Things that just work 

Bike
As we live the life of lockdown, slowly the realisation has dawned that it's going to be more of a challenge than I originally envisaged to maintain this particular human body in a state of barely sub-optimal physical perfection. My wife and I have (blearily) noticed that the recycling bags clink more than they used to, although we have yet to come up with a satisfactory explanation.

Equally well, our initial solution, the early-morning constitutional is beginning to throw up problems, as it turns out that many other folks are also setting their alarms earlier in order to beat the rush.  Unless we come up with an alternative, I can foresee the nation succumbing to sleep deprivation, as well as coronavirus.  As it stands, the park opposite is chock-full of grimly-intent walkers, many of whom have developed their own social-distancing rules, emitting loud shrieks and functioning like little plague-aerosols if one ventures within twenty metres of them.

So, my next bright idea is the Roadbike Renovation Project.  After all, social distancing is easier on the main road, and the traffic levels are (thankfully) much reduced.  Now, to be fair, my trusty steed has been, of late, in a bit of a decline (more of a rusty steed, before anyone tries that one).  I gave it a good clean, adjusted brakes, ensured that the tyres were at the correct pressure and then realised that the chain was an utter mess.  Corrosion and congealed goop don't make for an efficient means of propulsion, so I hunted around for some means of restoring this component to something resembling its former glory.  And - Lo! - I came across this brilliant piece of kit online:  an aerosol of biodegradable cleaner, married to a plastic chamber that you clip over the chain, containing nylon brushes that rotate in order to disperse the cleaning agent, and scrub the chainlinks.  What a brilliant idea!

Yesterday, it arrived.  I could barely contain my excitement.  In the flesh, of course, the gadget is less impressive than I had hoped.  There is an inherent flimsiness to the construction, indeed a kind of Heath Robinsonesque look and feel, which raises a few initial doubts.  And yet, after a few minutes of experimentation, those fears were no more.  It may look like one of those fantastically implausible Heath Robinson gadgets, but it certainly does the job.  This is the gadget for this particular job, and it performs its function with aplomb, other than spraying cleaner in my face (which may be more a function of technique).

Some things just work.  One that was never going to work, never could have worked, and in its original creation betrayed the kind of disregard for the real world that one has come to expect from regulation, was the MiFID II '10% rule'.  When those MiFID II rules were published in 2018, we looked closely at them, scratched our heads, checked them carefully against all the historic data in relation to long-term investment returns, and realised that "Houston, we have a problem".  For, as anyone with even a smidgeon of awareness will know, it is all-but impossible to invest in anything, if you wish to avoid the very real possibility of a 10% reduction in valuation at some point over a twenty-year span.  Clearly, this was not a perspective that had occurred to the EU bureaucrats and, strangely, the FCA's MiFID team were entirely sanguine about the matter when we spoke to them.  What on earth was I bothered about?

Well, it turns out, this.  This is what we were bothered about.  The kind of market volatility (for whatever reason) which triggers wholesale, systemic revaluations.  Not, the kind of specific event which might tell you that you do, really, have some cause to worry - but rather the kind of generic, universal event which affects any investor on the planet, and which therefore (by definition) cannot be avoided, unless overnight you develop some kind of magical market-timing insight.  In essence, what MiFID II came up with was a reporting tool which simply generated meaninglessness and futility as its outcome.  The kind of futility which would afflict people, rather than help them in any practical way.  And the kind of futility which would simply exacerbate anxieties and a trend towards short-termism, at precisely the time when few of us are equipped to make our best, rational decisions.

It makes you want to bow down, and worship with grateful ecstasy at the feet of those regulators, eh?  Thankfully, someone appears to be awake at the FCA, and the dratted rule has been relaxed - but in a sane world, one where someone looked at the data, and made rational decisions based on that data, we wouldn't have been in this position in the first place.

So, thank goodness, the important stuff just works - like my bicycle chain cleaner.  This morning I checked my online pension fund valuation, and, over the term of this crisis, it is down by precisely -10.95%, which is exactly what I could have predicted based upon the past-performance and risk-return data which we have baked into our VIP.  I can live with that - an investment solution which provides the client with a reliable indication of how his investments are likely to behave, and thereby encourages him to adopt the kinds of realistic expectations which are, in the end, the best antidote to anxiety.
 

Kevin Moss, 15/04/2020