Irregular Roundup, 26th May 2026

We begin today’s Irregular Roundup with feel-good assets.

Feel good assets

Joe Wiggins from Behavioural Investment wrote about a paper from Elroy Dimson and a couple of colleagues, which suggests (not too surprisingly) that investors are prepared to accept lower returns from assets that make them feel good.

• ESG funds seem a relevant example here, and we could also flip things around and look at the excuses made by fans of expensive brokers and star fund managers.

In the case of the new paper, the assets in question were collectables such as classic cars, art, wine and stamps.

• My objections to these are more pragmatic – they generally have no tax wrappers, are lumpy and expensive to buy, and since they are not standardised, they are non-fungible (which leaves you at the mercy of more knowledgeable dealers).

On the other hand, a lot of these things must be nice to have around the house.

The researchers compared the returns of 13 collectable asset class categories over up to 110 years to a risk-appropriate portfolio of liquid securities. Collectables underperformed by an average of 2.5% per annum. 

The gap is explained by an assumed “emotional yield”, which is part private enjoyment and part social signalling (we’re in Rolex territory here).

One unanswered question is the extent to which investors know that they are receiving a lower return.

Data on the returns for these assets is hard to come by, and I wouldn’t be surprised if those attracted to the shiny shiny are happy to be persuaded by brokers that returns are comparable (just as property fanatics and dividend investors are certain that they have identified the world’s greatest investment).

Economic illiteracy

This month’s sermon on how lefties don’t understand economics comes in four parts.

First up, the Guardian reported that Rachel Reeves was considering a one-year rent freeze on private sector homes, to combat the inflationary effects of the Iran war. 

• It’s interesting timing, given that the Renters ‘ Rights Act came into force this month without such strict rent controls (landlords are restricted to a single increase per year).

It’s hard for me to believe that there are still people who believe that rent controls help anyone other than incumbent tenants (and even then, only temporarily).

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Second up is CapX’s report on Green Party leader Zack Polanski’s wild idea that CEO salaries should be capped at 10 times the lowest pay packet in the same firm.

• The Greens have no power at the moment, but it’s worrying that 65% of Brits support this idea (including 54% of Tories and 58% of Reform voters).

With minimum wage at £25K (for now), the cap would be £250K pre-tax, or around £125K post-tax.

• Even if you could find a CEO prepared to take this, how would the hierarchy of layers below work out? The incentive to take on more responsibility through a promotion would disappear.
• And how would this be applied to footballers, musicians and actors?

Assuming that we can’t legally apply these rules to firms registered outside the UK, we might expect a dash to the exits typical of a theatre that’s on fire.

• CapX also noted that house prices would take a big hit.

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The third leg of the stool also comes from CapX, this time writing about New York mayor Zohran Mamdani’s kooky idea to open state-run grocery stores, selling food at below market prices. 

• The first store will cost $30M to extend and fit out., and won’t pay rent or property taxes.

The stores will have to employ union staff, but can’t subsidise the food with profitable tobacco or lottery tickets.

• It’s not clear how any of this will bring down the price of eggs.

Blending the stupidity of Mandani with that of Reeves brings is to the final example from Scottish First Minister John Swinney:

To help with the cost of the weekly shop, we will take a public health intervention to establish statutory price ceilings on a basket of 20 to 50 essential food items at large supermarkets, such as bread, milk and eggs, to provide tangible relief to families struggling with grocery bills, ensuring that necessities for a balanced diet remain affordable.

When this leads to suppliers selling at a loss, voters are promised subsidies. 

• One side effect will be to kill off smaller shops that don’t get the handouts.
• Another will be shortages, as demand for goods at below market prices exceeds supply.

CapX recalled Milton Froedman’s analogy:

Think of a kettle on your stove, and it’s got a cover on it. The boiling water is threatening to throw the cover off. The obvious sensible thing to do is turn down the heat under the kettle. Another thing you can do is take a brick and put it on top of the kettle, and at the same time turn up the heat.

The idea that we can lower prices simply by issuing an order for lower prices is endlessly seductive.

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After I drafted this article,  it emerged that Rachel Reeves had asked English supermarkets to cap the price of some staples (bread, milk, eggs, etc.). The plan has been rejected but it was considered.

• Even the Bank of England warned that this was a bad idea.

Instead, we got the “Great British Summer Savings Scheme”, which is fine if you have kids and like taking them to our great nation’s mediocre attractions.

Joking aside, we have a real problem looming. The Strait of Hormuz has been closed long enough to mean we will have higher fuel and food prices later this year.

• And the government has no headroom to throw money at these problems, so the consumer will bear the brunt.

In another splendid government left-hand right-hand moment, Labour voted against more North Sea drilling, before relaxing sanctions so that we can buy Russian oil instead.

Labour leadership

It looks like we might have a Labour leadership challenge after all. After Labour’s dreadful showing at the council elections, Wes Streeting appears to have wimped out (if he ever had the numbers). But if Andy Burnham can beat Reform in a by-election, he could be in Number 10 in a few months.

This would not be good news for the country or for investors. He’s a nationaliser and a tax-and-spend type, with supporters who believe that the bond markets “will just have to fall in line”. Good luck with that – I foresee the 10-year a lot higher.

The silver lining is that Burnham will have two years to lose the 2029 election for Labour, though he will surely help with polling in the short term.

• And maybe he will call an early election during his honeymoon period.

Novice investors

CityWire reported on Barclays research that finds novice investors greatly overestimate the risk of losing all their money in the stock market.

Barclays talked to 3,000 UK adults and found that 34% said that fear of losing money was the main reason they did not invest.

Consumers estimate there is a 23% chance that a portfolio of global companies could become ‘totally worthless’ within five years. Only one in six (17%) put the chances of losing everything by investing in essentially a global tracker fund at below 5%. Only 14% of respondents feel that investing is ‘for people like me’,

Yikes! Enter Savvy the Squirrel, a Sid for our times and the hero of a new government campaign to normalise investing.

• If you haven’t seen it already, the new slogan is “Take the next step. Invest”.

Boring Money reported on a parallel initiative to water down the frightening risk warnings that come with investments.

[They are] akin to British Airways telling anyone trying to book a flight how many aviation deaths there have been in the last year. Wave goodbye to the old ‘Capital At Risk’ and say hello to more helpful information.

I will show my age when I say that a cartoon animal is a sad way to drum up interest in the stock market. Savvy is not for “people like me”.

EM Pioneer

Fund manager Mark Mobius has died at the age of 89.

• He was a protege of John Templeton, and I think his emerging markets fund was the first investment trust that I ever bought back in the 1980s.

Mohamed El-Erian said:

Mark was a pioneer in the world of emerging market investing, spending decades as a tireless and honest promoter of the asset class he helped bring to the global stage. With this and his analytical brilliance, he inspired so many of us in the industry. May he rest in peace.

Amen.

VCTs

Wealth Club reported on VCT fundraising for 2025/26.

• A total of £918M was raised, the third-highest annual total on record.

Income tax relief has now been cut from 30% to 20%, so it’s unlikely that we’ll see a repeat this year.

Wealth Club CEO Alex Davies said:

VCTs play a vital role in the UK economy. In return for generous tax reliefs, investors provide capital that is deployed into early-stage and scaling UK businesses. Since their inception in 1994, VCTs have channelled more than £12 billion into ambitious companies across the UK. 

The last time income tax relief was reduced, in 2006/07, VCT fundraising fell by 65% year-on-year. While the impact this time may be less severe, we still expect a material decline.  This would be a negative outcome for the UK economy. 

We struggle to see the logic behind this policy decision. The projected tax revenue gain is relatively small – around £120 million per year – yet the potential damage to the funding ecosystem for start-ups and scale-ups, and the knock-on effects for growth and job creation, could be far greater.

Social Media

I’m not a big user or a big fan of social media, but the legal decision in California that platforms can be held responsible for harm to the mental health of their users is quite worrying.

• Meta and Alphabet have been deemed to design their platforms to be addictive to children, despite the plaintiff having broken rules and bypassed controls on the apps.

With no general rule against companies marketing products that can be abused or excessively consumed – and no medical definition of social media addiction – , this risks being a “Big Tobacco” moment.

It’s not clear to me how society gains from the recent moves away from the era of personal and parental responsibility, but as they say, you can’t easily put the toothpaste back in the tube.

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That’s it for today.

• Until next time.