Series of classical concerts in Pendle set for the axe (From Lancashire Telegraph)

The Council's budget meeting is on Thursday. Watch this space.

Tony Greaves

Musick has Charms to sooth a savage Breast

Isn't it worthwhile to soothe the savage breasts of Colne?

Graham Hartley wrote:
Musick has Charms to sooth a savage Breast

Isn't it worthwhile to soothe the savage breasts of Colne?

Graham, It will take more than music to sooth some of the t1ts in Colne.

The real scandal is not that this is being cut but that taxpayers money was being spent on this in the first place!!

I do not pay Council tax so that a small number of people can enjoy some classical music.

When will councillors realise this?

Local government faces a truly miserable future, largely as a result of the legal doctrine of specific competence and a funding model which places heavy reliance on grants from the Exchequer. In many ways local councillors have been reduced to the role of beggars holding a collecting tin out for the scraps thrown by the EEC and central government.

Pendle Leisure Trust needs an additional source of income independent from charges on users and grants from political bodies, in my view. I have to say that I am attracted to the Ivy League university funding model in the USA, where institutions have built an endowment fund which provides income that can be applied to assist the university. These endowment funds have been decades in the making but now they are reaping the rewards.

One would have to look at the legal powers but the formation of a Pendle Leisure Endowment Company would be the place to start. Into this Company would be paid of sum of money annually to be invested in income producing assets and for the first five years all income would be reinvested. Thereafter, the Company would pay a proportion of the income from investments as an annual dividend to the Leisure Trust. The trick here is to use one of the most powerful forces known to man: compound interest.

Costs? Well, obviously the money to form the capital base for investing but a Fund of this kind could be managed quite easily and successfully from a rocking chair in a small office in a back street in town.

Can it work? Yes. Would it be implemented? No.

This is because it constitutes genuine strategy that requires courage, innovation, common sense and flair; and all of these attributes are absent from public bureaus, which by definition have to be risk averse.

So I’m afraid to say that Pendle Leisure Trust is confined to a future that is rather bleak.

Kevin, Colne wrote:
Local government faces a truly miserable future, largely as a result of the legal doctrine of specific competence and a funding model which places heavy reliance on grants from the Exchequer. In many ways local councillors have been reduced to the role of beggars holding a collecting tin out for the scraps thrown by the EEC and central government.

Pendle Leisure Trust needs an additional source of income independent from charges on users and grants from political bodies, in my view. I have to say that I am attracted to the Ivy League university funding model in the USA, where institutions have built an endowment fund which provides income that can be applied to assist the university. These endowment funds have been decades in the making but now they are reaping the rewards.

One would have to look at the legal powers but the formation of a Pendle Leisure Endowment Company would be the place to start. Into this Company would be paid of sum of money annually to be invested in income producing assets and for the first five years all income would be reinvested. Thereafter, the Company would pay a proportion of the income from investments as an annual dividend to the Leisure Trust. The trick here is to use one of the most powerful forces known to man: compound interest.

Costs? Well, obviously the money to form the capital base for investing but a Fund of this kind could be managed quite easily and successfully from a rocking chair in a small office in a back street in town.

Can it work? Yes. Would it be implemented? No.

This is because it constitutes genuine strategy that requires courage, innovation, common sense and flair; and all of these attributes are absent from public bureaus, which by definition have to be risk averse.

So I’m afraid to say that Pendle Leisure Trust is confined to a future that is rather bleak.

What are these income-producing assets? The serious press has often reported that property, bonds and cunning financial instruments are held in low regard by the public and studious professionals alike; hence the uncertain future of most stripes of banking, let alone Pendle Leisure Trust. I confess to little learning in the matter, so teach me.

Graham , hi!

I don’t know about ‘property, bonds and cunning financial instruments’ but currently it is pretty hard to generate a meaningful real rate of return with the current zero-interest rate policy – ZIRP. This is distorting asset prices across the board.

Having said all of this, the situation is not entirely hopeless, especially if the time horizon for PLT is 25 years. This is not an ideal time to start, and I think it was Eric Ivory who said: “Now is always the most difficult time to invest”.

I should add that what I am about to say constitutes comment and not investment advice.

Frankly, it should be possible to take part-ownership of high quality businesses that produces a yield in excess of 4% with real growth prospects, and then let compounding work its magic. Of course, capital is at risk but an Endowment Fund should be investing with a very long time horizon and in the ordinary run of things would not be a forced seller.

I was undertaking some research the other day that showed a 15 years return of a fund without and with income reinvested. The figures were 118% without and 197% with income reinvested, and one should add that 12 years of this period covers a secular bear market! I should imagine that there are quite a few folks holding ‘with profit funds’ and saving into pensions who would like to know why the experts in charge of their pot have produced such paltry returns, especially when said experts have been paid handsomely for their expertise.

In closing I fear that the ‘serious’ press is part of the problem. They focus almost exclusively on the level of indexes over an arbitrary time-period, and are obsessed with relative rather than absolute performance. No wonder folks are confused and anxious. I have to say it does get my ire when I read press stories about a ‘wave of selling’. If there is a ‘wave of selling’ there must also be ‘wave of buying’ for who are the sellers to sell to? Or how about: ‘during the year the FTSE Index declined which means that investors lost money’. Then they urge readers to ‘buy low and sell high’ but this can work only if someone else is ‘selling low and buying high’.

I mean, how can a person take the mainstream press seriously when they produce this sort of distortion?

I would be very interested to read your take on the situation.

With every good wish,

Kevin

Thanks, Kevin, for responding so promptly in the face of my tardy correspondence.

Property, bonds, cunning financial instruments and the rest are in the toolboxes of those who give the rest of us financial advice, aren't they? I have pre-confessed to little learning here, since I am a (fading) torchbearer of 'proper' reason, mathematics, computers... the type one avoids at parties and so beyond the pale that I register as invisible in most visions of the world-that-matters.

I fear that I am among those who sell low and buy high, though usually the order of these trades is for me the reverse.

If the serious press is by your argument so easily shown to be such an exploitative joke, what remains of the intellectual perspective?

Graham ,hi!

Some of my best pals are proper mathematicians and statisticians. They’re really good at ‘dead ‘ard sums’ and many a time I’ve sat down patiently at their side while they explained probability, regression to the mean and the exponential function (the magic of compounding). I regret to say that over the years I’ve done my fair share of buying high and selling low, and of course buying high means that the return is bound to be low.

The tool boxes of those that give the rest of us financial advice are indeed stuffed with a variety of products. I’ve always followed the maxim of keeping investment simple and I find some of the investment products offered by banks, assurance companies and building societies to be truly and utterly awful.

Part of the problem is that many folk want to ‘get rich quick’ but the real tragedy, in my view, is that even those that have taken professional advice, acting prudently and were happy to settle for ‘getting rich slow’ now find that they have been taken to cleaners. Endowment policies, precipice bonds, split-capital investment trusts (of the bar-bell variety) and pensions are just a few of the products that have transferred vast amounts of wealth from savers and investors to the financial providers. It’s an absolute scandal and an utter disgrace.

For example, a well and renowned high street retailer offers financial services with a choice of 3 investment funds ranging from the timid, to the middling and the adventurous. The annual management charge is 1.25% and additional charges are then levied ranging from 0.63% to 0.78%. The yield from these funds ranges from 0.45% to 0.82%. These charges are obscene and the yields pitiful.

Then there is the building society that offers various investment bonds that offer ‘guarantees’ and ‘protection’ of investment linked to the FTSE-100 but when you examine them closely they are placing your money in a complex derivative and the bond has a set date of maturity. Investing in a stock market linked product with a fixed redemption date is not something that I would entertain, and more to the point because the ‘investment’ is in a derivative you forgo any income from the FTSE-100.

Products like the ones described above are sold regularly to ‘cautious’ investors who are being taken for fools by the mainstream financial services industry day in, day out.

Sorry to have ‘gone-off on one’ but it makes my blood boil when I see the sheer lack of common sense and integrity that is all too commonly found among mainstream financial providers, the silence from the mainstream press and the abdication of responsibility by financial regulators.

I have a penchant for investment trusts where the managers - and sometimes their families - own a significant amount of stock. It does not gaurantee success or superior performance but it does create a genuine common bond between them and external shareholders.

I offer all this as comment and not advice and investors must take professional advice from a from an authorised adviser.

Finally, I do think there is a problem with the mainstream press in general and one needs to bring to bear a real critical eye to much of their output, along with having some kind of inoculation against their daily account of ‘the market’ and where things are going.

I will make this my last posting on this story.

All the very best to you

Kevin