Hello and welcome back to Mortgage Advisor on FIRE. This week I offer some thoughts on why the stock market can’t fail, and take a look back at the growth in my ISA since it was opened.
Weekly Update
I’m still in that mindset of waiting for the year to end. I’m finishing up my time in my job, and waiting to see what the next chapter brings. I’ve started looking for other jobs because of Oana’s work situation. The plan had been to take a few months off but if neither of us is earning, even a basic standard of living will eat into our savings quickly.
Turning Down an Opportunity
I had a good chat with the director of an independent brokerage about joining their company. The guy was open about the pros and cons of being self-employed, and although there’s potential to earn a lot of money, it’s important to pay due respect to the word potential. To be successful in this industry as a self-employed mortgage advisor you have to be switched on all the time. You have to be able to network, and just the thought of networking fills me with anxiety. After thinking it through and talking with some people who have tried going self-employed as a mortgage advisor, I decided against it.
Off The Shelf
Earlier in the week we attended a talk as part of the annual Off The Shelf festival. This one was by author Adam Sharp and concerned his latest book The Wheel is Spinning. The talk was advertised as a collection of amusing phrases from different languages. The tagline of the book from Amazon is;
The Wheel is Spinning but the Hamster is Dead: A Journey Around the World in Idioms, Proverbs and General Nonsense.
The whole evening was a bit, well, underwhelming. It started with the sound system being handled in such a way as to create an ear-piercing shriek that was painful, followed by the same song being played on a loop for fifteen minutes whilst the venue filled. The event was supposed to start at 19:00 but was a little late getting going. The person introducing Adam Sharp read their intro from a sheet of paper as if they’d only just been handed it as they walked on stage. It was a few minutes after seven when the talk began.
I was expecting some examples of amusing language from around the world with some insight, analysis, and so on. It was just the author reading out numbered lists of sayings from around the world. There was a ten-minute break, and the talk finished at 19:56; I checked the time thinking, “Wow, this went quickly”.
It’s the first time I’ve attended one of these events and thought, “That would have been better as an email.”
The only positives from the evening were picking up some amusing phrases, such as “If the duck can’t swim it’s not the water that’s stupid.”
Off The Shelf: Part Two
Normally the talks from Off The Shelf are really good. We’ve been to many over the years and this was the most disappointing one by a long stretch.
On Saturday evening we went to another Off The Shelf event which was much better. It was called Collision: Stories from the Science of CERN. Steven Moffat (of Doctor Who and Sherlock fame) was there, as was a scientist from CERN, and the event was hosted by Spencer Kelly, who has hosted the BBC show Click for many years. It was an interesting event but did not go into as much detail about the science as I would have liked. It was mostly to promote the book which the event was named after. We bought the book and got it signed by Steven Moffat who contributed a story to the collection. I’m glad we went even if was a bit lacking in depth.
As we were waiting to get the book signed, one of the scientists was hovering around so I asked if they were free to answer a question. Their response was a little rude, as they seemed very dismissive and didn’t really listen or look at me. Someone else stepped in and answered my question but it was all very awkward. I wasn’t the only person who asked a question so I’m not sure what the issue was.
Diabetes UK Step Challenge
A massive thank you to those who have donated, and a reminder that I’m still accepting donations until the end of October. If you’d like to donate, you can do so here.
Letters to Oana
Part 2 of the series Letters to Oana is now live.
Looking Back **NEW POST**
Part 16 of the Looking Back series is also live.
What I’m Doing
Listening: The Power of Geography by Tim Marshall (audible).
Watching: Nightmares and Daydreams (Netflix).
I enjoyed Tim Marshall’s previous book Prisoners of Geography but this latest one just didn’t do it for me. There were some interesting bits to it, but I don’t think I was in the right headspace for this type of book. I’ll probably give it another go at some point. He has a good writing style and seems to know his stuff.
I watched the first episode of Nightmares and Daydreams, an Indonesian show, but I just couldn’t get on with it. From what I can tell it’s an anthology show with loosely connected stories but it was too out there for me. I won’t spoil it for anyone thinking of watching it, but it was just too wacky for my taste.
Website Stuff
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DonateDonate monthlyDonate yearlyFinancial Update
Assets
Premium Bonds: £15,100.00.
Stocks and Shares ISA: £95,301.22.
Fuck It Fund: £1,230.27.
Pensions: £87,251.91.
Residential Property Value: £237,447.00.
Total Assets: £436,330.40.
Debts
Residential Mortgage: £185,383.74.
Total Debts: £185,383.74.
Total Wealth: £250,946.66.
In typical fashion, I was chatting with a good friend of mine about our investments and we got to talking about how much growth our ISAs have achieved. The stock market has had a fire lit under it of late and is surging up. A few years back I looked at how much I’d made from my ISA, but that was some time ago. So, I revisited the figures and I was pleasantly surprised. Now, I should point out that the calculation is not 100% precise because it does not account for fees charged, but as they are a drop in the ocean it’s not something I’m too concerned about.
The numbers are as follows:
Total amount paid into my ISA: £98,300.
Total amount withdrawn from my ISA: £28,169.62
Current ISA value: £95,301.22
Growth: £25,170.84
That is incredible growth since I opened the ISA in 2018.
One of the great things about discussing FI with other people is you pick up all sorts of hacks for saving money. So, what I learned this week was that if a hotel offers you a price whereby you can cancel the reservation for a full refund, keep an eye on the price for the room and if it drops, cancel and rebook. Modern problems require modern solutions and all that.
Stock Market Fears
The most common response I get from those sceptical about investing in the stock market is rooted in fear. People are afraid of losing their money in a big market crash. The thing is, I don’t think the market will fail permanently. Let me explain why…
In today’s globalised economy, the stock market is a foundation upon which governments, corporations, and individuals all build their wealth. If you trace any investment back, you find yourself looking at the stock market. It’s not just about rich investors; public pensions, insurance funds, and 401(k)s (in the US) are all deeply tied to stock market performance. With so many stakeholders relying on it, there are strong incentives from all sides to prevent a total collapse. It’s a game which no one wants to see end.
When markets show signs of significant downturns, governments often step in like a parent calling time on their kids playing before someone gets hurt (think of the 2008 financial crisis or the COVID-19 pandemic).
The Central Banks and the Speed of Information
Central banks like the Federal Reserve or the European Central Bank have tools designed specifically to prevent market catastrophes, like controlling interest rates. The extent to which these measures work is up for debate, but these efforts show that no one wants the market to fail.
Unlike previous times when information and transactions were delayed, today’s real-time data and communication help prevent market freefall. Institutional investors, hedge funds, and retail traders alike have access to technology and information with minimal delay that allows them to respond swiftly to issues or problems.
Markets now have circuit breakers in place that act as a safety net, and if the market moves too far, too quickly, the game is paused to give people a chance to reflect before things get too crazy.
Who Benefits?
The global economy is a closed system and if the market was to crash irreparably it’s difficult to see who would benefit. I’m not talking about a dip or even something like the crisis in 2008. In those situations, the people with money to invest will often benefit because they can snap up shares at a cheaper price. This in turn leads to increased wealth when the market recovers. If the market were to fail completely though, the game would end and no one would benefit. As such, it is in everyone’s interest to keep the game going, even if they need to bend the rules from time to time to do so.
That’s all for this week, so thank you for reading and I hope you have a great week ahead.
Disclaimer
The views and opinions in this blog are my own, and do not represent the views or opinions of my employer, nor should they be considered advice.
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I agree entirely that the global stock market could never go to zero, but with additional reasons.
Lets say the entire world decided to stop using Uber, for example, and it stopped receiving any income at all. Quickly, it would go bust and the value of that company would be zero.
But, do people still need to take taxis to get about? Let’s assume yes they do. So, either all that business goes to another company who then has an increased business value due to an increased income, or let’s assume all major taxi firms go bust.
So, let’s say Shaun decides to start his own taxi company, just him driving round. It’s a success so he buys another car and employs another person, and so on and so on. This company ends up with say 50 staff and buying cars one at a time is quite a slow way to go about it. Someone, let’s say Fiona, offers to buy 50% of the business. A win for Shaun that he takes money out of the business, or Shaun and Fiona agree that all the money goes into growing the firm, buying more cars over and over with that cash. Shaun thinks it’s better to have 50% of a bigger business and also gets to share some of the management work.
This company continues and grows and more people want to buy a share of the business as Shaun looks to reduce his input into the business.
This, is how the stock market works, but just on a smaller scale. It doesn’t take much to see how this grows and this company could become the next Uber.
Furthermore, taking it back to absolute basics, if Tesco Supermarket somehow went bust here in the UK, Sainsbury’s etc would then automatically have to receive more business which in turn increases their value.
Someone who simply doesn’t believe in the stock market or feels it will all fail is essentially saying they do not believe a single company in the entire world is a business they would like to own a part of and no business will be profitable long term.
Also important to remember that there will be businesses we don’t even know about or that don’t even exist yet. Twenty years ago I dare say most people had not heard of SpaceX, and thirty years ago Amazon had only just started trading. The world changes, and the products and services we use change.