The curse of the bearish case

Markets are at an all-time high. Everybody is making money and I just had my best month ever (see previous post). Now what?

A critic would say that this is not sustainable and the markets are in a bubble. They can’t possibly go any higher as the PE ratios are so high, earnings are too low, insane valuations, interest rates are about to increase, inflation is coming, governments will raise taxes to pay for their Covid-19 expenditure etc.

Bears strike downwards with their claws which is why it’s said that markets are bearish when they go down.

Yes, there’s lots to be concerned about.

A bull strikes upwards with his horns which is why it’s said that the market is bullish when it goes up.

The positive spin would be something like this: the world is re-opening, the pandemic will be over or we will all learn to live with Covid-19, mRNA and CRISPR will be used to treat countless other infections and diseases, a cancer cure will be found this decade, we will all transition to sustainable energy production and battery storage technology will make many breakthroughs, automation and AI will significantly improve our quality of life, the 4-day work week will be the norm, anybody anywhere on the planet will have access to 5G internet speeds (Starlink), the future will be spectacular and the stock market can only go up.

You are probably thinking that the bearish case sounds more reasonable than the bullish case. And that, my friend, is the curse of the bearish case – it always sounds smarter.

The bullish case sounds a bit like pie in the sky and is just too rosy. It doesn’t sound that smart and is harder to believe.

If you listened to the media and got out of the market whenever someone said a crash is coming, you’d most likely be broke. Or, at the very least, you’d be significantly worse off.

I remember reading an academic study into the profitability of the clients of a brokerage company. Collectively speaking the best performers were accounts of deceased people or people who forgot their logins and weren’t able to make any investment decisions. Most people don’t know what they’re doing and they are shooting themselves in the foot when they trade. Investing is like any other skill – you need somebody to teach you, otherwise you can make very expensive mistakes.

I’m a believer in passive investing (buying index-trackers) but know that there’s a place for active investing and hedge funds etc as well. You do you. There’s millions of ways to make a profit – find out what works for you and do that.

Wealth update – 30/06/2021

June has been a very good month and I’m very excited to write this post.


I took two weeks of annual leave but didn’t go anywhere for my holiday as the puppy makes that quite difficult. So it’s a staycation in London where we make the most of our new home and its garden.

The weather has been mostly summery and I’ve been able to meet up with a few friends face-to-face. That was nice. We’ve also been taking our puppy out to explore the great big new world. His tail never tires from wagging… I hope he never grows up.

Deposit drama

We moved earlier this month to another rental flat. As these things go, we had to do an end-of-tenancy cleaning at the previous flat. I was recommended a cleaner by a trusted friend and to our surprise the end-of-tenancy gig only cost £30.

That sounded very cheap as previously it cost £80 for a small studio flat. This was a one-bedroom flat with two toilets. We didn’t argue with a good thing and agreed to the low-low price.

Unfortunately, you get what you pay for. We got the end-of-tenancy inventory report, which stated that the flat was cleaned to a professional standard but had a few specific omissions. Several things needed some extra cleaning (e.g. some limescale in sinks and toilets). Well, fair enough, we’re happy to pay for that as that did need further scrubbing.

What came as a surprise was the amount the agency wanted to deduct from our deposit. They came in at a lofty £195 to do the “necessary” cleaning.

Wow! Greedy much?

Almost £200 to scrub limescale off from a few places? I think an end-of-tenancy cleaning for a 1 bedroom flat would cost around £100 (I did a quick Google search) and they wanted to charge us double that to clean a few specific things? No way.

We disagreed with their quote and they magically reduced it to £120. That was still too much as this was a cost of a full end-of-tenancy cleaning, which the flat did not need. We explained that we are happy to pay for a reasonable amount as the flat does in fact need additional cleaning. They then claimed it was their “standard” cost for cleaning – we rejected that justification as well. So they advised us to take it to the deposit dispute resolution service and we responded that we’d be happy to do so.

I looked into the dispute resolution service and among other things found out that:

Many landlords don’t realise that the onus is on them to prove they have a legitimate claim to a share of the deposit, whilst the tenant has no obligation to prove their position. This is because the deposit remains the tenant’s money until the landlord has successfully proven their claim. It is the landlord’s responsibility to prove damage etc

We sort of left it there as I never got around to doing the actual dispute stuff. Luckily, a few days later the agency emailed to say they are happy to reduce their cleaning charges to £80, which we accepted. I thought this will bring our cost to £110, which is what the end-of-tenancy cleaning should’ve cost us anyway.

We then got the majority of our deposit back in the next couple of days. So, that was good for our finances.

The above exchange about the cleaning costs was quite unpleasant. It wasn’t so much about the money as we can afford the initial £195 they wanted but it’s the principle that is important. You can’t charge people inflated “standard” rates plucked out of thin air and greed. We were quite angry about this.

Once our deposit was safely in our bank accounts we pounced on the agency with a letter before action due to them failing to protect our deposit within the statutory time limit of 30 days. In part it’s revenge for all the failures and negative experiences we had renting from them but it’s also an opportunity to make some tax free gains 🙂 .


I also did my 2020/21 tax return and got £63.40 back – most of it was a refund due to me claiming the £6 p.w. allowance for working from home all of last tax year. I was planning on claiming loss relief on an EIS investment that went to zero but it turns out that the company is still in business… so I will need to try that again in the future.

However, £63.40 for an hour of work ain’t too bad.

Counting my beans

June was my biggest positive month for my portfolio so far. My net worth as of 30/06/2021 was £232,590 – an increase of £41,087 or 21.5% from the end of May 2021. This is after me making a £1,600 GIA top-up, £411 pension top-up, and £175 was added to my emergency cash pot. I also received my £1,000 LISA bonus in June.

June has been a fantastic month. My gains this month were more than my annual net salary. In just a MONTH! I’m now also solidly above the £200K net wealth figure. In fact I’m now above the average wealth of a UK adult (£210,529 or USD 290,724).

I am very happy.

Bitcoin – may be legal tender in El Salvador soon

Firstly, the term “legal tender” is only ever used when a Scotsman tries to use their funny money to pay in a shop in England. “It’s legal tender!” they would shout at the shopkeeper in a Scottish accent… That’s probably one of the few examples of “legal tender” used in a sentence.

Second, where the hell is El Salvador? I’m glad you asked. I googled it and can tell you with confidence that it lives in Central America next to Guatemala and Honduras. I’m sure the weather there is nice all year round…

I admit I know virtually nothing about El Salvador but I love the fact that they might make Bitcoin legal tender. This is huge! I hope many other countries will follow suit.

I’ve always liked crypto and all the possibilities of blockchain. That’s the way forward. I imagine central bankers are all scheming right now to maintain the status quo and how best to avoid innovation at the pretence of protecting the consumer. Let’s see what they come up with this time… maybe some economic sanctions on El Salvador because Bitcoin will totes be used for money-laundering (and conveniently forget that cash is also used for money-laundering).

Crypto is the future! I’m very excited to see it spread its wings and fly.

I also did a quick backtest of how well Bitcoin and Ethereum have done compared to the S&P 500. I looked at what it was like for somebody who missed the crypto boat in 2017 and started to contribute £100 each month from January 2018. Spoiler alert, they’d be pretty happy even though it’s been a very choppy ride in crypto.

Bitcoin VS Ethereum VS S&P 500, 2018 Jan to 2021 May.

The above isn’t investment advice but clearly shows the potential of crypto.

Enjoy the ride!

Wealth update – 31/05/2021

New home and a new friend

We are moving to our new rental flat next week and we also got a puppy. This has meant that we had an expensive May (as can be seen by my cash levels reducing a bit). We paid for

  • one month’s rent in advance – £1,150
  • 5 week’s rent as a security deposit – £1,325
  • moving van – £164

We will also have to pay another £100+ for the end-of-tenancy cleaning in the old flat but that’s yet to happen as we haven’t moved yet.

The puppy cost us £2,300 + a few hundred for toys, a crate, leash/harness, food, vet visits, poop bags etc. This was worth every penny as he is adorable!!!

June should be better from a cash flow point of view as we are due to get our old security deposit back. I’m expecting to get the full thing back but we shall see if any deductions need to be made. We will also claim for the 1-3x security deposit penalty from the current landlord as they failed to protect our security deposit within 30 days of us paying it. This will be the second time we’re doing it – so I’m confident this will be a “productive endeavor”.

Counting my beans

May was a negative month for my portfolio. My net worth as of 31/05/2021 was £191,503 – a decrease of £6,604 or 3.33% from the end of April 2021. This is after me making a £1,600 GIA top-up, £411 pension top-up, and £50 was paid into Premium Bonds.

I didn’t get my £1,000 LISA bonus in May. Instead it was paid on 1st June… so it will be reflected in the value of my portfolio in next month’s wealth update.

Upcoming actions

I need to do my 2020/21 self-assessment tax return as I now have all the information to put it together. This should lead to a tax refund of circa £100.

Enjoy the summer as it looks like it’s finally arrived!

Inflation and loyalty

We had the UK inflation figure come out today at 1.5% (CPI) compared to a year ago. A month ago this was 0.7%. It’s definitely on the rise and something that has been talked about in the finance media for quite some time. It’s similar in the United States where inflation is 4.2% compared to a year ago.

Inflation is a good thing provided that it is kept under control. That’s why you see governments target 2% for annual inflation. A slight increase in prices means that the economy is functioning well and money is changing hands and signals a healthy economy.

Conversely runaway inflation signals major trouble. Look at Venezuela (3,012.2% inflation), Iran (49.5% inflation) and Argentina (46.3% inflation) today. I know things are really bad in Venezuela… not so sure about the other two but they do need to get things back under control or risk heading in the direction of Venezuela.

One thing which has stuck with me is the way Milton Friedman describes inflation. He calls it “taxation without legislation”. Politicians don’t want to raise taxes as it’s a poor career move. As a consequence, they are happier to print more money. This leads to more money being in an economy and more of anything tends to reduce its value. Therefore money starts to lose its value and prices go up. We end up with inflation.

Printing more money requires no new legislation to be passed i.e. to target who or what gets taxed. The reluctance to raise taxes resulted in a tax – inflation – which impacts all of us.

You’re worse off financially now unless you got a raise of at least 1.5% this year if you live in the UK. My salary didn’t change as my letter from my employer stated “we have reviewed your salary, and can confirm this will remain at [amount] per annum”. Sad.

I wasn’t expecting much of an increase anyway. The best way to improve earnings is by changing employers. Loyalty doesn’t pay and results in you being materially worse off in the long term.

I’m glad I managed to secure my new flat at the same monthly rent as previously (£1,150 pcm) so my largest expense doesn’t change for some time. I hope some of you were able to do so (or better) as well.

Good luck navigating the more expensive world!

(All inflation figures above are from as at 19/5/2021.)