Investment platform AJ Bell (LSE: AJB) will benefit from people investing more for their retirement. Good news, then, that politicians aim to persuade people in the UK to do just that, increasing the amount of money they put into shares and so helping make sure that they can accumulate enough savings to fund a comfortable retirement.

AJ Bell offers financial products to consumers who want to manage their own investments by putting money into ISAs and SIPPs, and to those who are investing via financial advisors. At present, AJ Bell's assets under management (AUM) are split evenly between the two segments, though its direct-to-consumer segment has been growing at a faster rate.

Should you invest in AJ Bell?

AJ Bell has a strong brand: it boasts high customer satisfaction scores in addition to customer retention rates of around 93.5% for advised customers and 95% for those who directly invest with the platform. The average customer sticks with AJ Bell for 17 years. This has helped it grow to the point where it is now the third-largest investment platform, with a market share of 8.3% in terms of assets under management. However, it is capturing around 16.1% of the inflows into investment platforms, which suggests that its overall market share will continue to increase.

Of course, as with any service business, there is always the risk of disruption, either by a new entrant or from AI. But its solid reputation and regulatory barriers both help fend off rivals, while the company is also using AI to reduce its administrative costs and make its platforms even more efficient. The long-term problems caused by ageing should also reduce any political risk.

Overall, AJ Bell has seen its AUM more than double between 2018 and 2026. Sales have increased even more quickly, soaring 150% between 2020 and 2025, and are expected to keep on growing at a double-digit pace. AJ Bell's asset-light business model gives it a very high return on capital employed, enabling it to increase its dividend consistently and return money to shareholders via buybacks even as it continues to expand. Despite this, the stock trades at a more than reasonable 19 times expected 2027 earnings, with a dividend yield of 2.8%.

These strong fundamentals, in addition to unexpectedly good recent quarterly results, have been received positively, with AJ Bell's share price beating the wider market by 25% over the past six months. The shares are also well ahead of both their 50-day and 200-day moving averages. I would therefore suggest that you go long at the current price of 597p at £5 per 1p. I would put the stop-loss at 400p, which gives you a total downside of £985.

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Archer Aviation (Nasdaq: ACHR) is a company that focuses on advanced aircraft, particularly a category described as eVTOL (electrical vertical take-off and landing). These light aircraft offer the promise of being able to take off and land without a runway, but in a much more efficient, cost-effective and environmentally friendly manner than helicopters. This would enable them to overcome two major problems with helicopters: expense and noise.

Other technology companies ranging from SpaceX to Anthropic have floated on the stock market at valuations of hundreds of billions – or even trillions – of dollars. Excitement over technology stocks is at fever pitch. However, the ascendancy of these high-profile names shouldn't obscure the fact that the market has already started to sour on some technology firms with bold visions of the future. Archer Aviation is a case in point.

Archer Aviation wants to make flying taxis

Archer's idea is that eVTOL aircraft could allow people to avoid congested urban streets and motorways, particularly in the US, for trips that are too short for planes. Some argue that using these “flying cars” could even become the equivalent of calling a taxi for those who want a greater degree of speed and convenience, but can't afford to charter a conventional aircraft. However, as with any eye-catching technology, bridging the gap between hype and reality is proving to be a major challenge.

For example, even though the US government has tried to accelerate the regulatory process, getting the aircraft approved for use in US airspace will still take several years. Next, Archer Aviation needs to find a way to manufacture them at scale and at a reasonable cost, and then convince people to buy them. All the evidence suggests that despite some limited successful test flights, Archer Aviation is a long way from completing any of those steps, especially compared with rival firms in the area such as Beta Technologies. There are also wider concerns around how eVTOLs will be able to fit safely into airspace used by planes, helicopters and drones.

With no profits in sight, here's how to short Archer Aviation

Perhaps the most compelling argument against Archer Aviation is the fact that it burning through large sums of money. It lost $618 million last year. The board admits that it expects to lose up to $200 million next quarter alone. The company has enough cash to sustain these losses in the short run, but analysts expect steep losses to continue throughout the next few years, with no route to profitability in sight. The stock's valuation is nonetheless so high that even if Archer's revenue takes off, it will still be valued at around 30 times expected 2027 sales.

Investors also seem to have soured on Archer. Despite a brief resurgence in the spring, the stock is on a downward trajectory. It has lost almost two-thirds from its 52-week peak, and trades well below its 50-day and 200-day moving averages. I would therefore suggest shorting it at the current price of $5.73 at £300 per $1. I would cover the position if it hit $8.73, which gives you a total downside of £900.

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A new $250 bill has been proposed to celebrate America's upcoming semi-quincentennial, and Donald Trump has a plan to put his face on it. This might be easy to dismiss as yet another example of his overblown ego. But that would be a mistake. If Trump goes ahead, it could undermine faith in what remains the world's reserve currency at the worst possible time.

Trump's allies in Congress have already introduced a law that allows for an exception to the existing rules that no living president can appear on American banknotes. Designs have apparently already been commissioned from the Bureau of Engraving and Printing, which designs dollar bills. There are still plenty of obstacles in the way. The legislation still has to be passed for one, which is never easy, even with a Republican majority in Congress. But even if it doesn't happen, or is delayed beyond the main celebrations, Trump has already decided to become the first living president to add his signature to the notes. What used to be American money is steadily being turned into Trump money.

Trump's $250 bill could undermine the dollar's credibility

That may seem harmless enough. Trump loves the limelight, and what's a few pictures on the banknotes? In Britain, we have always been happy to have the monarch on notes and coins, and the same is true in many other countries. It is not as if we use cash as much anymore, and it is hard to imagine many people will be using the $250 note regularly. But in reality, this is a symptom of something far more serious – a warning sign about the underlying strength of the dollar.

There is a reason central banks have always put weighty historical motifs on their notes. The British have the likes of Winston Churchill and the Duke of Wellington. The European Central Bank has never managed to agree on any real people or buildings – since one member or another would end up taking offence – but has done the best it can with synthesised images of historic building styles. The Bank of Japan has a selection of famous scientists from the country's history. All over the world, central banks choose an image everyone can feel proud of.

There is a logic to that. Paper money is basically a conjuring trick. It is only worth something because we all accept it is worth something, and we are willing to exchange it for goods and services. Reaching into a nation's past is one way of establishing its credibility. It gives paper money an air of tradition and solidity. Without that, there is a real risk people might start thinking it is just a few brightly coloured pieces of paper.

King Dollar is under attack

This is the worst possible time to start taking risks with the US currency. The challenges to the dollar have been growing stronger all the time. The US budget deficits are out of control, running at 6% of GDP even when the economy is doing well, and eventually the rest of the world will get tired of financing those. Central banks globally now hold more of their reserves in gold than they do in dollars, and while that is partly because the price of the precious metal has risen so much over the last year, it is also an illustration of how they are diversifying away from the dollar. China has already launched a digital yuan and is starting to promote it as a serious alternative for settling payments for cross-border trade. The cryptocurrencies led by Bitcoin have had a rough year, but there is little sign they are going away and with every year that passes, they become more established within the financial system, and were always designed as an alternative to the dollar.

The list goes on. On their own, none of those factors might be enough to knock the dollar from its throne as the world's most important currency. But when they all come together at the same time, the greenback is clearly at risk. Like a Latin American strongman, Trump is intent on personalising the government of the US and boosting his own reputation. But if he goes ahead, this may well turn into the moment when the world decides the dollar was not the rock-solid reserve currency any longer and decides to switch to something new. If that happens, the results won't be pretty for the US economy, and Trump may well come to regret his vanity project.

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The space industry is booming. The falling cost of satellites and launches has stimulated great interest from both the private sector and the military users, while the imminent flotation of Elon Musk's SpaceX has also put the sector in the spotlight. Still, as with any boom, not every company will prosper, and this is particularly true if its core business is a competitor of SpaceX. A case in point is York Space Systems (NYSE: YSS), which went public at the end of January 2026.

At present, York Space Systems makes its money from selling satellites. The problem is that it makes virtually all of its revenue from just one client, the Space Development Agency (SDA), part of the US Space Force (the space branch of the US Armed Forces).

The SDA was using these satellites as part of its Transport Layer programme, with the aim of it building out a huge network of between 300 and 500 low Earth orbit satellites (between 750km and 1,200km above the earth) that could be used for targeting and communications purposes.

York Space Systems is chronically loss-making

However, as Wolfpack Research has pointed out, the US Space Force recently decided not to fund the latest stage of the rollout, which effectively ends the programme. Instead, it will be pursuing a slightly different arrangement called the Space Data Network (SDN). The Space Data Network will also require satellites, so it's possible that York Space Systems could supply the SDN. However, this won't be easy, as it will have to convince the Pentagon that it can build satellites more cheaply and efficiently than SpaceX, currently the preferred provider for the SDN.

Even if it manages to sell its satellites to the SDN, York's position still looks shaky. It is chronically loss-making, with scant progress towards breaking even, let alone achieving profitability. Operating losses increased by 50% between 2023 and 2025. One sign of the group's desperation is that it has started buying other space-related companies, which is likely to deplete its remaining reserves of cash further. It could even start issuing more shares in order to raise cash. Despite all this, the stock still trades at almost eight times sales, the sort of valuation that you would expect from a company that was both fast-growing and profitable, not one that risks losing its biggest customer.

York's shares have been on a rollercoaster, falling almost immediately after it floated before bouncing back to the point where it was trading 25% higher than its listing price. However, the past few weeks have seen the share price collapse; it is down by nearly half from its recent highs, and trading well below both its 200-day and 50-day moving averages. I would therefore suggest that you go short at the current price of $24.02 at £100 per $1. In that case you should cover your position if it goes above $33.52, giving you a total possible downside of £950.

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While AI is the main investment theme in the markets at present, robotics is also increasingly in the spotlight. Almost every day we see a new headline about a robot running a marathon, breakdancing, or beating a human at table tennis. Most experts predict a vast jump in the number of droids within the next few years. But not every robotics stock is worth buying. Some companies produce ideas that just don't work, face too much competition, or have shares that have become absurdly overpriced. That brings me to Serve Robotics (Nasdaq: SERV).

Serve Robotics’ business model appears plausible enough. Many people spend large amounts of money on takeaways delivered to their homes. This “last-mile” delivery takes time, costs money (either upfront or in tips) and causes pollution and congestion (if delivered by car). Occasionally, deliveries can get lost. In theory, Serve Robotics' delivery robots, which look like a box on wheels, can cut out this cost by taking food from restaurants to customers, navigating roads and pavements. As of February 2026, the group had around 2,000 robots in operation.

Serve Robotics is facing an uphill struggle

However, there are several flaws in the business model. While the technology has greatly improved over the past few years, Serve's robots still get stuck or lost, while there are also ongoing concerns about food theft. Serve Robotics also faces competition from a host of other providers, such as Coco Robotics and Starship Technologies, which are also pursuing similarly aggressive expansion plans. Many of the major food-delivery firms, moreover, are exploring other in-house solutions, such as self-driving cars or drones.

An even bigger difficulty is that the robots are deeply unpopular with many people, at least in America. Part of this is due to genuine concerns that they are creating a hazard for pedestrians, especially the elderly and those with disabilities, and other road users. Some people just find the idea of robots roaming the streets unnerving, and vandalism has also been a problem.

There are widespread calls for them to be banned, while parts of San Franciso and Chicago have blocked, or severely restricted, their expansion. The robots aren't popular with restaurants either. Research by short-seller Edwin Dorsey suggests that many restaurants have ditched them because they delivered few or no cost savings.

To cap it all, Serve is projected to keep losing money for the next few years, yet the shares are priced for perfection, trading at a whopping 20 time forward sales and 262 times current revenue – far more than the ratio of between seven and ten that most fast-growing technology firms can command.

The market seems to be taking a similarly negative view, with the stock down 50% from its 52-week peak and trading below its 50-day and 200-day moving averages. I therefore suggest you go short Serve Robotics at the current price of $9.40 at £100 per $1. I would put the stop-loss at $18.40, which gives you a total downside of £900.

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What are prediction markets?

Prediction markets are online peer-to-peer exchanges that let users wager money not just on sports and politics, but on everything from the chances of a full US ground invasion in Iran to what colour tie Donald Trump will wear on a particular day. The two biggest sites, Polymarket and Kalshi, have exploded in popularity over the past two years, as US federal regulators have taken a far more relaxed approach.

Trading volumes on the two sites were $50 billion in 2025, up from $16 billion the year before, and are set to be many times that this year. According to analytics firm The Block, cited by The Wall Street Journal, trading volumes on the two leading platforms rocketed to $24.2 billion last month, up from $1.8 billion a year earlier. Donald Trump Jr is an adviser and investor in Polymarket, and Trump Sr's media company is planning its own site, Truth Predicts. Meanwhile, several US states are suing the firms on the grounds that they facilitate illegal gambling.

Are prediction markets risky?

Betting on events that might or might not happen is obviously wide open to people taking advantage of inside information and/or seeking to influence events. Last month, a US soldier was the first person to be charged with insider trading on prediction markets. Gannon Ken Van Dyke is charged with using classified information to place roughly 13 bets worth $33,034 on positions including “US Forces in Venezuela” and “Maduro out”.

The sites claim they serve an important wider function in terms of price and information discovery – indeed, the Federal Reserve, no less, recently published a paper finding that Kalshi's market participants did a usefully good job of predicting changes in interest rates and GDP. Polymarket says it “aggregates wisdom from informed users, often outperforming experts”. But if those users are too “informed”, it stacks the deck against the rest of the players. Exactly how “informed” a user is permitted to be before they are doing something illegal is a question that's certain to play out in the courts many times in forthcoming months and years.

Are prediction markets allowed in the UK?

In theory, both Polymarket and Kalshi are regarded as unlicensed gambling sites by UK authorities and are blocked to UK-based users. In practice, there are routes (involving VPNs and cryptowallets) available to those who wish to bet. This week, the site was offering 20 different markets related to the local and devolved government elections in the UK, including mayoral elections. Unless an awful lot of Americans have developed an unlikely expertise in Britain's local politics, it seems probable that the “informed users” in question are UK-based.

How do prediction markets work in practice?

The principle is similar to sports-betting exchanges, in that prediction markets involve peer-to-peer betting (or “trading” for those who fancy themselves as pros) rather than betting against a bookmaker. On Polymarket and its competitors, unlike a conventional bookmaker, the house doesn't set the odds: it facilitates a peer-to-peer exchange – all bets are binary Yes/ No – and takes a fee.

At the time of writing, Polymarket is offering a market on what the highest temperature will be in London on 7 May. A high temperature of 16˚C is priced at 39 cents, meaning the market of interested punters thinks that there's a 39% chance of that event happening. If you bet Yes – and get it right – you get a dollar, and have made 61 cents profit on each 39 cents you stumped up.

Can you trade your position?

Yes, you can sell out of either winning or losing positions before the event is resolved – and most users do just that. Say you buy Yes at 45%, and it moves to 55% as people think it's becoming more likely. You can cash out early and make a smaller profit of 10 cents. This is an important point in terms of market manipulation and abuse by insiders – you don't need to win your prediction to make money, you simply need to move market sentiment and cash out. On 9 April, for example, the official temperature recorded at Charles de Gaulle airport jumped suddenly before falling back. The spikes were due to suspected tampering with sensors and coincided with suspicious bets on Polymarket, with hundreds of thousands of dollars in play.

Do prediction markets facilitate corruption?

It appears so. According to analysis by the Anti-Corruption Data Collective, a non-profit research and advocacy group, more than half of “long-shot” bets on military action made on Polymarket – defined as wagers of $2,500 or more at odds of 35% or less – are successful. That suspiciously high average win rate (of 52%) compares with just 25% in politics and 14% for all long-shot markets. The day before the US attack on Iran on 28 February, 150 people made trades of at least $1,000 predicting an imminent strike.

The risks go beyond insider trading, says Sam Freedman on Substack. “The more lucrative these markets become, the more predictions about the future will affect decision-making and behaviour” – and the more public trust will erode as misinformation aimed at manipulating markets becomes widespread.

Should you have a punt?

For a bit of fun, maybe. As a way of making money, probably not. The Wall Street Journal finds that 70% of users lose money and that 67% of all profits on Polymarket go to just 0.1% of accounts. “Casual traders are bleeding cash while a small number of sophisticated pros – including trading firms with access to vast streams of data – eat their lunch.”

Separate analysis by Charles Martineau, a professor at Toronto, came up with similar results. His paper concluded that 69% of Polymarket customers lose money, while the top 1% captured three-quarters of the profits. On Kalshi, too, the large majority of users lose money, with 74% of accounts unprofitable over the past month (on the firm's own figures). Good luck beating those odds.

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It makes sense to invest in a company benefiting from a long-term trend; if you can find one profiting from two, so much the better. Best of all is a company exploiting two structural shifts, in the midst of a turnaround, reasonably priced, and with an activist investor taking a large stake in it. Enter Saga, which makes its money from selling services to the over-50s, a fast-growing segment of the British population.

Until recently, the company was a mess, racking up enormous losses. This was partly due to Covid, which greatly reduced consumers' demand for its cruises and holidays. However, even before the pandemic, and for a few years afterwards, Saga grappled with major problems. It had spread itself too thin by becoming involved in too many businesses, with its insurance-underwriting arm in particular bleeding money. This strategic ineptitude, in turn, propelled debt to dangerously high levels.

Saga is gathering strength

However, recently Saga appears to have got its act together. It negotiated a partnership with Ageas, which last summer involved Saga selling off its underwriting arm to the Brussels-based insurer. This raised a large amount of cash, which Saga has used to pay down debt; the company has also restructured its loans so that they are not due until 2031.

The sale also moved Saga away from the capital-intensive and difficult business of judging risk, reducing overall complexity in the business. This allowed it to focus on what it does best: the customer-facing part of the job, including selling Ageas' policies and managing complaints. At the same time, Saga has started to rebuild its travel business, a sector booming as people seek out experiences rather than goods. The group's river and ocean cruises have proved to be extremely popular, with a rising number of forward bookings providing a high degree of security for the business. The fact that only a tiny fraction of Saga's holidays involve trips to the Middle East and Mediterranean (and even those are to the relatively safe countries of Cyprus, Egypt and Turkey) means it should be unaffected by the ongoing global geopolitical tension.

Revenue jumped nearly 75% between 2021 and 2025 and continues to grow at a strong pace, with an 11% increase during the last quarter compared with the same period a year ago. Most importantly, Saga is expected to move into the black in the coming financial year. Yet its valuation seems very reasonable at 16.2 times 2027 earnings.

The share price also boasts impressive momentum, having more than tripled in the past year. It trades above both its 50-day and 200-day moving averages and continues to outperform the rest of the FTSE 250 over one, three and six months. I suggest you go long at the current price of 627p at £4 per 1p, putting the stop loss at 400p. This gives you a total downside of £908.

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A decade ago, advertisements for spread betting firms were ubiquitous. The industry promised simple, tax-free access to financial markets, with a large amount of leverage. However, it quickly became clear that for many people, spread betting is unwise.

After several cases of ordinary investors on the hook for hundreds of thousands of pounds, regulators cracked down, increasing the amount of cash that customers had to pay up front. Shares in spread betting firms plummeted, and took a long time to recover. However, recently the industry has enjoyed a revival.

One big winner from the upswing is IG Group (LSE: IGG). At the start of 2025, the shares were still trading below levels seen in August 2016, but over the past few months, they have surged by 50%. The company has successfully changed its business model to offer a much wider range of products, including traditional broking and investing services for ordinary investors, in addition to complicated, high-margin derivatives for wealthy ones.

What's new at IG Group

IG Group's CEO Breon Corcoran, who joined two years ago from money transfer business WorldRemit and had two years with Paddy Power Betfair under his belt, has also helped cut costs. He has pushed IG into new areas such as products based around the booming area of cryptocurrencies. Even though crypto is now widely deemed a mainstream asset, many investors would still prefer to buy it through a trusted provider, even if the fees are higher.

Meanwhile, with attitudes to gambling becoming much more liberal in the US, IG Group is thinking about expanding there, including a potential move into prediction markets (featuring bets on world events), and is even rumoured to be considering swapping its listing for one in the US, which should boost its share price. All these plans should help the company maintain the track record that saw sales jump by nearly two-thirds between 2020 and 2025. Earnings per share also grew by nearly the same amount during the same period. Margins have been strong, with a consistent return on capital employed (ROCE) of roughly 20%, far above the cost of capital.

IG Group also has a large amount of cash on its balance sheet, with little debt. All of this makes the fact that it trades at only 11.3 times 2027 earnings, with a dividend yield of 3.5%, seem a bargain.

Given these strong prospects, it should be no surprise that IG Group is one of the best performers in the FTSE 100, rising by more than a third in the past six months. What's more, it has continued to outperform the market over the last one and three months, and trades well above both its 50-day and 200-day moving averages. I therefore recommend going long at the current price of 1,444p at £2 per 1p. In that case I would put the stop-loss at 1,000p, giving you a total downside of £888.

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Galliford Try (LSE: GFRD) is a construction business that has managed to get things right. It is a UK-based company that specialises in a wide range of projects, such as the construction of schools and prisons. Its business is divided into three segments: constructing and renovating buildings and facilities; running infrastructure (primarily roads and sewage systems) and providing specialist services (such as maintenance). This set-up comprising three divisions ensures that the group is not too dependent on a single project or one type of service, and avoids the opposite trap of becoming sprawling or unfocused.

The construction sector offers investors a compelling long-term outlook. Most major economies urgently need to repair or replace ageing infrastructure, thereby making up for decades of underinvestment. At the same time, there is a chronic shortage of housing in many countries, especially the UK. But the sector is not without risk. Construction firms are prone to cost overruns, while housebuilders can also be affected by short-term turbulence in the housing market.

Galliford Try is on a buying spree

Galliford has bolstered its business through buying a range of smaller firms in related areas and has plans to expand its efforts in affordable housing. This is a shrewd move as the government has made building more affordable housing a priority. The group's high rate of repeat customers and bulging order book both suggest that its clients are happy with the level of service it is providing, and offer a degree of insulation against an economic downturn. In addition to planning to keep increasing sales, Galliford is also trying to expand its margins through a combination of volume growth, high efficiency and focusing on more profitable work. Galliford's revenue grew by more than two thirds between 2021 and 2025, while it more than doubled its adjusted earnings per share during the same period. At the same time, it has managed to become more efficient when deploying its capital. Its return on capital employed has climbed to well above 20%. This in turn has enabled the company to quadruple its dividend.

Despite this success, the stock still looks attractive from a valuation perspective, trading at a more than reasonable 13.4 times expected 2027 earnings, with a solid dividend yield of 4.1%.

Galliford's operational strength, strong future prospects and favourable valuation have translated into significant market momentum, with the share price up by around half over the past year. The stock has continued to do better than the overall market over the last six months and is also trading above both its 50-day and 200-day moving averages. I would therefore suggest that you go long at the current price of 538p at 5p a share. In that case I would put the stop-loss at 340p, which gives you a total downside of £990.

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Utility companies, who provide basic services such as power, water and gas, are traditionally seen as defensive investments. This is because these goods are considered necessities, which means that demand will remain relatively stable even during periods of economic stress.

On the other hand, during periods of strong economic expansion, these sectors will grow at a much slower rate than the rest of the economy. As a result, their shares tend to be of interest to investors looking for a nice dividend rather than for capital growth. However, there are exceptions, and one of these is the energy company SSE.

The core of SSE’s energy business involves delivering electricity across southern England and Scotland. While this is considered a low-risk, humdrum activity, SSE is doing several things to boost growth, including launching an ambitious £33 billion investment programme.

Part of the money will be spent on increasing its capacity for generating renewable energy. The group believes that the planned transition to a low-carbon economy will continue, resulting in consumers being willing to pay a premium for renewable energy.

SSE is upgrading the network

However, the vast majority (around two-thirds) of SSE’s investment is directed at upgrading its electricity-transmission network. The idea is that this will enable it to make money by connecting the producers of renewable energy to the national grid, where the electricity can be transported to those who need it. Provided SSE can deliver the various infrastructure projects on time and on budget, this should enable it to receive a high return on this investment.

Of course, there is no guarantee that these plans will work, which makes SSE riskier than other UK energy companies. The firm’s strategy depends on energy prices not falling and demand for green energy remaining strong. However, the potential upside is greater too, especially if the demand for electricity from data centres and from other sectors of the green transition (such as electric cars) accelerates the pace at which electricity is required in the overall economy.

So far the strategy seems to be paying off. SSE’s revenue jumped by almost 50% between 2021 and 2025, with normalised earnings per share more than doubling between 2020 and 2025. SSE’s management expects this trend to endure, projecting that earnings per share will increase by 7%-9% a year over the next five years, allowing it to increase its dividend by up to 10% a year over the same period.

Despite these bullish estimates, the stock trades at only 14 times estimated 2027 earnings, with a solid dividend yield of 2.8%.

SSE’s ambitious plans seem to have caught the imagination of investors. The share price has risen 26% over the last six months and 44% over the last year. SSE shares also trade above their 50-day and 200-day moving averages.

I would therefore suggest you go long at the current price of 2,596p at £1 per 1p. In that case, I would put the stop-loss at 1,600p, giving you a total downside of £996.

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Consumer credit company Affirm (NYSE: AFRM) makes a large proportion of its money through buy-now-pay-later (BNPL) payments, whereby people are offered the chance to secure a product upfront and pay the cost of it back (with interest) over an extended period. Supporters argue that BNPL enables people to buy goods or services that they wouldn’t otherwise be able to afford, but critics say the core business model barely differs from traditional consumer credit, with interest rates typically high.

But recently, investors have been rattled by Donald Trump’s call for a law to cap interest rates on credit cards at 10%. Some of the biggest names in finance have seen their stocks fall. And, while a cap on interest rates is unlikely to become law, the proposal could highlight some of the more controversial parts of the personal-finance sector – bad news for firms whose business model is already dubious.

Technically, Trump’s proposed ban wouldn’t directly affect the BNPL industry, and might even boost it in the short run if it becomes harder to borrow using traditional credit cards. However, as Sahm Adrangi of Kerrisdale Capital points out, the BNPL sector would inevitably be caught up in any wider regulatory action or legislation on consumer credit. That could have a disastrous impact on Affirm, which charges an average interest rate in excess of 30%.

Why Affirm is at risk

Even if this doesn’t happen, Affirm’s lending practices are aggressive compared with those of its competitors, with large levels of leverage, a greater reliance on high-risk consumers and longer loan duration. While most BNPL companies make around half their revenue from charging vendors a fee for their services,

Affirm makes only a quarter of its money this way, making it much more dependent on interest income from those purchasing the goods. All this makes the company vulnerable if the slowing US economy leads to even a small uptick in the rates of default on loans to consumers, or if its assumptions about the credit-worthiness of its users prove too optimistic.

Even a slowdown in the rate of growth of the BNPL industry could present difficulty: Affirm’s valuation assumes that both revenues and profits will continue to expand strongly, with the shares trading at 152 times trailing earnings and 6.8 times sales. Although this multiple is expected to decline in subsequent years, the stock still sells for 44 times expected 2027 earnings.

While Affirm’s share price has nearly doubled over the last two years, investors are losing their enthusiasm, as illustrated by the shares’ depreciation over the last six months. They are now trading below their 50-day moving average. I would therefore suggest shorting it at the current price of $72 at £25 per $1. In that case, I would put the stop-loss at $111, which would give you a total downside of £975.

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One of the recurring themes of this column is that some of the best opportunities are provided by firms in industries that aren’t glamorous but are important. One industry that certainly fits the bill is pest control. If you run a restaurant, you’ll know how vital pest control is to your survival, as no one wants to eat in a place with flies in their soup – or worse. Similarly, as emerging markets become richer and people move into cities, their tolerance for pests dwindles. Rentokil Initial (LSE: RTO) is one company perfectly positioned to take advantage.

Founded in the UK just over 100 years ago, Rentokil dominates the UK market and has expanded overseas by acquiring companies in other countries and integrating them into the Rentokil brand. The most notable of these purchases was US company Terminix in 2022, which made Rentokil the largest company in the US, the biggest market in the world. Rentokil is now the world’s biggest pest-control company, operating in 90 countries, including virtually all of the world’s largest cities.

Rentokil Initial has ambitious plans for growth

The global pest-control market is expected to grow by 5%-6% a year over the next few years, and Rentokil has ambitious plans for giving its growth a further fillip. Firstly, it wants to expand into the countries where it doesn’t have a presence. It is also investing in digital technology to make its operations more effective and to keep costs down.

The group also plans to expand its hygiene and washrooms business, which currently accounts for 20% of its revenue. At the same time, the sale of its workwear business to HIG Capital in October 2025 will not only make it a tidy sum of money but will also help keep the company streamlined and focused. Rentokil has seen its revenue double between 2019 and 2024, while its earnings per share have gone up by nearly two-thirds during the same period (and are expected to keep growing rapidly over the next few years). The company makes a solid 7% return on capital employed, a key gauge of profitability, and boasts a double-digit operating margin, which has helped it increase its dividend sixfold from 2019, while still investing in the business and keeping debt at manageable levels. All this more than justifies the fact that it trades at 19.4 times 2026 earnings; the stock also offers a dividend yield of 2.2%. In addition to strong fundamentals,

Rentokil’s stock has plenty of momentum. Over the second half of 2025, Rentokil was one of the stars of the FTSE 100, rising 38%. As a result, the shares trade well above their 50 and 200-day moving averages. With several brokers, including Morgan Stanley, recently upgrading Rentokil, I suggest that you buy it at the current price of 471p at £6 per 1p. In that case, I would put the stop-loss at 316p, which would give you a total downside of £930.

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2025 has been a solid year for both the S&P 500 and the FTSE 100, which have risen about 17% each, with the British index edging ahead slightly. My trading tips put in a mixed performance, with some big losses but also some big wins.

Trading tips carried forward in 2026

I began 2025 with eight tips: six longs (Marks & Spencer, Harworth, United Airlines, Hilton Food Group, Trainline and Domino’s Pizza Group) and two short-selling tips (Trump Media & Technology Group and Ocado).

As usual, all of them were closed during this year, but while it’s normal for some of my ongoing positions to be closed out early in the year, it took a little longer this time. However, in the magazine issue 1252, no fewer than three long positions – those in United Airlines, Marks & Spencer and online ticketing firm Trainline – were closed out. While the United Airlines position made a profit of £819, I lost £196 and £774 on M&S and Trainline, respectively.

In magazine issue 1260, I closed out my short position in Trump Media & Technology Group, which runs Truth Social (President Donald Trump’s social media network), making profits of £977. In magazine issue 1264, my long positions in Domino’s Pizza Group, which is the UK master franchise of the pizza-delivery chain, and Harworth (a land and property regeneration specialist) were closed at losses of £204 and £280 respectively. Finally, in magazine issue 1270, I closed my long position in food packager Hilton Food Group at a loss of £144. I also covered my short in online supermarket Ocado at 1270p, at a profit of £300.

Overall, five out of my eight tips proved unprofitable. While I made a net income of £498, this was worse than the position at the end of last year when they were making net profits of £2,664.

Trading tips made and closed in 2025

I made 18 tips (or 19, counting the pairs trade in magazine issue 1282 as separate tips) in 2025. Nine were closed during the year. In magazine issue 1243 I suggested shorting buy-now-pay-later company Sezzle. However, shortly afterwards the price surged, and I closed the position in magazine issue 1248 with a loss of £900. Shorting telecoms company Lumen Technologies (magazine issue 1245) proved a slightly better bet. I closed it in magazine issue 1280 at a profit of £66.

Sadly, drone manufacturer Red Cat (magazine issue 1248) was another loser, ending up £600 in the red when I closed the bet in 1282. My long tip on payments firm Corpay (magazine issue 1250) ended £456 in the red when it was closed in 1277. Quantum computing group IonQ (magazine issue 1252) left me £799 in the red when I had to cover it in 1268. African e-commerce company Jumia (magazine issue 1254) proved to be a mistake, too; it was closed in 1268 at a loss of £780. Soft drinks producer AG Barr, the maker of Irn Bru (magazine issue 1258), bucked the trend, as I only lost £40 when it was closed in 1282. But vending-machine maker ME Group (magazine issue 1260) was another misstep, costing £517 when it was closed in 1286.

My advice to go long on computer games company Electronic Arts (magazine issue 1268) proved timely, and I closed it in magazine issue 1280 after it was bought by a consortium, making a profit of £893. Overall, my closed tips produced a net loss of £3,133. While not ideal, this is what you’d expect given that my strategy is to close poorly performing trades quickly.

Ongoing tips

The good news is that my ongoing tips are powering along. Three of the six long bets (Airtel Africa, First Solar and Barclays) are in the black. Telecoms and mobile-payments group Airtel Africa, which we returned to in magazine issue 1264, is the tip of the year, making a profit of £2,160. First Solar (1272), a manufacturer of solar panels, is £804 in the black and Barclays is making a profit of £504. Home-furnishings retailer Dunelm is losing £104, food-service distributor Sysco £132 and bitcoin £413. Nevertheless, the gains far outweigh the losses for a net profit of £2,829.

My four current shorts (Aurora Innovation, Faraday Future Intelligent Electric, Strategy and CoreWeave) are also doing well, with each of them in the black. Self-driving freight truck specialist Aurora Innovation is making me a profit of £362. Electric-vehicle maker Faraday Future Intelligent Electric is £248 in the black. Bitcoin treasury company Strategy is making £168. Data-centre firm CoreWeave is making £396. The short tips are making combined profits of £1,691.

All my ongoing positions are making combined profits of £4,520. I suggest that you raise the stop-losses on Airtel Africa to 255p (from 250p); Dunelm Group to 815p (810p); Sysco to $66 ($65); First Solar to $205 ($200), Barclays to 330p (325p) and bitcoin to $60,000 ($55,000).

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Three years ago, OpenAI launched ChatGPT, sparking a surge of interest in AI and sending the stocks of many of the world’s largest technology companies soaring. However, in addition to the likes of Microsoft and Nvidia, shares in many smaller companies have also rocketed thanks to their role in building the infrastructure required for the adoption of AI. However, investors are starting to wonder whether all this investment in the new technology is likely to prove profitable.

Their doubts are having a knock-on effect on some of the more contentious AI-infrastructure plays, such as Coreweave (Nasdaq: CRWV). Coreweave makes its money from building data centres full of high-end computer hardware that provide the vast amount of computing power needed to train firms’ AI models; it leases the data centres to companies willing to pay for them. So far, this seems to have worked well, with explosive demand causing sales to rocket from $15.8 million in 2022 to an estimated $5.1 billion this year, a figure expected to more than double again to $11.9 billion by the end of 2026.

Coreweave's business model is unsustainable

However, if you look more closely, it becomes clear that the business model is unsustainable. Running data centres is a business that rewards scale, says Sahm Adrangi of Kerrisdale Capital, which is why it is dominated by large cloud-computing providers such as Amazon Web Services, Microsoft Azure, Google Cloud, and Oracle.

Coreweave’s relatively small size means that to compete with these players, it has had to offer large discounts and slash profit margins. What’s more, renting computer power can be a risky business because Moore’s Law means that most computer hardware becomes obsolete within a few years.

Andrangi argues that even in the best-case scenario, where demand for computing power continues to expand, Coreweave will struggle to make enough money to recoup the upfront costs of building the data centres, let alone make a decent return on investors’ money. If demand falters, the hardware becomes obsolete more quickly than planned, or firms start building their own data centres, then Coreweave could be in serious trouble, especially as it has taken on huge debts to finance its investment. Other red flags include the fact that the key insiders have started selling their shares in the company.

With Coreweave currently valued at around 10 times current sales, investors’ expectations for its future success are extremely high. And the market has been starting to get cold feet recently, with the stock falling by nearly a quarter in the last month alone. It is now down more than 50% from its highs this summer. This suggests that it is a good time to go short at the current price of $88, at £22 per $1. Given tech shares’ volatility, I suggest you cover your position if the price hits $132, which gives you a total possible downside of £968.

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Technological improvements have unrecognisably changed much of the global economy in the last 30 years. But one area that remained steadfastly stuck in the past is one of the most fundamental parts of any economy – money. In recent years, however, a financial revolution began. Cryptocurrencies have been with us now for 16 years, but they bring with them a whole host of complexities that only the faithful are willing to overlook. In most cryptocurrencies acolytes lies the spirit of the rebel – somebody who wishes to sit outside the system with their wealth independent of oversight and away from traditional assets. Inevitably, this has roused suspicion that the main benefit of cryptocurrencies is as a cover for nefarious activities.

A different type of cryptocurrency has recently come to light – stablecoins. Where Bitcoin and similar digital currencies aim at tearing down the financial order, stablecoins’ purpose is to improve it. These digital assets, backed by real-world currency, are beginning to act as an important bridge between the traditional financial system and the burgeoning world of decentralised finance. At the forefront of this movement is Circle (NYSE: CRCL), a US-listed financial technology (fintech) business that is positioning itself to be a central player in this new global landscape.

What are cryptocurrencies?

Cryptocurrencies are essentially strings of data that represent value. The key characteristic is that they are fungible, meaning that any one unit is interchangeable with any other, just as a pound coin is equal in value and function to any other pound coin. The magic that makes these digital assets secure lies in the blockchain, a development that became possible with the internet.

A blockchain is a decentralised digital ledger, a record of all transactions, that is maintained across a vast network of computers rather than being held by a single central authority, such as a bank. To understand its power, consider the traditional system of double-entry book-keeping. When you send money to someone, both you and the recipient keep a record of the transaction. A bank acts as a trusted, private third party to ensure that both records match.

The blockchain introduces a different third party outside of the private banking system. The radical idea was that the confirming party in transactions was to be a public record, open to be seen and verified by anyone. Every transaction is recorded in a “block” of data and, once that block is verified by the network, it is added to a permanent, immutable chain of previous blocks – thus creating a blockchain. This open, unchangeable record is what makes the assets on a blockchain truly unique and resistant to fraud, as it removes the need for a single, central authority. Imagine a contract between two parties. Then imagine that this contract only becomes valid once the whole world can see it and it thus only becomes legal if everyone agrees. That is the essence of the blockchain.

The difference is that a contract is a unique, non-fungible asset. Because cryptocurrencies are fungible, they can be used to facilitate secure, peer-to-peer transactions without a middleman such as a bank. That is the fundamental idea behind the original cryptocurrencies such as Bitcoin.

The rise of stablecoins

The older digital currencies grabbed headlines due to their volatile price swings and the vast wealth they created for the mavericks who saw the potential early. Stablecoins may prove a more practical innovation. As the name suggests, they are digital assets specifically designed to maintain a stable value, and their value is typically pegged to a fiat currency such as the US dollar or the euro. There are different types of stablecoins, each with a different mechanism for maintaining their peg.

The most common and trusted type is the fiat-backed stablecoin, such as Circle’s USDC. The mechanism is simple: for every digital token created, an equivalent amount of a real-world asset is held in a reserve account. This backing provides trust and stability, ensuring the stablecoin can always be redeemed for its real-world dollar equivalent. Crypto-collateralised stablecoins, such as MakerDAO’s DAI, are backed by volatile cryptocurrencies and use extra collateral to manage risk. Algorithmic stablecoins, such as the failed TerraUSD, rely on complex programs to maintain their value, but can collapse. The recent public failures of algorithmic coins have highlighted the importance of transparent, asset-backed models such as Circle’s.

Circle, formerly Circle Internet Financial, is a prominent US-listed fintech business that has made this model its core mission. Its flagship product is the USD Coin (USDC), but it has since expanded to include the EUR Coin (EURC). The company was founded in 2013 and initially focused on Bitcoin payments before making a strategic pivot to stablecoins. Circle’s history is defined by its commitment to working within the existing financial and regulatory system. From its early days, it actively pursued regulatory approval around the world. It secured key licences in New York, the UK and Singapore.

This dedication to compliance has set it apart. By actively seeking regulatory clarity from the outset, Circle has positioned itself as a trusted partner for financial institutions and businesses. Unlike many of its competitors, rather than trying to replace the financial world order, it is trying to fix it. This is in stark contrast to its main rival, Tether and its USDT coin. Historically, Tether has operated with less transparency and a more decentralised approach, often drawing intense regulatory scrutiny. Tether remains the larger stablecoin by value of currency in circulation, but Circle’s strong focus on trust and following the rules has helped it grow quickly. Because of this, many large investors and businesses see it as a safe and reliable way to enter the world of digital assets.

Circle's new financial infrastructure

Beyond simply providing a digital dollar or euro, Circle is building a new financial infrastructure. This is where the concepts of the off- and on-ramp become critical. The on-ramp is the process of converting traditional currency into a digital one, such as moving dollars from your bank account to a crypto exchange to buy USDC. The off-ramp is the reverse. Currently, these two steps can be a barrier, often involving fees and delays. But the true power of a stablecoin system could lie in a frictionless future where on-ramping and off-ramping are less frequent. Once an individual or business holds their currency in a stablecoin such as USDC, they can transfer it to anyone else in the system instantly, at nearly no cost, and at any time of day. This “always-on” payment rail will bypass the traditional banking system and its associated fees.

This is already happening – in international remittances, for example, where a USDC transfer can take seconds and cost fractions of a penny. This stands in contrast to the traditional system, which can cost upwards of £20 and take several days. In a world of mass adoption, one could even receive a salary in stablecoins, then use them to pay for groceries or bills, all within the same digital system, unlocking a cheap, frictionless, financial life. Circle has actively pursued partnerships with major financial players such as Visa and Fiserv to turn this vision into a reality. These collaborations will allow traditional finance firms to integrate Circle’s technology, helping to bridge the gap and accelerate the adoption of USDC.

Most of Circle’s income comes from the interest it earns on the money that backs its stablecoins. Each USDC and EURC is supported by cash and short-term government bonds, which together provide a steady source of earnings. How much Circle makes depends mainly on two things: current interest rates and how many of its stablecoins are in use. It’s an attractive model, but not without its risks. In a high-interest-rate environment, the firm’s profitability soars. In a rate-cutting world, however, Circle’s revenue from this source would be directly affected.

Acknowledging this dependency, Circle is diversifying its income by offering a suite of software services and customisable interfaces that help businesses integrate stablecoins into their own operations. This includes its Circle Payments Network (CPN), which provides a transaction-based revenue stream that is less sensitive to interest-rate fluctuations. At present, these are small parts of Circle’s business, but they have the potential to become more important as the firm grows.

What the future holds with Circle

Circle’s strategy of working with regulators positions it to be centrally important to an emerging global financial framework. This is no longer a theoretical possibility, especially given the recent passage of the Guiding and Establishing National Innovation for US Stablecoins, or GENIUS, Act. This new US law is the first to set clear national rules for stablecoins. It says that only approved companies can issue them and that they must follow strict rules to protect users and remain transparent. Every stablecoin must be backed one-for-one with safe assets such as cash or short-term US government bonds. Circle has followed this approach from the start and proves it through public reports. The GENIUS Act is a big deal for a company like Circle. Many other stablecoin makers will find it hard to follow these strict new rules, but Circle’s business model was already set up to meet them. This new law provides the clear rules that banks, tech companies and large businesses need. They can now use stablecoins with confidence because the law removes the legal doubts that stopped widespread use before. Additionally, the Act bans stablecoins that don’t follow the rules and sets clear guidelines for foreign companies. This will probably make Circle’s USDC even stronger as a trusted, regulated choice in the market. It punishes companies that don’t meet this new “gold standard”.

By building a trusted, compliant infrastructure, Circle is not simply creating a new cryptocurrency. It is also helping to lay the groundwork for a stablecoin-powered financial system that could one day become the backbone of global commerce. In the process, it has the potential to make the company enormously profitable. The traditional banking world is on notice: the future of finance is here, and it is built on a foundation of stable, digital money.

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At the heart of the global financial markets are the exchanges, such as the London Stock Exchange, the New York Stock Exchange, and the Nasdaq. The function they fulfil in the market is straightforward, yet vital. Exchanges match buyers and sellers and publish the data on the trades. They’re also responsible for bringing assets to market, which can range from shares in public companies to contracts on commodities and interest rates. Most exchanges don’t own the companies that are listed – they only facilitate buying and selling by market participants and take a cut for the privilege.

The CME Group (Nasdaq: CME) is a little different. It is the largest futures and options exchange in the world and, unlike other exchanges, it owns the futures contracts traded on its platforms. These range from the E-Mini S&P 500 contract to interest-rate futures, crude oil, cattle and even bitcoin. For example, more than one million contracts of WTI oil futures and options trade daily, with approximately four million contracts of open interest on the exchange. In this case, one contract is equivalent to 1,000 barrels of oil. The most liquid contract on the exchange, and indeed in the world, is the Three-Month SOFR Futures contract, used for hedging interest-rate exposure.

CME Group has long-term potential

The CME Group’s edge lies in its market position. Liquidity begets liquidity – the more traders there are in the market, the easier and cheaper it is to buy and sell. Along with the advantage of scale, the CME Group’s position in the market for debt futures means it’s well-positioned to capitalise on ballooning government deficits around the world.

Where the company lacks exposure, however, is in the equity futures market. Of all the major exchanges, it has one of the lowest levels of exposure to equity markets. Overall, 18% of revenue in 2024 came from equity contracts, compared with 27% for interest rates, 13% for energy and 10% for agricultural commodities.

The company’s growth over the past five years provides a good indication of its long-term potential. The number of contracts traded across its platforms has jumped from around 18 million a day on average in the first quarter of 2019 to around 30 million. Meanwhile, the revenue per contract has steadily increased. In equities, revenue per contract is expected to rise from $0.529 in 2022 to $0.635 in 2026, according to UBS’s estimates. The overall group average revenue per contract is expected to have risen from $0.643 to $0.689 by 2026.

That might not seem like much on a contract-by-contract basis, but when CME facilitates the trade of 30 million contracts a day, revenue of $0.689 per deal adds up. The group’s Ebitda margin has risen from 67.4% to 70.3% since 2022.

Trading is just part of its offering. CME Group also sells market data. This is becoming an increasingly important part of all global exchanges. LSEG, which owns the London Stock Exchange, generates only 3% of its revenue from trading. A total of 12% of the CME Group’s revenue comes from the sale of data, which is generally far more profitable than trading activity. In the third quarter, CME’s revenue from market data reached a record high, up 14% due to expanding demand, particularly in the Asia-Pacific and Europe, the Middle East, and Africa regions.

CME Group expansion

Steady, but profitable growth has been the name of the game for CME. However, it’s now capitalising on two trends to accelerate expansion. The first is crypto. The group has launched a range of crypto contracts and in the third quarter it facilitated the trading of 340,000 contracts per day, up by more than 225% year-on-year. The group plans to accelerate this growth with the introduction of 24-hour trading.

The second is increased trading in the retail sector. Retail investors have surged into the US futures and options markets since the pandemic, aided by trading apps and easy leverage. Management is leaning into this expanding market. It recently signed an agreement with sports-betting platform FanDuel, which will provide access to approximately 13 million potential new retail accounts.

The exchange has also launched products to facilitate trading in smaller volumes, such as one-ounce gold futures as well as more flexible products, such as weekly agricultural options. As well as these levers, the group is also a leader in AI and machine learning. It’s been using AI to launch new products and reduce settlement and trading times, as well as administration.

CME Group's income kicker

With multiple routes to growth over the coming years, CME Group has all the hallmarks of a growth play. But unusually for US growth stocks, it also has an income kicker. The group pays a regular dividend, supplemented by special dividends. Last year, it paid out $10.80 per share and this year it’s paid out four regular quarterly dividends totalling $5 per share, with the final special dividend yet to be announced (last year, the final payout was $5.80). It’s not inconceivable that the total dividend in 2025 could exceed $11 per share, a yield of 4%. With net cash on the balance sheet (net of regulatory assets) and an Ebitda ratio in the 70s, CME has the capacity to maintain this payout.

Based on the current growth trajectory, analysts at UBS have the stock trading at about 19 times 2029 earnings. That’s not demanding at all for a business that’s consistently registered steady, high-margin growth and has a record of returning cash to investors. CME appears to be an attractive hedge against market volatility and uncertainty with an added growth bonus in the form of its exposure to crypto contracts.

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After World War II, America and its allies put in place a set of alliances, institutions and power structures to rebuild war-ravaged countries, create geopolitical stability and generate global economic growth. This post-war order has endured – with one important change – for much of the following eight decades.

The fall of the Berlin Wall and the dissolution of the Soviet Union seemingly marked the end of any alternative to Western capitalism and liberal democracy as the main global economic system. However, in recent years, it has become increasingly obvious that the ties holding this US-dominated system together are fraying and are likely to break.

We are heading into a new world that is likely to be more unstable. In a symbol of this change, on 5 September this year, US president Donald Trump signed an executive order renaming the Department of Defence as the Department of War. This restores the name that it carried from 1789 until 1947 and points to the rising risks of conflict in the years ahead.

So how should investors position themselves for what comes next? What areas that are currently under-represented in most portfolios should they consider for diversification and protection?

Rivalry and conflict between the US and China

The main question is how the shift from a single superpower to two contending nations – the US and China – will affect global supply, demand and the efficiencies of comparative advantage. Free trade has generated huge gains since the end of the Second World War, and even more so since the end of the Cold War. This is now clearly under threat.

With the end of the post-war order comes the new “Great Game”. This name was originally given to the struggle between Britain and Russia for influence in Central Asia (Afghanistan and Persia). This time, the strategic rivalry and political conflict is between the US and China. Paradoxically, it is America that is now pursuing a more inward-looking strategy under Trump’s Make America Great Again (MAGA) banner, while China aims to build economic and political alliances through its Belt and Road (BRI) and Global Development Initiative (GDI) projects.

While America strives to bring its manufacturing base back onshore, Europe is now having to divert budgets from social welfare to rearmament. Both are now in stiff competition with China to electrify the planet and build digital infrastructures. This will inevitably lead to global competition for resources across energy, metals and critical minerals.

This is leading the two superpowers to weaponise their core strategic advantages. For America, this is the US dollar, still the world’s global reserve currency. For China, it is a stranglehold on rare earth elements and critical minerals.

China needs an alternative to the dollar

Freezing and confiscation of assets and denial of access to global payments systems is forcing non-US aligned countries to look for an alternative store of wealth and means of exchange. Herein lies the potential significance of the Brics+, the informal name for the original group of five key emerging-market powers – Brazil, Russia, India, China, South Africa – plus other countries that have begun joining them for summits and policy coordination. Some see this group as a counterpart to the G7 group of developed economies. Initiatives by the Brics+ members so far include work on a development bank, central-bank cooperation and an international payment messaging system.

Any alternative to the dollar looks increasingly likely to be a form of tokenised, asset-backed digital currency. This explains why many central banks closely aligned with the Brics+ nations have been large buyers of gold and other precious metals.

If the creation of a new currency system seems far-fetched, it is worth a quick review of the genesis of the post-war order: the Bretton Woods Agreement of 1944. China is a great student of history, and this agreement provides an template for how new world orders are created. While World War II was still raging, more than 700 delegates from 44 countries met at Bretton Woods in New Hampshire in the US to work on a new global monetary system. The goal was to create a globally efficient foreign exchange market, prevent competitive currency devaluations and promote global economic growth.

John Maynard Keynes, one of the principal economists at the meeting, proposed creating a new international reserve currency called the “bancor” and setting up a global central bank called the “Clearing Union”. However, these proposals were eventually watered down by the US Treasury in favour of a more prominent role for the US dollar, whereby the dollar would be pegged to the price of gold, and other participating currencies would be pegged to the dollar. The agreement was fully implemented in 1958, pegging the US dollar to gold at $35 per ounce.

This system functioned until the early 1970s when it became evident that US gold reserves were not adequate to sustain the peg. This caused a run on gold, forcing first a temporary suspension of the dollar’s convertibility into gold followed by complete collapse of the agreement in 1973. US president Richard Nixon also imposed a 10% tariff on all dutiable imports to force its major trading partners to adjust their currencies upwards and trade barriers downwards. Does this sound familiar?

China has already taken the strategic initiative to convene the Brics+ group of nations. It has established the Shanghai Gold Exchange – and associated physical storage – and now holds a significant percentage of its reserves in gold. It has shown little desire to replace the dollar with its own currency – internalisation of the renminbi would erode the ability to operate capital controls – but it and its allies need an alternative to the dollar.

Given China’s embrace of technology and advanced domestic digital-currency adoption, it does not feel far-fetched to envisage it launching a Bretton Woods-style gold-backed digital currency for those unable or unwilling to access the US dollar system. Crypto tokenisation is the vehicle, not the asset.

China's control of strategic resources

China’s strongest bargaining chip lies in its control of rare-earth elements (which are used in magnets, electrification, lasers and optical devices, catalysts and emission controls and radar/guidance systems), as well as critical minerals, that have broader energy, industrial and defence applications.

China has this control because, while the West focused on the comparative advantage of outsourcing its production to countries with lowest costs, China focused on building an end-to-end supply chain comprised of exploration, mining, refining and industrial manufacturing. With its looser environmental controls, it has come to dominate the global supply of these critical minerals.

In the tit-for-tat game of tariffs and sanctions, China is able to leverage its position in the one area where the US is completely vulnerable. So just as China and its allies have no alternative but to develop a competitor to the US dollar as a store of wealth and means of exchange, the US and Europe now see they have no choice but to develop alternative sources for mining and processing capacity to break this reliance. Exacerbating the situation, America’s prioritisation of its own MAGA agenda over historical alliances has left Europe and other previously US-aligned countries to build their own rather than collective resources.

If investors believe the post-war order is irretrievably compromised, they should consider investments that give exposure to these themes. Gold and precious metals for hard assets. Tokenisation and chips to enable digitalisation. Energy and power generation, rare earth elements and critical minerals, which will be in demand as both sides try to secure supply chains. And US and European defence stocks as the West joins in the new arms race.

Investors have many ways to access these ideas, including individual stocks, thematic exchange-traded funds (ETFs) or exchange-traded commodities (ETCs) that hold physical metals. Listed commodity futures and options are also becoming increasingly accessible, as major exchanges such as the Chicago Mercantile Exchange (CME) roll out mini and even micro contracts, which are 1/10 or 1/100 of the size of standard contracts and require less up-front capital. Such instruments are only suitable for experienced investors, but they offer a way to quickly add hedges or speculative positions to a portfolio – something that will become more valuable in a fast-changing world.

James Proudlock is managing director of OptionsDesk.

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I repeatedly come back to this subject because I think it is one of the most important yet overlooked issues in global finance. The geopolitical ramifications are enormous. Something that the Trump administration appears to understand in a way that previous administrations didn’t is this: it doesn’t matter if you issue the global reserve currency; if you don’t make anything, when the tide goes out, you are going to be caught swimming naked.

During Covid, the dangers of excessive dependence on China and its supply chains for critical or strategic products became apparent. It became clear again during the Ukraine war. Russia managed to manufacture munitions much faster than Nato.

Reshoring US industry is not something that can be done overnight. It is going to take years, if not decades – almost as long as it took to unwind in the first place. But the Trump administration is at least trying to kick-start the process with tariffs, a weaker dollar and, more subtly, the managed decline of the US dollar as global reserve currency.

As a result, neutral gold’s role as a global reserve asset is returning to prominence. History’s “golden” rule will soon apply again: he who has the gold makes the rules.

My argument is that China has considerably more than the 2,300 tonnes it says it does. That figure constitutes the world’s fifth-largest reserve of the yellow metal. The central banks of the US, Germany, Italy and France are the top four holders of gold reserves, with respective 8,133, 3,350, 2,451 and 2,437 tonnes.

How much gold does China have?

The People’s Bank of China (PBOC) is China’s main custodian, but other state entities, such as the China Investment Corporation (the sovereign wealth fund), the State Administration of Foreign Exchange and the Army, also own gold. In fact, having other state bodies hold gold is one of the means by which China is able to understate its reserves.

I’m going to use a slightly more conservative methodology, which means I will arrive at a lower estimate. Even so, the numbers will shock you. Remember that China is the world’s largest importer of gold, the largest consumer and the largest producer (in 2008 its output eclipsed South Africa’s). I am going to use round numbers, as they are more digestible, and when there is a spread (between 500 and 1,000 tonnes, say), I will take the middle number: 750.

It is impossible to know just how much gold China has imported, because so many transactions are private ones, particularly those that go through London, Switzerland or Dubai. Gold transactions in Hong Kong are more transparent.

However, most, although not all, of the gold that goes to China goes through the Shanghai Gold Exchange (SGE), which opened in 2007. Withdrawals from the SGE between 2007 and mid-2025 total 29,500-30,000 tonnes, based on aggregated data from the Shanghai Gold Exchange (SGE) and World Gold Council (WGC) reports. I’m going to overlook gold that made its way to China prior to 2007, although it’s quite easy to make the argument that this amounts to several thousand tonnes.

The SGE is just a flow metric, it should be noted. It does not represent total consumption. Some of the gold passing through will have been double-counted, either as a result of reselling and recycling, or because of China’s booming money-laundering business and the circular trade with Hong Kong. Estimates for double-counting range from 10%-30%. Let’s take the middle 20% figure (6,000 tonnes), and that leaves us with 23,250 tonnes of SGE gold.

As for the undisclosed gold, consider that the PBOC likes 400-ounce bars, as traded in London. These do not trade on the SGE, which uses smaller kilogram bars and 3kg and 12.5kg ingots. (400oz is about 11.3kg.)

So London imports will not go through the SGE, unless re-smelted, and are therefore counted in addition to the numbers above. Analysts mostly concur that while reported imports via London, Switzerland and Dubai total between 3,500 and 4,500 tonnes, another 3,000 tonnes (mostly post-2009, accelerating since 2022) have gone unreported. Add the 3,000 tonnes to the 23,250 of SGE gold and our total is now 26,250 tonnes.

Gold mining in China

Around 55% of Chinese gold production is state-owned, and we know from geological records that this century, China has mined roughly 7,500 tonnes.

Between 70% and 80% of Chinese production is sold through the Shanghai Gold Exchange, so we have already counted that. The other 20%-30% goes to the state. Using estimates from the mid-range, 25% of those 7,500 tonnes (1,875 tonnes) has gone to the state. The rest has been sold through the SGE. Add 1,875 tonnes to the total, and we reach a figure of 28,125 tonnes.

By the way, I have not included overseas Chinese gold production, of which there is a lot. Some of this gold is sold on international markets and never actually reaches China. But what does reach China is sold through the SGE and has therefore already been counted. Finally, we have to add in gold held in China, whether as bullion or jewellery, prior to 2000. The WGC estimates a figure of 2,500 tonnes in privately held jewellery. Added to domestic mining and official reserves, you get a figure of around 4,000 tonnes. This brings our grand total to 32,125 tonnes.

Demand for gold

Previously, I have argued that 50% of that gold would go to the state. That would mean roughly 16,000 tonnes – almost twice as much as the US’s reported 8,100 tonnes! Let me propose another methodology.

It stems from my conversation with Konstantin Kisin in the Triggernometry podcast a fortnight ago. Last year, investors and central banks comprised a respective 25% and 23% of overall demand for gold; the figures for jewellery and industry are 47% and 6%.

These figures of course change from year to year, with demand from investors and central banks being the big variables. But if we assume demand from China roughly matches global demand, that would mean that of the 32,125 tonnes, roughly 15,100 tonnes is jewellery; 8,030 is now bullion held by investors; 1,930 tonnes went into manufacturing; and the Chinese government has 7,400 tonnes.

This assumes Chinese gold has been allocated over the last 25 years according to the global habits of last year, which is almost certainly a bogus assumption. China is such a big manufacturer that demand from the Chinese industry may well be higher than 6%.

It’s also easy to argue that because the Chinese people like gold so much, and the state has been encouraging them to invest since 2007, that both Chinese jewellery and investment demand is higher than 47% and 25% respectively.

Similarly, because of dedollarisation, demand from the PBOC could be higher than 23%. In any case, I have been transparent about my methodology.

You can make up your own minds. The upshot is that China’s stated reserves of 2,300 tonnes are a gross underestimate.

In a way, it’s actually better for investors if China has less gold, because it means they have more buying to do, and that should help drive prices higher. Meanwhile, the Middle Kingdom’s stated 2,300 tonnes only account for 7% of its $3.4 trillion of overall reserves. To get above 70% and match the allocation ratios of the US, Germany, France and Italy, at $4,200/oz gold, it would need something like 18,000 tonnes. That’s a lot of buying yet to come, in other words.

If you take my assumption from previous years (that 50% of the gold that has gone to China via imports or production went to the state), then China has 16,000 tonnes of gold. That is twice America’s reported holdings of 8,133 tonnes.

This comes just as gold, at current prices, accounts for 30% of global foreign-exchange holdings, according to Deutsche Bank. The US dollar, meanwhile, makes up 40%. The euro’s proportion lies below 20%. This is quite the move: gold’s share was just 20% at the beginning of the year.

At $5,800 – a 33% rise from today’s price of $4,340 – gold overtakes the US dollar to become central banks’ largest holding. That assumes banks don’t buy any more, of course, when they will. A recent survey by the WGC found that 43% of central banks plan to increase their holdings over the next year, while 95% of reserve managers expected global central-bank holdings to rise over the next 12 months.

I was looking for parity between the dollar and gold in terms of reserve holdings at some stage in the next decade. We could see it within the next six months on current trajectories.

Why is China keeping its gold a secret?

And gold isn’t money, according to former Federal Reserve chairman Ben Bernanke. So why does China understate its reserves? China is still in accumulation mode. While it is buying, it wants the price low.

It certainly doesn’t want to cause it to spike.

If China were suddenly to say that it actually has 7,400 or 16,000 tonnes, rather than 2,300, it would send the gold price rocketing. More significantly, it risks sending the dollar into a plunge. China has $3.4 trillion-worth of dollars. It wants to preserve their value, presumably.

In short, coming clean on gold holdings would create enormous financial upheaval. It has that card, ready to play, should it ever need to, should it ever get into conflict with the US, for example. Money is the first thing that gets weaponised in war.

But for now it doesn’t need to. China is surely happy growing as it is, making things and selling them to the rest of the world, thus ensuring that the rest of the world becomes dependent on it. Why rock the boat? It’s on to a good thing after all.

“We must not shine too brightly,” as Deng Xiaoping is once supposed to have said. I understand that what he actually said amounted to “keep a low profile”, or “don’t draw attention to yourself”. Same difference. China doesn’t want to rock the boat, particularly while it’s still accumulating gold.

This is quite a shift that is taking place, and it is happening quickly. The upshot? You really want to own gold, overbought or not.

Dominic Frisby writes the investment newsletter The Flying Frisby (theflyingfrisby.com). His latest book is The Secret History of Gold: Myth, Money, Politics & Power, published by Penguin Business and available from all good bookshops.

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Sometimes an idea is so catchy that it doesn’t matter whether it’s true. The “debasement trade” – the claim that investors are starting to price in a severe surge in inflation that will erode the value of money – is a good example. We see it everywhere in headlines at the moment. Yet it’s impossible to see much evidence in markets. To begin with, we have to agree on what is being debased. The US dollar is the favoured target. However, if you look at the dollar versus other major currencies, there is no sign of this happening. Yes, it is down since the start of the year, and still seems more likely to fall than rise against over the next few years if foreign sentiment towards US assets continues to cool. But it has been stable since June. We’re not even seeing weakness now, let alone debasement.

Maybe the debasement is in all fiat currencies, so they won’t fall against each other because they are all equally bad. Instead, they will weaken against real assets. The surge in gold and other precious metals seems to support this. Yet stocks are also doing well, even though they typically struggle in high inflation (they often rise during hyperinflation, but that is a different scenario). More likely, traders are latching onto gold because it’s been going up: record flows into gold exchange-traded funds (ETFs) support this idea. A few months ago, I noted that we were not seeing these flows – now it has changed.

Bond yields and the debasement trade

If markets were genuinely becoming much more worried about inflation, we’d expect to see it in bond yields. While many yields have risen this year – especially longer-term government bonds – this always felt more like markets were pricing long-term uncertainty about government policy and finances, not specifically forecasting inflation. It continues to look that way.

Yields have mostly come down in the last few weeks. Even more significantly, inflation breakevens – the difference between the yields on a conventional bond and an inflation-linked one of the same maturity – are not rising (see above). Breakevens are not a good forecast of inflation, but if markets are functioning normally, they will express fear of inflation through nominal yields that rise faster than inflation-linked ones and thus through widening breakevens.

Of course, we may well see high inflation if governments run large deficits while forcing central banks to cut rates and control yields. But it’s wrong to claim the market’s watchdogs are sounding the alarm. They are clearly not – yet.

What to do if inflation surges will be on the agenda at Turmoil, Tariffs and Trump 2.0, the MoneyWeek Wealth Summit, on Friday, 7 November in London. Our morning keynote speaker, Dylan Grice, will discuss the difficulties of investing in this “high-signal” environment, while our multi-asset panel of Charlie Morris (ByteTree), Charlotte Yonge (Troy), Frank Ducomble (RIT) and Jasmine Yeo (Ruffer) will share ideas on how to hedge the risks. See moneyweekwealthsummit.co.uk for details.

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Rob Granieri is “the last founder standing” at Jane Street – “the black-box money machine” currently “minting Wall Street records”, says Bloomberg. But he’s almost impossible to pin down – guarding his “low-key stature” so tightly that he often goes unrecognised, even in his own company, where he officially has no title. His profile in the employee directory stands out for its missing headshot.

If you want a sighting of the “schlubby” billionaire recluse, you’re better off looking beyond Wall Street. The “soft-spoken libertarian” is most at home at alternative gatherings: notably that “mecca of counterculture”, the Burning Man festival. Another favoured haunt is the Scarlet Pearl casino in Mississippi’s Biloxi Bay – a family affair he helped build and finance.

Still, “invisibility has grown harder to maintain” as Jane Street’s profits have exploded, says the New York Post. The firm, which some have dubbed the world’s most lucrative trading house, has enjoyed such breakneck growth over the past five years – at the vanguard of the exchange-traded fund boom – that it accounted “for nearly a quarter of all US-listed ETF trading volume last year”. “The amount of money they make is almost obscene,” one former analyst told the Financial Times, which describes the “quirky and opaque” outfit, renowned for spotting arbitrage opportunities, as one of the “new titans of Wall Street” – frequently trouncing establishment rivals. Jane Street’s $21.9 billion trading revenues in 2023 were “equivalent to roughly one-seventh of the combined equity, bond, currency and commodity trading revenues of all the dozen major global investment banks”. The arrival of bitcoin ETFs the following year put another rocket under revenues. As of June this year, it had already pulled in $17 billion.

Granieri, now 53, always “harboured ambitions to make a lot of money”, says Bloomberg. After graduation in 1992, he printed a stack of CVs and dropped them off on each floor of Philadelphia’s tallest buildings. The strategy worked. He scored a job at Jeff Yass’s Susquehanna International Group, “the quant-trading firm that was quietly becoming a market behemoth,” and was soon pulling in $700,000 a year. But, itching for change, he teamed up with two other traders to form the firm that became Jane Street in 1999.

Rob Granieri: into the limelight

Being dragged into the limelight by success is one thing. Sadly for Granieri, Jane Street is increasingly under scrutiny for other reasons, too. Most serious, says Bloomberg, is an accusation by the Indian regulator of “rigging the world’s largest options market”, which the firm has vowed to fight. The collapse of Sam Bankman-Fried’s FTX crypto exchange, and subsequent high-profile fraud trial, also shone unwelcome light on the firm’s culture – “SBF” spent his early career there, personally recruited by Granieri. “Having Jane Street on the CV was a crucial bit of Bankman-Fried’s sales pitch,” notes the FT. Yet the lax office vibe at FTX was a partial mirror of Jane Street’s, where Granieri “has inculcated a culture that mirrors his quirks”, says the New York Post.

The wider worry, says the FT, is that Jane Street’s “tight-knit” corporate culture no longer fits its size and global clout. The firm is run by roughly 40 equity partners with no traditional management structure: a recipe for a lack of accountability, say critics. Much depends on the outcome of the Indian investigation. The worse-case scenario for the firm is that “the temporary block on activities” imposed there could spread to other jurisdictions as regulators dig deeper. One of Granieri’s few personal indulgences is fine dining. Why cook, he jokes, when you can “eat at Le Bernardin every night”? Given his woes, he could be forgiven a spot of comfort eating.

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Digital currencies (cryptocurrencies) have moved from the outer fringes of investing into the mainstream in recent years. While it’s been a roller-coaster ride for investors, crypto is here to stay. Governments and regulators progressed from ignoring it to fighting it; now they are trying to jump on the bandwagon by allowing investors access through exchange-traded funds (ETFs). However, while bitcoin might not be in a bubble, some of the companies involved in it are.

Chief among these is the group of companies known as bitcoin treasury companies. These firms’ business models involve buying a load of bitcoins and holding them on their balance sheets in the hope that investors will be willing to value their shares at a premium to the value of the bitcoin. They would then promise to take advantage of this premium to issue more shares, which could be used to buy more bitcoin, in the hope that those who invested would see the bitcoin per share holdings increase.

Trouble ahead for bitcoin treasury companies

Incredibly, this model worked for a time, with some companies trading at twice (sometimes more) the value of their net crypto assets. However, because mainstream financial institutions now offer products such as ETFs, it has become much simpler for even cautious investors to buy crypto, so bitcoin treasury companies have become much less attractive. As a result, the valuations they can command have started to dwindle. Meanwhile, some bitcoin treasury companies have struggled to issue more shares, leaving their investors with a large amount of very expensive bitcoin.

One such company is Strategy (Nasdaq: MSTR). While Strategy has its own business software and intelligence business, most analysts believe that virtually all its value resides in its 640,000 bitcoin, the largest corporate holding in the world. The problem is that while this pile is worth around $73 billion at current prices, Strategy also has debts of $11 billion. Overall, this means that it trades at a 40% premium to the value of its bitcoin, using the industry’s preferred metric. In other words, those who invest in the company are paying $1.40 for every $1 worth of bitcoin that Strategy holds, a pretty poor deal, especially compared with holding bitcoin directly or through an ETF.

Despite the ongoing appreciation of bitcoin, Strategy’s share price is currently trading below both the 50-day and 200-day moving averages, and is significantly down from its peaks earlier this year. I would therefore suggest shorting Strategy at the current price of $305 at £5 per $1. At the same time, I suggest that you go long on bitcoin at the current price of $114,639 at £1.50 per $100. This means that as long as the price of bitcoin outperforms Strategy’s share price, you should make money. To limit your losses, I would cover your position in Strategy if its share price rises above $610.

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Over the past few years electric vehicles (EVs) have developed from being niche products to becoming a well-established subsector of the vehicle market. They are only a few years away from eclipsing cars running on petrol and diesel. EVs comprise a fifth of new cars sold in the UK; if you add in hybrid cars, they also make up a majority of sales in the EU. However, many of the companies attempting to bring products to market will ultimately sink without a trace, as investors in firms such as Nikola and Fisker (both of which have filed for bankruptcy) found out the hard way.

Another company highly likely to follow in their footsteps is the US car firm Faraday Future Intelligent Electric (Nasdaq: FFAI). Founded just over a decade ago, Faraday has spent most of its history trying to break into the luxury end of the EV market, claiming that it was in the process of producing fully autonomous luxury EVs that would sell for more than six figures. More recently, it has shifted its focus to luxury SUVs and minivans containing an AI system to help users do everything from selecting the music played in the car to driving the car itself.

Faraday Future is following the herd

It’s an enticing story with two key flaws. Practically every car company in the world is focusing its efforts on both EVs and AI, so Faraday’s approach is hardly novel. More importantly, the firm has had a troubled history. Over the past 10 years, it has had to ditch plans to build a large factory from scratch in Nevada, while its founder and former CEO declared personal bankruptcy. In the meantime, it has delivered only a handful of cars to customers (many of whom were investors in the company or worked for it). Things are so bad that at the start of the year, it was reported that the company’s flagship SUV is essentially just a rebadged model of an SUV made by a Chinese firm.

Faraday’s accounts make for painful reading, with the company losing $13.8 million on sales of $539,000 in 2024, which means that the shares cost around 330 times trailing sales. While sales are expected to pick up this year, it is still set to lose money. Meanwhile, Faraday has burned through the vast majority of the cash it received when it went public in 2021 (via a special purpose acquisition vehicle, naturally).

Faraday’s status as a company targeted by short-sellers meant that last year it briefly became a “meme stock”, resulting in its share price surging. However, the shares rapidly fell back and investors seem to have lost interest in them, as evidenced by the fact that they have fallen by more than 60% this year. Faraday is now trading well below both its 50-day and 200-day moving averages. I suggest shorting it as the current price of $1.39 at £8 per $0.01. In that case, I would put the stop-loss at $2.50, giving you a total downside of £888.

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While the US dollar was continually getting stronger and sterling was continually getting weaker, British investors rarely needed to worry too much about currency movements. If you held an international fund that was benchmarked to the MSCI World or a similar index, your currency exposure was around 60%-70% to the US dollar and the trend worked in your favour.

If the era of the strong dollar is over – and the Trump administration’s policies imply that it probably is – that will no longer work in our favour.

Even if the US stockmarket keeps going up – which is quite possible if the US Federal Reserve cuts rates aggressively – a weaker dollar would mean much lower gains for foreign investors.

One obvious conclusion is that investors will give much more thought to whether they should hedge currency exposure – eg, by buying currency hedged classes of exchange traded funds (ETFs).

For example, an ETF such as iShares Core S&P 500 is available both as a share class that is quoted in sterling (LSE: CSP1) and one that is hedged into sterling (LSE: GSPX). The first will be affected by how the dollar moves against sterling. The latter will be hedged against it to some extent – but there will be a limit to this as well.

How currency hedged funds work

To understand why even a currency hedged fund won’t insulate us from currency movements completely over the long term, it’s useful to think about how funds hedge currency exposure.

Hedging means using forward contracts to lock in the exchange rate at which the investor will buy or sell a certain amount of the currency on a future date.

Of course, the exchange rate that is locked in will not be the same as today’s exchange rate. For every currency pair such as the sterling and the dollar, there will be a forward rate for a transaction in one month, one year, five years and so on. The forward price should depend on the difference in expected interest rates over that time period. If it did not, an investor could earn risk-free profits by borrowing in one currency; investing the proceeds at a fixed interest rate in a different currency for one month; and buying a forward contract to exchange the second currency back into the first currency (and repay the money borrowed) without taking any risk of how exchange rates will change.

If you have very certain long-term cash flows – eg, from an infrastructure project – you can enter into very exact hedges. You buy forwards to perfectly match the foreign currency you expect to receive when you receive it. This is not true for most equity or bond ETFs or funds, where future returns may be uncertain and where money may flow in and out of your fund all the time. So a currency hedged fund typically enters into a series of short-term forwards, which it continually rolls over. This certainly helps smooth out currency volatility – but in a world in which interest-rate expectations and hence forward exchange rates become more volatile, it may not always work as well as investors expect.

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While many technology firms seem to have reached the stage where they are making money from AI, other companies have achieved huge valuations based solely on a promise of future profits. And some have not yet even been able to make their technology commercially viable. These companies are particularly vulnerable to any shift in market sentiment.

One that may have promised far more than it can deliver is Aurora Innovation (Nasdaq: AUR). Aurora Innovation focuses on the development of self-driving trucks, arguing that by doing away with the need for a driver, it will cut the costs of transportation and be able to grab a large share of the US trucking market – which had revenues of $987 billion in 2023. The company boasts it has already conducted many tests to prove the technology works on various highways in the US and is poised to roll it out across the rest of the country.

Flaws in Aurora Innovation's plan

However, analysts are sceptical, with Sahm Adrangi of Kerrisdale Capital arguing that the group’s product suffers from two major flaws. Firstly, its bespoke system (like many other companies involved in self-driving) relies on Aurora spending huge amounts of time and money mapping each of the 50,000 miles in the US Interstate Highway System. Despite years of research and development (R&D), it has managed to map and test fully only a 200-mile stretch of highway, with a few hundred additional miles in the pipeline.

Even when this task is finished, it will only be able to operate on highways rather than within cities. This means that companies that use them will first have to deliver their goods from their factories or warehouses to special terminals, where they will be handed off to Aurora’s trucks, with the same thing happening in reverse once they reach their destination. The costs of this additional step will mean that making a trip using Aurora’s technology will actually cost more than using ordinary manned trucks for all but the very longest journeys, which represent a tiny fraction of deliveries.

Given these dismal economics, it is not surprising that Aurora’s gross revenues are expected to amount to a paltry $40 million in 2026, with annual losses predicted to rise to $864 million in the same period, compared with losses of $91 million in 2019. Throw in competition from other firms pursuing similar technology, and it is hard to see how Aurora’s valuation of roughly $10.5 billion is sustainable.

Not surprisingly, the market seems to be cooling on the self-driving truck company, with the share price down by half from its peak at the start of this year. It is also below both its 50-day and 200-day moving averages. As a result, I suggest you short Aurora at the current price of $5.73 at £2.25 per $0.01. In this case, you should cover your short if it gets above $9.73, which gives you a total downside of £950.

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The US has been undergoing a quiet energy revolution. The amount of energy produced by solar, wind and geothermal sources has more than tripled over the last decade. Solar energy has been one of the big winners.

Total installed capacity has grown eightfold, while solar power’s share of new energy capacity has expanded almost continuously from a minuscule 4% in 2010 to 66% in 2024, a figure that rises to 84% when you include storage. While Trump’s return to the White House has cast doubt on the subsector’s progress, even he may not be able to stop its rise. That is good news for firms like First Solar (Nasdaq: FSLR).

For most of its history, First Solar has focused on making and installing solar panels; it is still the seventh-largest manufacturer of photovoltaic (solar) power cells in the world. However, in the past few years, it has shifted its emphasis from panels for retail customers to utilities and now makes much of its money from building and maintaining solar power plants.

This shift has proved a shrewd move, as power companies have been eager to invest in solar energy in order to secure a range of tax credits and mandates from both the US government and individual states, notably the Inflation Reduction Act of 2022.

Silver linings for First Solar

Even though Donald Trump’s new bill curtails many of Joe Biden’s incentives for solar power, there are several silver linings for First Solar. Firstly, the tax credits for utilities will last longer than those for residential panels, while Trump’s changes won’t affect state-level mandates.

Most importantly, Trump’s tariff policies mean that the solar panels sold by Chinese rivals, who currently dominate the market, accounting for seven out of ten of the world’s largest producers, are now much more expensive. While the tariffs have also increased the price of many components that First Solar imports, the net impact of the tariffs is so positive for First Solar that even when you take the subsidy cuts into account, the group is in a better position than it was before Trump arrived in office, according to management.

First Solar has made excellent progress over the past few years, with sales rising from $3.06 billion in 2019 to $4.21 billion five years later – an increase of 40%. Sales are expected to grow even faster in future, increasing by around 50% in the next two years. Normalised earnings per share have jumped more than tenfold between 2019 and 2024, while operating margins have swelled, and the company now boasts a double-digit return on capital employed. Despite this, First Solar is still valued at only eight times 2026 earnings.

With First Solar recently upgrading its profit forecasts, the stock has been on a tear, beating the wider market over the last six months. It is also trading above its 50-day and 200-day moving averages. I therefore suggest that you go long at the current price of $184 at £11 per $1. In that case I recommend putting the stop-loss at $100, which gives you a total downside risk of £924.

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There are not that many people still working in investment who can remember a time when Japanese government bond (JGB) yields did not trend inexorably down. They peaked in 1990, just after the bubble began bursting, and declined through most of the following 35 years.

For the entirety of my career, shorting JGBs has been known as the “widow-maker”. No matter how low yields went, they always found a way to fall further, wiping out anybody reckless enough to bet that the bottom had been reached.

This may be why the big upward moves in longer-dated JGBs over the past year have not drawn as much attention as you would expect. Anyone who has been conditioned to expect JGB yields to be low forever will instinctively doubt that it can last. This is a brief upheaval, and they will soon head right down again.

Yet, something fundamental seems to have shifted. The 30-year JGB currently yields 2.9%, comparable to the 30-year bund at 3.1%. It had ticked up to almost 3.2% before the Bank of Japan said it would reduce the pace at which it is stepping back from quantitative easing (QE), while the Ministry of Finance indicated it would issue less ultra-long-dated debt in future.

The implications of this are significant – not just for Japan but also for global markets, because low-yielding Japanese debt has been a key funding source for many global carry trades. Borrow at low rates in one currency, invest in higher-yielding assets in another, pick up the difference in returns and hope you can unwind the trade before something – eg, typically a massive currency move – leaves you with sudden losses.

Long-dated JGBs signal uncertainty everywhere

Still, the higher yields on long-dated JGBs don’t imply that Japanese monetary policy is going to normalise any time soon. Markets are pricing in a very drawn-out adjustment – while the 30-year JGB and the 30-year bund are now in line, five-year yields are still well over a percentage point apart (0.97% vs 2.18%). This long-term distortion in global markets may gradually unwind – which is likely to be bullish for the yen over the long term – but it’s not immediate, or so the market thinks. Whether this may be too sanguine is another matter: if inflation (3.5% in May) remains high, rates should go up faster.

Instead, what long-dated bonds are signalling in Japan and elsewhere is a huge amount of uncertainty. Take the US 30-year Treasury, which now yields 4.8%. This doesn’t seem to be due to fears of runaway inflation in particular, because the 30-year inflation-linked Treasury is yielding about 2.5% (ie, the rate of inflation needed for them to return the same is just 2.3%). Rather, it simply feels increasingly reckless to lock up capital for so long. Investors worry about increased government spending, the potential for large amounts of bond issuance to fund it, politics (at the time of writing, the UK 30-year gilt had ticked up to 5.4%) and much more. They are right to be worried, and current yields still feel like very meagre compensation for those risks.

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Video games are one of the most rapidly expanding forms of entertainment. Thanks to improving technology, today’s games are far more immersive than they were even a decade ago, which helps them compete with alternative forms of entertainment, such as television. The demographics of gaming are changing; middle-aged people who grew up with computer games still enjoy them. Throw in new technologies, such as virtual reality (VR) and the advent of eSports, and it’s no wonder a recent report by consultancy PwC estimated that the sector’s total revenue will exceed $300 billion by 2028. One company already benefiting from this is Electronic Arts (Nasdaq: EA).

Electronic Arts is one of the largest video-game studios. It is involved with some of the biggest franchises in the industry. These include the Battlefield and Sims series of games, as well as Sports FC and various other sports franchises, such as the Madden series. While people can still buy individual games, EA also offers a subscription service whereby people can access a library of EA’s top titles for a monthly or yearly fee. Combined with the ability to purchase additional features for each title, such as extra stadia or team uniforms in its sports games, this gives Electronic Arts a recurring income stream.

Electronic Arts is fending off rivals

Costs are rising along with sales as gamers are demanding increasingly lavish spectacles. Any missteps can therefore have a significant impact on the bottom line, as EA found to its cost earlier this year after some of its latest games were less successful than initially expected, causing its share price to fall by 20%. On the plus side, however, rising costs are making things harder for smaller studios, with some closing down and others being taken over. Combined with EA’s strong, recognisable brand, this provides a degree of protection from competition.

EA’s revenue has grown by more than a third over the last five years, with adjusted profits going up by more than 50% since 2021. Revenue is expected to keep expanding by 5% a year over the next two years, with profits more than doubling during the same period.

Operating margins remain strong at around 20%, with a return on capital employed of around 17%. EA trades at a very reasonable 17 times forecast 2027 earnings, which is far less than other major games studios, such as Take-Two Interactive, which trades at around 26 times 2027 profits (even though it has had to delay the latest release in its Grand Theft Auto franchise).

EA also looks attractive from a technical perspective, with its share price having recovered from the disappointing start to 2025. Moreover, it is trading above both its 50-day and 200-day moving averages. I therefore suggest going long at the current price of $155, at £19 per $1. In that case, I would put the stop loss at $105, giving a total downside of £981.

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I had coffee with an Anglo-Italian friend the other day, and he began telling me about his grandparents. They called themselves “mezzadri”, or “sharecroppers”. They worked on land belonging to somebody else. Half of what they produced, they gave to the landowner; the other half they got to keep. They went to the market and sold it. My friend’s family had been doing this for generations, never actually breaking above that status to become landowners themselves.

There are many parallels with the medieval serf, who had to work the land of his lord in exchange for his subsistence and protection. Just as the serf was the descendant of the Roman slave, the mezzadri were the descendants of the serf.

In any case, in 1966, Grandad left Italy, followed by Grandma in 1967, and they came to work in England. With trade-union laws quite protective at the time, most Italians in the UK either set up small businesses or worked for their friends’ or family’s small company, especially in the catering industry. They were paid in sterling, and largely in cash, on which they are unlikely to have paid much income tax.

While sterling was hardly a beacon of fiscal rectitude, it was far better than the Italian lira, which suffered many devaluations and became a laughing stock. The money Grandad and Grandma were paid in therefore kept its value, at least on a relative basis.

Climbing the ladder

My friend’s grandparents worked hard and saved. Then, in 1970, they went back to Italy and bought themselves an apartment. For the first time in the family’s history, they owned property. They kept working in the UK and by 1976 managed to buy some of the land on which they had previously been workers. Their social status had changed – from peasant to landowner.

It was a common progression among Italian emigrants in the 20th century. When they went back home, they had far more money than those who had stayed. They hadn’t had particularly good jobs in England, they were waiters. They were only able to do what they did for two reasons.

Firstly, the money they were paid in and saved in was much stronger than the Italian lira. Secondly, operating in the cash economy and receiving much of their income in tips (which were not taxed then), they did not have 50% of the produce of their labour confiscated, whether by landowner, lord or state. There is an important message in this story about how society works and how you should position yourself.

Not only are workers fleeced by the amount of tax they have to pay (most of which is then wasted on government incompetence or worse), but they are also fleeced because the money they are paid loses its value.

Owning property has been one of the few ways in which ordinary people have been able to protect themselves against the extraordinary currency debasement of the 20th and 21st centuries. As I constantly argue, property prices are a function of the money supply, and property is unaffordable as a result of relentless money-supply growth.

Protection in property

So much newly created money goes into property that houses have become financial assets, an effective hedge against currency debasement. As house prices have gone up, it feels as if wealth has been created, but it is just an illusion. All that has happened is that property owners have had that part of their portfolio shielded from the debasement. Storing your wealth in property proved a much better bet than keeping it in cash, be it sterling, lira, euro or dollar. In addition, your main home goes untaxed, so you don’t get fleeced that way either.

My Italian friend described his confirmation some 35 years ago. One family member gave him a gold sovereign. Another gave him 20 newly minted pound coins, which my friend still has in the original packaging. Which has kept its value? Those pound coins might have some collectors’ interest, but £20 buys you far less now than it did 30 years ago. The sovereign, meanwhile, has kept its purchasing power, as gold always does.

When you work, you expend energy. The money you are paid for your effort is, in effect, stored energy to be used at some later stage. It is essential to an honest and functioning society that the expended energy keeps its potential. But it doesn’t. What can we do? We can’t change the system. But we can change ourselves.

Consider all the work that you have done over the years. Imagine if you had converted what you were paid for it straight away from fiat into strong currency – be it gold or a house. The value of your labour would have been preserved too, instead of eroded. With the cumulative savings, you’d be able to buy things today that were previously out of your reach, just as my friend’s grandparents did.

Now imagine that for all the work you’ve done over the last ten or 15 years, you had been paid in bitcoin – or, having being paid in fiat currency, you had immediately converted the money into bitcoin. You would be extraordinarily wealthy now, so wealthy that your entire social status would have changed. Many people have done that. They converted their salary into bitcoin as soon as they were paid. Because they saved in a strong currency, they no longer need to work. They could probably buy the company they worked for. They can buy houses. There is a whole movement of people who are now doing just that. They will transform their lives.

Weak money weakens you. You will not change your life or your status if you keep your wealth in a rubbish currency. Bad money is a way of keeping people down. Many will think this is deliberate, a tool of suppression. It certainly used to be. At one stage, serfs were not allowed to handle gold or silver.

Fiat has a similar effect, deliberate or not. There are some economists who argue that it is good to have a weak currency to attract overseas investment. It might well attract investment, because people with stronger currencies can buy your and your country’s labour and assets on the cheap. Why do you think so much of the UK is now foreign-owned? A weak currency makes you and your country weak.

Switzerland has maintained the strength of its franc. Ordinary Swiss people, therefore, have a higher status than inhabitants of countries with joke money. With a weak currency, you lose status globally. Imagine being an Argentine: Argentina was once one of the richest countries in the world. Italy used to be the richest country in the world, as did Britain later on. With the serial devaluation of its lira, it became a laughing stock.

A government's duty

One of the first jobs of government should be to protect the value of the currency, because then you are protecting the value of your citizens’ labour. By defending your currency, you are defending your people. You are empowering them. But when your currency is weak, you weaken your people. The upshot? Save in strong currencies. You might live in a country with a weak currency. Not all of us can up sticks and go and live in Switzerland. But you can still convert your weak currency into a strong one, be it gold or bitcoin. Saving in strong currencies will gradually change your life. And your social status.

My Italian friend, meanwhile, a basic-rate taxpayer, found himself unable to buy a property in the UK. He took a leaf out of his grandparents’ book and emigrated, at least digitally. Three years ago he began putting everything he saved into bitcoin. He put MicroStrategy in his ISA (the stock has risen thirteenfold since I recommended it to readers in MoneyWeek two years ago). Bitcoin became his savings vehicle. Now he’s buying a house.

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The Trump administration increasingly seems convinced that the US dollar’s status as the world’s reserve currency is a burden, not the “exorbitant privilege” that it is often said to be. Key economic advisers such as Stephen Miran believe that the persistent strength of the dollar has driven the deindustrialisation of the American economy by making exports less competitive.

Economists can legitimately debate this. There could even be a smidgen of truth in it, although blaming the rest of the world conveniently ignores poor decisions willingly made by US corporations and politicians. However, treating the dollar’s unique status and strength as yet another example of America being ripped off ignores some obvious benefits.

These include higher margins and lower inflation, but even more important is the impact on markets. The role of the dollar means that Treasuries have been the global reserve asset, which will have made it cheaper for the government to fund itself. Yet there are hints that this is now going into reverse.

The end of American exceptionalism

The most common theme among investors outside the US is that American exceptionalism is over. The rest of the world has been rattled by poor governance, soaring deficits and growing fears of some new anti-foreigner measures (section 899, a provision in the new budget bill that would increase taxes on US income for foreign investors, is constantly mentioned).

It would be a huge exaggeration to say that investors are fleeing the US, but it is clear that they are reconsidering the structural overweight to American assets that most have. The consequences go beyond Treasuries, since other US assets also benefit from strong demand. For example, reserve currency status has also created a huge cost of capital advantage for US companies, argues Alec Cutler of Orbis. This will now shrink, he says – another reason, on top of high valuations and soaring capital expenditure for big tech, why US stocks will enjoy fewer advantages in future.

Disorderly change

Still, this sounds like a gradual change – a reason to be less bullish on the US, but not a source of vast upheaval. While the dollar’s share of central bank reserves has declined from 60% in the early 2000s to about 46% now, according to the European Central Bank, it is dominant in payments (almost 90% of currency trades involve it). It is impossible to imagine a rapid move away from the dollar: no other currency has the same liquidity and market depth.

Yet the unpredictability of the US government – the risk that it will destroy one of its strengths because it sees it as a weakness – means that we can’t dismiss this risk. Sometimes, disorderly change is forced on us. This may be one reason for gold’s continued strength. The trend in reserves since 2008 (see chart) points to demand for a reserve asset that no government controls. Donald Trump will probably accelerate that shift.

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One tip on this page that proved very successful was to go long on the African mobile phone company Airtel Africa (LSE: AAF). I highlighted it in October 2021 and by the time I had sold nearly a year later, in September 2022, the stock had jumped from 98p to 135p, making a profit of £1,480. For the subsequent two years, its performance was indifferent, but it has nearly doubled since November. It is still worth buying.

Airtel Africa specialises in telephone, internet and mobile-money services for people in 14 fast-growing African countries, including Kenya and Nigeria, which together have a combined population of 662 million people. The mobile-money aspect of its offerings is particularly interesting as the lack of a banking system in these countries means that many people use mobile-payments services as their sole way of making and receiving payments. Estimates suggest that 65%-70% of adults in these countries don’t have a formal bank account.

Airtel Africa's subscriptions are soaring

Whichever measure you use, Airtel has been doing an excellent job of building up its customer base. Counting all its customers, including those who are paying only for the most basic voice services, its total number of subscribers is increasing by just under 10% a year to 166 million. However, this headline figure underestimates the extent to which it is growing, as the number who are paying for smartphone services, which makes Airtel more money, is expanding at 20% each year, and now accounts for around half of all subscribers. The number of subscribers to its money service is also growing by a similar amount.

Thanks to this consistent growth, Airtel’s overall revenue is now 45% higher than it was five years ago, and is expected to keep expanding at between 8% and 10% a year. While earnings have been a bit more volatile, they are expected to reach record levels over the next few years. Operating margins also remain strong, with a return on capital employed, a key gauge of profitability, of around 20%. This has enabled it to increase the dividend and return cash to shareholders via a share-buyback scheme. Despite all these positive factors, the stock trades at only 17.2 times 2026 earnings, with a decent yield of 2.6%.

Airtel looks enticing from a technical perspective, too. The share price is trading above both its 50-day and 200-day moving averages, while it has also been outperforming the wider market over the last three, six and 12 months. Perhaps the most positive sign is that the Bharti Mittal family, wealthy Indian investors who own a substantial stake in Airtel, have decided to increase their holding, a positive sign that insiders are happy with the direction of travel. I suggest going long at the current share price of 178p at £15 per 1p. Put the stop-loss at 118p, which gives you total downside of £900.

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“Markets are discovering the real Trump trade is ‘Sell America’,” say Saleha Mohsin and Carter Johnson on Bloomberg. Stocks soared late last year on bets that the incoming president would initiate an American golden age. It hasn’t worked out like that. The dollar has dropped 9% against other major currencies in 2025.

The US relies on international capital to finance its budget and trade deficits. As Torsten Slok of Apollo Management notes, foreigners own $19 trillion of US equities and $7 trillion of government bonds, equivalent to 20%-30% of the market. Those funds are now fleeing for more predictable climates.

Will the dollar continue to reign?

Trump served up fresh controversy last week, saying that the “termination” of Jerome Powell as Federal Reserve chair “cannot come fast enough!”. Trump is angry with Powell for not cutting interest rates, says Jeremy Warner in The Telegraph. Central banks “generally deserve whatever brickbats they get”, but it is considered “beyond the pale” for a sitting government to publicly criticise them. Central-bank independence is a “cornerstone” of modern economic policy for good reason: when politicians get their hands on rates, “they almost always abuse” the power.

Trump probably doesn’t have the legal authority to remove Powell. On Tuesday, the president retreated from his comments, saying he would just “like to see” Powell “be a little more active”. The real purpose of the rhetoric? Preparing the ground to blame the Fed should Trump’s trade war cause an economic slump later this year, says Nick Timiraos in The Wall Street Journal.

On Trump’s telling, “Powell worked to help Biden during his term” with rate cuts, but is “unwilling to provide the same support” now. This overlooks that, first, it was Trump who originally appointed Powell in 2018; second, it was Powell who provided unprecedented economic support in 2020 when Trump was in office; and third it was Powell’s Fed that raised rates steeply in 2022 and 2023 during Biden’s term. This politicisation of the Fed is doing no favours to the dollar’s credibility.

“American prestige has taken a hit”, but King Dollar’s reign looks secure, says Daniel Moss on Bloomberg. The greenback’s role in world trade has survived previous American disasters, from the 1971 “Nixon shock” to the 2008 subprime mortgage crisis. Rather than a grand reordering of the global financial system, we may just be witnessing a “healthy” currency market correction after a period where the dollar was chronically overvalued.

The dollar has been the “lynchpin” of world trade for 80 years, with 88% of all foreign-exchange transactions involving greenbacks, says The Economist. A key argument for the currency is that there are no clear alternatives. China’s yuan cannot take over so long as Beijing keeps strict capital controls in place. As for the euro, while investors regard Berlin as a safer credit risk than Washington, the market in bunds is much shallower – just a 12th the size of that for US Treasuries. King Dollar will continue to reign, but its relative role will diminish as central banks pile into alternatives, including gold.

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With many AI stocks having fallen substantially from their recent highs, investors have been seeking the next big technology that can deliver large investment returns. Many people think that quantum computing – using quantum mechanics to enable computers to perform calculations deemed too complex for conventional computer technology – could fit the bill. However, while quantum computing does hold out the promise of exponentially increasing the speed at which computers can carry out tasks, this doesn’t mean that every company in this area is worth buying.

One firm longer on hype than on substance is IonQ (NYSE: IONQ), a quantum computing hardware and software company based in Maryland. Its shares quintupled over the last three months of 2024 thanks to promising recent developments in quantum computing at both Microsoft and Google. IonQ claims that its particular type of quantum computing technology is more promising than versions used by its rivals, and is only a few years away from reaching the stage at which it can be used in a range of fields, such as drug development.

IonQ’s fundamentals look shaky

The sales pitch sounds appealing, but there are several obstacles to progress. Firstly, as short-seller Sahm Adrangi of Kerrisdale Capital Management points out, IonQ has a long record of making big promises and then either taking much longer than expected to meet its targets, or missing them entirely.

While IonQ has managed to increase the power of its systems over the past five years, it still hasn’t solved the key problem of how to minimise the noise and errors that appear in quantum computing – one of the main barriers to commercialisation. As a result, IonQ continues to lose large amounts of money, with no timeline in sight for becoming profitable, which bodes ill for a company whose shares trade at 60 times 2025 earnings.

IonQ’s problems in reaching profitability are compounded by the intense competition it faces. There are many well-funded smaller companies with similar goals, while some of the biggest names in technology, such as IBM, Google and Microsoft, are also working hard in this area. As Andrew Left of Citron Research points out, these technology giants can invest billions of dollars into research and development, compared with mere millions in IonQ’s case. So it is hard to see how IonQ will be able to keep up with them.

While IonQ’s fundamentals look shaky, the surge in enthusiasm that propelled the company’s share price upwards at the end of last year seems to have cooled. The stock is now down by over half from its high at the start of this year, and is 27% below its 50-day moving average. I would therefore short IonQ at the current price of $25.02, at £40 per $1. I also suggest that you cover your position if it rises above $49.02, which gives you a total downside of £960.

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One of the problems with operating in a fastgrowing industry is that constant change and disruption can make it hard to remain successful. No sooner has a company developed a business model that is profitable than the technology shifts or competition pushes down prices. This causes margins or market share to tumble, since large amounts of investment are required to stay ahead of the competition.

So it’s often better to find a niche that is big enough to be worthwhile, but not so big as to attract a lot of other firms.

Financial technology company Corpay (NYSE: CPAY) has done just that. The firm specialises in corporate payments, including travel and hotel expenses as well as general vendor payments. These can be a nightmare for companies to manage, as giving too much latitude to employees can result in wasteful (or even fraudulent) spending.

Yet on the other hand, micro-managing employees’ spending can sometimes backfire, increasing the need for outlay on administration, not to mention the risk of missing opportunities.

Corpay is keeping it simple

Corpay has developed several solutions that allow firms to keep things as simple as possible, while still ensuring that money is spent efficiently and companies can change their payments policy quickly. These solutions include automated systems as well as pre-paid cards.

Another touted benefit of Corpay’s offering is that it can function as a one-stop shop for business payments, eliminating the need to give employees cards from separate companies to deal with different types of payments.

This ambitious strategy has been a big hit with many businesses, as shown by the fact that Corpay’s revenue has grown by an average of around 15% a year since 2010.

Even though growth has slowed a bit in recent years, Corpay still managed to increase sales by around 50% between 2019 and 2024. It expects to keep growing, helped by plans to launch a service that can make it easier for firms to handle cross-border payments in multiple countries.

Margins remain strong with a consistent operating margin of over 40% and a return on capital employed of just under 20%. With last year’s earnings of $14.2 per share projected to rise 73% over the next two years, thanks to the effect of acquisitions and strong growth in the US and Brazil, Corpay trades at a relatively modest 14 times the consensus forecast for 2026.

As well as a business that is profitable and growing, Corpay’s shares seem to have a good amount of momentum behind them: they have gone up by 40% over the past nine months. They have also outperformed the rest of the US market over the last six months and trade above both their 50-day and 200-day moving averages.

I would therefore suggest that you go long at the current price of $368 at £8 per $1. You should also put the stop loss at $245, which gives you a total downside of £984.

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One of the key developments in military technology in recent years has been the rapid rise of unmanned aerial vehicles, or drones. Their major advantage is that they allow military forces to carry out attacks and survey the battlefield without either directly risking soldiers’ lives or expensive aircraft.

While drones are not a new technology, they used to be so large and expensive that their use was limited. Over the years they have become much cheaper and smaller, a development that has made them a major part of any modern army’s equipment.

However, as with any form of technology, the rise of drones has led to the creation of a large number of companies trying to cash in on the boom in demand. Inevitably some of these lack the financial acumen or the engineering know-how to achieve their ambitions.

A case in point is drone manufacturer Red Cat Holdings (Nasdaq: RCAT), which aims to make drones for the US military, as well as for other purposes, such as carrying out safety checks in places where it would be dangerous for people to go.

Has Red Cat jumped the gun?

At the end of last year, Red Cat’s shares more than quadrupled on the news that it had won a competition to supply one of its drones to the US Army. The hope was that this would bring in a large amount of revenue and potentially open the door to contracts with other forces. However, as Kerrisdale Capital point out, there are two problems with this optimistic scenario.

Firstly, the contract, which has yet to be agreed, is likely to be much smaller than the company projects. Demand from the Army (or other US government agencies, such as the Department of the Interior) for the type of drone that Red Cat is selling is likely to be very limited. A bigger long-term problem for Red Cat is that the market for drones is becoming extremely competitive, with a large number of firms keen to grab a share. This has caused the price of drones to start falling.

Several established companies are offering similar drones to those produced by Red Cat for a much lower price. Finally, even if Red Cat did win a large contract, it is an open question as to whether they could fulfil it. This is because the company’s attempts to ramp up production over the past few years have been bedevilled by numerous delays and missed targets, while it has also lost money every year for the last six years.

There is evidence that the hype surrounding Red Cat is already starting to fade away, as its share price has fallen by around 40% from its peak at the start of this year, and it is trading well below its 50-day moving average. As a result, I suggest shorting it at the current price of $8.92 at £150 per $1. In that case, cover your position at $14.92, which would leave you with a total downside of £900.

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One of the most controversial areas of the financial technology (fintech) sector is buy-now-pay-later, or BNPL. Like traditional consumer financing schemes, BNPL allows a firms’ customers to buy goods without paying for them upfront; the company essentially lends them the purchase price. However, instead of the company having to provide the capital, and take on the risk that the purchaser won’t be able to pay, a BNPL provider uses its own money, assuming the credit risk, in exchange for a cut of the sale price.

BNPL’s supporters argue that it can be a win for all concerned, with consumers getting hassle-free access to a wider range of goods and merchants making more sales. Of course, BNPL firms hope that the money they get from the loans and merchant fees will more than compensate for any defaults. It has certainly proved popular, with research suggesting that the value of BNPL loans in the US will eclipse $100 billion for the first time in 2025. However, the worry is that it may encourage people to borrow beyond their means. What’s more, from an investor’s point of view, the quality of some of the loans that BNPL firms provide are a cause for concern.

A case in point is the American BNPL provider Sezzle (Nasdaq: SEZL). Originally listed in Australia, Sezzle changed its listing to the US 15 months ago. Between May and November 2024 the share price rose tenfold thanks to soaring revenue growth and the fact that it now says that it is making money. However, sceptics, such as short seller Hindenburg Research, argue that these profits depend on whether it is correctly estimating the percentage of loans that will default. If the loans do worse than expected – either thanks to bad lending practices or a general economic downturn – then these profits could very quickly disappear.

The quality of the loan book isn’t the only thing investors are worried about. All the evidence suggests that the number of merchants signed up with Sezzle has actually gone down over the past three years, with several partnerships with major companies such as Target failing to materialise. There have also been complaints about Sezzle allegedly making it very easy for users to sign up to its premium subscription service by accident.

Are Sezzle's shares overvalued?

The shares look overvalued too. They are on 24.5 trailing earnings and a price-to-sales ratio of 5.75, which is relatively high for a technology firm, and higher than most other BNPL firms.

There are also signs that the market is beginning to reconsider Sezzle, especially after it decided to issue some more shares in November, possibly suggesting that even Sezzle’s management thinks it is overvalued, or that it wants to have more cash on hand to cover losses from loans. Already Sezzle is down by more than half from its November peak. With the company now trading well below its 50-day moving average, I suggest shorting it at the current price of $228 at £10 per $1. In that case, cover your position if it went above $318, which gives you a total downside of £900.

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Twenty years ago, if you had asked the average professional investor, their description of Amazon would have been something like “it sells books online and it doesn’t make any money”. Had they been particularly sniffy about the business, they might have dismissed it as a “virtual Waterstones”.

Yet today it is one of the largest firms in the world. It has revolutionised how we think about business-to-consumer (B2C) commerce and entrepreneurialism. Over those 20 years, its value has surpassed $1 trillion in value and given investors a one hundred-fold return.

For investors to benefit from future Amazon-like opportunities requires vision and long-term thinking. In the UK, Wise (LSE: WISE) has many of the characteristics of Amazon 20 years ago, including investors who dismiss it as “just a currency transfer business”. The following will explain why Wise is unlike anything else listed in the UK and has the potential to be a hugely profitable investment for those with the patience to see it through. It could become the first British company to be worth more than $1 trillion.

The story of Wise: a simple idea born out of frustration

The story of Wise began in the late 2000s at a time when the financial world was in the grips of its worst crisis in 80 years. Two Estonian expats living in London met at a party and bonded over their shared heritage. Kristo Käärmann was working as a management consultant and Taavet Hinrikus had been the first employee at Skype.

Eventually, the chat moved to a bugbear for them both – transferring money from euros and pound sterling or vice-versa. The pair had opposite problems. One was earning in euros but had expenses in pounds, whereas the other earned in pounds but had large euro expenses thanks to an Estonian mortgage.

The problem was that when money was transferred from one currency to the other, they incurred expenses that were opaque, variable and very expensive. Furthermore, depending on the day of the week and the time of the day, money might take five days to arrive in one account after leaving the other. As a smart pair of young, tech-savvy chaps, they concocted an idea to circumvent the process of using traditional transfer markets via the banking system.

The solution was to not change one currency for another. Rather, the one who earned in euros would deposit money into the other one’s euro account and vice-versa. This was done via an agreed market rate for currency transfers done via a Skype account. Since transferring money from one account to another in the same currency was a simpler process, it was almost free rather than expensive and it was considerably quicker.

Over time, the pair saved each other thousands of pounds by avoiding the usual route to move money from one currency to another. After a few years, they realised that they could provide this service to other people in similar situations, such as expats with expenses in currencies other than the one in which they earn. At the time, they thought there were 200 million people worldwide who lived like this. In January 2011, TransferWise was founded to address this market.

Wise vs Swift: how it works

The traditional way currency transfers are completed began in 1973 after a cooperative was founded in Belgium called the Society for Worldwide Interbank Financial Telecommunication (Swift). It is owned jointly by global banks and provides a messaging network for international payments.

In 1973, it was technologically advanced and allowed a process that prior to its foundation was much more onerous and costly, but Swift itself is now outdated. It works as follows:

1. A customer instructs their bank that they would like to send currency in one currency to a different currency at a different bank. The bank charges a transfer fee, which is variable but can be relatively high, especially on small amounts of money.
2. A second, intermediary bank sends the money through the Swift network, which incurs an additional fee.
3. The exchange rate is calculated and marked up for a profit.
4. The recipient bank deposits the money in a different currency in a bank account. It then charges a recipient fee.

It is cheaper than it used to be, but this whole process can add fees of more than 6% so that in effect the recipient receives 6% less money than the sender sends. Additionally, banking is not a 24/7 operation – each bank along the way has different times when it transacts currency movements. The effect is that it regularly takes several days for money to appear in the recipient’s account.

Simplistically, Wise’s model is to have pools of money in different currencies and locations. Customers instruct Wise to deduct some money in one currency locally and add it to an account in a different country with a different currency. Just because it seems simple, it isn’t easy. Underpinning this system is a technology supported by almost 1,500 development staff. Moreover, to operate in this way has required hundreds of licences across the world. This is all so that a customer receives the same service whether they are transferring sterling into US dollars or Brazilian reals into Indian rupees.

Wise’s system removes Swift from the procedure entirely and with it, considerable time and expense. In 2024, the average cost for a customer to send money through Wise was 0.59%, meaning, for example, a fee of 59p to transfer £100. For a customer transferring through a bank, it would cost around £6. Wise also reports that 60% of transfers are completed immediately (in less than 20 seconds), more than 80% are within an hour and 95% within 24 hours. Just 5% of transactions take longer than a day. Banks take between three and five days.

How does Wise make money?

One way Wise makes money is that it charges a small fee for transferring a sum (pricing starts at 0.33%). However, this has been steadily reduced throughout the history of the company. The CEO and co-founder, Kristo, has stated that he wants currency transfers to be free. One might therefore ask if the company is giving away its service for free, how does it make any money and, more importantly, why bother investing?

Customers with Wise accounts have money deposited with the company. This money earns income for Wise. More money transferred through the company increases the amount of customers’ money held on deposit, which means more profit for Wise. As with fees for transferring money, Wise plans to give as much back to customers as possible, but it can retain enough income from this source to add meaningfully to its profitability. So the bigger Wise becomes the more it earns on customers’ deposits. In turn, it can lower the cost of transferring money between currencies. This is already 90% cheaper than traditional banks, and Wise intends to make this figure 100%.

Jeff Bezos liked to say of other companies “your margin is my opportunity”. What he meant by that was companies that were making money doing traditional activities (like selling books in large, expensively maintained bookshops) could not compete with Amazon. Amazon is built to be the most efficient way of selling to customers imaginable. It reached its position by continually cutting the price of its services to customers, which entrenched its competitive advantage to the point of being insurmountable. There are loud echoes of this strategy in the way Wise operates where it, too, is entrenching its position so thoroughly that it is becoming impossible for incumbents to compete.

Is Wise a valuable investment?

For its first ten years, the company was called TransferWise because it was Wise to use its services to Transfer money. In February 2021, the company dropped “Transfer” and became Wise. The implication is clear. Wise has the opportunity to disrupt far more than just the currency transfer market.

In the past few years, the company has added more services, such as debit cards, to its offering, so that money in a Wise account can be spent as if it were in a bank account. Just as Amazon used book sales as a springboard to disrupt consumers’ commerce, currency transfer is a springboard to much more for Wise.

Yet before the company expands into new areas, there is still massive opportunity in currency transfer. Last year, the company transacted roughly £120 billion for individuals and small businesses, while more than £11 trillion was turned over globally, thus giving the company ample growth opportunity. Wise has three divisions. Two are exciting for investors given the growth possibility, but the third could be a game-changer. The company’s largest division, Personal, serves individuals. The second division, Business, serves small business accounts like small retailers. It was launched a little later but is rapidly growing into a very large market.

Before the third division is explained, consider the following analogy of what Wise has achieved. When it comes to currency transfers, banks are like train companies. They charge you £250 to go from Manchester to London and it takes two hours (if you are lucky). Wise has invented a teleportation device whereby you arrive in London as soon as you set foot in Manchester Piccadilly train station. Moreover, it only charges you £25 for the pleasure and, to top it off, is promising that in future it will be free. How can traditional train companies (banks) compete?

Wise’s Platform represents the third part of the business. Here companies that transact very large amounts of currency can piggyback onto Wise’s infrastructure. Via a process known as white-labelling, companies that offer currency transfers to customers can transact through the Wise infrastructure but the client interface appears to be their own.

In the UK, for example, customers who transfer currency through a Monzo bank account actually do so through Wise. Wise now has 90 banks globally conducting customers’ requests for currency transfers through the Wise platform. Most notably, Standard Chartered, a major multinational bank headquartered and listed in London, recently joined the Wise platform.

The answer to the question above about how a traditional bank can compete with Wise is that they can’t. Instead, banks are increasingly circumventing the outdated Swift system and operating on Wise’s infrastructure. Back to the analogy – train companies have stopped using traditional rail tracks and are now using the teleportation device for their trains.

Wise certainly has the qualities of a business that could become very special and valuable indeed. It is growing rapidly, is already very profitable and most importantly has a visionary CEO. Rather than focusing on how much money Wise is making in 2024, which is largely irrelevant in the long run, consider that Wise is building an entirely new infrastructure for a significant part of global finance. It is hard to gauge what that is worth, but the best guess is that it’s worth a lot more than today’s share price implies. It would be very optimistic to say that Wise could be the first UK $1 trillion company but it is a realistic possibility.

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This was a good year for markets, with the FTSE and S&P 500 rising by 10% and 30% respectively. Similarly, while I suffered some reversals this year, it was generally a profitable 2024.

Tips carried forward

I began the year with 13 tips: seven longs (Computacenter, Mitie, Watches of Switzerland, Howden Joinery, SThree, easyJet and Moonpig) and six shorts (Paycom, GameStop, Sunrun, Robinhood, Joby Aviation and Carvana). As usual, all were closed during the course of the year.

Construction firm Mitie was the first to be closed, at a profit of £40. Watches of Switzerland was then stopped out, resulting in a loss of £468. My short of trading platform was Robinhood, losing £723, while my short of car retailer Carvana left me £950 in the red. I decided to take profits of £666 on IT firm Computacenter.

I took losses of £200 on card company Moonpig and profits of £515 on payroll software firm Paycom. Kitchen firm Howden Joinery was closed in issue 1206, taking profits of £510.

My short of video games seller GameStop made at a profit of £462, recruiter SThree was closed with a profit of £234, and solar energy firm Sunrun at a profit of £300. Budget airline easyJet was closed in issue 1214 at a profit of £235. My short of air-taxi firm Joby Aviation was at a loss of £375.

Overall, eight of the tips that I began the year with ended up in the black, and five in the red. While the profits outweighed the losses at £246, this was down from the £2,128 they were making at the start of the year.

Tips made and closed this year

I made 21 tips in 2024, with 13 of them closed during the year. Travel concession operator SSP was closed at a loss of £648. I had better luck with spread betting firm IG Group, with profits of £604, and car company GM Motors, with £452 in the black.

While building materials-supplier Builders FirstSource was closed at a loss of £150, I did far better tipping Rolls-Royce Holdings, which was eventually cashed out at a profit of £1,253.

I turned my attention to leisure company Hollywood Bowl, which was closed at a loss of £203. I tipped retailer Next, which was closed out at a profit of £205.

I tipped Royal Caribbean Cruises. This proved to be by far the most successful, since it made £2,940 by the time it was closed. Payments firm Paypal also made a profit of £800 when it was closed.

My suggestion that you should short bank Axos Financial ended with a loss of £850. Builder Vistry and foreign-exchange specialist Alpha Group also lost £518 and £510 respectively when they were closed out.

My worst tip was bitcoin miner Riot Platforms which was closed at a loss of £960.

Overall, the big size of the wins meant that I emerged £2,415 ahead.

Ongoing tips

As the same time, my ongoing tips are also doing well. Out of the six ongoing long tips (Marks & Spencer, Harworth, United Airlines, Hilton Food Group, Trainline and Domino’s), four are flourishing.

M&S is at 389p, making a profit of £700. United Airlines has reached $97, making profits of £1,584. Trainline is at 421p, making £102, while Domino’s is at 340p, producing a profit of £6.

The only two exceptions are developer Harworth, which is at 112p, losing £252, and Hilton Food Group at 901p, losing £51. My two shorts, Trump Media and Technology Group and Ocado, are at $35.77 and 319p respectively, making profits of £569 and £6. Overall, my open tips are making a net total of £2,664.

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Russia’s rouble hit a two-year low against the dollar on 26 November following new US sanctions against Gazprombank, says Reuters. The bank handles the last remaining European energy transactions with Russia, so the sanctions will cut into Russian gas revenue. The rouble dropped through the 100-to-the-dollar mark for the first time in over a year. The currency lost 11% against the dollar and 7% against the euro this year.

The central bank has raised interest rates from 9.5% before the war to 21% now. Even that eye-watering level is barely containing inflation of 8.5%. High interest rates are hurting stocks, with the local MOEX index down 20% this year. Foreign investors have been frozen out of their Russian holdings since the country’s 2022 invasion of Ukraine.

What does the rouble collapse mean for Russia's economy?

“Relentless” Kremlin war spending is causing Russia’s $2 trillion economy to overheat, says Jason Corcoran in The Moscow Times. High interest rates are stressing the property sector, with “over 200 shopping malls” at risk of bankruptcy because of soaring debt costs. Butter prices are up almost 30% this year, turning a “simple staple” into “a luxury” and prompting a spate of butter thefts.

Defence and “national security” spending now accounts for 40% of the Russian federal budget, says Tim Lister for CNN. Non-defence businesses are struggling to find enough workers, driving a wage-price spiral. Still, a “steady stream of commodity revenues” and “escalating repression at home” means the Kremlin “can continue funding its war effort for the foreseeable future”, says Alexandra Prokopenko of the Carnegie Russia Eurasia Center.

The Russian economy is likely to be heading for “stagflation”, says Filip De Mott in Business Insider. But analysts at the Center for Analysis and Strategies in Europe think the Kremlin can hold off a more “serious crisis” for at least “three-to-five” more years. They argue that Moscow can bring in new immigrant workers from central Asia to stem labour shortages, while there is still scope to raise taxes on individuals and companies to buttress government spending.

A country that agrees to trade advanced military technology in exchange for North Korean soldiers is evidently running into major “resource constraints”, says Martin Sandbu in the Financial Times. Ultimately war economies must transfer resources from the private sector to the military.

High interest rates have that effect. Russia’s 21% rates are starving “long-term corporate investment”, diverting resources to immediate defence production instead. Russian industrialists are already complaining. Even Sergei Chemezov, the boss of state-controlled weapons business Rostec, has “publicly warned” that “if we continue to work like this, most companies will go bankrupt”.

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The fund manager Peter Lynch was known for his theory that you should “buy what you know”. Of course, this was a bit more than simply buying the brands you encounter in your day-to-day shopping. Lynch also meant companies that you interact with through your job, or through being part of an industry, and he pointed out that you still had to do your homework to understand the business, balance sheet and valuation. But the logic is clear: sometimes the service you get helps you see why a company makes sense as an investment.

For me, Trainline (LSE: TRN) is a good example of this. The company specialises in selling rail tickets for the entire UK rail network. As someone who does a lot of long train journeys outside London, I find it useful in helping me to find the quickest route and the cheapest ticket, all for a low booking fee. Customer service is also good: in the cases when I’ve accidentally bought more tickets than I need, they have been fine with cancelling them and refunding me, provided I give a reasonable amount of notice.

Is Trainline a good stock to buy?

Of course, Trainline is not universally popular. The RMT trade union recently accused Trainline of ripping off customers and not properly updating timetables to account for delays. However, since the RMT represents those who work in station ticket offices, this should be taken with a pinch of salt. Trainline’s popularity suggests that many users feel that it delivers a far greater degree of convenience compared with ticket machines.

While there has been talk about the UK government building its own app – especially if the rail network is gradually taken into public ownership over the next five years – the realistic chances of this seem low to me. In any case, Trainline has been diversifying its model, branching out into bus travel (including National Express in the UK), as well as moving into continental Europe (where growing competition between multiple operators creates an opportunity for a single website).

With rail transport being seen as the green alternative to roads, it’s not surprising that Trainline’s revenue has been growing quickly, nearly doubling between 2019 and 2024. It has also managed to expand its operating margins, which are now nearly 20%, and it has a double-digit return on capital employed. Debt is moderate, which should enable it to withstand any downturn. All told, the valuation of 24 times the forecast earnings for 2025 seems reasonable.

Trainline’s shares are also benefiting from short-term momentum. Several brokers have upgraded their earnings forecasts in light of its string of half-year earnings, which caused its shares to jump by more than 20% over the last month. The price is above both the 50-day and 200-day moving average. I would therefore go long at the current price of 404p at £6 per 1p, with a stop-loss of 254p. This would give you a total downside of £900.

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War, the US presidential election, geopolitical tensions, cyber warfare, trade protectionism, the environment and the energy transition, changes to the post-war world order, de-dollarisation, and eye-watering levels of global debt and fiscal deficits all make for an extremely uncertain investing environment. Yet time and again throughout history, the world’s money and investment flows adapt and evolve with the challenges of the day.

Corrections and market downturns inevitably happen, so the key is to prepare for these before they strike rather than after the event. Asset, sector and geographic rotation are the staples for most private investors looking to protect their wealth. But what other alternatives are there? For those willing to invest the time to understand them, options may well be part of the solution for those looking to protect and grow their wealth in these dangerous times.

Why opt for options?

Protecting and growing your wealth are two sides of the same coin. For those with youth on their side, building and holding on to long equities exposure is often recommended as the most effective way to accumulate wealth over time.

However, what if a 20% market correction (a 20% drop being the common definition of a bear market) happens later in life, leaving you with less time for the market to recoup its losses and make new highs? You could switch from equities to bonds, but this may result in lower capital growth and income compared with holding equities through the economic cycle.

Options provide investors with a readily accessible way to protect (or hedge) their market exposures over multiple different timeframes. With options, it is as easy to go short (by buying a put option) as it is to go long (buying a call option), so these instruments and strategies can be used to position your portfolio and trade in a bear market in just the same way as you could use them in a bull market.

Protect your portfolio with put spreads

The simplest way to hedge a long position that you have in an underlying asset is to buy a put option. If the value of that underlying asset (for example, shares or gold) goes down, you have the right to sell that asset at the put option’s strike price. You may either exercise that option or sell it as it increases in value. However, in times of high volatility, the cost of these options increases significantly, so investors often use put spreads instead of put options. A long put spread involves buying a near-the-money put option and selling (also known as “granting” or “writing”) a further out-of-the-money put option with the same expiry.

The logic behind this is that you can use the premium collected from selling the further out-of-the-money short put option to finance a portion of the nearer-the-money long put option. In this case, the risk is limited to the price you pay for the spread (the value of the near-the-money put less the premium you collect for the further out-of-the-money put) plus commissions and fees. In return for the lower cost of entry you are effectively capping the near-the-money put’s profit potential, so put spreads are best used if you are moderately bearish.

Growing wealth by trading volatility

In uncertain times, market moves can be exaggerated, with volatility increasing significantly. This can be concerning for investors, but it can also generate some interesting opportunities for options traders. The price of an option is determined not just by the strike price, but also by the time to expiry (the longer to expiry, the higher the premium) and volatility (the higher the volatility, the higher the premium). So buying options during periods of low volatility can be a good way to position yourself for anticipated moves in the future.

If you are unsure whether the moves are going to be significantly up (which might be the case if peace is restored in Eastern Europe and/or the Middle East), or significantly down (which might be driven by rapidly rising inflation and interest rates), then you might consider buying a straddle or a strangle.

Straddles and strangles
Straddles and strangles are options strategies that profit from a sharp increase in volatility regardless of whether the stock rises or falls, so long as it moves by a magnitude sufficient to cover the combined cost of both options. Since these are bought-option strategies, the risk is limited to the premium paid for the strategy plus any fees and commissions.

A long straddle is a strategy in which you buy a call option and a put option at-the-money, both with the same strike price and expiration. Together, they produce a position that will profit if the stock makes a big move either up or down. The best time to buy a long straddle is during quiet trading periods – since you will pay less for the two options as their implied volatility will be lower – when you expect that more volatile trading conditions will happen in the future. For example, you might anticipate volatility in Nvidia’s shares when it publishes its quarterly results.

Given the way that the long straddle is set up, only one of the options will have intrinsic value when it expires, but the investor hopes that the value of that option will be enough to earn a profit on the entire position. This allows for theoretically unlimited profit potential on the call option to the upside. The maximum profit from the put option to the downside would be achieved should the asset become worthless.

Strangles are similar to straddles but are more cost-effective because instead of buying relatively expensive at-the-money puts and calls you buy cheaper out-of-the-money options. Although the net initial outlay for a strangle is cheaper, the strategy requires a bigger price move in either direction than a straddle for the trade to become profitable.

Generating income by selling options

Buying options and bought-options strategies limit your risk to the premium paid plus any fees and commissions that you pay to trade them. Conversely, writing them means collecting the premium paid in return for accepting a potentially unlimited risk.

Given this risk profile, why do sophisticated investors choose to grant options? They choose to do so because they feel the premium they can earn from granting options is worth the risk. If the market moves against them they can cover the losses with cash, or they are happy to make or take delivery of the underlying asset at the option’s strike price at expiry.

To illustrate this latter point, a relatively conservative way to grant options is a strategy known as covered calls. This involves granting out-of-the-money call options on a stock that you own.

For example, if you own shares in a UK bank, you might be willing to sell some of those shares if the price goes up by more than a certain percentage in a few months. In this case, you could grant a call option, collect the premium, and be prepared to deliver 1,000 shares in the bank should the option be exercised. If they don’t rise to the strike price by the expiry date, you simply keep the premium you collected.

The risk here is clearly defined and limited because you can easily deliver the underlying stock since you already own it. However, you would forego any further increase in the underlying stock price beyond the strike price. Note if you wrote a call option but did not own the stock, and the option was exercised, you would have to buy the stock in the market to deliver it. This exposes you to uncapped potential losses if the stock soars.

Options: should you use them?

The flexibility of options can make them useful tools for experienced investors, either as an overlay on an underlying portfolio of assets or for tactical trading. Still, as with any investment, your capital is at risk, and derivative products are considerably higher risk and more complex than more conventional investments. They come with a high risk of losing money rapidly due to leverage and are not suitable for everyone. If you’re not sure whether trading in options is right for you, you should contact an independent financial adviser.

James Proudlock is chief executive of OptionsDesk

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One of the big long-term issues facing the UK is the relatively high cost of housing. Over the last 30 years, the ratio of house prices to average incomes has steadily risen (with a brief fall during the financial crisis) from around four to around eight, according to a study by Schroders. This is the highest level since Victorian times and mostly reflects a longstanding failure to build enough homes to keep pace with Britain’s growing population. 

However, the problem is that building more homes is controversial, especially among people who live in small towns and villages, who are worried about urban sprawl. This is where a company like Harworth (LSE: HWG) comes in. 

Haworth specialises in developing what are known as “brownfield” sites. This is land that has been previously developed but is no longer being used, or is being under-used, for various reasons including the failure of a project or business. Since this land was once built upon, there are fewer objections, both legal and political, to redeveloping, compared with untouched “greenfield” sites. In many cases, local residents are actually happy to have new homes and offices replacing vacant or derelict buildings.

Harworth has built a strong pipeline

Harworth is one of the largest developers of brownfield land, with 14,000 acres of land across around 100 sites in the north of England and the Midlands. As of the end of June, it had planning permission for 38.8 million square feet of industrial and logistics space and 26,639 plots for new homes. Of course, not all of these projects will go ahead, and even those that do will take time and money to build before being sold. However, the hope is that with the new government committed to building large numbers of homes, and continued strong opposition to developing greenfield sites, the need for brownfield development will ensure that it benefits from a high level of demand.

Growth is set to take off

Like many small developers, Harworth’s growth hasn’t been smooth. Total revenue soared in 2021 and 2022, only to fall back in 2023. However, recent strong trading updates suggest that it is now on an upward trajectory, with revenue expected to rise by over 50% this year, and by a further 30% the year after. It also has managed to maintain reasonable profit margins, with return on capital employed of just under 10%. Despite this, it trades at only 6.5 times the consensus forecast earnings for 2025, with brokers updating their forecasts for both profits and sales. 

Harworth’s shares have jumped by nearly two-thirds this year, and a few weeks ago it was admitted to the FTSE 250. The chart continues to look attractive from a technical perspective, with the shares trading above their 50-day and 300-day moving averages. I’d suggest going long at the current price of 190p, at £14 per 1p. I’d put the stop loss at 120p, which would give you a total downside of £980.

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Trading platforms have started letting investors put fractional shares in their ISA again ahead of an expected change in HMRC rules.

The taxman had been working with the Treasury and the Financial Conduct Authority (FCA) on changes to ISA rules since the end of 2023 amid the rising popularity of trading apps that let users purchase fractional shares through the tax wrapper. Current ISA regulations didn’t specifically permit portions of shares to be used in a stocks and shares ISA, raising fears that investors may have to sell their fractional share holdings from an ISA.

But the rules are now expected to be officially amended, possibly even before the Autumn Budget, after investors and trading apps were last month given the go ahead to continue backing fractional shares and receiving tax-free returns through an ISA with no penalties.

An HMRC spokesperson said: “The government has committed to changing the ISA rules to allow certain fractional shares. Taking a pragmatic approach, we will not raise an assessment on managers or investors for fractional shares acquired before these changes are made.”

What are fractional shares?

A fractional share lets an investor buy a portion of a stock rather than paying the full share price. They have become more popular since the emergence of trading apps that let you buy and sell shares from your smartphone.

It provides a cheaper way to start investing and build a portfolio, which can appeal to younger investors with less money to put away - or even those nervous about committing too much. This means any returns are equivalent to how much they have invested. They are popular in the US where share prices are particularly high and brokers argue that it lowers the barriers to entry for retail investors.

Not all investment platforms offer fractional shares and you will mainly find them on newer trading apps. Some platforms may let you buy and sell fractional shares but only in a general investment account.

Here are the financial apps and investment platforms that will let you put fractional shares in an ISA:

Freetrade

Stock trading app Freetrade previously let users buy US fractional shares through its self-invested personal pension, general investment account and ISA. It had stopped allowing new investment into fractional shares through an ISA while the rules were clarified.

Anyone with fractional shares in an ISA could keep them in their portfolio but were unable to add new ones. The trading app announced this week that users can now purchase US shares through its Freetrade ISA again.

Etoro

Investors on eToro can put money into fractional shares through its general investment account but it is currently not possible through an ISA.

Dan Moczulski, managing director of eToro UK, told MoneyWeek: "Whilst we offer fractional shares on the eToro platform, we currently do not offer fractional shares as part of our ISA solution.

"Nonetheless, we are strong advocates of fractional shares and allowing them in ISAs is a sensible move from HMRC and the new Labour government. This will reduce barriers to investing for Brits, as more savers will be encouraged to put their cash to work if they can easily diversify their portfolios with smaller amounts of money without having to pay tax.

"Crucially, fractional shares in ISAs also give people the freedom to invest and withdraw the exact amount of money that they want, rather than being forced to take out smaller or larger amounts, just because their ISA holdings need to be made up of whole shares."

Trading 212

Trading212 lets users buy fractional shares and exchange traded funds through its ISA. It was so confident that HMRC would allow them that it didn’t even stop new investment while changes were being considered.

InvestEngine

InvestEngine lets users build a portfolio of exchange traded funds. This can be done through its ISA by purchasing fractional shares.

Moneybox

Moneybox has also consistently let users include fractional US shares in its stocks and shares ISA, alongside funds and exchange traded funds. Brian Byrnes, head of personal finance at Moneybox, said: “We, like other platforms, had interpreted that the original ISA legislative wording, which was introduced prior to fractionals existing, allowed for fractional shares within the ISA wrapper.

“We have been consistent with our offering and messaging to customers while awaiting clarity from HMRC. “

Byrnes welcomed HMRC officially changing the regulations, adding: “It is widely recognised that far more people could be benefiting from investing than are currently doing so. If the past few years have taught us anything, it's that as a society we need to take financial resilience more seriously and, the truth is, financial resilience is mostly about enabling more people to build wealth throughout their lives.

“Thankfully, the environment is slowly changing, and clearing up any perceived ambiguity around fractional shares will allow more people to build diversified investing portfolios from much lower starting amounts. More progress on the Advice Guidance Boundary Review and pensions dashboards will also be welcome.”

There is a growing global market for cross-border payments, in which new companies are taking business away from traditional banks and foreign exchange brokers who lack the resources to cope with increasing compliance requirements. Finseta (Aim: FIN) is a good example of one such company. It provides multi-currency accounts for businesses and high net-worth individuals (HNWIs) all over the world. The firm removes the complexity of international payments by managing currency risk, payment and electronic account services. Finseta has a market value of £22 million and achieved a turnover of £9.65 million in 2023, up fourfold from 2021.

How Finseta is leaving a worldwide footprint

Finseta does not compete in the low-value, high-volume retail market, but instead provides bespoke services to corporate and HNWI customers making high-value compliance intensive transactions. The company serves 1,400 customers in more than 150 countries and with more than 58 currencies. It offers accounts in at least 35 different currencies and provides four main advantages over traditional banks. These are: first, one-to-one personalised service; second, reduced paperwork; third, speed (witness a turnaround time of less than 24 hours) and, fourth, cost (the service is up to 5% cheaper than high-street banks’ offerings). 

Finseta was formed in 2010 and was listed on Aim in 2021. It has a low-risk business model since it does not engage in speculative currency trades nor trade from its own balance sheet. Payments are facilitated through counterparty relationships with only limited use of Finseta’s balance sheet, and this leads to low working capital intensity, a high return on capital and high cash conversion. Finseta invests in its regulatory and compliance capabilities, which are important for its customers, and its diversified business is not reliant on particular currency pairs or payment corridors. Its highly scalable technology platform facilitates future growth and innovation. 

Finseta is expanding internationally and into new markets to position itself for sustainable long-term growth. In January 2024, the firm signed a deal with Mastercard to launch a corporate card scheme. The company will now be able to launch commercial cards co-branded with and supported by Mastercard for the group’s corporate customers. The card is expected to be launched in the next few weeks and will offer customers an additional payment route, which should be particularly useful in managing business expenses flexibly.

Finseta has grown both organically and through bolt-on acquisitions. It was known as Cornerstone FS in 2021 when it was first listed on Aim. In 2022 both Capital Currencies and Pangea FX were acquired and the company’s name was changed to Finseta in April 2024. International expansion began with the opening of a new Asia office in August 2021 followed by an office in the United Arab Emirates in September 2021. Authorisation to operate in Canada was granted in April 2024. In June 2024 Finseta received £150,000 cash for selling, to a non-competing business, its non-trading subsidiary Capital Currencies.

Given this international expansion and the 2022 acquisitions, it is not surprising that revenue rose 38% from 2020 to 2021 and then more than doubled between 2021 and 2022. It then doubled again the next year to reach £9.65 million. The pre-tax loss grew from £1.4 million in 2020 to £5.6 million in 2022 as the company expanded internationally, but the doubling of sales from 2022 to 2023 enabled it to declare its first pre-tax profit of £1.3 million and first positive cash flow in 2023. In reporting the company’s 2023 results, CEO James Hickman said that the strong trading momentum of 2023 had been sustained in 2024, so the company expects continuing growth this year.

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Bitcoin has been an extremely lucrative asset for those who invested when it first took off. Even if you had bought as late as four years ago, and simply held on, you would be looking at a very good return. However, since early 2021, bitcoin has been a lot more volatile, prone to large rises and falls. 

Owing to this volatility, many people have turned to bitcoin mining – the process of using brute computer power – to unlock more bitcoins. However, even this is starting to become unprofitable, which is bad news for bitcoin miners such as Riot Platforms (Nasdaq: RIOT). 

There are several big problems with bitcoin mining. In order to protect the value of bitcoin, the designers set a limit to the total number of bitcoins that can be unlocked, with the amount of effort to unlock each bitcoin increasing at regular intervals the more that bitcoin is mined. 

This means that companies engaging in bitcoin mining have to keep increasing their amount of processing power, which requires large amounts of capital investment. This, in turn, requires more and more energy, which is controversial at a time when there is a major emphasis on trying to reduce carbon emissions.

The problem with Riot Platforms 

Perhaps the most pressing problem is the increasing amount of competition. As short seller Kerrisdale Capital points out, bitcoin mining is global in nature, with miners from around the world competing to mine bitcoin ever more cheaply. 

Even miners in areas like Texas (where Riot is located), which is regarded as the most bitcoin-friendly part of the US thanks to relatively light regulation and cheap energy, are finding it difficult to compete with rivals from Africa and South America, which have much lower labour costs and can access cheap Chinese equipment more easily. 

As a result, even as bitcoin soared, Riot has struggled to make money. It has made a loss in five of the last six years (only in 2023 did it manage to produce earnings). While it hopes to make a small profit next year, even the most optimistic estimates have it trading at 58 times 2025 earnings, the sort of valuation you would associate with a successful company, not one bleeding red ink. 

The losses, combined with the constant need for capital to upgrade equipment, have forced the group to keep issuing additional shares, diluting shareholders – usually a sign of a company in trouble. 

Given these fundamental problems, it is hardly surprising that Riot’s shares have done poorly recently, suggesting that they have further to fall. They are trading well below both the 50-day and 200-day moving averages and have also lagged the wider stock market; they have halved since December. I would therefore suggest that you short them at the current price of $7.20 at £200 per $1. I would put the stop loss at $12, which would give you a total downside of £960.

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When traders first start using options, they often employ them either as a way to take a directional view on an asset (buying a call if they expect it to rise or a put if they expect it to fall) or as a way to hedge their portfolio against market volatility. However, experienced traders can also go on to consider more complex strategies that involve buying or selling combinations of options. 

It is important to have a strong grasp of options trading principles before attempting this and to understand the risks involved in each position. Broadly speaking, bought options and long option strategies carry limited risk. The buyer pays the seller a premium that equals the maximum loss on any position expiring out of the money. Granted options and short options strategies (also known as sold options and written options) have the potential for unlimited maximum losses in some cases if the position expires in the money, and so very careful risk management is needed when employing some of these strategies.

Trading spreads 

Traders seeking leveraged exposure to an underlying equity might consider trading cheaper call and put spreads. These benefit from lower initial outlays in exchange for a capped maximum profit or loss. 

A long call spread, also known as a debit call spread or a bull call spread, is used to express a moderately bullish view on an underlying asset. It is constructed by purchasing a call option with a lower strike price while selling a call option with a higher strike price. Both options have the same expiration date. 

This profits from a moderate rise in the price of the underlying asset. Purchasing a call with a lower strike and selling a call with a higher strike – creating a spread – lowers the initial net premium in exchange for a capped maximum profit, which is reached if the underlying asset’s price is at or above the higher strike price at expiration. The profit is the difference between the strike prices minus the net premium paid. The maximum loss is limited to the net premium paid for the spread and occurs if the underlying asset’s price is at or below the lower strike price at expiration. 

For example, if XYZ Inc stock is trading at $400, a trader might buy an out-of-the-money XYZ $420 20-Sep-2024 call option for $17 and sell an out-of-the-money XYZ $460 20-Sep-2024 call option for $6. The net premium paid for the spread and hence the maximum loss is $17 - $6 = $11. If the stock price rises to $460 or above, the trader’s maximum profit is $460 - $420 - $11 = $29. 

A short call spread, also known as a credit call spread or a bear call spread, expresses a moderately bearish outlook on an asset. It entails selling a call option with a lower strike price while buying a call option with a higher strike price. Again, both options have the same expiration date. 

This strategy profits from a moderate decline or neutral movement in the price of the underlying asset. The trader receives a net premium since the sold call option (lower strike) is more expensive than the purchased call option (higher strike). The maximum profit is the net premium and is achieved if the asset’s price is at or below the lower strike price at expiration. The maximum loss is limited to the difference between the strike prices minus the net premium received. 

For example, a trader may sell an out of the money XYZ $420 20-Sep-2024 call option for $17 and buy an out of the money XYZ $460 20-Sep-2024 call option for $6. The net premium received for the spread is $17 - $6 = $11. If the stock price remains below $420, the trader’s maximum profit is $11 (the premium received). If the underlying asset’s price is at or above the higher strike price at expiration, the maximum loss is $460 - $420 - $11 = $29. 

Similar strategies can be employed with put options. A short put spread (bull put spread or credit put spread) is another way to take a moderately bullish view. It involves selling a put option with a higher strike price and buying a put option with a lower strike price. A long put spread (bear put spread or debit put spread) expresses a moderately bearish view, by buying a put option with a higher strike price and selling a put option with a lower strike price. As with call spreads, these strategies have a maximum potential loss that can be calculated before entering the trade.

Getting to grips with volatility

Options can also be used to construct positions that are sensitive to changes in volatility, rather than directional movements in the underlying asset. These positions allow traders to profit from sharp changes in the market without needing to predict the overall direction of the change in an asset’s price. 

The CBOE Volatility index (VIX), often referred to as the “fear gauge”, is a real-time market index that represents the expectations for volatility in the US stock market. It is derived from the implied volatility embedded into the prices of S&P 500 index options traded on the Chicago Board Options Exchange. 

When the VIX is high, it indicates that traders expect large price swings in the underlying assets. Both call and put options become more expensive during periods of high volatility. This is because the potential for large price movements increases the likelihood that an option will expire in-the-money. When the VIX is low, it suggests that traders expect stable prices with minimal fluctuations. Both call and put options become cheaper during periods of low volatility, because of the reduced probability that an option will expire in the money. 

During times of geopolitical and macroeconomic uncertainty, opportunities to trade volatility may arise amidst the chaos. A long straddle, also known as “buying volatility”, is employed by a trader expecting a sharp rise in the volatility of an underlying asset. It is constructed by buying a call option and a put option with the same strike price and the same expiration date. It will make a profit when the underlying asset price moves by a magnitude sufficient to cover the combined cost of both options. 

For example, a trader may buy an at-the-money XYZ $400 20-Sep-2024 call option for $30 and buy an at-the-money XYZ $400 20-Sep-2024 put option for $23. The net premium paid for the straddle is $30 + $23 = $53. If the price of the underlying asset goes above the strike price of the call option, the trader’s potential maximum profit is determined by how high it goes and is (theoretically) potentially unlimited. Should the price of the asset fall instead, the maximum potential gain from the put option is $400 - $53 = $347. The strategy breaks even when the underlying price at expiry is either $453 or $347, since this is equal to the strike price for each option plus or minus the total premium paid for both options. The maximum loss if both options expire out-of-the-money is the total premium of $53. 

A long strangle, similar to a straddle, is also executed by investors expecting a sharp rise in the volatility of an underlying asset. It entails buying an out-of-the-money call option and an out-of-the-money put option with different strike prices and the same expiration date. A long strangle will be cheaper than a long straddle because the premiums for out of the money options will be lower than at-the-money options used for a long straddle, but the underlying asset price will have to move further to make the position profitable. 

For example, if a stock is trading at $400, a trader will buy an out-of-the-money XYZ $450 20-Sep2024 call option for $6 and buy an out-of-the-money XYZ $350 20-Sep-2024 put option for $7. The net premium paid for the strangle is $6 + $7 = $13. The maximum profit to the upside from the call option is again in principle unlimited; the maximum profit to the downside from the put option is $350 - $13 = $337. The maximum loss is limited to the $13 premium paid for both options. However, the breakeven points for this strategy are $463 or $337 (the strike prices plus or minus the $13 total premium) – a greater distance than for the long straddle. 

Traders who want instead to bet on volatility being lower could sell put and call options to create a short straddle or short strangle. However, unlike the long strategies we have discussed, both of these strategies can produce potentially unlimited losses if volatility spikes, so they should only ever be considered by very experienced traders with rigorous risk management.

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Today we look at what must be the most important price in the world – that of the global reserve currency, the US dollar. Does it go up or down from here? There is probably no more important question in global finance. Why? The dollar is the pricing mechanism for essential materials; commodities such as oil, copper, gold and wheat. International debt is mostly traded in dollars. The International Monetary Fund thinks in dollars. The greenback determines global capital flows – whether money is flowing from or to the US. Most importantly, is money flowing, or tightening?

If the dollar is falling it usually signals boom times for assets, equities and commodities especially. The US prints and spends, and then exports the inflation. Money becomes loose and there is a party. House prices go up, equity prices go up, bond prices go up, energy and metal prices go up. Everybody feels wealthy as the US prints and spends, and then exports the inflation and debasement. But when the dollar is strong, everyone gets the jitters. Money tightens. 

Today the US dollar is seriously oversold. The inverse trade, gold, is at all-time highs. US equity markets are flirting with record peaks, while the euro and the yen, even the pound, have been soaring. What’s more, the US elections are coming.

Fluctuating value of the US dollar over the years

Since 1985, almost like clockwork, the dollar has declined under the Republicans – Reagan, Bush (twice) and Trump – and rallied under the Democrat presidents Clinton, Obama and Biden. Who wins in November has a big impact on the price. Do you want to know who is going to win? Look at what the dollar is doing now. But there are several months to go until November, and much can change in just a few weeks. 

The US dollar index tracks the dollar against the currencies of America’s main trading partners – the euro, Swiss franc, Japanese yen, Canadian dollar, British pound and Swedish krona. The Relative Strength Index (RSI, a measure of momentum designed to determine if an asset is overbought or oversold) has gone beneath 30 for the first time in more than a year. You would typically expect a reversal from these levels and, indeed, as I write this piece, the dollar does seem to be turning. 

The last time it was this oversold, July 2023, the dollar had a three-month rally that was quite something: about 8%. That’s a lot for a currency in that time frame. In fact, based on this, I have taken a small short position in cable (the pound/dollar exchange rate), betting that the dollar will rise against the pound. US Federal Reserve chairman Jerome Powell has indicated that the central bank is now ready to start cutting rates, which should be bearish for the dollar. But oversold is oversold. “The time has come for policy to adjust,” he said. “My confidence has grown that inflation is on a sustainable path back to 2%.” 

The market is somewhat divided as to whether the first cut will be 0.25 or 0.5 percentage points, but lower rates are certainly coming. The “inflation monster”, by their definition, has been tamed. “The two-year yield has fallen to 3.9% compared with base rates at 5.5%, which is the bond market’s way of pricing in future rate cuts,” says Charlie Morris at ByteTree. “The difference, at -1.6%, means a full rate-cutting cycle lies ahead. This reading is more pronounced than [that] seen in 2001 and 2008, implying the cuts could come thick and fast.” Note that 2001 and 2008 were major turning points in the US dollar. 

What about sentiment? To gauge this, I ran some polls on various WhatsApp chats and Twitter/X. WhatsApp was inconclusive (30% bull, 35% bear, 35% no strong view). Twitter/X was more telling: 50% bearish, 30% undecided, just 20% bullish. Bullish is the contrarian view. On a purchasing power parity basis, the US dollar is still expensive. (Have you been there lately?) But purchasing power parity can stay irrational a lot longer than you can stay solvent. The same goes for all value trades. 

The dollar tends to trade in long cycles. Even so, this one has been going on a very long time. From its peak in 1985, it did not make a final low until 1992, seven years on. It then retested the area in 1995. Just the bottoming process took some seven years. There then followed a period of strength from 1995, which peaked in 2001. Again, the reversal process took some three years between 2000 and 2002. This was followed by a down cycle – accompanied by that amazing bull market in commodities – that lasted six years, from 2002 until 2008. The bottoming process then took another three years. And the next bull market lasted from 2011 to late 2022.

My view, based on previous cycles, is that we are likely to be in the latter stages of a topping process. I’m not entirely sure the next bear cycle begins here. However, with plenty of gold and bitcoin, and being sterling-denominated, I am more than happy to be proved wrong. From a macro geopolitical perspective, I believe the dollar faces major challenges in the years ahead, possibly from the Chinese yuan or a gold-backed currency or petrocurrency that the likes of China, Russia and Iran may use for trade. However, we are still a few years away from that.

Dominic Frisby writes the investment newsletter The Flying Frisby: theflyingfrisby.com.

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For years, the retailer Marks & Spencer (M&S) was a byword for poor performance. Unfashionable clothes and lack of investment in stores, along with the general decline of the high street in the face of online shopping, are just some of the reasons put forward to explain the fact that its share price peaked back in 2007. A succession of leaders have tried to reboot the company, but until recently their efforts failed to stop its decline, as shown by the fact that its share price fell by roughly 80% between May 2015 and October 2022. 

However, over the past two years, the shares have staged a comeback, more than tripling from a low of below 94p to 339p now. So has the business finally turned the corner, or is this just a “dead cat bounce”?

What's behind the M&S turnaround?

Some of the recent improvement is down to factors beyond M&S’s control. Like other retailers, it initially benefited from the end of the pandemic and the return of consumers to the high street. Problems with rival Waitrose have also led some shoppers to switch to M&S for food. Meanwhile, the recent cost-of-living crisis has seen many clothes buyers focus on affordable quality at the expense of high fashion. 

However, it’s hard to dispute that M&S deserves credit for embracing online sales, which now account for nearly a third of revenue. The company has also cut costs by boosting efficiencies, especially in logistics. It has closed down tired and poorly performing stores in favour of newer, more modern stores in better locations. Just two years into a long-term reorganisation, the potential gains are far from exhausted. At the same time, the closure of several well-known rival brands on the high street, as well as the continued expansion of its online businesses, should also help. 

Overall, M&S has seen sales grow by just under 50% over the past three years, with its profits expanding fivefold during the same period. Sales are expected to keep growing over the next few years. Another sign that it has turned the corner is the decision at the end of last year to resume paying the dividend that it stopped during the pandemic. Operating margins have also gone up and it is achieving a double-digit return on capital employed. Despite this, the shares trade at only 12 times forecast 2026 earnings – the same valuation as Tesco and Sainsbury’s, both of which have been less successful recently. 

As well as the strong prospects and cheap valuation, M&S’s share price continues to exhibit positive momentum. It is currently trading above its 50-day and 200-day moving averages, and has been the third best-performing share in the FTSE 100 (including dividends) over the past six months, only slightly behind Darktrace and Hargreaves Lansdown, which have been taken over. I would therefore suggest going long at the current price of 339p at £14 per 1p, with a stop loss of 269p. This would give you a total potential downside of £980.

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Let’s start by stating the obvious. Commodities exist in the physical world. That means they are very different from stocks, bonds or cryptocurrencies. 

Those asset classes can move around the world with a keystroke. Commodities must be transported. That is both costly and time-consuming. They degrade and spoil, are stolen, hidden and fought over. Meanwhile, their prices can move in an exceptionally volatile manner. That means fortunes can be quickly made or lost. 

They are also totally essential to our daily lives. I’m not ready for the day until I’ve had my coffee, for example! It doesn’t matter what happens to the stock or bond markets – commodities will always exist and so will our need for them. 

Commodities offer valuable diversification from other assets: they may rise when most markets fall. Individual commodities often also trade very differently from each other, so that offers an additional avenue for diversification within the commodity asset class. 

However, you have to know how to trade them to get the benefit of this. Simply buying and holding commodities is not likely to get the best results.

How commodities trade

Commodities trade on both a “spot” basis (the price to buy them immediately) and as futures (the price for delivery at a given point). Of course, as a financial trader, you don’t actually take delivery of these physical items, but this reality is reflected in how these markets behave. 

Futures prices have a relationship to spot prices, but they are not the same. The difference reflects both expected changes in supply and demand and also, crucially, the “cost of carry”. It costs money to store commodities, so as soon as you open a commodity position, you are paying for storage. Those costs are mostly wrapped into the price of the various instruments that you trade, rather than being charged explicitly – but they are always present. That’s why, for example, spot crude oil might trade at $85 per barrel, futures for delivery in three months at $87 and futures for delivery in a year at $90. 

Experienced traders who are able to put up the large amount of capital required may sometimes trade commodities futures directly. However, traders can use also spread betting and contracts for difference (CFDs) and these require less capital, as well as being simpler to start learning the principles.

Spread betting and CFDs

You can use spread betting and CFDs to trade both the spot price and futures prices. Exactly what is available will depend on the commodity and on the provider you use – some will have more choice than others. If you trade the futures price, the bet will follow the conventions of the underlying futures market. For example, gold futures contracts are three months long, while natural gas futures contracts expire at the end of every month. (You can, of course, close your position at any time before expiry.) 

Let’s take an example of spread-betting gold and see how it relates to spot prices and futures prices. At the time of writing, the spot price of gold is trading at $2,471 per oz. The December futures prices (ie, gold to be delivered in December) are trading at a spread of $2,510-$2,510.60 (ie, you can sell at $2,510 and buy at $2,510.60). That $39 difference between spot gold and December gold is the holding cost of gold for four months. If gold prices simply go sideways for two years, those costs add up and eat into your capital. That’s why most commodity trading strategies rely on trading volatility rather than buying and holding. 

Let’s say that I want to bet that gold will rise. I buy the $2,510.60 price. Spread bets are based on pounds per point, with a point here being a $1 move. Say I bet £10 on my gold wager. If gold rises $50, I will make £500. If gold falls $50, I will lose £500. You will notice from the above example that currencies don’t come into this: you can bet pounds on a dollar-denominated instrument because you are betting on the number of points moved rather than the strict value of the product you are trading. 

Spread-betting firms also offer daily rolling bets on spot prices. The spreads on these bets are tighter, so they are less expensive if you are a day trader (ie, you are getting in and out of the position on the same day). However, the costs will mount up if you roll over the bets from one day to the next: the provider will close the bet at the end of the trading day and open a new position for the next day, and you pay the spread a second time. My rule of thumb is if you intend to hold the position open for more than three days, it is less expensive to bet on the futures price than the spot. 

Ultimately, both spread betting and CFDs work in a similar manner to trading futures directly. However, they may limit the strategies available to trade. For example, they do not allow calendar spreads (where you go long a futures contract with expiry on one date and short a contract that expires on another date).

The problem with commodity funds

An alternative way to trade commodities is to buy exchange-traded commodities (ETCs) – funds that are traded on the stock market and bought and sold through a stockbroker. ETCs typically work by taking positions in futures contracts and regularly roll the position into the next maturity before they expire. 

How well these kinds of funds perform is closely related to the cost of rolling these futures over for a prolonged period. The prices of the futures contracts factor in the cost of holding the physical commodity until expiry. In addition, since most commodity trading is leveraged, the cost of borrowing the money to hold a position is also factored into the price of the futures contract. The result is prices can vary significantly from one contract to the next, just as we saw with the difference between spot gold and the December contract above. 

As a broad rule, the normal condition in the commodity markets is that the price for delivery in future is higher than it is today (known as contango). That makes sense: if I buy copper, it costs me money to hold it for three months, and so I will want a higher price to commit to selling it when the contract expires in three months than selling it now. 

When markets trade in contango, ETCs do not tend to perform well, because to roll over they must sell lower-priced futures contracts that are expiring and replace them with higher-priced ones expiring further ahead. They will only generate positive returns if the price rises enough to offset what they lose on each roll.

However, there are times that prices are higher in the present than in the future (known as backwardation). These are generally associated with supply shortages. This happened recently in the cocoa market: there have been several bad harvests and it takes several years to grow new trees. The shortage of available supply created higher prices overall, but also backwardation because cocoa buyers are scrambling to get hold of supplies immediately. Futures-based ETCs do best on the rare occasions when backwardations more than compensate for the cost of holding. 

Some ETCs hold physical commodities rather than commodity futures. These funds are usually limited to metals, because these don’t rot and they are dense (you don’t need a lot of storage space to hold a significant volume of material). 

The biggest physical metal ETCs are the ones that invest in gold. Using these funds keeps the cost of holding physical metal as low as possible. At the same time, they remove the leverage, risk and cost of trading gold via futures. Many traders and investors see them as the most convenient way to get exposure to the gold price. Of course, they are not appropriate for anyone who wants leverage to the price of gold. 

A final note: trading commodities can be profitable, but they are very volatile and not straightforward. There are many different ways to participate in the commodity markets. The most important thing to remember is that all commodities behave according to their own unique characteristics and traders should study these markets carefully before starting to trade.

Eoin runs the Fuller Treacy Money investment strategy service (fullertreacymoney.substack.com).

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The S&P 500 index tends to rise or fall half a per cent in a day – a swing of 50 points or so. That may not mean much to a buy-and-hold investor but, to a trader, it’s enough for a spectacular gain if they employ sufficient leverage. With 20:1 leverage, for example, that half a per cent move in the index means a 10% move in the value of your position.  

But while using spread bets, contracts for difference (CFDs) or futures for that kind of trade will give you much more potential upside, you also have more downside if the trade goes against you. In some trades, the downside is – in theory – potentially unlimited.  

Options are different, of course. With some (not all) options, your maximum loss is capped at the outset. For example, with a long call option, the downside is limited to the premium paid, while the potential gain is much greater if stocks surge upwards. That kind of asymmetric pay-off makes them very attractive to people who are drawn to lottery-ticket-type trades. 

This helps explain why the powerful bull market in the US in recent years has been accompanied by the increasing use of options by retail traders – and, in particular, an explosive growth in zero-days-to-expiration options (0DTEs), or “dailies”.

What are 0DTE options and how do they work?

A 0DTE is an options contract that expires on the day it is being traded. In the past, S&P 500 options trading activity would be concentrated in contracts that would expire relatively soon, but still had a few days or weeks to run. Today, 0DTEs account for more than 40% of S&P 500 options activity. 

S&P 500 options contracts used to have one weekly expiry. This went up to three days a week and then five in 2022. So there is an index options contract expiring each day, which is very appealing for a trader who wants to take a punt on how the market will move because of a US Federal Reserve meeting… a payrolls report… or Nvidia’s results. They can buy an out of the money call or put and hope for the best. 

Since the option will expire that day, there’s a high possibility that it will expire worthless if it is not already in the money. However, the premium will be small. If the market moves enough to bring it in-the-money, the pay-off can be large. Note, though, that research by the Chicago Board Options Exchange (CBOE) shows that the big intraday swings needed for large gains in 0DTEs are not common – less than 10% of moves are “gap” moves (meaning a two-standard deviation sudden increase in short-term volatility). 

So 0DTEs come with a serious health warning. This kind of trading is high risk for addiction. Once you’ve seen a $5 bet end up worth hundreds, it can be very intoxicating. You can see why traders get seduced into buying them and end up consistently losing money over time.

Can you make money with 0DTEs?

So is there a way to trade 0DTEs with any prospect of success? The characteristics of these trades – a very short time to expiry (so they lose value very quickly through a trading session), a high chance of expiring worthless and very convex pay-offs (small moves in the index can mean a big move in the value of the option) – mean that timing is all important. This doesn’t simply mean timing in relation to the underlying market move, but timing in relation to the expiry of the option. 

Activity in 0DTEs tends to start trailing off by around 11.30am New York time. Canny traders tend to buy the option that has one day to expiry, hold it overnight (when the price will probably gap up or down) and sell it in the morning of the following session (when it becomes the current 0DTE). This trading behaviour accounts for the tighter spreads and greater volume in 0DTEs before noon. 

Consistently successful 0DTE traders will not be those who happen to end the trading day owning options that ended in the money because luck went their way that time. Instead, those who trade the high volatility inherent in these options and then get out before the market dries up, may have a better chance.

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Leveraged trading with spread betting and contracts for difference (CFDs) isn’t for everyone. It certainly won’t form the core of a strategy for most MoneyWeek readers. However, for some people, short-term trading can be a useful supplement to your longer-term investments. Gains can be tax-free with spread betting, although not with CFDs. Stronger regulation, especially around leverage and negative balance protection for retail investors (so you can’t end up losing more than is in your account), have also reduced the risks of some of the horror stories of traders suffering large losses that were more common during the early days of these markets. 

However, leveraged trading is still risky. It is called “spread betting”, not “spread investing” for a reason. When I was spread betting before I joined MoneyWeek, I ended up learning some hard lessons about the importance of controlling losses. 

Here are five tips that should help you when starting out. This advice won’t guarantee your success, but it will at least cut the risk of racking up losses that you can’t afford. It will also help you think about whether your expectations are realistic enough.

1. Spread Betting: where to start with trading

How much "disposable" money do you have?
The first thing to do when starting out in trading is to work out how much available money you have. This is money that you can afford to lose. A good rule of thumb is that the amount "at risk" should form only a small part of your investment portfolio – no more than 5%. You should never spread bet with borrowed money, or money that you need to pay the bills, under any circumstances. 

Do you have enough capital?
No trading strategy is perfect, and sooner or later you will hit a run of bad luck. Some professional traders suggest that you should risk no more than 1% of your pot per trade, which implies that the total pot should be 100 times bigger than the size of each trade. While this may seem excessively cautious – especially if you don’t trade that often – I wouldn’t stake more than 10% of your trading fund on each trade.

Having less capital will restrict the type of trading that you are able to do. For instance, if you want to spread bet the FTSE 100 at 50p a point (the minimum at many providers), having a limit of £100 per trade will mean that you can only absorb 200 points worth of losses before you need to close the trade – so you are likely to be very focused on short-term trades. 

Providers will also require you to have a minimum amount of money in your account to back each trade. The exact amount you require varies between markets and is usually expressed as a leverage ratio (eg, 5:1) or a margin requirement (eg, 20%) of the face value of the trade. For example, if you are trading a market that has a leverage ratio of 5:1, you will need £100 in capital to open a position with a value of £500. 

Overall, if you can’t afford a trading fund of at least £4,000, then spread betting might not be for you.

2. Come up with a trading plan

Trying to trade without a strategy is a certain route to failure, so you should come up with a trading plan before putting your money at risk for the first time. This should detail the factors you will use to decide when to buy and sell. It should also include more general things such as the markets you will be trading in, whether you will be going both long and short, or long only, and the length of time you will hold positions. The plan should also include the amount of time, energy and money that you are willing to commit to spread betting. 

For instance, do you want to trade every day, or are you going to just check your positions for an hour or so every week or so? Are you going to do lots of research on potential trades, buy the latest trading software or stick to a simple system that requires minimal updating? All these things are worth considering, and the process of writing things down will force you to clarify things in your mind before you start doing things for real, as well as checking whether your plan is realistic. For example, day-trading multiple markets isn’t a good idea if you work during the day and have an active social life. Finally, a plan can serve as a reminder of what to do when you eventually start trading.

3. Look at a range of providers

There are a large number of spread-betting firms offering the ability to spread bet over the internet, each with pros and cons. However, there are three things that you should look for: 

Regulation
First, you want to make sure they are properly regulated by the UK Financial Conduct Authority (FCA). FCA regulation comes with a series of protections (such as negative balance protection) and will give you up to £85,000 worth of protection if the firm holding your money goes under (though, obviously, this won’t compensate you for any losses you make due to poor judgement). 

Markets
You should also make sure they offer the markets you want to trade in. While virtually all the main companies offer things such as the FTSE 100 and the dollar/sterling exchange rate, coverage of more obscure markets varies, so check what is listed on your chosen provider’s website before signing up. 

Size of spreads
Another key variable is the size of the spreads – the difference between the buy and sell price. Since spread-betting firms don’t charge upfront fees, they make their money on the difference between the buy and sell price, which can eat into your capital over time. Everything else being equal, lower spreads work out to smaller costs, so you are looking for a provider that offers tight spreads in your chosen markets.

4. Open some demo accounts

At this stage, you may be raring to go. However, many spread-betting firms allow you to practise with a demo account for free. For instance, IG’s demo account simulates trading with a capital of £10,000, as well as running various seminars walking you through the process of trading. You may think that this is only for complete beginners, and it’s true that nothing can fully prepare you for the experience of risking your own money. However, practise accounts can help you make sure that you are comfortable with the strategy that you have selected, (as well as with spread betting in general) and fine-tune your approach. 

At the very least, using a demo account, and taking the time to read through the documentation provided, can get you familiar with the controls so you don’t end up accidentally placing a much larger bet than you intended, and can take advantage of all the features available. One key feature that should become a part of your process is learning to use stop losses.

5. Always use stop losses

Stop losses are a crucial weapon in the armoury of spread bettors. They work by instructing the spread-betting firm to close a position that is going against you if it falls below a certain point (in the case of long positions) or rises above it (in the case of short positions). Many long-term investors don’t like stop losses because they force you to close your positions. However, when it comes to trading, where every price movement against you has a direct impact on the bottom line, it is a very different story. Despite the rules limiting leverage and eliminating negative balances, it’s still possible for a sudden move to end up taking a large chunk out of your trading capital. 

Even using an ordinary stop loss may be insufficient in certain circumstances. During periods of high volatility, the market may suddenly jump from one price to another without stopping at a point in between. If this happens, the stop loss will not trigger at the price you set it at. For example, assume you are trading the FTSE 100 at £1 a point and your stop loss is at 6,500. If the market suddenly fell from 6,501 to 6,480, because of some bad economic data, you would end up losing £21, rather than just £1. The only way to get around this is to use a guaranteed stop loss, which triggers at the point at which you had set it. This comes at an additional cost (sometimes called the stop premium) that is charged if your stop loss is triggered.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

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