The Unique Property
It's been a year of total madness. But
where are we now? And where are we heading?
I have been asked by several readers to give my opinions on
where we are heading. I'm intrigued that anyone thinks I can
see a way forward. The plain fact is that I cant.
About 445 companies listed on the London
Stock Exchange have cancelled or cut their dividends,
according to an analysis from the ETF provider GraniteShares.
All told, the dividend cuts are costing British investors more
than £30 billion in lost income.
That is a substantial hit, and I'm sorry to say the government
and its advisors, plus the mainstream press are all to blame.
Early on it was clear there were treatments already out there
for the latest flu virus. They were used on the passengers of
the Diamond Princess way back at the beginning of this
Unfortunately government advisors who didn't know what they
were talking about, knocked those drugs. I would remind you
that they are regularly being used today, and maybe with the
fast recovery of president Trump, they will get some publicity
Also early on were articles in Nature, which is the most
prestigious science magazine on the planet. The first was
slagged off by the press. What do hack journalists know?
The American Institute of Physics did a thorough piece on
masks, showing they were not only useless, but caused more
problems than they solved.
Earlier this month, the prominent New England Journal of
Medicine published some interesting research.
The premise of the research was that masks do not provide
protection from COVID-19.
An example was used from an Argentinian cruise ship that
provided passengers with surgical masks and N95 masks. Even
with this precaution taken, almost everyone on the ship caught
COVID-19… and 81% of those passengers were asymptomatic.
The authors were brave to publish this research. After all,
we’re told that masks protect us and stop the spread, but the
actual research clearly states otherwise. And even the N95
masks do not stop the spread of viral particles.
A team in Denmark completed a study on masks that acknowledged
the challenges of wearing them outside of a controlled
setting. The study acknowledged that
a) masks are not tight enough to keep the virus out and
b) the mucous membrane of the eyes remains exposed.
The researchers acknowledged that masks do not stop the spread
or protect the wearer.
As I'm always saying, I prefer to believe that people are
fundamentally stupid rather than espouse a conspiracy, but
sometimes the evidence is just too strong. This is one such
instance. There is no evidence that any of the current
restrictions are necessary, or help prevent deaths. It is also
crystal clear that the more people who catch the disease, the
quicker we reach herd immunity and the quicker those who are
likely to succumb to the flu will be able to come out of
If you're healthy your chance of dying of covid-19 is roughly
half the chance of dying of the old-fashioned flu.
I thought I had all bases covered in my own system, but I have
to admit that it never occurred to me that countries would
shut down their entire economies in the face of a not
particularly problematic form of flu.
Flu viruses have always been with us and we have learned to
live with them.
Vaccines rarely work against these viruses, so this hysterical
race for a new one is probably going to go the way of all the
other flu vaccines.
In any event Covid-19 causes half the number of deaths of the
older forms of the virus, so why the panic?
We are told to wear masks when all the scientific tests show
them to be useless. Even my own home-made test, putting my
mask under the tap (https://www.youtube.com/watch?v=9rfRsLQ8SCA
shows just what gets through.
And social distancing is a laugh a minute. Does anyone
seriously think it serves any purpose? Of course not. So
what's going on?
I have to say I don't know. I usually blame stupidity on these
problems, but this particular situation is even beyond
stupidity. There has to be something behind this or it would
not keep going like this. So what is going on?
Until I can be sure what the purpose of this is, I can't make
any sensible judgment about the future. In short, sadly, I'm
in the same boat as the rest of you.
* * * * *
However, what has this done to the real estate sector?
In march it came to a silent halt.
A moratorium on evictions in the UK prevents renters from
being evicted for up to six months if they cant pay rent.
Perhaps unsurprisingly, on June quarter day, 38% of landlords
reported issues collecting rent payments.
No-one was going to get a mortgage while that was going on.
A REIT saw its share price plunge by 24% this year so far and
has slashed its dividends by 50%. BMO Real Estate Investment
and Picton Property Income are in the same boat, with both
cutting their dividends by 50% and 29% respectively.
Oddly, the housing market bounced back with unexpected force.
August saw the number of residential sales soar 76% above
their five year average, with prices consequently climbing by
the largest amount in 16 years. Mortgage approvals were 29%
higher in August than in 2019.
Given that young people and low-earners have generally borne
the economic brunt of lockdown, they have been effectively
excluded from the market.
Being forced to work from home in cramped London flats has,
perhaps unsurprisingly, led to a growing number of people
fleeing the city in favour of leafy suburbs and rural areas.
Compared with this time last year, there are 60% more empty
rental properties in the London market.
In contrast, peripheral London boroughs and the countryside
surrounding major cities have enjoyed a boost that is likely
to continue. The property website Rightmove reported a notable
spike in searches for properties in the commuter belts outside
major cities. Formby in Merseyside, Fair Oaks in Hampshire,
Welwyn in Hertfordshire, plus Shenfield and Kirby Cross in
Essex have seen the greatest boost to house prices as buyers
hope to escape to the country. Upminster, a London borough
bordering Essex, has seen a 42% rise in sales compared with
I have already pointed out that commercial property is going
to take a serious and continued hit to the downside, with more
people working from home.
But what about the rest of the market?
* * * * *
If you are young or in mid career, you've got some serious
problems. If you are retired or near retirement you need to
find a place where the government is relatively ambivalent (a
tough task), and where the population is relatively smart and
reasonably well off.
Finding both together is a real problem, but I have to ask
myself whether Europe is finished. Those of you who have been
following my writings for some time will know I have felt this
way for a long time. Europe is on a long, slow path downhill.
The latest stats that hit my desk on thursday show this in a
stark fashion. Let me quote a couple of sentences before I get
to the stats.
"One of the best ways to keep a close eye on the health of the
global economy is to track what’s happening in the
semiconductor industry. After all, semiconductors are the key
components enabling just about anything that uses electricity.
Cars, phones, laptops, servers, clocks, watches, aircraft,
spacecraft, microwaves, smart speakers… you name it.
"So if semiconductor sales are increasing, we know that the
global economy is healthy. If the opposite is happening, that
means we are in a slower economic environment. The August
numbers for the industry were released on Monday:
• China: 3%
• Japan: -1.4%
• Asia Pacific: 2.1%
• Europe: -10.1%
• Americas: 23.6%"
The EU is falling further and further behind in terms of
economic growth and trade. It's share of world trade is
decreasing at an alarming rate, and has been for some time. If
you want to live in a country that is growing, move out of
The EU has done what I feared it would. It has set countries
at each other's throats. Roughly a third of the countries are
crossing swords, and in too many of the member states those
supporting integration are in the minority. That does not bode
well for the future, which is sad. A great opportunity has
been lost by the half-wits in charge who are doing their best
to start a new war.
Next january I hope to start a pilgrimage to find somewhere
nice to live. I'll keep you posted. That is, if there is
anything to be found.
As for the future of real estate, I have to look back to
previous melt-downs, the most recent being the 2008-9 crisis.
I can't see that investing in property at the moment is
especially beneficial. A large proportion of the working
population is either out of work or in reduced circumstances.
That does not bode well for house price increases.
As for the future, someone has to pay for this mess, and that
usually means the average working population. We are talking
higher taxes, inflation, and continued disruption.
With the advance of automation, which has been given a massive
boost, jobs will start disappearing, and they won't be
replaced. It's cheaper and healthier to employ a robot. Two
hours recharging time is all it needs to be able to get back
to work again. No wages, no sick pay, no arguments, no
holidays, no time off sick. What is there to dislike about
In my latest book (How to Wreck the World -- You can buy
the book here
) I give a list of the jobs that will
disappear over the course of this decade, and it is a long
one, with the expanding reach of blockchains, and the march of
automation, by 2030 there isn't going to be much left.
We might even be able to pension off politicians and replace
them with A.I.s. That may solve rather a lot of problems and
cause life to run a great deal smoother than under the present
scheme. The present bunch appear to be utterly clueless.
I'm afraid the prospects for the near future are not bright.