Archive for December, 2015

Was 2015 As Bad as We Thought?

Wednesday, December 16th, 2015


Q4 Market Review

An already volatile 2015 has witnessed further turmoil this quarter as concerns regarding the crisis in Greece receded following a last minute bailout only to be quickly replaced by concerns that growth in China may be slowing and could impact on global economic growth. In addition, the wider geopolitical problems and tragic incidents in Paris have also done nothing to calm sentiment.

Bond and stock market performances were volatile during the quarter with global stock markets falling sharply during August and into September, causing anxiety for some investors, before recovering some of the losses.

However, to put the recent volatility into context the FTSE World Index, which peaked on the 10th of April at its highest ever value and ended this reporting period 8.46% lower than the peak, has actually risen over 2% during 2015. In fact, if 2015 turns out to be a loss making year for this index it will only be the third in the last decade. The return over the previous 10 calendar years has been 81.01% which is considerably ahead of cash and inflation.

The ten year period which began in Jan 2006 has not felt like a good period for investors despite the reasonable absolute returns. The credit crisis crippled global banks and international stock markets in 2008/2009 and has been followed by a series of other crises including defaults by Euro members, US debt ceiling negotiations, Arab Springs, the Russian incursion into Crimea and more recently concerns of a slowdown in Asia and more specifically in China.

As we consider the recent period of volatility it is important to focus on the areas of good value and poor value. Whilst markets are moving quickly at present, we expect that when volatility reduces again in the future, prices will have moved significantly from current positions. Identifying the right assets at this stage is important to achieving positive investment returns.

The recent falls in global equity markets are not abnormal and unfortunately are a re-occurring feature of stock markets. Longer term investors have still benefitted from market participation despite the falls, although recent investors may be feeling less comfortable. These falls have been triggered by concerns of a slowdown in China and other developing markets as Western economies are reliant on these regions for export demand.

These concerns, along with resurgent Western economies, have led to the Asian and Emerging Markets underperforming the developed world by around 40% – 50% since October 2010. Given the nature of the global economy it was unexpected for one area of Global markets to perform so differently to another. As assets flowed into the quantitative easing economies of Japan, the US and Europe it took a tide of capital away from other markets (Asia and Emerging Markets in particular) resulting in a significant valuation differential.

Western markets have now followed Asian and Emerging Markets down and it seems the realisation is dawning that all major economies are reliant on each other for growth. The exodus of assets from one area ultimately has an effect on the whole system and there are early signs of a reversal as flows into Asian funds have turned positive for the first time in a long period.

The key question at this stage is; will falling growth in China pull the whole global economy back into recession? This is possible but seems unlikely. Growth has been re-established in Western economies post credit crisis and the actual slowdown in China is now likely to be shown to be less than was the perceived view. China is in a position to stimulate economically if needed and the authorities are expected to be open to this action. The Federal Reserve is also open to further quantitative easing if required (it seems unlikely this will be needed) whilst Japan and Europe continue to print money and will extend this policy until they see growth or inflation.

Taking all of this together, we conclude that the current sell off is uncomfortable, but normal within a market cycle and this is often indicative of a change in trend. The two trends which we feel are overly mature are the rise of bond markets (the current cycle began in the late 1980s) and the underperformance of Asian and Emerging Market equities. There are early signs that both of these trends may have reversed already. Global growth is expected to remain positive and we expect long term investors to continue to enjoy good returns above cash and inflation.

In conclusion, further stimulus will be applied if needed, but inflation and growth are expected to come through going forward, especially as the commodity cycle feels much closer to the bottom than the top. Equity markets should recover losses and Asian and Emerging Markets have the potential to close the valuation differential, whilst fixed interest markets look vulnerable.

So here’s to a more stable and prosperous 2016!

Merry Christmas and a Happy New Year from all at James & George Collie Financial Management.

James & George Collie raise money for local charities

Tuesday, December 15th, 2015

Jamie's selected charities are shown on his vest, kindly donated by Compass Print

“So, you’re willing to do it then, Jamie?”  – this is the initial sentence that started off my training and culminated in my running the 2015 Inverness marathon.  It was a lunchtime Social Committee meeting in early February and I had just agreed to run the Baker Hughes 10k for Collie’s two chosen charities, Friends of the Special Nursery and Charlie House.  Full of bravado, I exclaimed that 6.2 miles was an easy run and I quipped that I always wanted to run a marathon. To my horror, when my fellow Committee members asked me if I would run one for our chosen charities in 2015, I was well and truly backed into a corner, and had to reluctantly agree to do so.  How tough could it really be?  I had until 27th September…

I looked up training plans, did a little bit of research and like all modern approaches I got all my information from Google.  What I realised very quickly was that regardless of how good a search algorithm is, it has clearly never done long distance running training.  My usual training regime consisted of runs of about 7 miles, maximum, with little undulation.  By contrast the Inverness marathon route is 26.2 miles of undulating inclines which begin from mile 7 and then proceed to take you through the stunning, scenic, but hilly terrain of the rural highlands.  However, I am running ahead of myself.

Training on my part was initially very lax.  I went on 4 runs a week, and the ‘long’ runs were no more than 10 miles maximum, finishing by running up either the brae at Kincorth (past Northsound) or Wellington Road (past the Shell building).  This persisted for a number of months until I was about 12 weeks away from the marathon.  I also gave up drinking alcohol for 12 (long) weeks to help with my training, but this ended with a colleague’s leaving drinks and I never regained my steely temperance to the same degree again.

From 12 weeks out I started expanding my training distances to 15 miles, regularly leaving from Cove, running to Garthdee, picking up the old railway line out to Milltimber, then on to Peterculter, before heading back in the Cults road, down Union Street, King Street, and finishing by running along the beach front.  I felt euphoric at the end of each run but one day my better half asked me how far I ran, to which I replied gleefully “15 whole miles”.  She then quickly gave me a reality check by asking “but isn’t a marathon 26.2?” This was with 6 weeks to go, and at this point I realised I was woefully undertraining.  From that point onwards, and with her kicking me out at 9am, there wasn’t a Sunday morning that I wasn’t running up to about 18 miles, with three 10-12 mile runs during the week after work.  Suffice to say, there wasn’t much time for a social life but the training very quickly became addictive and sadistic in equal measures, especially when running through all four seasons on the same run. I only completed a 20 mile run with about 7 days to go before the marathon.  I truly had no idea how the marathon would play out….

6am on 27th November my hotel alarm went off.  It was game day.  I grabbed a shower, applied half a family-sized tub of Vaseline and took 2 constipation tablets (not to be graphic, but this is the reality of marathon running) and that was me off on the bus to the start.  The bus journey made me think the start line was situated somewhere between Inverness and what felt like the Outer Hebrides.  In reality it was presumably 26.2 miles away from Inverness city centre.  On the start line, standing in a throng of over 5,000 runners, I felt both excited and nervous in equal measure.  The starters pistol went and I was away.  The first 5 miles were easy going, the adrenaline and endorphins pumping through me.  One of my thoughts at this point truly was “I could do a marathon every week!”  However from mile 7 on, the inclines started and that, combined with the rush of blood making me go off quicker than my planned pace, made me start to lose those good vibes at about the half-marathon mark (13.1 miles).  From then onwards it became an increasing war of attrition.  A major issue of long-distance running is loss of salt from your body, it crystallises on your skin the more you perspire.  So it was a constant battle to hydrate, but to ensure there was enough salt in what I drank to avoid over-hydration. At mile 20 the real incline started, a local comparison would be the incline of Wellington Road, except I had to repeat this three times over 3 miles.  From mile 23 I had cramp in my quads and calves at the same time, which means you can’t stretch one without tensing the other.  The upshot of this is that I ran the remainder of the race with cramp.  4:22:16 after starting, I crossed the finish line, very proud of myself but very sore.  I am delighted to have ran the race, and pleased to have raised £300 for the Firm’s chosen charities, but will I run a second? Watch out for future newsletters to get the answer.

Moving House

Tuesday, December 15th, 2015

It is said that moving house is the third most stressful experience after bereavement and divorce.  Although I have not suffered the second, I have suffered the first and while moving house cannot be compared to the loss of a loved one, it is an extremely stressful experience. As a solicitor having been in practice for more decades than I care to remember and having helped literally hundreds of clients through this process, one would imagine for me it would be a fairly straightforward process – not at all.  The last time my family moved house 33 years ago, my husband did everything but on this occasion I had to be client as well as solicitor – perhaps not a sensible idea.

Preparing the Home Report was fairly painless with the patient assistance of the very able Kevin Angus of Shepherds but then came the brochure.  Although my colleagues would suggest I can talk for Scotland, England, Wales and Ireland – not true – I am firmly of the view that images tell the story rather than adjectives and superlatives that have one scurrying to the dictionary to see what they mean.  After pondering this task over many evenings into the wee small hours, it was taken over by my very able and helpful colleague Gregor Sim who, along with our Estate Agency Department, produced sale particulars to present my home at its very best without transporting a prospective viewer into fantasy land.  Then came the viewers, many of them out of curiosity as our family home was one of those rare houses in Aberdeen which had been owned by very few families since its construction in the mid 1800’s and was tucked out of sight behind mature trees and shrubbery.  I remembered my husband, who had also been a solicitor, telling clients to ignore the viewers who claim to be rushing off to see their solicitors to put in an offer the very next day.  He used to maintain that the likely purchasers were viewers that perhaps you didn’t even remember and how true that has been.  It is a horrible experience to show your own property and there were a number of occasions, not being the most patient of people, I would gladly have shown viewers the door before they had even reached the upper floor.  It took a while, but eventually our home was sold to a most delightful family and I am reassured that in their hands it will continue as a happy and much appreciated family home.


Then came the search for a new home which at the beginning of this year was proving difficult and would have been a real challenge for even Kirstie and Phil! As the weeks passed I had to reduce my list of essential requirements, but eventually I found the perfect flat literally round the corner from where I lived.  After dealing with the legal side of things, next came the removal.  I think the removal men thought they were shipping to outer Mongolia.  Boxes were taped so as to defy even the alcohol fortified scissors wielding homeowner trying to find the essentials, the kettle and the gin; eventually peace settled over the chaos and Hamlet, the family Basset, gave his seal of approval, and a well-deserved chilled glass of prosecco infused with a dash of raspberry Edinburgh gin was enjoyed by me!

Anyway, for those clients thinking of buying and selling, I hope I will have a more sympathetic as well as professional approach to the trials and tribulations of moving house after my own traumatic experience.

For advice on the buying/selling process, feel free to contact Liz Mackinnon on 01224 581581 or by email at

A Year of Lower Alcohol Limit

Tuesday, December 15th, 2015


Just over a year ago, on 5 December 2014, the alcohol limit for drivers in Scotland reduced from 80 milligrammes of alcohol in every 100 millilitres of blood to 50 mg of alcohol in every 100 ml of blood   (in breath, 35 micrograms to 22 micrograms per 100 millilitres).  According to the Scottish Government, this reduction was to bring Scotland in line with most other European countries, to save lives and make Scotland’s roads safer.  The reduction has forced many people to change their drinking habits. A Scottish Government spokesperson said “alcohol at any level impairs driving, which is why our message is if you’re driving, the best approach is none”.    The new limit has also had a marked effect on the hospitality industry.

If the police want to investigate whether you are over the limit, they will carry out a screening breath test at the roadside using a breathalyser.  If you fail this test or they have other grounds to believe that your driving was impaired through drink, you will be arrested and taken to a police station, where further tests are then carried out.

The penalty for being caught over the legal alcohol limit is a ban from driving for at least a year, a potential fine of up to £5,000 and possibly imprisonment for up to six months.  The penalty imposed depends on the seriousness of the offence.  Anyone caught drink driving more than once in 10 years can be banned for at least 3 years.

Some figures are available on the effect of the reduction in the drink-drive limit on the crime rate.  In the first three weeks following the introduction of the new limit, 255 people were found to be driving under the influence of drink or drugs compared to 348 the previous year, a decrease of 27 per cent.   In the first three months of 2015, Police Scotland recorded 1,337 crimes for drink/drug driving.  For the same period in 2014, the figure was 1,388.  In June, figures release following the first fortnight of the 2015 Summer Drink Drive campaign showed one in 40 drivers stopped and breathalysed were over the limit.  This was an increase in the figures from the previous year when one in 55 was over the limit.

Over time, the effect of the new limit on the crime rate in Scotland will become more apparent.   Furthermore, the reduction in the limit should help reduce road traffic injuries and deaths in certain contexts.  A European study in 2006 found that reducing the blood/alcohol level to 50mg/100ml decreased alcohol related driving death rates by 11.5% in young people aged 18-25 and by 5.7% in men of all ages.  There was a time lag before the benefits of the reduction in limit were seen – the effects were evident after 2 years and increased over time, with the greatest impact being between 2 and 7 years.

The longer term effect in Scotland remains to be seen, but in the short term, approach and enjoy the festive period with a degree of caution!

Abolishing Payment of Industrial Tribunal Fees

Tuesday, December 15th, 2015


Since the UK Government introduced fees for applying to Employment Tribunals, the number of applications has diminished by a staggering 80% or thereabouts.    Generally, the feeling has been that the imposition of not insignificant monetary fees was unfair and more than likely to create a barrier to accessing justice for employees.  To try to limit the effect of such fees, the Government also introduced an early conciliation procedure that had to be implemented before any application to Tribunal could be lodged in any event.   Not surprisingly, the Government’s decision to impose fees was appealed.   Again, somewhat surprisingly, the Court of Appeal rejected the challenge by the Trade Union Unison on the basis that there was insufficient evidence to support the contention that fees have made the process unaffordable and therefore indeed, a barrier to justice.   That decision in itself is to go to the Supreme Court for further consideration.

Recently, however, the Scottish Government as part of its legislative programme for 2015/16 announced that in accordance with its powers under the Scotland Bill 2015, they intend to remove fees from Employment Tribunals.  The precise details of how they are going to achieve this, and indeed when, are currently unclear but it seems likely they will be introduced when clarity on how the transfers of powers and responsibilities under the Scotland Bill becomes known.

This undoubtedly would lead to an increase in Tribunal applications but whether getting back to the pre-2013 levels is far from clear.   Watch this space!

If you wish further information on Industrial Tribunal procedure and practice, please contact Tony Dawson by email at or by telephone on 01224 581581.