Rationality returns to the world

It almost seems as though the world is waking up to the madness of the last few years, says Merryn Somerset Webb. And not before time.

Is some sense of rationality beginning to return to the world? It rather feels like it might be. In the UK, Brexit hysteria is beginning to calm as everyone notices that a perfectly reasonable deal is perfectly likely. The "reverse Brexit" voices are fast falling in number (with the remaining ones seeming madder by the day). Theresa May seems to have pulled back from the brink. She may not fight the next election, but there is no longer much talk about her being bumped for Jacob Rees-Mogg.

Globally, central bankers are beginning to admit to the damage that their extreme monetary policy has done (a recent working paper from the Bank of England suggests, for example, that UK house prices are 22% higher than they would have been without quantitative easing) and to begin to reverse their actions.

At the same time the scales are falling from the eyes of over-enthusiastic technology investors it turns out that valuations do matter. The talk of data breaches around Facebook has also brought a new sense of realism to a topic close to our hearts the death of cash. We have long worried that the rise of digital money, and the constant efforts of all governments to hurry it along, would have a catastrophic effect on the final vestiges of our privacy.

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The Swedes who live in one of the most cash-free nations on earth are suddenly catching up with us on this. They are worried about glitches, worried about fraud and worried about war ("If Putin invades Gotland", says one critic, he could paralyse all of Sweden by turning off its payment system.) But most of all, says the head of the Swedish Consumers Association, they are worried about privacy: who wants the state or indeed anyone else to be able to track every action of their life via their bank account? Not the Swedes as it turns out and not us either. Not all change is good.

On the subject of the bad type of change, I want to point you in the direction of a new US study showing just how much taking too much risk (and getting it wrong) can hurt: people who lost three-quarters of their wealth (one way or another) during the 20-year period in the study were 50% more likely to die during it thanks to "short-term increases in systolic blood pressure and inflammation which may increase risk of cardiovascular mortality".

We talk a lot here about diversification, about paying the right price for investments and about keeping a margin of safety when you invest. This is why: making major losses really hurts and sometimes it kills. Turn to this week's Analysis for thoughts on how to diversify easily and cheaply.

If it is too late for that (perhaps you hold too much Tesla), turn to the Travel page, where Stuart Watkins explores some the world's greatest pilgrimages. You won't find rationality on any of them. But you might be able to at least delay your cardiovascular mortality.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.