large caps and as the table below shows us, the cash flow is also allowing UK to employ buy-back strategies that has long been seen in the US.

Source: Noisecancelling

A few other charts and tables caught my eye this month, starting with the slightly odd sounding ‘crack spread’. While the Iran/Hormuz Strait war lingers on with the markets seemingly less frantic about every $1 move in the spot price these days, the crack spread is at all time highs.

The crack spread in basic terms is the catalytic ‘cracking’ of the long hydrocarbon molecules of crude oil by the refiners into shorter, more valuable molecules, namely petrol, diesel, jet fuel etc. The market-used spread terms take the prices of six parts/barrels of crude oil, relative to three gasoline, two heating oil and one diesel with the difference/spread being the ‘profit’. Ie. You make more out of your raw material of crude oil at a high spread than low. Obviously, this is a good time for refiners but unfortunately one of the reasons why prices at the pump aren’t coming down is while we have less oil supply worries, we have a severe shortage of refining capacity. With oil inventories back to their lows, you would naturally expect the backwardation of oil prices where the forward prices are considerably lower than spot. You can certainly understand investors’ appetite for refiners such as BP Plc, despite their UK pull-back every time the dividend yield gets back to 5%.

Source: US Energy Information Administration (EIA)

Brent Crude Price, 5-years

Source: Hargreaveslansdown

Source: Visualcapitalist.com

Light Crude Oil Futures, Forward Curve

Source: Tradingview

Source: John Authers, Points of Return, Bloomberg

Second up, the continuation of understanding the needs and demands for copper and the current market conditions. Every aspect of our current narrative leaves us in no doubt regarding copper demand whether it is the AI-related infrastructure or the increased electrification needs as a result. You have the growing electric car demands, far more copper-intensive than fuel-combustion as well as expansive renewable energy plans. The trouble is there is far less around than there used to be. While copper deposits have much longer mine life than gold for example, copper veins can be mined for decades, we are discovering less than before. Prices are rising as a result. One of the charts, (courtesy of well-known guru, Tavi Costa, now at Azuria Capital) below shows the lack of pullback in copper prices that has been seen in gold prices in the last four months.

Stocks such as Rio Tinto, BHP and Antofagasta which have featured many times in The HindeSight Letter over the years are often the main beneficiaries of commodity bull trends and any pull-backs in price levels should be considered.

Source: Tavi Costa, Azuria Capital, Bloomberg

Source: BHP

Lastly, a chart of the Korea stock market index, (KOSPI) which has been getting its fair share of attention in the press of late. While it has long been a rather dull overseas market, suffering the same discount as the Japanese stock market, the last year has been a helluva ride, from early January 2025 to the recent June highs, some 250%+. It has been the beneficiary, both from similar positive policy reforms as seen in Japan regarding corporate governance, but mainly as a result of the AI and semi-conductor mania. No doubt, in downtown Seoul, there are shoeshine boys trading Korean stocks and giving tips. Although, we do have to remember the two biggest index stocks, Samsung & SK Hynix currently make up 55-60% of the index, scary in itself. When you consider, that Microsoft & Nvidia make up just 16% of the S&P 500, and Astrazeneca & HSBC make up 15% of the FTSE100, there might be a problem here, Houston. But, right now… And as usual a few extra charts and tables from the month.

KOSPI (Korea) Composite Index, 5-years

Source: Yahoofinance

Source: FINRA, www.econovis.net

Source: Bloomberg

Source: Saleh Almenawer, MD, World Gold Council

HINDESIGHT PORTFOLIO UPDATE (JULY 2026)

There was one CLOSE alert and no open alerts, 3^rd July-31^st July;

· CLOSE ALERT : TP ICAP Plc, (TCAP), 20^th July, Exit price 350p, Absolute return 42.3%, Relative return 45.4%, Days held 143 days, (Annualised 107.9%)

Share Price, TP ICAP, (TCAP), 1-year

Source: HargreavesLansdown

I always remember the sketch in Blackadder where Lieutenant George Barleigh is being admonished about not telling the group that he was such an accomplished artist, “One doesn’t like to blow one’s trumpet” leading Captain Blackadder to remark, “You could have told us you owned a trumpet”!

Sorry, random anecdote….

We exited TCAP this month for a great profit of 42.3% after just 143 days and by many M&A metrics that is a straightforward 107.9% annualised return. With 5% of the return coming from the dividend payment and beating the index as well, it’s HSL selections like these that keep us interested in doing this. Pity there aren’t more relative easy opportunities at this time.

The FTSE indices, especially the FTSE100 continues to perform strongly, up almost 12% YTD including dividends. While we understand the cheapest of some stocks in relation to the overseas M&A interest, the rising interest rates, especially in the long end should be seen as a worry for continued strength.

Share Price, FTSE 100, 1-year

Source: HargreavesLansdown

Have a look at the full Portfolio #1 below.

The Hindesight Letter July 2026 Portfolio

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ISSUE 134 - June 2026 (Published July)

OVERVIEW

Another month goes by and yet another British Prime Minister is consigned to history. We used to ridicule the 70 Italian governments and its 30-odd Prime Ministers since WWII compared to our own UK political stability. But, by next month, we will have had four British Prime Ministers in-situ since Italian Prime Minister, Georgia Meloni has held office and seven in a decade. Despite much self-trumpeting on his departure with his ‘legacy’ of achievements, I know the history books are unlikely to be kind to Sir Keir Starmer. Much will be written about the last rites of his demise but for many the resignation speech of the UK Defence Secretary, John Healey will feature; “You have been unable, and the Treasury has been unwilling, to commit the resources that the nation needs to defend the country at this time of rising threats….” (John Healey)

I can’t help but see the direct comparison from John Maynard Keynes lamenting from 1938.

“We are suffering today from the worst of all diseases, the paralysis of will. And nothing can be more dangerous than that…We just rearm a little more, grovel a little more and wait to see what happens” (John Maynard Keynes)

Surely, the 1930’s are whispering a warning to Britain again for all to see, at least those who have a modicum of knowledge of history.

History does not repeat itself, but it does seem to have an unnerving habit of posing the same questions to successive generations. Britain in the 1930s knew that Europe was becoming more dangerous. It knew Adolf Hitler was rebuilding Germany’s armed forces at extraordinary speed. Yet year after year governments delayed decisive rearmament, convinced that moving too quickly would damage the economy more than the growing military threat.

The uncomfortable question today is whether Britain is making precisely the same mistake.

The strategic environment has undoubtedly changed. Russia is not Nazi Germany, and Vladimir Putin is not Hitler. Britain faces cyber-attacks, hybrid warfare and the possibility of conflict involving NATO rather than invasion across the Channel. Yet the dilemma facing politicians is remarkably familiar: how much economic pain should a nation accept today in order to avoid a far greater security crisis tomorrow?

Unfortunately, the economic ‘pain’ in 2026 runs parallel with the left-wing political naivety and the burgeoning welfare state and ridiculous state of “sickness welfare”. Andy Burnham, the incoming unelected Prime Minister-in-waiting-by default, doesn’t give us much hope for positive change on these issues. The presumably out-going Chancellor, Rachel Reeves whose time in office has proved to all that the extreme of ‘The Peter Principle’ is alive and thriving, was apparently adamant that more welfare spending takes precedence over defence spending. Unfortunately, I think we all know that her expected replacement, Ed Miliband may well make new lows on that front, as difficult as that seems! Could the lurch to the left be worse than Burnham, of course- think Angela Rayner but it is the ‘youthful’ innocence of the Labour back-benchers and their undeserved weight of opinion that is arguably the biggest concern to addressing reality any time soon.

Stare at this chart below and weep-maybe war is the only solution to address the insanity!

As the recent Chatham House paper argues, by 1935 Britain’s leaders were divided between “two world views”. Neville Chamberlain represented economic caution. Winston Churchill represented strategic urgency.

Chamberlain feared rapid rearmament would “destroy the business confidence which now happily exists, and cripple the revenue.” Churchill feared something altogether worse. Britain, he argued, should place the country on a footing of “state of emergency preparations”, even if it required sacrificing “a good deal of the comfort and smoothness of our ordinary life.”

History records which judgement proved correct. But, despite all the warnings, we just don’t want to believe it again. Of course, as US President Donald Trump aptly remarked, “Sir Keir Starmer is no Churchill”. Unfortunately, there are no Churchills or anyone close to be seen in the Labour ranks today.

Britain did eventually rearm, but years of hesitation left dangerous gaps. Defence spending rose from 2.5 per cent of national income in 1935 to 3.8 per cent by 1937, yet the creation of a Ministry of Supply and the introduction of conscription came only after Hitler had torn up the Munich Agreement and occupied Prague. Time, once lost, could not be recovered. Today, Britain risks drifting into an equally dangerous complacency.

Every week, ministers at home and in Europe acknowledge that the world has become more dangerous. They promise to raise defence spending towards 3.5 per cent of GDP. Yet, as Chatham House notes, “2035 is far too distant.” Russia is not waiting until 2035. Nor are China’s military ambitions or the growing uncertainty surrounding America’s long-term commitment to European security.

The problem is not that Britain lacks wealth despite Labour’s tragically unsound policies on taxation and growth. It is that Britain has tied up so much of its national income in current consumption that governments struggle to fund future security.

Public spending now exceeds 45 per cent of GDP. Health, pensions, debt interest and welfare consume an ever-growing share of national resources. One of the most outrageous charts is of the growth in sickness-related welfare. According to Department for Work and Pensions figures, the number of people receiving incapacity-related benefits has risen from around 400,000 in 2019 to almost 3.5 million today. The welfare state, originally designed as a safety net, increasingly risks becoming one of the largest claims on the public finances, amid widespread abuse and shockingly lack of accountability or acknowledgment.

At the same time, Britain spends barely 2.5 per cent of GDP defending itself. That imbalance should trouble us greatly. No serious nation can assume that expanding welfare commitments indefinitely carries no opportunity cost. Every additional pound committed to a suspect long-term benefit expenditure is a pound unavailable for rebuilding the Royal Navy, replenishing ammunition stockpiles, modernising the Army or expanding Britain’s industrial capacity. Governments rarely acknowledge this trade-off because cutting welfare is electorally hazardous, whereas delaying defence procurement is politically painless—at least in peacetime.

This is exactly the mindset that Churchill spent years trying to overcome. The greatest danger was never simply inadequate spending. It was the belief that difficult choices could always be postponed.

Our armed forces are often regarded among the finest in the world, but they are way too small and in constant decline. Recruitment is struggling. Stockpiles are depleted. Defence procurement remains painfully slow. Successive governments have constantly dragged their feet to produce reviews, strategies and ambitious targets while avoiding the more fundamental question: what should Britain spend less on if national security is genuinely the first duty of government? Surely, only the insane could believe it should be sickness benefits rather than a minimum level of national defence?

The lesson of the 1930s was not simply that Britain needed more tanks and aircraft. It was that a democracy eventually recognised that security was the precondition for every other public good. Hospitals, schools, pensions and welfare all depend upon one prior condition: the nation must first be secure.

Churchill understood that. Chamberlain understood it only too late. Today, our senior military figures often refer to the large “Say-Do” gap with regard to our indecisive politicians of today, in normal speak-it’s just our gallant leaders talking BS!

History offers no guarantee that another great conflict lies ahead. But it offers one unmistakable warning. Nations rarely lose their security in a single dramatic moment. They lose it gradually, through years of hesitation, comforting assumptions and politicians unwilling to tell voters that freedom, like prosperity, has a price but where governments are convinced that tomorrow will offer one more opportunity to prepare.

But, eventually, tomorrow runs out.

The question facing Britain today is the same one Churchill posed nearly ninety years ago.

Do we prepare while we still have the choice—or wait until events make the choice for us?

“The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to its close. In its place we are entering a period of consequences.” (12 November 1936-Winston Churchill).

Last month, we bade a fond farewell to Alan Greenspan who passed away at the ripe old age of 100. For most of my early trading career, he was the US Federal Reserve chair who served five terms from 1987-2006 and all US Treasury traders hung on his every word, trying desperately to decipher his speeches. He presided over the longest sustained period of US economic growth in a generation but his policies of easy credit fuelled much of the excesses of the internet boom-bust and the housing bubbles. His term of “Irrational Exuberance” summed up much of the late 1990’s, no doubt he is already turning in his grave regarding the current state of affairs in the AI bubble.

INVESTMENT INSIGHTS

A pessimist is a well-informed optimist”, the age-old quote, widely attributed to author Mark Twain and one I have had to repeat over the years on regular accusations. “But, what if I’m right on my dire analysis, etc…”

Anyway, let’s start with at least a small positive note with one of our long-term holdings, EasyJet, (EZJ) rising over 70% in recent weeks. Unfortunately, despite the growth in travelling populace in recent decades, pandemics and wars have not helped the sector benefit accordingly. And now, annoyingly, just like Tate & Lyle last month, the soaring price rise from 350p-600p+ is again just a result of yet another US-backed takeover bid, with the latest bid price at 690p, as much as 100% higher than the late May share price lows.

I’m afraid that’s the only good news! It is quite easy to demonstrate that UK Ltd has been on the decline for many years now, arguably a quarter-century, but much more visual in the last ten years and increasingly so. As the table below shows, Britain have suffered a major fall in wealth per household since Covid as the cost of living bites hard. Payback’s a bitch as they say. For the UK, the 300 per cent real house price growth since 1982, not apparent at all in the G7, has seen UK households hold £5.5 trillion in property, some 40 per cent of their total assets. With the highest borrowing rates in the G7 now and at best a frozen property market, still at high multiples currently, we have some real problems.

And it does feel like that, across almost every part of the private sector, so very difficult to be that optimist for the foreseeable, blind or partially-sighted.

A stagnant property sector, embedded inflation keeping borrowing costs elevated and cost of EVERYTHING climbing, coupled with the most aggressive tax regime since the 1970’s while the burgeoning welfare and public sector see government debt reach the lunatic levels of £3 trillion.

As Dominic Frisby, who writes the excellent “The Flying Frisby” tells us. “At £3 trillion in UK public debt, you could have spent a million pounds every day since Jesus was born and still have not have spent a trillion-that’s how incomprehensible a sum a trillion is.”

In GBP currency terms, our purchasing power doesn’t just erode because of inflation, unlike gold. But, so easy to see against other major currencies. The GBPUSD exchange rate was over $2: £1 as recently as 2008, but for the last decade treading water at $1.30 : £1. Against our major trading partner of Europe, EURGBP while seemingly stable trading with £1: €1.17, for the first few years of the century, it was closer to £1 : €1.50.

All of this may not appear that dramatic, but you add in the huge outperformance of the US SP500 Equity index compared to our UK FT 350 Equity index and the 20X increase in the gold price in GBP terms and you really get the picture of our demise.

Our faithful Permanent Portfolio which had a stellar 25% year in 2025 started the new year in fine fettle but has sunk back to unchanged at half-year end, assuming no re-balancing. The long-end of the fixed interest rate market and a pull back in the gold price hasn’t helped of late but while my confidence in its permanence remains in the long-run, the equity allocation is still a concern with respect to the valuation levels in the US market and related AI ‘bubble’ potential. We are all aware that when and not if, the US stock market gives us the ghost, the effects will be felt very hard in the UK as well, especially bearing in mind, one of the key supports of the UK market is continual M&A interest from the US.

Of course, timing is everything and maybe that day of reckoning will never come for US stocks but there are some signs of old Alan Greenspan’s “Irrational Exuberance” around and you don’t have to look too hard. A couple of charts below by the legendary analyst, Simon White who writes ‘The MacroScope’ for Bloomberg are compelling. Over the skis time?

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The Permanent Portfolio

And as always, some charts and graphs that graced my reading this month that may be of interest. These ones are a bit bigger so click to download them.

The Hindesight Letter June 2026 Wtf

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HINDESIGHT PORTFOLIO UPDATE (JUNE 2025)

A straight forward selection for the HindeSight Portfolio this month. Long-term consumer defensive, Imperial Brands. It has appeared four times in the HSL in the last decade or so;

With a £19.6bn market capitalisation paying a solid, well-covered almost 6% dividend and a p/E ratio of just 9X, the 15% pullback this year from the 3300p highs looks a worthy entry price for a HSL stock selection.

Have a look at the full Portfolio #1 below.

The Hindesight Letter June 2026 Portfolio

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ISSUE 134 - May 2026 (Published June)

OVERVIEW

In 1784, the Prime Minister, William Pitt the Younger suggested that of the 13 million pounds (weight) of tea consumed in Britain, only 5.5 million had been brought in legally, (and taxes paid). The majority was smuggled across the English Channel into the nooks and crannies of the Kent and Sussex coastlines under the cover of darkness.

Relocating our family home to the South coast of England from central London over a decade ago was more random than planned, although with the languishing property market in London in recent years, it has turned out very well on that particular liquidity event. There is much to be said for living close to the sea amid far less dense population. I laugh when I hear locals here talk about traffic jams with more than a few minutes delay as the hourly train passes. You want to be stuck in the Limehouse Link for an hour and half choking on fumes getting home from Canary Wharf, like the Gridlock episode in Dr Who!

But my love of history is alive and thriving here, especially with all the history of 18th Century smuggling with hidden tunnels and pathways in the local villages. The stories are of The Hawkhurst Gang and their cohort meeting up at The Mermaid Inn in Rye (last rebuilt in 1420) with their pistols stacked high on the tables. I particularly liked finding out that one of my favourite cut-through car parks, Gibbets Marsh is so named as one of the last places of ‘Gibbeting’ where criminals were executed and their rotting bodies were entombed in cages and hung for years to deter others. Nice.

Smuggling in the UK saw its origin during the reign of Edward I, (1272-1307) who established the first official national Customs system to fund his military campaigns by imposing export duty on the highly sought-after English wool and hides. The centuries-long cat-and- mouse game between merchants evading duties and the monarch’s early revenue collectors was created. By the 18th Century, regarded by most as the ‘Golden-Age’ of smuggling, the illegal imports were tea, tobacco and alcohol while wool was still being illegally exported, despite a 200-year outright export ban, from 1614 to 1825.

N.B Summer holiday book recommendation, Winchelsea by Alex Preston, a smuggling adventure set in the 18th Century old town of Winchelsea, near Rye which bathed in the fame of being the capital of Britain’s contraband trade. So I have to shake my head in despair when I read the article this month from KPMG and Philip Morris stating that half of all cigarettes in the UK are black market and are costing a whopping £4.5bn to the country’s tax losses-apparently a record high. Have we learnt nothing at all in 300 years? Do these muppets not read books or any history?

The retail price of a standard pack of 20 fags in Britain is almost £18, of which roughly an eye-watering 80% is tax for the UK coffers. It is often referred to as a ‘health tax’, deliberately punitive to discourage smokers in order to ‘save’ money on health services, allegedly. The phrase ‘You can’t have it both ways’ springs to mind. Like our industrial electricity prices, the UK’s retail cigarette prices due to the excessive taxation are multiples of what the prices are overseas, so surprise-surprise you get smuggling. But let’s just call it price- arbitrage movement. Ridiculous tax levels creating silly high prices with much cheaper prices a quick boat trip away leading to a black market, simples!

Maybe it doesn’t occur to the dweebs at KMPG or HMRC that if the only cigarettes that were available were at the legitimate but extortionate £18/pack price, demand would fall through the floor, or robberies of off-licences would increase maybe! So the ridiculous statement that HMRC is missing out on £4.5bn lost tax is beyond farcical.

www.cityam.com/4-5bn-black-market-cigarette-tax-loss-should-be-a-major-wake-up-call-for-labour/

It was actually William Pitt through the Commutation Act of 1784 who cut the import duty on tea and stopped the smuggling trade in one fell swoop as it was no longer profitable. No different to back in 2010 when Sainsbury’s and Tesco’s closed their Calais branches because the ‘booze cruise’ was no longer profitable. Maybe the government should cut taxes on cigarettes or just be happy with their ‘quota’, still pretty good at £8bn/year if your aim is to discourage use rather than collect taxes, who are they trying to kid?

“Those that fail to learn from history are doomed to repeat it” is a great quote that Winston Churchill allegedly adapted from philosopher George Santayana. The relevance in current times, especially with the one-term Labour government proving to all that learning lessons from history is very much not their strong point.

Unfortunately, there is far too much material of poorly- thought out active government policies and potential policies currently so only the top ‘winners’ get the prize selection of mention. The recent ‘floating’ idea of price controls on supermarkets to ‘control’ inflation by our ‘esteemed’ Chancellor, Rachel Reeves was a LMFAO tragedy, as you might well imagine.

I have just popped my old copy of Forty Centuries of Wage and Price Controls: How Not to Fight Inflation by Robert L Schuettinger in the post to Number 11 Downing Street, who knows? She might read it, does she read? My particular favourite would be the history from Roman Emperor Diocletian’s Edict on Maximum Prices, (Edictum de Pretiis Rerum Venalium) issued in AD 301. A sweeping attempt to curb rampant inflation setting maximum prices on over 1000 goods and services. Arguably, the most dramatic chapter that combines inflation, political instability, black markets and the decline of an empire into a single narrative. Sound familiar? Of course, as the title reads, price controls haven’t worked for 4,000 years, whether in Ancient Egypt or 1970’s Britain so WTF was Rachel thinking, (big assumption) last month.

The Cycle of Complacency: Success and peace often lead to complacency, wealth inequality, and political instability. As societies grow comfortable, they forget the struggles that built their stability, inadvertently planting the seeds for their own disruption or downfall -No prizes for guessing where we are in this cycle.

I have always liked the analogy of “Re-arranging the deck chairs on the Titanic” which is particularly apt for much of our current policy planning. But while we may feel like we are drowning - the country and most of its workers in the private sector, (each one having to support the 2.4 persons who don’t work or ‘work’ in the public sector) we are just going through a difficult economic time and need a playbook from history in how to manage.

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Of course, the straight-forward option is just leave the country as we are reminded most months with yet another high profile self-made wealth entrepreneur announcing their departure from our ‘green and pleasant land’. The latest, just in time for the April deadline to avoid inheritance tax changes for family businesses, Betfred founder, Fred Done relocated his multimillion-pound Property Trading Group to Jersey. If you keep hearing that slow ‘whooshing’ sound, it is of billions of £££ oozing out of the UK heading for friendlier climes. Anyway, we are where we are. We have several more years of the one-term Labour government in the UK assuming you aren’t leaving the country, you need that playbook and focus on the ‘bright’ side, as hard as that may be.

Here’s one revelation from yours truly. Recently, I went to have lunch at one of my favourite London dining spots, Cecconi’s in Mayfair. My turn to pay for three of us, the bill came to ‘just’ £160. I couldn’t help thinking what a bargain that was compared to no doubt a similar price at my local –‘gastro’ pub where the service and food are definitely not comparable. It goes into my belief that price/value compression is becoming the norm as the general price level is driven up and costs are exploding, the best plan is to go upmarket because the value is far higher than the price increase.

I think my 2026 catchword is compression. It seems quite relevant across the spectrum. We seem to have a housing market that is in dire straits with illiquidity and lack of transactions crucially apparent. Stamp duty levels are killing much movement but higher mortgage rates are putting the boot in-big time. Higher rates amid stubborn inflation is a challenge before the left-wing political lurch potential of Rayner and Burnham. Apparently, higher UK interest rates this year are being referred to in the financial markets as having a “Burnham” premium. That should be straightforward then, want a cheaper mortgage, don’t vote for left-wing no-clue socialists at by-elections or general elections! I got sidetracked, the housing compression seems to be such while higher minimum wages are driving up the lower priced homes, the other factors mentioned are creating a huge overhang and price pressure from above and the middle, albeit with far fewer transactions is bulging.

One of the other notable ‘compressions’ are observing the frozen tax thresholds in the UK dragging more and more workers into paying more tax and compressing take- home pay. The chart below seems particularly poignant, a Band 6 nurse-the main stay of the NHS looks destined to be paying higher-rate tax for the first time in history by 2027! How can you possibly spin that positively?

“You cannot fix the cost of living without fixing the cost of doing business. And the cost of doing business is reaching a tipping point.”

Rain Newton-Smith, CEO CBI, (Confederation of British Industry)

So assuming you are not leaving the country or topping yourself in despair at UK Ltd’s prospects but with a playbook from the most comparable of economic times being the 1970’s in the UK, what do you do?

Back then, there were many ways to avoid the sky-high corporate and income tax rates that typically focused on ‘perks’ and ‘benefits’. Company cars, business lunches, season ticket payments and interest-free loans all featured amid a ‘cash-in-hand’ economy. While the HMRC of the day, still going since Edward I, clamped down in typical ‘whack-a-mole’ fashion by imposing the P11D Benefits- in-kind charter, it was easy to argue that the lowering of tax rates by Margaret Thatcher’s Conservative government did most of the heavy lifting for them, no different to two centuries before with William Pitt the Younger.

It is no surprise to hear again that companies and individuals are looking for the 2026 version of receiving tax-free perks and benefits in different ways. No wonder so many businesses are allowing fully remote or hybrid working by Zoom/Teams as the ‘perk’ so not pay extravagant train and petrol prices. But, I have already started to hear of small companies sending staff on ‘business’ trips with their families for a couple of weeks to explore business opportunities in the UK and overseas!

Or maybe, we should embrace the escapism of the 1970’s, much featured by the British sit-com The Good Life, that was rooted in DIY culture, frugality, thriftiness and low-waste lifestyle habits that didn’t require a massive income but still fun and enjoyable. Too many years of gratuitous consumption = happiness may have passed since then, I fear. Still, drinking and entertaining at home seem to be coming back in spades and who can argue. Most pub prices are 10X the cost of drinking and dining at home.

But after all, it’s important to remember that the wealth you want to achieve if you believe in the association with happiness and ability is only relative wealth. There’s no point having a great paying job earning loads if many others are doing so as well. The pictures of crowds cramming down the summer streets of beautiful Positano and Capri in Italy recently definitely tells that story.

Clearly, investments are key to that relative wealth or wealth preservation equation, more so now perhaps than in the past. During the 1970’s, stagflation saw cash deposits, fixed income and equities, all have a torrid time both in nominal but especially in real inflation-adjusted terms. The stand out winners were commodities, from precious metals to agriculture. Apart from surge in US tech investment, it’s easy to suggest that the pattern is already repeating on this front.

Whether it’s oil, copper, gold or generally commodities via single stocks or ETF’s, I believe history is on your side. Left-wing political farce, continual inflation and currency debasement amid exploding debt mountains are here for years to come, probably getting worst!

INVESTMENT INSIGHTS

Last month, Tate & Lyle was acquired for £2.7bn in an all-cash deal by US competitor, Ingredion in the latest acquisition of a ‘cheap’ UK company. But, few analysts have sought to mourn the passing of the last original constituent of the FT30 Index. The Financial Times 30-share index is the UK’s oldest continuous equity index, launched on July 1st 1935. Devised by Maurice Green and Otto Clarke of the Financial News (which later merged with Financial Times in 1945), it was modelled on the Dow Jones Industrial Average, tracking 30 major UK industrial and commercial companies. It was equally weighted and the constituents were originally chosen by Financial Times’ editors to act as a qualitative barometer for the broader UK economy. The original 1935 constituents had many household names, some that became far wider known in the FTSE100 and FTSE250 indices which became mainstream in recent years, while others passed into history.

Associated Portland Cement, Austin Motor, Bass, Bolsover Colliery, Callenders Cables & Construction, Coats (J&P), Distillers, Dorman Long, Dunlop Rubber, EMI, Fine Spinners and Doublers, GEC, GKN, Harrods, Hawker Siddeley, ICI, Imperial Tobacco, International Tea Co. Stores, London Brick, Murex, Patons & Baldwins, Pinchin Johnson & Associates, Rolls-Royce, Tate & Lyle, Turner & Newall, United Steel Companies, Vickers-Armstrongs, Watney Combe & Reid, and F.W. Woolworth & Co

The index was based at 100 at inception in 1935 and while not appearing in the huge ETF investing world of today, is still being calculated, more for posterity I guess than relevance. However, the chart below does show us that we are still lower than the 2000 internet highs, oddly enough.

UK Ltd and its many companies have become attractive ‘poaching’ grounds for overseas investors, rather like West Ham were to Chelsea for many years a while back. The shocking decline of our valuations and currency have seen many companies such as DS Smith, Britvic, Hargreaves Lansdown, Royal Mail and Deliveroo, to name a few depart our shores, often to the US where they can add great value to their acquirers. We have been lucky to have many of those names appear in the HindeSight Portfolio over the last few years, including Tate, although that’s more of a recovery than great gain.

Obviously, many of the metrics that the HindeSight model uses to select ‘cheap’ stocks will no doubt be no different from the metrics that the hovering overseas ‘vultures’ use. Does it have a long history?, is the p/e ratio low?, does it generate enough cash from operations to pay large dividends etc? But, it is a worry for UK Ltd that far too many stocks we believe have good value are on their radar and only the dross remains? Like the rest of the 1970’s problems, it is a very sad state of affairs currently.

As we highlighted in the Overview section, apart from the commodity world, the 1970’s playbook doesn’t give us much hope for the standard 60/40 equity-bond portfolio with stagflation raging in the UK. Our purchasing and investing power is very much on the wane with product/ service prices rising amid increased taxation for all. The Permanent Portfolio that was up almost 8% earlier in the year is heading back to break even whilst the global money supply continues to soar with rising debt and debt interest in the race to infinity too.

As always, leaving some of the charts and headlines that came across my desk this month, unfortunately most are depressing but that’s the way of it in 2026

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HINDESIGHT PORTFOLIO UPDATE (MAY 2025)

There were no add or close alerts in the HindeSight portfolio in May.

The two charts below highlight one of biggest concerns for investing in UK stocks currently. The US market that has long benefitted from Big Tech and AI and sits abroad huge valuations despite capex outlay concerns among the major players. But, this strength has, at best kept a minimum amount of support for its lowly cousin across the pond but no more and any loss of US strength from nose-bleed valuations could have drastic consequences closer to home.

Have a look at the full Portfolio #1 below.

The Hindesight Letter May 2026 Port#1

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ISSUE 133 - April 2026 (Published May)

OVERVIEW

Last month, the amazing pictures and commentary that came back from the Artemis II spacecraft provided (to me at least) a much needed distraction from the ongoing depressing news on Earth currently. I remember reading a line from European Space Agency astronaut Alexander Gerst returning from the International Space Station, “that the view from space changes everything. He wished all eight billion people on Earth could see it just once – a small, fragile, beautiful planet, cared for not nearly well enough by the species lucky enough to live on it.” Poignant.

Like most parents of school age children, keeping them ‘entertained’ while doing your own work during the long Easter holidays is truly hard work. Fortunately, my son likes museums, especially military ones so off we trotted for day trips to the Imperial War Museum in London and Chatham Dockyard in Kent. At my age, it’s becoming rarer to be really impressed with anything but the dockyard experience was fabulous, especially the “Ropery”, where for over 400 years they have been making rope of all sizes and still continuing today. To see the process in action starting from the plant fibre fluff to full rope for any dimension in the incredibly long, (1/4 mile) brick building was quite amazing. Highly recommend.

thedockyard.co.uk/attractions/the-ropery

Admiral Nelson’s flagship at the battle of Trafalgar in 1805 was built at Chatham Dockyard some 40 years prior and needed 31 miles of rope from the ropery for its extensive rigging. After having visited the Holocaust floor at the IWM, the dockyard and watched the Artemis moon journey, all in the same week, my son could be excused for his naïve comment of “ How can humans be so capable of such brilliance and tragedy at the same time?”

It’s seemingly so much easier to listen to a 12-year old than any politician to state the obvious. Most politicians are long past admitting to the ‘bleeding obvious’, because there is an agenda for them, always. My best answer to his question was that some times we have more good people in charge and some times we have more bad people and immediately pre-empted the next question by stating that we don’t have terrible, as in Stalin-terrible, but just totally clueless people in charge in the UK at the moment and in many other countries.

“How much worse is this going to get?” is a question you hear regularly these days in the UK. Sadly, it could be referring to all manners of things. Wars everywhere, government in complete disarray, cost of living crisis, rental and housing market having a shocker and so on and so on…

It’s always good to actually qualify those thoughts historically, especially where you are trying to plan a business strategy or investments. The Ipsos Economic Optimism survey, arguably the longest continual survey poll in the UK, at almost a half-century probably tells us what most suspect. It’s the worst situation since 1978!

When you think of some past events and periods in the last 50 years, that’s saying something. Worse than the 1980’s inflation and Cold war, 1990’s Gulf wars, the Internet crash and even the Great Financial Crisis in 2008. Crikey….

I have looked everywhere for my favourite 1900-1950 UK stock market chart that I have used before to no avail, so apologies. But, this one will have to suffice and some imagination. Although it doesn’t look that dramatic, (log- scale after all) two dips, the first around 1932, post the US Wall Street crash and the second in summer 1940, typically referred to as “The Dunkirk Low”. But, it was in market terms, quite classic. As the 338,000 soldiers, mostly British were being plucked off the beaches at Dunkirk, all looked lost as the nation stood alone. The royal family prepared to depart for Canada as an invasion of Britain was expected imminently. Both stock markets of the belligerents reflected the extremes, the UK stock market at its lows and the German stock market surging higher. Of course, the worst didn’t happen and those extremes very quickly dissipated.

The analogy of the 1940’s set-up must have some relevance I believe to the current situation in the UK as shown by the IPSOS survey. Business and consumer confidence are shocking, everyone is worried about the cost of doing business or cost of doing anything! You can’t find an optimist for love nor money, even a deluded one. So, are the markets already building in the worst case, like the soaring long-term interest rates, highest in a quarter century? And are the UK stock market indices being held back here and not powering ahead like the US?

But unfortunately, just like in 1940 if the Germans had actually invaded Great Britain, it’s still easy to see the situation get worse on all fronts. Politically, some would argue against that. Sir Keir Starmer is making a historic new low in popularity as Prime Minister without doubt. Having a left-wing humans rights lawyer as a PM never seemed a good plan, but with tax-dodging Angela Rayner waiting in the wings, you don’t need to look far to see even further real deterioration in quality, from cliff-face drop to abyss diving. Or chuck in the Greens, whose policies are so pathetic, it’s embarrassing to believe some of their MP’s received their education in the UK. Everywhere you look, you wonder WTF?

Such as Education Secretary, Bridget Phillipson, whose work career prior to government was a few years at Sunderland Council and then a few years at her mother’s charity, Wearside Women in Need. Of course, she is going to have appallingly thought-out policies such as VAT on independent schools, how could she have otherwise with that lack of experience? The recent revelations of Peter Mandelson’s appointment are beyond words but far more troubling is the Telegraph’s reporting on our Attorney General, the Rt Hon Lord Hermer KC. I doubt whether he will or should ever sleep soundly in his bed again, knowing that his legal actions against UK soldiers and servicemen have many journalists describe it as bordering on treason. Who knows what betrayed ex-SAS veterans might feel appropriate in their actions….

“The Government asks why they can’t hit recruitment targets for our Armed Forces. They ask why half of our young people say they would never fight for their country. Well, they should start by looking at their Attorney General,”

-Tom Tugendhat, MP

Unfortunately, I tend to alternate from the ‘Dunkirk’ extreme thought to the Wiley Coyote potential, where we just run out of road, and any blind optimism on “we must be close to the worst” being built in to current price or yield levels just fails climatically into a true catastrophe. Whether it’s the almost 50 years of budget deficits in the UK or the lunacy of raising £330bn in income tax last year and spending £331bn on welfare benefits, something will eventually give. The routing by the Reform Party of the May 7th elections is the protest against beyond shoddy government, potholes and national decline that are visible to all. Of course, most educated people aren’t voting for the Reform party in the belief of working miracles, but they do know that the rest of the incompetent muppets are in the wrong jobs at the wrong time and worse is likely to happen anyway. And never far from my thoughts for any investments is Hussman’s favourite chart on demonstrating the extreme valuation of the US stock market and the obvious correlation with other equity markets, despite the sound of the broken record.

Easier to argue that investing and making investments in the current climate are harder than in much of the last several decades. The risk/reward skew with the backdrop of declining growth and continuing inflation is a real challenge. Amid that, the final nail has been well and truly hammered into the private landlord’s coffin with the abolition of the Section 21 notice on May 1st, a key component of the “Renters’ Rights Act 2025”.

I feel this is one of those cyclical moments, where past reasoning and mistakes have to be re-made because so much time has passed and the naïve decision makers today have scant regard for history.

In the Housing Act of 1988, Section 21 was introduced as a piece of legislation directly focussed at injecting a much-needed boost into the private rental sector, (PRS) which had been declining for many years. As a result of the existing laws that made it difficult to evict or increase rents, the PRS shrunk from 32% of all housing stock in 1961 to just 8.6% by 1986. The 1988 Act intended to address this and make the private rental sector a far more attractive place to invest, making it easier to charge market rates and end a tenancy when the landlord needed.

Most of my adult life has seen the huge success of this, where people from all walks of life were able to “buy-and do-up” properties to rent or sell and create wealth. The ability to borrow against the collateral was fundamental to the leverage ability and the introduction of “Buy-to-let” mortgages was a game changer for thousands of individuals. The private rental sector more than doubled in size and by 2016, it amounted to 20.3% of all households. The first nails started to be tapped in back in 2015 when UK Chancellor George Osbourne restricted the mortgage relief for higher rate tax payers at 40-45% down to 20%, albeit scaled in over a few years but the coffin is well and truly sealed now. There has been a continual exodus in private landlords in recent years, but I have heard of an incredible flood of Section 21’s being served this year prior to the April 28th deadline. As if the abolition of Section 21 wasn’t enough, our ‘esteemed’ current Chancellor Rachel Reeves latest gambit threw out the random prospect of rent controls to throw lighter fuel on the inferno. Many tenants who have been served notice will no doubt have been model tenants in place for many years and are now scrambling to find accommodation amid rapidly tightening supply. You couldn’t f***king make this farce up if you tried.

In the short-term, it’s the proverbial sh*t show in spades for all, the landlords desperate to exit and the evicted tenants scrambling for new accommodation. In the longer term, we should expect large institutions like Blackrock et al to own huge swathes of rental properties and new flats/houses are now being built specifically for long-term rental across the UK.

Will corporate ownership benefit future tenants rather than the benefit of knowing your private landlord? Only time will tell, but I would argue against, although one thing is clear, the days of making money out of property for Joe public, apart from your primary residence are gone forever and that is a real investment loss for all. The lack of liquidity in the property market, coupled with huge structural change in rental accommodation is not just killing well known listed UK stocks such as Rightmove and Foxtons, it is all the related trade work that UK Ltd has benefitted from for years.

The tragedy continues…

INVESTMENT INSIGHTS

One of the main reasons we started writing The HindeSight Letter, well over a decade ago now was our belief that education about investments for ordinary folk in the UK was sadly lacking. Unlike in the US where personally making investments in your “401-K” retirement account see widespread knowledge of financial markets and investment instruments for much of the population. In the UK, pensions for the most part are managed by large funds and paid little attention to. But, seemingly everyone has been involved in property and it has long been regarded as the key wealth generator for so many UK residents. Unfortunately, as I highlighted in the Overview section, that ship has finally sailed. Maybe a time for a subscription to HSL to further your education, now “doing-up” a flat in Hackney is no longer an option?

Always assuming that any discussion on investments is with the understanding that it is from current levels, I would suggest it’s as tricky as I have ever known it. Valuations for US equities are a constant worry with all the correlation risk associated across the equity spectrum. Inflation is a constant presence such that interest rates are pushing higher for the most part with related fixed- income losses. With low growth and high indebtedness everywhere, precious metals and commodities are the only asset class that you might consider, but their huge gains over the last few years still challenges the current entry point.

One of the few cheap ‘assets’ in my opinion is the Japanese Yen or its denominated investments. Ah…The trumpet blower again..

Back in the summer of 2023, I did write some very positive pointers regarding the Japanese stock market that you check out here. hindesight.substack.com/p/hindesight- investment-102-july-2023-6b4

Everything has become so much easier since we moved to the Substack platform for our letters and the archive does go back several years now.

hindesight.substack.com/archive

What I closed with back in July 2023 was “For education purposes, I will take my trade monitoring mark at letter publish date, hopefully not too far away from now, at 1.8250 and 32390”

Referring to a long position in the Nikkei-225 index and holding in Yen or hedged with short GBP/Long Yen currency position. Since then, the Nikkei equity index has almost doubled but some of the gains have been given up because of the hedge, so roughly +70% combined to date. While the US Tech indices have seen as dramatic gains, the Nikkei still looks ‘cheap’ with the continual transformation that is going on in Japan’s corporate structures rather than the potential large overvaluation in the US.

The GBP/JPY which has reduced the long Nikkei position gains by roughly 20% looks far more over-extended now and with the UK economy heading directly for the sh*tter and the ‘cheapness of the Yen itself, I would expect this to play out favourably in the future.

Wars are not ideal, even for the Permanent Portfolio. At the end of Feb, the portfolio was +7.72% YTD and now barely positive, mostly dragged down by the long fixed income allocation. We have spoken before about staying shorter in maturity in bonds and increasing yield by widening credit choice rather than government paper.

To some degree the markets are still focussed on oil and worries about gasoline prices at the pump and flights being cancelled over the summer with the high jet fuel prices, despite the roaring highs of the US stock market. One might argue that the forward oil markets know better than most and according to the snap shot West Texas Intermediate Oil forward curve below, prices next year are much lower. Of course, in that time we could see both the Russo-Ukraine war and the US-Iran war end, Venezuelan oil production come on line and demand destruction from recession bound economies so not difficult projection.

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HINDESIGHT PORTFOLIO UPDATE (APRIL 2025)

The current HSL portfolio is looking very mixed on the returns currently. Both BTRW and TW are suffering with the general housing decline, exacerbated by the rising interest rates as a result of the Iran conflict and airlines such as EZJ are in the bad mix too, but with strong dividend yields here, if they are maintained. The high average dividend yield at 5.95% reminds us the requirements for HSL portfolio selection.

Download the current Portfolio below.

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The Hindesight Letter April 2026 (dragged)

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OVERVIEW

“I have got some bad news and some good news” was the response from my local heating oil supplier to my mid-March enquiry about a potential oil delivery. Having experienced the sharp rise in prices in 2022 at the outbreak of the Ukraine/Russia war, I was ‘fully’ prepared for a shocking difference from my February purchase of 500 litres for £340 as a result of the Iranian war.

“The bad news is that the price is £900 for the usual 500 litres order sir, but the good news is you won’t be paying that”. Pause, for the effect. “Because we don’t have any, all sold out!”.

Everyone a joker…

Apparently, heating oil is kerosene, which is closely related to jet fuel in pricing, (who knew?) such that prices have been affected far more than petrol prices, it would appear. We now know that only 5% of UK households are on heating oil, mostly in rural areas like me, but also 500,000 households in Northern Ireland for some random reason. ‘Don’t panic, Mr Mainwaring’, the UK Labour government is roaring to the rescue with a whopping £53mil support package for financially struggling consumers. Obviously, that seemingly only includes people on welfare benefits, so they can keep warm and toasty sitting at home, being anxious or whatever and watch TV rather than going out to work! For the rest of us muppets, it’s thermals and jumpers and hope for an warm Spring to arrive soon.

No doubt, I was not alone in hearing that £53mil number for government support and thinking, they must have a got a big figure wrong there, £53mil is peanuts!

So, off we trot down the rabbit hole of Google finding out to the penny that the key beneficiaries of the oil price surge and ‘windfall’ taxes are actually the Labour government coffers. With still 40+ million litres of petrol and diesel sold every year, the rise in the related VAT receipts could be anywhere between £100-£400 million a month EXTRA as a result of the Iranian conflict. The ‘huge’ support to heating oil consumers of £53 million equates to about a week of extra VAT! But, apparently when this was pointed out at a recent Cobra meeting between oil and banking chiefs and cabinet members, there were a lot of blank stares by Rachel and others by all accounts, but that’s just hearsay, of course. Would it surprise anyone, no.

Of course, while Rachel Reeves’ UK Treasury is coining it through much enlarged petrol and diesel VAT receipts, money is spewing out the door elsewhere as renewed inflation concerns stemming from the oil price rise and the knock on effects. Most crucially, with interest rates rising across the board pushing up borrowing costs for government and businesses alike. Despite the daily headlines of petrol prices at the pump, creating close to mass hysteria, oil is not that expensive in historical terms and importantly, many can make immediate changes to reduce cost and demand. Already, I am hearing home working/ shared-car work and school runs and people favouring petrol cars rather than diesel. (Diesel prices are up considerably more than petrol as a result of the UK’s higher petrol refining capacity than diesel).

Obviously, we can all remember the crazy days of 2022 which saw pump prices at £2/litre, coming back soon! But look back to 2008 and 2013 when prices were 140p/ litre, no different to where they were in February 2026. Actually, the price of a barrel of oil briefly reached $150 in 2008, some would argue that was the real instigator of the Great Financial Crisis and subsequent recession, not some dodgy mortgages in Wyoming!

The point is that in 2013, when petrol prices were at 140p/ litre, and still there in early 2026, comparisons to other goods and services show petrol prices are still cheap. UK CPI, (Consumer Price Index) even by suspect government statistics show that the general price level is at least 50% higher than the 2015=100 base year. But, back in the real world, most people know that prices for almost anything are multiples of what they were in 2013-2015 period.

Obviously, long-term subscribers know I can’t write for long without mentioning gold ,but in the context of relative oil prices, the gold-oil ratio chart is quite relevant, IF, you believe the gold price more accurately reflects long-term purchasing power than a government CPI number. Forthe most part, an ounce of gold has averaged 20 barrels of oil over the very long-term. I can well remember the crazy lows of 6X (One ounce of gold could only buy six barrels of oil) when oil traded at $150/barrel and gold was $900/oz as I was running The Hinde Gold Fund with BenDavies and we had interesting discussions with some oil producers about hedging their oil sales forward against buying gold across the same periods. In February 2026, this ratio traded above 90X!

One of the certainties of our modern world with hugely indebted governments is INFLATION in some shape or form, such that while oil currently seems ‘cheap’ relative to gold and many other goods, prices of everything seem destined to move higher as currencies debase globally.The demand and consumption for fossil fuels continues to increase by year, but as the population is still expanding by a similar rate, you would argue that OIL USE/per capita is really quite stable and bearing in mind increased industrialisation across the world, it is surprisingly lower than it could be. Alternatives such as solar and wind and even nuclear are clearly helping, it’s just difficult to speed up.

The UK economy wasn’t in good shape prior to the Iranian conflict, largely due to poor policy decisions by the Labour government with left-wing socialism at its core. The tax increases are too numerous to mention as are the U-turns and general anti-growth policies amid some class warfare desires. I heard someone mention the other day that the government was planning to ban horse-riding as it was ‘elitist’. Of course, there is no such plan, (currently) but there is such madness in most policies that you can’t bet against any lunacy. So, poor shape prior to the war-Now, our economy is clearly heading straight for the sh*tter and it certainly isn’t the oil price to me, but the related effects such as the rise in borrowing costs, with short-term interest rates up 100 bps (1%) in March, UKT 2years from 3.5% to 4.5%, that is a killer for businesses and mortgage holders alike.

In late February, 2-year mortgage fixes were going through as low as 3.80% as rates were expected to be cut throughout the year as the economy slows. Now, you will be lucky to find those same mortgages much better than 5%. On a £500,000 roll over or new mortgage, that is a move from monthly payment of £1600 to £2100! Straight out of your consumption abilities.

Almost 40 years ago, I started my accountancy exams as part of my planned career path. Sadly, the lure of the trading floor at the Japanese brokerage firm, (where I was an accounts clerk) was too much and the exams fell by the wayside. But, my 2026 resolution was to restart the CGMA exams, (1/12 done!) potentially as a dementia prevention hobby and before I croak! It has been a surprisingly interesting refreshment although it has been in my ‘dry’ part of the year, so I will keep you informed on progress.

While reading about recent UK growth estimates that were looking less than rosy with winning headlines such as;

• UK suffers steepest G20 growth downgrade as Iran conflict bites: OECD

• Manufacturers suffered the biggest monthly increase in input prices since Black Wednesday in 1992.

• Car production has collapsed from 1.7 million units in 2016 to around 700,000. Demand, both from abroad and at home, is weak

I happen to stumble on the basic Economics-101 equation in my Exam books;

Y = C + I + G + NX which is the expenditure approach formula for calculating a country’s Gross Domestic Product (GDP) or Aggregate Demand.

(Y = Income, C = Consumption, I = Investment, G = Government spending, NX =Net Exports)

Time to pay attention, Rachel even if it’s very new to you! But, if you just look at the components, it is no surprise that the UK growth is going nowhere and the UK and its wealth is fading into the sunset.

We all know that (I) Investment must surely be seriously on the wane as the UK is no longer viewed as an attractive place for capital investment, quite the opposite and (NX) Net Exports have consistently seen trade deficits run by the UK, although January saw a surprising net surplus of £3.92bn. You would have thought with our GBP currency at such depressed levels that more monies would be incoming just as a result of that, but alas, no.

The trouble with (C) Consumption and (G) Government spending is that they are currently at odds with each other. The government has sharply increased taxes across the board in order to spend, (obviously far too much on socialist and non-growth agendas) that the poor consumer is having to cut back his expenditure considerably. Although prices may rise, his quantity demanded is dropping by the cliff edge. No surprise that UK GDP per capita is falling far behind the G7.

Random anecdote, a local friend who earns a typical £35,000 salary takes home £2,200 a month, yet her council tax on her two-bed cottage is £380/month. Since when did council tax take 17% of monthly take home pay?

Unfortunately, we are leading the pack in two unwanted fields, we pay the highest borrowing costs in the G7 and we pay the highest non-domestic electricity costs in Europe but that gives you the general idea of ‘headwinds’. Let’s blame Andrew Bailey, Governor of the Bank of England for the first and of course, “Net-zero ‘Tsar’ Ed Miliband for the latter.

Also, difficult to believe, our unemployment rate has just risen above Italy’s for the first time this century arguably transferring the ‘basket case of Europe’ mantle over to us. Less difficult to believe when you look at the dreadful Labour policies delivered over the last two years for employers, “Is it all part of a cunning plan, Baldrick?”

Consequently, we must give very high odds to entering into a recession later in the year and plan accordingly with our trading and investments, more in the Insights section. There is no part of the economy that isn’t at risk of imploding, the real risk of a house price crash is just one of those but small businesses, family run businesses, farmers and most others are on the brink looking over into the abyss. Government borrowing already skyrocketing with rash spending will not be enough to cover the coming shortfall.

After all these bad graphs and news, I have to leave you with a funny one, “The World Happiness Rankings” where apparently the UK is the far out loser. The fact that Israel is far higher than the UK is interesting, so people are ‘happier’ in Israel, being bombed and always at war compared to living in the UK? Maybe, I guess that sounds right!

N.B. I have spent far too much time recently dealing with lawyers/solicitors in a variety of business and personal matters, not through choice! I have finally realised that as ‘expert’ as they potentially are in their particular narrow legal field, 90% have no financial aptitude whatsoever, nor any business related acumen. They are an expense item and in the days of AI, fast losing their niche it would appear, but very rarely able to assist in any aspect of financial or business planning and strategic decision making. Is this possibly part of the UK’s problem with its ex-human rights lawyer, Sir Keir Starmer? You might think so, I couldn’t possibly comment.

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INVESTMENT INSIGHTS

Unfortunately, the Overview section wasn’t particularly upbeat and certainly the Iranian conflict has put the kibosh on the market in March compared to last few days of February when the FTSE 100 was flying high almost at 11000, up over 10% on the year and gold at one time was up almost 25%. Gravity made its play and we are much closer to Earth now.

The boogy word of ‘recession’ is creeping on to many lips as growth looks quite anaemic while higher oil prices feed through everywhere fuelling inflation as well, is it really the dreaded Stagflation coming back from the 1970s to haunt us.

Of course, Stagflation being the unhealthy combination of high inflation and low growth makes investing challenging, to say the least. While in nominal terms, eeking out a meagre return might seem feasible, in real (inflation) adjusted terms, it certainly won’t be easy at all. For UK inhabitants who have long been far too pre- occupied with property investment over recent decades, just take a look how that has worked out over the last ten years. The UK Retail Price Index is up a whopping 57% since 2015, which for prime central London real estate was arguably the high price level. A £1mil flat purchase in 2015 that just kept in line with inflation should be worth £1.57million, but most people will be happy if they are flat in nominal terms, sadly most aren’t.

Everywhere in plain sight in the UK, there are higher taxes and more anti-growth policies coming into full view, especially since the April 6th roll over in the new year. The new family business inheritance taxes will slaughter generational businesses with job losses and reduced UK investment guaranteed and widespread. The welfare bill now exceeds the entire income tax take, let’s repeat that. The workers who get up early every day, with a few weeks holiday a year to produce goods and services so they can be taxed to the hilt, now doesn’t even cover the welfare spend on all the population that stays at home and doesn’t work. Not exactly rocket science to see the end game here! So don’t expect growth in the UK any time soon but as a combined result, the continued government borrowing to fund this socialist nonsense means inflation is another sure bet as well.

Source: BofA Global Research

The table above highlights a general idea of which investments ‘may’ get you through these difficult years, akin to the 1970s era perhaps. As you would expect, commodities such as gold and oil figure highly, as well as more defensive stocks like staples and healthcare and high quality dividend-paying equities with value stocks tending to outperform growth stocks in these troubled times. Of course, ‘real’ assets would usually include property but the very high starting point with respect to price multiples that were seen during the zero interest rate period between 2016-2022 and rising rates now suggests otherwise, certainly for a long while.

Those thoughts on preferred stagflation investments read rather like many from The HindeSight Letter over the last few years already-gold and high quality dividend paying stocks. Every month we also publish an update to The Permanent Portfolio and with respect to the “Stagflation” element and as you can see on the 1970s table, cash and long dated bonds/interest rates don’t fare well at all. I have mentioned before quite recently that I would certainly be “shortening” up any fixed income investment, relying on a weaker economy to see rates not rise officially, so more 3-5 year duration rather than 10+ year instruments.

During the March madness, we put out a thought, (You need to follow on Substack!) on UK short rates as below which despite the bounce, I still believe very relevant that pricing in several UK rate rises as the economy heads for the proverbial ‘toilet’ is a bad bet and one should counter that.

As a trader you love volatility. Without volatility, making money is much harder typically and takes far longer, so most traders will love Trump or any war. Of course. you can get carried out with losses too, but the possibility of making money back is always there. Keep in mind the win/loss ratio thoughts, well shown in below table.

Source: LinkedIn-Glenn Handley

HINDESIGHT PORTFOLIO UPDATE (MARCH 2025)

Apologies, I did miss writing up last month that there was an add alert on almost the last day of February;

• ADD Alert: 27/02/2026, TCAP, Entry price 257.5p

TP ICAP Group Plc, (TCAP) is a leading global inter-dealer broker, listed on the FTSE 250 with a current market capitalisation of £2.1bn. It’s easy to see the model identifying TCAP as a selection for The HindeSight Portfolio with a 6% dividend yield and P/E ratio of 8.5X.

Higher earnings at brokerages such as TCAP are typically correlated with more market volatility and as long as Donald Trump is US president, volatility seems like a sure bet!

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The Hindesight Letter March 2026 Portfolio

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*side not our prediction is there’s no way they’ll cut with where SONIA is.

Content: Overview / Investment Insights / Portfolio Update / Hindesight Dividend UK Portfolio (download)

*this month’s edition has been made available for everyone courtesy of our advertiser, Epic Life, below.

OVERVIEW

Another month, another conflict-war with all the tragedies and future implications it brings. But, you do have to appreciate the trench humour of UK billionaire and Dubai resident, Nick Candy, remarking that he feels safer in Dubai with a few Iranian missiles flying around than on Sadiq Khan’s London streets where robbery and violence are rife. Another ex-colleague currently living there as one of Rachel Reeves’ ‘tax exiles’ added, that the terminal decline of the UK with the worsening political and economic insanity certainly has evened up the risk profile. Actual war zone or terminal decline zone, you choose.

When the famous US economist, Hyman Minsky developed his theory that “stability breeds instability”, he was referring to the long complacency periods of financial stability, often with low interest rates that sowed the seeds of the next financial crisis. We could also use that concept for the complacent stability of peace that we have generally enjoyed for many decades that has breed the instability and wars that are breaking out across the globe. It would be easy to argue for a historian than the lead up to WW1 has many similarities to present day.

In the lottery of life, there are many middle-aged UK residents like myself who are very cognisant of being in the right place at the right time for much of their life. Benefitting not just from the Cold War peace dividend, progressive centre party politics and world trade globalisation amid huge technological advances but also the wealth increases related to 50-year bull markets in interest rates and raging property prices. As I have heard more than once, “We have had a very good run”. Unfortunately, that is no longer the case and unlikely to return any time soon. Do not misunderstand the concept of “Recency Bias” and “Anchoring (Bias)”, the good old Heydays of the last decades are most likely gone forever, sad to say.

The UK is one of the worse if not the worse prepared countries with far too many conflicts breaking or threatening to break out to assume that a return to the calm peace is most likely. Our armed forces have been run down to such a degree that it is very difficult to see much of a reversal even within several years, despite hot-air talk of our politicians promising wildly optimistic defence spending of 3% of GDP in this government. Apparently, in the defence industry and the military, this is now being generally referred to as the “Say-do gap”. i.e. Don’t believe a word the politicians say with respect to defence as the doing never happens! Finally sending a single British Navy vessel to defend Cyprus that arrives later than the Greeks or French navies tells us everything you need to know.

Trump’s recent comments regarding Sir Keir Starmer’s dithering on allied support for the Iran attacks “We are not dealing with Winston Churchill here”, sadly remind us that we are being led by left- wing socialist donkeys. But, don’t worry we have Angela Rayner and the Green party waiting in the wings! Seriously, our political and military establishment have become a laughing stock to the rest of the world. It’s embarrassing, like a bad dream you just want to wake up from.

Arguably, we are not the only basket case of diminishing power and relevance. France with the highest level of public spending, the highest budget deficit in the eurozone and highest rising public debt has its own fracturing political issues. Germany’s famed manufacturing powerhouse for the last fifty years is falling off its own proverbial cliff amid a corporate tax collapse. But, sadly the UK has visible metrics that show us up, even relative to other basket cases.

While the UK’s influence dies a death on the world stage, we must appreciate that the US’s dramatic actions have far ranging consequences on the balance of power that was seemingly tilting eastward in recent times. This Zerohedge article is worth a read in full but a few lines caught my eye straight away, “The energy math turns against Beijing, China bought 1.38 million barrels per day of Iranian oil last year and takes over 80% of everything Iran ships. Half of China’s total oil imports pass through the Strait of Hormuz….”

Hearing Rachel Reeves announce “My plan is working” at the Spring statement while the Office for Budget Responsibility cut the UK 2026 growth forecasts from 1.4% to 1.1% had echoes of Blackadder’s Baldrick’s “cunning plan” saying. Indeed, it does only make sense in a comedy sketch. You do to have pick your self off the floor watching the employment market fall apart with the Labour government policies. My luck of joining the City in 1986 when jobs were plentiful and huge finance expansion was the order of the day is the total reverse of today’s youth employment.

For the first time in 25 years, since the creation of the single currency Eurozone, the UK now has higher youth unemployment than the EU average, which is quite a feat. But, it has had to be well thought-out and planned to manage that scale of disaster, although it still relatively straight forward. You just raise the level of employer National Insurance to £9,000 from £5,100 and 15% from 13.8%, directly affecting the lower paid and youth, then you raise the minimum wage for 21-22 year-olds to £12.71, the same as older workers and you give more rights to employees than employers under the auspicious sounding “Employment Rights Act 2025”.

Hey presto, job done. Youth unemployment through the roof, especially in the private sector where you have to make an actual profit to pay people! Employers are left with no option but to hire older workers, who actually have experience and know what they are doing for the same money and hire temporary workers on rolling contracts. Apparently, temp agencies are doing a roaring trade these days as it’s taken over from the zero hours contract and the catch phrase is temp-to-perm, which lets an employer roll 3 x 13 week temp contracts over before offering them a permanent job. It used to be called “probation period” before that was outlawed! Fortunately, it does benefit economics tutors who no longer have to teach lessons of why socialism doesn’t work from history books as modern day madness is on full display. But, it is a real tragedy for our youth who as parents we have all our expectations for.

As someone who has done well out of London and country property, again much more to luck of my age and employment time than anything else, watching the current London housing crisis unfold is less of a worry. But, another farce that sees the UK losing any vestige of economic strength and attractiveness for investment.

House building in London has entered a state of near- emergency, with construction starts in 2025 falling to just 11% of the average of the previous five years and under 5% of the government’s target. The slump is driven by a “perfect storm” of high construction costs, expensive, slow and complex regulatory hurdles and falling investment demand, especially from overseas, (who we have massively disincentivised by current tax policies).

If we dig a bit deeper, we also find the Building Safety Act 2022, (Post-Grenfell) introduced stringent new safety requirements including the mandatory addition of second staircases for buildings over 18 metres. As you can imagine, that vastly reduces the net saleable floor area of any building with reduced revenue and profit the obvious result. There is no good news, I’m afraid, just bad and worse!

Of course, London property prices on the standard price/ income ratio did get to ridiculous levels due to the zero interest rate policies employed in the decade or so from the 2008 crisis until inflation blew the doors off. It will be a long wait for wage inflation to close the ratio gap for many, but at least supply is now being curtailed! The UK, arguably more than any other country has benefitted from wealth creation and related employment of property price increases spreading out from London but another nail in the coffin for many years to come.

There will be some smiles from many, including Rachel Reeves, no doubt, seeing the supposed “influencers”, (whatever they do) come streaming back from Dubai as the luxury life now includes air raid siren warnings. But, what lessons does history give us. It may get much worse, the UK might well get dragged in to increasing conflicts, be prepared, don’t think that the ‘lucky era’ of last 30 years will return, you are unlikely to make money on property, you need to be more versatile in all walks of life, not just in investment terms.

If I didn’t have children or younger friends I feel like I could easy fit into the Victor Meldrew mould here and watch the UK implode and enjoy complaining about everything, whether it be potholes or embarrassing politicians who God knows who they represent but it can’t be the British masses…

It doesn’t matter what social or business event I have attended in the last year, if the discussion moves to politics, you get, “Total shambles, absolute clowns, shocking, disgraceful, left-wing losers” and those are of course, the printable comments!

And then general agreement, (you may think so, I couldn’t possibly comment), that the Prime Minister is so far out of his depth and limit-down unpopular, but the choices such as Angela Rayner, David Lammy, Rachel Reeves, David Miliband et al are another cliff drop lower!

But, let us well remember when you don’t show up when your closest and biggest ally, the US needs you to, do not be surprised if they do not show up when you desperately need them to in the future. You will also be regretting at that time, the UK governments haven spent all your hard- earned tax revenue on enlarging the public sector with diversity and regulations, (Don’t be naïve and believe it is for the NHS, whose productivity measured in efficiency and economy hasn’t improved in 30 years) while running down the armed forces to the lowest per capita levels for 300 years.

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Epic Life is raising at a precise inflection point, between a validated Alpha and full commercial launch, the moment where early capital has the most leverage. Funds will fuel the Beta rollout, accelerate product development including deeper wearable integrations and health intelligence features, and expand a world-class team of exited founders, clinicians, data engineers and AI specialists.

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Disclaimer: Don’t invest unless you’re prepared to lose all the money you invest. This is a high risk investment and you are unlikely to be protected if something goes wrong. Take 2 mins to learn more.

INVESTMENT INSIGHTS

Apparently, there are up to 2.5 million people in the UK using weight-loss jabs now and growing in popularity as the “wonder drug” for seemingly maybe 5-10% of the adult population. But, not good news for Greggs, the favourite high street café retailer who have lost so much trade selling their wares, their share price has halved in the last two years according to broker, Jeffries among other concerns!

On a more serious note, the “latest” war in the Middle East is having dramatic effects across the globe as a result of the oil supply interruptions and the price surging up 80% at the time of writing. For any economy, but especially energy importing countries, this hits the bottom line very quickly, either in increasing input costs or inflation concerns on everything from heating oil to food supply.

Lots of charts below as usual, hopefully telling the story better than me. The interesting takeaway this time as we see stock markets decline to reflect this news is that the bond markets which may previously have rallied on perceived weaker growth have actually seen lower prices/ higher yields as the jump to “higher inflation-bad for long duration” has been almost immediate. Not ideal for the 60/40 portfolio at all, unless…

You had the new diversifier, GOLD, in your portfolio, which has already benefitted this year by 20-25% keeping the Permanent Portfolio strong despite other issues. While gold may clearly have taken the place of fixed income as the risk-off asset choice, as one journalist quipped, “the sovereign has finally dropped”, there are many reasons to assume that gold’s future path may well continue to be understood by the lack of new gold supply amid increased central bank holdings and geo-political fracturing.

Last week, I was on a podcast with the great David Stevenson, who used to write “The Adventurous Investor” for the Financial Times. Nowadays, he writes for The Telegraph but the Adventurous Investor letter can be found on the Substack platform which is well worth a read.

Some of the main discussion points for investment considerations that we fully agreed on were;

• Japanese equities despite last year’s rally have much going for them, (With the early March sell off, maybe now is worth another look)

• Gold and especially now precious metal mining stocks are surprising still cheap on real metrics, again despite the strong rally last year. Please see this link for the PEA, (Preliminary Economic Assessment) for Yukon gold miner, Fuerte Metals, (FMT.V) to understand more on the value.

• Long duration government bonds may well struggle to offer the historic protection in portfolios, both for levels of debt and also the seemingly structural inflation that is becoming increasingly apparent. Potentially, fixed-income yield seekers would be better off with shorter-date maturities for corporate bonds of well-known companies. Here’s a quick list.

Where we diverged a bit on our views was David’s penchant for Emerging Markets and also, UK mid cap stocks. I can see the value in both without doubt but my concern would be the high correlations between sell-offs in Developed Markets and EM and despite the expertise that our UK companies still show regularly, the Labour government policies towards businesses especially smaller companies are appalling for growth prospects.

SOME CHARTS BELOW AS USUAL THAT ARE PRECIOUS METAL AND COMMODITY FOCUS AS THAT IS WHERE THE ACTION IS CURRENTLY.

HINDESIGHT PORTFOLIO UPDATE (FEBRUARY 2025)

There were no add or close alerts for the HindeSight Portfolio in February.

Easy come, easy go! Both the FTSE 100 and FTSE 250 were off to a good start, too good?, +10% and 6.5% respectively, until yet another war reared its ugly head and the retracements have been quite dramatic, with the FTSE 250 back to its January 1st starting position by early March.

Download the current Portfolio below.

The Hindesight Letter February 2026 Portfolio

830KB ∙ PDF file

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Thanks for reading and Happy Investing!

Led by Mark Mahaffey and our team of seasoned financial experts from HindeSight Publishing, each episode unpacks the latest insights and updates from the HindeSight Dividend UK Portfolio. We provide you with the tools to manage lifestyle inflation effectivel…

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OVERVIEW

In December 1946, not long after WWII, a proposal was made by US Secretary of State James Byrnes to Danish Foreign Minister Gustav Rasmussen to formally offer to purchase Greenland for $100 million of gold. Naturally, this proposal made by the administration of US President Harry Truman was not only declined but also kept secret for almost 50 years. At the time, gold in the US was pegged at $35/oz so that $100 million offer would convert to 2.8 million ounces of gold, that at today’s record price of $5000/ounces it would have an almost $15bn price tag equivalent. Arguably, still cheap with the mineral deposits in Greenland but with its GDP only $3bn, it is somewhat more realistic if we were just discussing a real estate deal!

Of course, in modern times, is anything ever really kept secret for long? And certainly it is not current US President Donald Trump’s style to be subtle in any form, but the world seems truly shocked that the US would be so ‘crass’ at asking to buy Greenland or any other sovereign country or invade if needed.

We like to think that we are at the absolute cutting edge of modern thought as a result of timeline, just because we live in the present. Where international law, justice and equality are so paramount in theory, but in reality we are just like all our predecessors, merely passing through. It has all happened before and will no doubt happen again, long after we are gone. The cycles of history keep revolving and we act our parts on the stage, often learning nothing from our mistakes.

There appears no shortage of headlines in world events that typically would create market volatility, whether it be European or Middle-East wars, US turning inwards, potentially pulling out of Nato and the UN or the UK Labour government ‘plan’ to destroy the British economy. But, according to the VIX Index, (equity volatility) or the MOVE Index (bond volatility) we are just trailing along their lows, last April’s tariff tantrums a distant memory.

Most financial traders during long or short careers typically ‘specialise’ in one particular market, commodities, fx, equities, bonds, credit and so on. For others, that can also include property and recent new instruments such as crypto. Of course, every market has cycles, from zero volatility tedium where money making opportunities are limited through to beyond mental volatility where there is ‘too’ much opportunity to make money or lose your shirt completely! The macro ‘prop’ or hedge fund traders often seem to have the holy grail opportunity where they have ability to trade multiple asset classes, although invariably this comes with elements of ‘Jack of all trades-master of none’.

Right now, the real action with volatility beyond belief are the precious metals markets, which are covered in more depth in the Insights section. In the last two years, the gold price has more than doubled and there are many potential reasons behind the stratospheric rise.

Compare that galloping gold chart to the one below of London property prices in real terms in the last decade and from more anecdotal input, I would say that the real situation, especially at the higher end in London is far worse and quite illiquid, but you get the picture.

In the guise of everything has happened before, some in recent times, others far further back, it’s the same for investment returns. Gold rose 20-fold in the 1970’s before declining for two decades and despite a sober acknowledgment that UK property is no longer the great investment of the early noughties, you only had to look back to the 1990’s to find similar pattern.

Getting the cycles right is key to staying safe both physically and financially. The smaller, more frequent cycles are potentially easier to grasp as they are within a work-life frame, but the bigger cycles have to be understood as the materiality of change has a much wider scope of significance.

There, I’ve said it. I have started so I should finish or at least elaborate. You are starting to hear the phrase ‘The Great Reset’ more and more, especially with the move in gold, the ultimate asset class. But, great reset from what?

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Our signals are flashing red for inclusion through our trade marked AI and overseen by our seasoned money mangers.

We will let you know more about this decision (and the other Jan share add) in Jan’s newsletter due the first week of Feb as we write up why we’re adding it and why now.

‘Timing is King’ for the markets - VIP - PAID CONTENT - only paid members get the Add Alerts when we update the portfolio.

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Our signals are flashing red for inclusion through our trade marked AI and overseen by our seasoned money mangers.

We will let you know more about this decision in Jan’s newsletter due the first week of Feb as we write up why we’re adding it and why now.

‘Timing is King’ for the markets - VIP - PAID CONTENT - only paid members get the Add Alerts when we update the portfolio.

Premium Subscriber Content - Not premium yet? Tap to claim your FREE 90 day trial and see what we’re adding today.

Read more

Led by Mark Mahaffey and our team of seasoned financial experts from HindeSight Publishing, each episode unpacks the latest insights and updates from the HindeSight Dividend UK Portfolio. We provide you with the tools to manage lifestyle inflation effectivel…

Read more

OVERVIEW

Long-term readers will be used to my year-end letter that merges November and December into one as time runs out like the proverbial late dentist appointment. Apologies all the same. The holiday season and arrival of the New Year always gives us opportunity to sit back and assess the world, both as a place to live and enjoy and with relation to investments, of course.

I was struck by an article written by legendary war correspondent, John Simpson who pronounced that he had never seen a year so worrying as 2025. The last paragraph of the article read;

LINK: Here

I doubt anyone predicted that the Ukraine-Russian war would be entering its 5th year, in February 2026, but arguably its 12th year, if the 2014 Crimea invasion is used. Bearing in mind our recent history of two world wars saw four and six years duration, you could believe we must be running out of support, either domestically or abroad, regardless of Trump’s best efforts. However, when I google a list of wars by timeline, I find anything from 774 years for The Reconquista, which saw the Christian armies rid Al-Andalus (Modern-day Spain) of the Muslim kingdoms to the shortest recorded conflict of Anglo-Zanzibar war of just 38 minutes! So way open.

Wikipedia: List of Conflicts By Duration

John Simpson is infinitely more qualified than me to write of worrying war histories in 2025 and clearly the outlook for 2026 and beyond would appear less than optimal. Whether it is the widely expected Chinese invasion of Taiwan, that is already hotting up amid Sino-Japan spats of late or US global police power against Iran, Venezuela et al, while nothing resolved in Ukraine, we should be as worried as John Simpson suggests, I fear.

Somewhat regretting it now, but I finally got around to watching Oppenheimer over the festive period. An incredibly powerful movie with Cillian Murphy playing the lead role tells the story not just of the development of the atomic bomb but the discussions of expected nuclear war deterrent, which did happen for 80 years since the only conflict use by the US against Japan in 1945. Clearly, a worry now is that with far too many regional conflicts growing and several countries in possession of nuclear weapons, we have to keep Oppenheimer’s faith that the threat of self-annihilation is too apparent to all.

Unfortunately, the world has seemingly entered a new cycle of instability globally and alliances and treaties that have moderated conflicts for decades are now being challenged. It doesn’t help by any means, especially in Europe that many of the current politicians are far below historic par in terms of competence, domestically or on the international stage. It is no surprise at all that according to recent reports, the US administration aims to persuade Austria, Hungary, Italy and Poland to distance themselves from the EU and the UK and align more closely with the United States. It’s not rocket science to observe these nations are making better decisions on immigration and defence than the rest of Europe.

As for the UK, the “one-term” Labour government will be hard stretched to become more unpopular and deemed more incompetent in 2026 than 2025 but no doubt, they will try. We had some soberingly news locally late last year with some farmers committing suicide that intended to avoid the April 1st inheritance deadline for a 20% tax on family farms/businesses over £1mil, a tragedy which has been seen across much of the UK. It will be of no consolation to their surviving families that yet again Labour has had to reverse a poorly-thought out plan and now the inheritance threshold has been raised to £2.5mil.

It doesn’t matter where you look, the working population in the private sector is in open revolt against the government, the latest visual is the growing number of pubs, bars and restaurants that are displaying signs barring Labour MP’s from their premises due to the horrendous tax increases that the hospitality industry faces. Of course, with pubs closing at a rate of one per day across the UK, it won’t just be the Labour politicians who will be resigned to drinking at home soon.

Meanwhile, the burgeoning state’s public sector workers enjoy 8% annual pay increases, 20 sick days a year and golden-plated pensions but with the private sector’s declining profits and rising unemployment having to fund this fiasco, it’s only a matter of time before a recession/ collapse and the piper will have to be paid.

I did like this comment by Gary at Gibraltar Corporate Partners, “Watching Rachel Reeves point at the FTSE 100 and declare the UK economy “thriving” is like a landlord bragging about property values while the roof caves in and the boiler’s packed up”. Of course, the stellar +22% performance by the FTSE 100 this year is more driven by international profits with the cheap £GBP currency enhancing that, but I very much doubt that Rachel has been briefed on that fact. The FTSE 250, much more representative of UK Ltd is up just 9% , one of the world’s worst performers which tells a more relevant story.

Everywhere I go, I hear the same-Headcount is sensitive. Ie. Very, very difficult to justify! Whether it is the rising costs of National Insurance and minimum wage levels, especially for the younger workers or real concerns about the Employer Rights Act that became law in December- companies, large and especially small are not hiring and actively shedding staff to cope. Official figures show the number of payrolled employees has fallen by 187,000 in the 12 months to October 2025 and continuing to fall as the unemployment rate rises above 5%. The remaining options of finding a job in the public sector or going on the dole, both at least benefit from minimal workloads and loads of sick days is not the best plan for UK growth potential.

Much of the discussion around the country is typically English sounding very much like WW1 trench humour-no pubs, no farms, no justice and cancelling local elections (afraid of losing) like a communist state. We often hear Sir Keir Starmer and his cohorts use the phrase “Sensible reform” but as one journalist wrote, “ You can say it as many times as you like, but if most of the country think it’s bullshit, it probably is!”. The Peter principle is so apparent within the government ranks that it’s hard to know where to start although I did like billionaire Nick Candy’s comment regarding David Lammy, Justice Secretary, “He wouldn’t get a job as a janitor in any of my companies”.

My personal favourite in recent months that had me ROTFLMFAO at the insanity was Rachel Reeves being asked on BBC News about how people were expected to pay for her new mileage-based tax for electric vehicles. Her answer was, “When they have their MOT, the mileage is taken” But, when the presenter told her that new vehicles, (which most of the electric vehicles would be) didn’t need an MOT for the first three years, she was completed stumped! Hmmm.

To me, that just sums up every policy that has been brought in to date, no real planning, no practical framework and no understanding how real people live and the new choices they will make if you deliver ridiculous policies. Whether it’s getting rid of 800-years history of trial by jury or adding VAT on private schools, the country is going down the tubes faster than a lead ballon in a vacuum!

The old adage from the classic film, Alice in Wonderland seems very apt for the Labour party currently, “If you don’t know where you are going, any path will get you there”!

I must move on soon on this topic as I fear I am danger of repeating myself and no writer wants that on their epitaph. Older readers will well remember The Sun’s headline the day before the 1992 UK General Election regarding leaving the country if Labour leader Neil Kinnock won the election. At the time, I was on the streets of Basildon helping to campaign for the long-term conservative MP, David Amess who was victorious in holding his seat then. Tragically, he was murdered in his constituency surgery by a Somali immigrant in a terrorist attack in 2021 after almost 40 years of service as an MP. Labour lost the election, people didn’t leave and the lights stayed on and the country prospered for decades afterwards.

At a neighbour’s 80th birthday party last year, I heard his story of leaving the country in 1976 as a young man because of the state of the nation under Harold Wilson’s/ Callaghan’s disastrous terms and we talked of the same drain going on now. While a poorly researched article, IMO by The Economist (When did they join the BBC and become so left-wing biased?) on net migration numbers suggested otherwise, it is clear to anyone that there is some real movement going on here. But, it needs to be grouped correctly. Sure, super wealthy entrepreneurs and non-doms have been first out the door, well-off wealthy UK citizens worried about inheritance tax at 40% instead of 4% overseas are keen to re-domicile abroad before an exit tax and the incoming less wealthy returners seem to be in the upper age bracket, arguably coming back for NHS healthcare. But, the group that should worry the most is the 25-40 year-olds who are looking to build wealth and realise they can’t do it here that easily at this current time.

The Venezuela episode at the opening of 2026 seems to have set the stage for some continued volatility this year although I worry that some asset classes like equities are not going to enjoy the best of returns that people cheered in 2025.

I will sign off the Overview section with four charts below that are top of my concerns for major asset classes;

• Japanese bond yields

• French budget deficits

• German insolvencies

• UK’s export issues

Of course, it does seem even more farcical that Sir Keir Starmer is trying to engineer a reverse Brexit policy just at a time when Europe and the single currency looks more prone to failure than at any time in its 25-year history. Throw in the US keen to reduce NATO commitments and Russia resurgence and easy to argue that the worse place to be for all reasons is Europe.

INVESTMENT INSIGHTS

It’s that time of year where it’s good to take stock and look at what worked in the investment world and what didn’t. In general, 2025 was a storming year for anyone who had precious metals as a good part of their portfolio. Whether it was the physical metal itself or the relate mining equities, it was truly a sweet spot for returns. The Permanent Portfolio, (PP) that we publish every month here to keep investors focussed on having reasonably gold exposure has had its best year in a long while, +20.54% with gold up 65% being the main driver. The FTSE 100 had its best year since the post GFE 2009 stormer at +25% including dividends which is not to be sneezed at, despite the FTSE 250 lagging quite a bit, unsurprising given the state of the economic numbers in the UK. The FTSE 100 big winners were a split of miners, banks/insurers and defence stocks for the most part but even UK/US government bonds had reasonable returns as yields fell while paying out the coupon interest. Defence spending and geo-political worries driving precious metals while banks are benefitting from the steepening yield curves. (Borrow short-Lend Long =Profits etc).

Bitcoin, oil and Japanese government bonds were the most obvious losers on the main screens and the chart below showing the long-term ratio of silver to oil tells a good story.

We will notionally be re-balancing the Permanent Portfolio for the new year back to the 25% weightings across the board which is a simple straight forward rule but many investors will be wondering what 2026 will bring in the major asset classes.

As we have mentioned in the Overview section, we have heightened concerns regarding downside volatility given the valuations of the equity markets and the free- money spigot of zero Japanese rates being turned off after decades of support. We would be very wary of long-dated government paper, such that any recession concerns that sees lower central bank interest rates, we would favour the front end of fixed income markets. The UK and the European economies are far, far from strong. Regulation, taxation, high energy costs and public sector/ state enlargement with increasing indebtedness haven’t held the equity markets back this year but I fear that it’s only a matter of time.

The global debt visual below coupled with the constant money supply increases tell us that currency debasement and inflation are either desired outcomes or natural results so that continues to tell us that gold and its derivatives are likely to be ongoing beneficiaries, even without the geo-political backdrop. All real assets are certainly a safer bet than paper assets at this juncture.

The Permanent Portfolio

AS USUAL, A SMALL SELECTION OF CHARTS THAT I THINK ARE RELEVANT.

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HINDESIGHT PORTFOLIO UPDATE (DECEMBER 2025)

With two more profitable closes and no add alerts, the HindeSight portfolio for single stocks has shrunk considerably this year. Much of this reflects our belief that UK equities have had an amazing run in 2025 in general but even more so our selections. But, also it should be understood that the parameters that the HS model uses are currently not generating single stock equity selections where the expected return on that single stock is greater than a standard index position. Despite my general belief in the ‘laziness’ of passive index investing, it is far more straight forward if alternative clear choices are not forthcoming.

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Hindessight Letter Dec 2025

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Thanks for reading in 2025 and Happy Investing!

On the back of a close for Phoenix on 1st Dec at +51% in dividend, we’re adding to the seasonal profits with another close alert.

Add & Close alerts help our Premium Subscribers to understand how we run our portfolio, it is 100% transparent and we’re simply educating about what a money manager might do in specific scenarios.

Make the most of both our Add & Close alerts, why not try a FREE 90 day pass to get all the benefits for 3 months and access to the potential of our Portfolio #1. Simply click below to get yours.

Once fully subscribed you’ll be a premium member, unlocking the very best of our service with alerts at the exact time when we change positions in our Portfolio #1. Time is of the essence in investing.

If you’re a premium Subscriber click below to see what we’re taking our profits on, this share has been in the portfolio since 26th Feb 2024.

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Add & Close alerts help our Premium Subscribers to understand how we run our portfolio, it is 100% transparent and we’re simply educating about what a money manager would do in specific scenarios.

If you want to make the most of both our Add & Close alerts, why not try a FREE 90 day pass to get all the benefits for 3 months and access to the potential of our Portfolio #1. Simply click below to get yours.

Once fully subscribed you’ll be a premium member, unlocking the very best of our service with alerts at the exact time when we change positions in our Portfolio #1. Time is of the essence in investing.

If you’re a premium Subscriber click below to see what we’re taking our profits on, this share has only been in the portfolio since 12th Feb 2025.

Happy investing CLICK HERE for a FREE 90 day Premium Trial.

Read more

Led by Mark Mahaffey and our team of seasoned financial experts from HindeSight Publishing, each episode unpacks the latest insights and updates from the HindeSight Dividend UK Portfolio. We provide you with the tools to manage lifestyle inflation effectivel…

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