BBC TV News . .

. . . just now is telling us about an unfortunate householder who lost the whole of his pension "pot"(*) of £200,000 because he had been given "bad financial advice". He is now doing a manual job for the minimum wage. £200K in a pension "pot"(*) suggests he was a 'professional' . . . er . .  professionally, in which case presumably, though not definitely, he could READ. (I  qualify my "presumably." After all, football players are described as "professional" although I doubt most of them can read above the level of Red Top headlines. My evidence?  Most of them can't grunt their own names intelligibly.) 

I crave your indulgence while I say it again.  IF YOU CAN READ YOU DO NOT NEED A FINANCIAL ADVISER.  You don't actually need a pension fund. i.e. a bottomless pit of promises that you pour money into every month in the hope that it will still be there when you die or reach retirement age, assuming that happy day ever arrives now that the pensionable age is growing up faster than you are.

But if you insist on (oops . . maybe your conditions of employment require that you HAVE to pay into a pension fund, well hard luck!) . . . setting up a pension pot (*) under the guidance of a Financial Adviser, make sure that he or she knows:-

1. where the FTSE Indices of shares will be when you reach pensionable age.

2. that no World Wars are due to break out before you retire

3. that your government (UK in my case) will not default on its Bond repayments or interest payments or otherwise go the way of Greece, Iceland, Ireland, Portugal etc before you retire

4. that your FA is not going to invest your cash on your behalf in Enron, Lehman Brothers, GEC-Marconi, Ferranti, BCCI, Polly Peck, British Airways or similar disaster areas.

4. which Managed Funds will do best between now and when you retire

5. with 100% certainty that the funds she or he will dump your money into are going to do at least as well as the one they name in 4.

6. that the answer to 4 won't have changed when the FA gets to next week/customer.

I hope you see the ironies implied in this rant.  If you can read, you can fix your pension for yourself - at least when nemesis strikes you won't lie awake blaming someone else because your £200K has vanished.

The basic rules are very simple.  One third in Bonds(**). One third in Blue Chip shares. One third in cash. (Most Financial Advisers charge you about £100/hour for telling you that.) 

(to be continued)

(*)  pension funds are referred to as "pots" because of the alliteration. The BBC obviously employs a Poet-In-Residence.  I can think of a more fundamental reason for the term "pot" in the context.

(**) Mine are all UK Gilts. A life-long friend of mine lost £4K IN A FEW DAYS when her Financial Adviser suggested an investment in bonds issued by . . . Lehman Brothers just before the 2008 melt-down.

BBC Radio 4 News . .

. . . at 6a.m this a.m was gearing up for another Media Orchestrated Terror Campaign.  And what is it this time?  Well, it's FOOD SECURITY, innit?  The problem seems to be that the world's ballooning population (6.4 billion and rising faster than you can count) is putting pressure on:-

Agricultural land (that's WHERE we grow food)
Fresh water         (a resource necessary for growing it)
Energy                (for - you name it, food needs it)

As Molesworth sez, "Eny fule kno all this" although we collectively pretend it doesn't matter - as long as it impinges only on the poor of the world and not on the developed world - and even though many of us weigh twice as much as is good for us. But I digress. The bulletin went on to say (something like)  "various authorities have been issuing warning about the impending crisis for the last thirty or forty years."  

ONLY thirty or forty?  The Reverend Thomas Malthus first pointed to the problem  in his Essay on the Principle of Population (1798 to 1826) in which he argued that population growth must eventually be limited by famine and disease.  At the time he was up against utopians like Jean-Jacques Rousseau.  (For the more mathematically minded, Malthus pointed out that population can in principle increase in a geometric progression - whereas food supply can increase only in an arithmetic progression. When the graphs cross, we're in trouble.) Technology has done pretty well so far to fix things up, despite the insane vapourings of the anti-GM lobby.  These are amongst the World's True Weirdos. Why?  Because if they are below the age of about 150, they haven't eaten a mouthful of food in their whole lives that isn't genetically modified(*).  These maniacs are not objecting to GM. They are objecting to GM being done quickly and cheaply in laboratories, rather than slowly and expensively on plant and animal breeding stations. They are objecting to science, which they don't understand yet rely on for everything they do and are, every minute of their lives.  They will change their minds the day they find empty shelves in Tesco. Remember folks . . next time you eat any of your five- a- day, you're eating a genetically modified  hybrid.   ENJOY!  

(*) fish and game are perhaps exceptions to this, except that evolution has been genetically modifying even these species for millions of years.

I'm just now watching

 . . . an elderly economic lunatic from Ernst & Young "explaining" that although fuel, commodities and VAT increases are pushing up shop prices faster than we can follow them, underlying inflation is "below the Government's target" even though inflation has been above the Government's target every month for the last six, twelve or is it twentyfour, and that's despite the Government or is it the Treasury switching to a new measure of inflation which excludes anything that has the audacity to go up in price but does include the price of saddle-soap, repairs to your longbow and housemaids knee-pads.  You've never had it so good, folks, and do you wonder that Doctor FTSE takes no notice at all of economic news, indicators and above all of the vapourings of half-way insane pundits when he decides which FTSE options to deal in next time around.  Goodbye.

January 2011 FTSE Index Options

I redeemed my 7 x 6200 Calls in the FTSE 100 Index this morning, paying 4p per "share" or £40.00 per contract (Lots of 1000 "shares"). Followers and fans who study the dealing prices on the Euronext pages will perhaps notice that towards the expiry date, the "buy back" prices of contracts for expiry "this month" are declining much more slowly than those for contracts expiring "next month."  Thus it is potentially more profitable to redeem "this month" contracts a few days before expiry, and sell "next month" rather than waiting till "this month" contracts finally expire.  

So I have trousered an overall profit in January of £1571.60p.  My contracts for expiry in February are 7 x 6350 Calls and 7 x 5400 Puts. These deals added £1584.80p to the account balance, and this is the profit I will make if the contracts expire worthless on 18th.February - i.e. with the FTSE 100 Index anywhere between 5400 and 6350 - presently at 6028.