New industries bring new problems

published 31 January 2019

932_MW_P03_Contents — Cybercrime is on the increase

Data. It's the new oil. And the UK is swimming in it. We are, it turns out, the second-leading producer of it in the world something that, as Matthew Lynn points out this week, should be seen as really good news. It reminds us just how well the UK tech sector is doing and bodes brilliantly for our future growth (assuming we drive home our headstart). That said, the existence of all this data and the fact that so much more is collected every second comes with some major problems.

There is the conflict between public and private interests, as Gillian Tett notes in the Financial Times. There is the ability for those with the data to mine it to exploit (rather than just sell things to) us. The Financial Conduct Authority has, for example, started to look at how banks could use their data stashes to figure out which customers are too idle/busy to move their money to find better interest rates, and to then keep their rates lower than other people's. Dastardly stuff.

And of course there is basic privacy. As Shoshana Zuboff says in her new book The Age of Surveillance Capitalism, we live in a world where vast "stockpiles of personal data" are kept on all of us. Every product with "smart", "personalised" or "digital' attached to it, is a "supply chain interfaced for the unobstructed flow of behavioural data." Worried? You should be. You should be worried about how all that data can be used to "nudge" your behaviour in ways that don't necessarily suit you. And you should be worried about the security of all that data. You'll find all our usual worries about high fees and low returns in the investment industry in almost every issue of MoneyWeek. But the quickest and nastiest way to lose money (and possibly reputation too) fast? Cybercrime. I'm just starting to look at the cyber insurance options available for individuals and will report back soon. Perhaps we all need it.

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On to investment (there's no point in paying up for extra insurance if you have little to lose). It's still scary out there. In my interview with Bruce Stout, we talk (at length you can hear more on our podcast here) about the rise and rise of global debt; the misery of low growth in the West (with particular reference to the eurozone); and the ongoing failure of tech investors to accept the inevitability of the business cycle affecting them as much as anyone else (Apple is in the middle of providing a salutory example of this see page 10).

That doesn't (as ever) mean there is nothing to buy. Our cover story is on possible opportunities in the gambling industry (we know this isn't for everyone); we also look at smaller Japanese companies (which could be) and smaller US banks. I'd also point out, for those of you looking for income and still thinking about last week's cover story on the best dividend-paying UK stocks, that the yield on the FTSE All Share has now hit 4.5%, the highest level since 2008. Interesting times.

Finally, if you want to hear more on all these subjects on the evening of Tuesday 12 February, John Stepek is running an event with MoneyWeek regular Tim Price and Iain Barnes of wealth manager Netwealth. They'll be talking (over a drink or two) about and answering questions on everything that's going on in the markets right now, from Brexit to trade wars to the end (or maybe not?) of QE. Book your ticket at Theweekevents.co.uk.

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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.