Nvidia report bumper results - why does it matter and is an AI bubble set to burst?

0:02Lee Boyce: Welcome to This Is Money podcast sponsored by Charles Stanley Direct. I'm Georgie Frost and joining me and Simon Lambert today is Lee Boyce. And coming up, the most important stock in the world. Has the latest NVIDIA earnings results genuinely eased fear of the AI bubble bursting or just bought the market a bit more time? Also today, more of our money is to be protected should our banks go bust. Young people are too focused on saving for short term goals and risk falling behind. plus what is really likely to be in the budget with a week to go. Good news for giggoers as the government announces a long-awaited crackdown on the resale market and what can a famous goalie teach us about money beyond not buying a brand new Aston Martin.

0:45Lee Boyce: Don't forget you step to date with all the latest breaking money news. Just go to thisismoney.co.uk or download the app. But first, one week to go until the autumn budget. Are you ready? Whether you're planning for retirement, thinking about inheritance, or just want to protect your wealth, now's the time to get expert advice. Lisa Kaplan and her team at Charles Stanley Direct's financial coaching service offer one-to-one support to help you make smart decisions. Start with a free 15-minute call at charles-stanley.co.uk forward slash financial coaching. Go on, take control before the budget lands.

1:18Lee Boyce: Remember, investment involves risk. Now back to the show. Our fears of a stock market meltdown due to the AI bubble bursting are laid. In one of the most eagerly awaited updates in recent corporate history, the world's most valuable company, NVIDIA, said it raked in a heck of a lot of money. £44 billion in the third quarter of the year, up 62 % on the same period 12 months earlier. And it reckons it's going to get also a heck of a lot of money in the next quarter as well. Nvidia shares edged higher as a result as record revenues ease fears that the artificial intelligence stock market bubble is about to burst, Simon Lambert.

1:57Lee Boyce: So is that it? All that talk of a crash, of AI fears and bubbles. Is it all over? Nvidia have posted some decent, who are Nvidia? Remind us.

2:10Simon Lambert: So Nvidia, you may ask yourselves as a listener, why are we talking about Nvidia? We're just talking about this to jump on the bandwagon. NVIDIA this, NVIDIA that. But no, NVIDIA is a$4.5 trillion company. To put that in context, NVIDIA is worth 50 % more than the entire FTSE 100 combined. NVIDIA has risen. I mean, that's a big, big number, right? And so to put that in context again, right? Right. So NVIDIA has doubled in value over the last two years or something, for example. Right. In that time, the amount that NVIDIA has added to the global stock market is the equivalent of the entire FTSE 100 going to zero.

2:56Simon Lambert: So we are talking a incredibly important company in terms of valuation. So if you put your money into a global stock market tracker fund, which many, many people do, you will hold more NVIDIA than you hold of the UK. The Magnificent Seven, which are the US tech giant stocks, make up more than a third of the US stock market. The US stock market makes up more than 70 % of the global stock market. If NVIDIA were to deliver disappointing results, then the knock-on effect on the rest of the Magnificent Seven would be obvious because all of these businesses are not only effectively mainly a trade on the same thing, but also have increasingly interlinked business models.

3:42Simon Lambert: But it would cause probably the rest of the stock market to fall. And if the US stock market falls, the rest of the world's stock market falls, and it dents your investments and it dents your pensions. So NVIDIA had its third quarter earnings out on Wednesday night. So yours truly had the pleasure of working at 9, 10 p.m. because they make after hours announcements, getting ready to deliver our story on this. And the results were expected to be good. NVIDIA was expected to make an unbelievable amount of money. Why?

4:19Lee Boyce: Why does it make so much money?

4:21Simon Lambert: Because it is selling$30 ,000 computer chips to people who are buying$30 ,000 computer chips like computer chips are going out of fashion. There is an unbelievable AI gold rush going on, largely in the US, but also around the world, to build data centers in order to deliver the computing power for the rise of AI. They are companies that have been dubbed the hyperscalers. They are called this because they are massively building out their AI computing power. And in order to do that, they are buying NVIDIA's chips. NVIDIA is the world leader in designing, not making, designing the chips that you need for AI.

5:05Simon Lambert: It started off actually as a computer chip designer that was for computer games. And it turned out that the way that you process information for computer games is also ideal for doing it for AI. You need to be able to do two sets of complicated tasks at the same time and very, very well. and when uh nvidia went all in on this probably just over a decade ago and then when chat gpt emerged open ai's chatbot ai chatbot nvidia went into hyperspace um and because people just cannot buy enough of these chips you can buy alternative chips and other chip makers and chip designers are are competing to make chips that can do as well as nvidia's but as it stands they are the market leader and this huge build out that's going on is leading to an absolutely massive rush of sales from nvidia and nvidia is not just seeing a huge amount of sales nvidia is also seeing a huge amount of profit its margins are about 70 so and it sits at the heart of this ai boom and there are a lot of questions over that that we're going to go into in a minute is it a bubble is it going to burst what are the problems and so on but the reason why people were paying so much attention to these results and i think these are probably the most eagerly awaited set of results that i've seen in a very very long time was because if a video if nvidia delivered what was expected it would be okay and markets have been a bit febrile the last month or so then concerns over this bubble so if it delivered on what was expected it would be okay if it delivered better than expected well that would be more than okay okay the party is still on right if it was worse than expected that's it lights out everyone goes home all bets are off is it going to trigger some kind of domino effect that starts the market crash that people have been banging on about so that's why people were watching this now nvidia does have a track record of delivering expectation beating results and in the u.s they have this quarterly earnings season things going on where it's literally like you've just had one set of earnings and then oh here we go there's another one they talk about earnings season in the u.s it constantly appears to be earnings season i would describe it as like premier league football do you remember when football used to be on a wednesday night yeah and a saturday afternoon and there was a game on a sunday and now it's just on all the time and it never stops that's a bit like the u.s earnings season um anyway nvidia did deliver it was better than expected the party is still on for now but there are a lot of people asking the question of if not now when right so we're all at this ai house party lee and we're

7:58Lee Boyce: all thinking oh is it time to come home nvidia's just turned up with a heck of a lot of booze cranked up the music is that it i mean are we just going to party the night away i'm even dancing as i say this or uh are our parents going to come home and just say it's just it's enough time time to go well you can't have a party forever can you georgie the party has to end well i don't that's the question lee that is the question you can't have an endless party as she's talking about

8:24Georgie Frost: parents i was thinking about this when someone was talking about nvidia i bet there's so many people that have no idea what nvidia is uh i've ever heard of it and the amount of power that it currently yields uh over our pensions and investments is incredible and i just know like if i mentioned this to my wife she'd have absolutely no idea what nvidia is she would have said she'd never heard of it um but that just goes to show you know how astonishing the rise of this company has been now you only have to look at the start of the year um we had to remember deep seek the chinese yeah ai uh high performing low-cost ai models it caused absolute havoc in the markets and there were suggestions that you know the ai ai bubble was popping then markets were crashing and then it largely recovered uh in the coming months we've kind of all forgotten about it a little bit it was just like a blip a temporary blip at the party it's like someone turned up unannounced at the party and got kicked out pretty quickly and we all forgot about them but it shows you how quickly things can change and the unknown of countries like china that are investing huge amounts of money to try and win the ai the war uh you could call it and we don't know you know a lot of that is shrouded in mystery we don't know what's you know they're not as open they don't have a a result season every single day of the week um we don't know quite what's going on and things like that can torpedo what's going on but all you can take at face value from nvidia is this strong set of results and it's claiming that the party will continue because in its next quarter, it's predicting even more revenue.

9:59Georgie Frost: And it's all feeling a bit Skynet out of Terminator, if you ask me. But, you know, the party seems to be still going for a while, but it could pop at any time, Georgie, and try to predict when that is. It's just, it's impossible.

10:15Lee Boyce: Simon, Lee makes a really good point there about people who probably haven't heard of NVIDIA, which obviously listeners to the podcast will, because we've talked about it enough. But I've just been looking up, And if you had, let's say, 100 ,000 in a global tracker, around about, and I'm right in saying, 5 % would be NVIDIA. So in its exposure of about 4 ,000 to 5 ,000, the Mag 7, you're looking at around about 15 ,000 to 20 ,000 pounds of 100 ,000 pounds. That's such a phenomenal amount if you haven't even heard of this company.

10:47Simon Lambert: It is a phenomenal amount. And I think a lot of people don't really realize this. And one of the causes for concern is the rise of passive investing and tracker funds, which, if you look at it from one point of view, is the most sensible way of investing. Instead of trying to beat the market, you are investing with the market. so instead of you trying to find that one person that fund manager who is cleverer than all of the other participants in the global market or you thinking that you personally are cleverer than all of the other participants in the global market which bear in mind there's a lot of people investing around the world some of them are professionals some of them are hedge funds some of them have a lot of resources at their disposal instead of you thinking that you or your chosen fund manager can beat that whole market you go do you know what i'll go with the market i will trust in the ability of companies to put money to productive use and earn a profit because if they couldn't put money to productive use and earn a profit they'd just keep the money in the bank and actually the winners will rise to the top and the losers will fall to the bottom because what you're doing is you're investing around the world and the companies that do well get bigger and they become a larger part of the index and the companies that don't do well get smaller and eventually they fall out of the index and what has happened is the magnificent seven have done very very well now what's different to the dot-com boom is that these companies are making a stink load of money they are making humongous profits like literally unbelievable amounts of money and that has meant that they have risen to the top but then they have become a very large part of the US stock market.

12:30Simon Lambert: The US stock market has become a very large part of the global market. And so you as an individual investor are then very exposed to these companies. And the issue is, is not whether they are profitable, because they are profitable, they do make a lot of money, they have a very high cash flow, for example. So they've got loads of cash coming in. The question is, is like, what happens when the incredibly high expectations being placed on these companies are not fulfilled. And the difficulty is in a market like that that is going up, where it's becoming increasingly concentrated, where a lot of it is built on momentum of stuff going up, continuing to go up, you get these greater and greater expectations.

13:12Simon Lambert: And then when the disappointment comes, it can be crushing. And you can suddenly see a large and sudden fall. There are then some other things going on that people are concerned about. For example, at the heart of this sits OpenAI. OpenAI is not a stock market listed company. It has the backing of some very, very large companies with a lot of money, and it is worth a lot of money itself. It, unlike those magnificent seven companies, doesn't make much money, right? Okay, it's not a big profit centre. And it has been striking a number of circular deals with these other companies and nvidia has also been striking circular deals with other companies and effectively you know what these amount when you mean a circular deal what well it's like i'm gonna look i'm gonna pay you some money to take a stake in your business and then you're gonna buy my stuff variations on that theme there's some kind of i'll do this for you you do that for me and it's all reported as good news now we've seen an old fashion tech company getting on the game recently a company called oracle oracle unlike the magnificent seven is not a high margin company uh it's not a company that's printing unbelievable amounts of money i mean it's a profitable company and everything like that but it's been seen as a bit pedestrian a bit old tech it struck a deal its share price rocketed um all of a sudden uh larry ellison the boss temporarily i believe might become the world's richest man or second richest man or it's hard to keep track of these guys to be honest um and they're like premier league games they're just all rich all the time every day who knows anyway since then oracle has then given up a lot of its gains because people looked at this a bit more closely and went the way this deal appears to be structured is that oracle makes a load of money only if oracle spends a load of money and that doesn't sound like such a good idea to us at the same time you've got this huge thing going on investing in all these data centers there's a lot of questions being raised over these data centers and i'll just quickly rattle through them one the location a lot of them are in the middle of nowhere two the chips going into them being sold to them by nvidia um a lot of money's been investing in those companies are saying they're going to last a certain amount of time are they going to be great for a certain amount of time are they really or is there going to be another good chip out in a year's time and actually in a year's time they're not worth as much money uh three the power they use an unbelievable amount of power to the point where you read stories about data centers that would need their own mini nuclear reactors to power them.

15:52Simon Lambert: Four, there's a huge debate over the actual end product of all this AI and whether anybody is actually willing to pay for it and whether the businesses that are expected to pay for all these AI services are seeing any benefit from it whatsoever. And there are a number of reports coming out that indicate that is not. Five, if you actually add up all of the money that is meant to go into building all of these data centers. And there was a really great JP Morgan report on this recently, which just Google it. It's like almost nearly all the money in the world. It's not really nearly all the money in the world, but it feels when you read the report, you're just like, hmm.

16:28Simon Lambert: And one of the questions it raises is that a lot of this is expected to come not from stock market investors, but from bond investors. And bond investors tend to be quite a bit more demanding when it comes to handing over money to people. and that combined with the power of the location all the other things starts to raise some questions so underlying this whole AI boom is quite a big question or there might be some companies like NVIDIA doing very very well out of this but that doesn't mean that some of this and some of the companies involved it's a bit built on sand and maybe we're all looking at NVIDIA going well when it disappoints the dominoes will start falling but NVIDIA won't be the first domino that falls maybe it'll be another company uh it's the kind of thing where there's so many red flags that you would be right to question it and then to go okay do i want so much of my money invested in that one thing but to go back to my original point if you do that you are saying that you are

17:27Lee Boyce: smarter than the entire global stock market i'm conscious about the fact that you've just explained quite how much the stock market's gone up largely due to ai over recent years and it's been something of a purple patch, I think we can say. But it is kind of scary, should and when the party stops to take a look at, you know, pensions and investments. Is there anything that you can do? Right, the red flags are waving. We've now educated everyone as to what NVIDIA is and why it's important. Can we do anything about it?

17:58Simon Lambert: Well, you could either do nothing about it and decide that you're not smarter than the entire global stock market, as I just said, which might be the most sensible course of action just to be 100 % clear or you could maybe decide that you're a bit worried about it and you could tilt yourself somewhat away from it so that's not to say that you go entirely anti-ai and start making huge bets against it but it could be that you for example keep most of your money in the global stock market tracker fund and then you divert some of your money into places that you think have some of the opposite characteristics.

18:36Simon Lambert: So maybe they're a bit unloved and a bit undervalued and they haven't benefited from the same rush of herd mentality, rush of people going in there. So, you know, there's talk of Europe, for example, the UK stock market, the Japanese stock market. And if you go digging into some of those markets, into more niche elements of it, smaller companies tend to be cheaper than large companies at the moment but again as i said you're then starting to make a bet and actually a bet is the wrong word to say you're then starting to make an investment into other things where you might be wrong and you could be wrong for a long time and i've said this before on the podcast but i have been under invested in the u.s stock market for at least five years maybe 10 years and i hate to think how much money i have lost from doing that because i thought i was smarter than the global stock market and you know what

19:32Lee Boyce: it turned out i was wrong uh lee simon spoke focused on equities there look we i remember a couple of weeks ago there was an article on your website talking about holding perhaps a bit more in cash we've obviously spoken about gold and silver i think it was last week bonds are these

19:45Georgie Frost: sorts of things we should be looking at i think the first thing to think about is uh looking into how much exposure you have to certain things and that might involve a little bit of admin taking and look at where your pension's invested for example are you part of the default fund like a lot of people are what's that default fund in how much exposure is there to the us and other markets could you benefit from diversifying i think that you know investing as we always say is a long-term endeavor you know minimum of five years but it doesn't hurt to spread around the risk and have money elsewhere and i think as part of a balanced portfolio you should of course have a bit of a spread around it's worth reading into things like gold and silver obviously both of those things have been on an absolute tear up as well uh in the last year or so you can still get fairly decent rates on cash savings so you can beat inflation you know wouldn't say put all of your money in cash but it is worth potentially a part of your portfolio being in cash basically educate yourself and make sure that you're just blindly following you know the latest fad or whatever you know you want to make sure that your money is spread around you know for risk reasons and it's working hard and by doing all those things that should happen but there is a there is a lot of people i would

21:01Lee Boyce: say that we are heavily exposed to us all right from investing to saving let's go there now now as you mentioned a couple of weeks ago but we got some official confirmation this week more of our savings will be protected or more of our money will be protected should your bank go bust so So the financial services compensation scheme deposit protection limit, that is a mouthful, will rise to a bumper£120 ,000 from the 1st of December from the current£85 ,000 now. Lee, I mean, you spoke about this a few weeks ago, but it suddenly all come up. Just a quick reminder. What's the FSCS? How is the limit set and why is it£120 ,000 now?

21:42Georgie Frost: It's almost as if you listen to the podcast, you're ahead of the game, Georgie. It's almost like you're getting the news before it's everywhere else. yeah just saying you know listen to our lee he knows what he's talking about i mentioned it a few weeks ago the podcast 110 000 pounds was what was expected but it's 120 grand it's a 41 rise on the 85 000 pounds it is at the moment the fscs is a safety net if your bank or financial provider goes bust and they're part of the fscs protection it's funded by levies by all of these financial firms and what it means is that more money is now protected in banks in building societies and people do park large sums of cash and there are people that have to spread their money around to make sure that they're not breaching that 85 000 pound limit because as soon as you are breaching that there's no guarantee if something did go wrong you'd get your money back it also means actually on joint accounts it's going up from 170 grand to 240 000 pounds and there's also an increase in the temporary high balance cover it's quite a crucial uh a little bit of protection there that a lot of people don't know about what it means is if you receive an injection of cash from you know life events like moving house or receiving inheritance but if you receive more than a million quid that money is at risk because you get a six-month temporary reprieve basically so something where if the money went into an account and for whatever reason again that bank went bust or whatnot anything over a million pounds you wouldn't be protected for that's going up to 1.4 million pounds so positive moves all around there and

23:13Lee Boyce: it's a good level of protection if you need it just a quick one lee not every bank is covered is that right and you also need to be careful because of course some banks are linked yeah all

23:24Georgie Frost: major banks are part of the fscs and it should carry the logo on any bank or building society that you're with but they're largely uh the reputable big firms are part of that but you must check and make sure because there are some newer upstarts that potentially don't have full banking licenses and whatnot and the money might be in what you call an e-banking license which is a little bit more complex but it means money's held elsewhere and in terms of banking licenses some of the banks do share licenses so for example hsbc and first direct would share a license so you want to make sure that the licenses and all your money's covered as i say a lot of people go well yeah how many people actually need this protection but you'd be surprised georgie people find out where they have money uh held yeah quite a bit of research about young people

24:13Lee Boyce: and saving those simon on your website here fromst james's place and it sort of if you're reading this they're not likely to get that 120 000 limit anytime soon because they're more focused on short-term savings things like travel plans than they are for putting money away for retirement It's something different here. I mean, they're talking here about 18 to 27-year-olds. I'll be honest with you, Simon, and maybe I'm talking to the wrong person here, but at 18 years old, I probably was thinking more about saving for a holiday than I was about saving for retirement. And to be honest, at least they're saving.

24:48Lee Boyce: He's nodding sagely. Yes.

24:50Simon Lambert: I would agree. I think you need to separate people into different brackets here, right? So you can have an 18 to 21-year-old who is not going to have a hope in hell of saving any money whatsoever because they've gone to university. But you could also have an 18 to 21 year old who's out there working and has a very different life to someone who is 18 to 21 and at university. And I would argue that they probably should be saving and will be thinking about saving for a holiday. And maybe actually they should be thinking about saving for a pension. Then you can look at where people are most likely to then be employed and in work and I think once you get to the kind of 22 and up then most people whether they've been to university or whether they haven't going to be at university are going to be working and they should be saving for retirement and actually I bet loads of them are saving for retirement and when they answered this didn't even realize that they were and they're saving for retirement because most of them if they're working will be employed and they will benefit from auto enrollment and auto enrollment will have enrolled them into their workplace pension unless they opted out and all of the evidence shows that most people stay put in it and there's a really really good reason for doing this and the reason for doing this is that if you save for 40 years instead of 30 years thanks to the magic of compounding the snowball effect of earning returns on returns you will double your money in fact you will double your money and that is really really good news and that's why when your work offers you the chance to join a pension in your early 20s you should say yes because future you will say thank you it will say thank god i did that in my early 20s rather than my mid 30s when maybe thinking about saving retirement seemed more important because I'm now going to have a lot more money in the future and it's also a very good deal basically in many cases if your employer will match what you put in auto enrollment won't do that but in many cases your employer would offer you a better deal than that you put in 100 pounds they put in 100 pounds you get 25 pound tax relief all of a sudden you've turned 100 pounds into 225 pounds that's why joining a workplace pension scheme is good if you are not employed if you are self-employed then unfortunately it is on you to do this but you should still start doing that open a sip it's dead easy you won't get the employer contributions but you will get the tax relief and again the compounding works the same way the longer you do it for the better it is and if you're self-employed because you're not going to get the employer contributions starting early matters even more right so if you are a self-employed plumber electrician builder or anything like that in your early 20s listening to this podcast start paying into a pension yeah do it every single month or any other type of self-employed person but yeah understandably when I was in my early 20s I was much more concerned about saving for my next day than I was for long-term goals but I guarantee you that people in their early 20s now are probably way more switched on about saving for long-term goals than I was when I was that age because it's that

28:00Lee Boyce: much harder to do things like buy a home 100 i think they're a lot a lot more switched on but lee you know as i'm said your future self will thank you for this but your current self says i really want a holiday i actually might want uh to pay for a car i might want to get a deposit for a house i've got bills to pay and i think doesn't matter what age you are getting into a long-term saving mindset is actually quite hard for a lot of people so you are the savings I was about to say guru but we've already got a savings guru but you are someone who's big on savings so how do you I suppose mentally switch your brain to to think about long-term savings and

28:40Georgie Frost: future well first of all I read the headline on this and read the story and thought well you know it's good that uh young people are saving for a holiday rather than what you know we were in a credit generation where we just bunged everything on the credit cards and you know sort of deal with that later and I'm not suggesting there's there's not still some of that going on but I do think that the generation below us are more switched on with their money in terms of things like apps that make it easier to track what you're spending track what you're saving and keeping on top of things and also the importance of saving for retirement i think the message has been hammered home way harder now than it probably was 10 15 20 years ago auto enrollment has been a big part of that and also just lots of chat about the future of what the state pension will look like and making sure that you're you're tucking away enough money for for the future but it's very hard when you're in your 20s because you want those holidays you're young and nimble and you can do it you know you're probably not bogged down with a family which makes it more difficult and then of course getting on a property ladder is harder than it's ever been and that's a massive priority for people you know you want somewhere to live and somewhere that's yours and if that means sacrificing a little bit of money going into your pension people will do that because it's a far closer goal and thinking about yourself in your 60s and 70s you know it feels so far away it's almost morbid to think about uh sometimes but once you potentially do get on the property ladder and perhaps you start a family i think that's when a lot of people go okay the next goal is retirement i had someone in the office who's in their early 20s who's worked here for for three four years was asking we have to log into their pension and look over how much they were putting in everything and again I think that shows you that there is that engagement level in terms of building up that savings pot the way to really think about it is you know you know I'm a big fan of the regular saviour accounts for example you can get six seven percent on typically you can put two three hundred quid a month away into it and then you end up with a big chunk after a year and you go actually that wasn't as hard as what I thought it was going to be and then you keep going and And then eventually, hopefully, this is what I did.

30:51Georgie Frost: I turned that into some of that stayed in savings and some of that went into investing. And then I've carried on building that snowball from starting off that regular savings account. So that would probably be my number one tip for younger people to get into that habit. But also, again, reading this research, if people are saving for holidays or saving for driving lessons or whatever it is that they're trying to do, it's much better that they're saving for it than sticking it on credit that is a tomorrow problem. And that's what this research was kind of pointing out, in my opinion. That's it for part one.

31:33Simon Lambert: I'm joined now by Lisa Kaplan, Charles Stanley Direct, for our weekly Investing Explained feature. Lisa, we've got a question here from a listener. I'm a working mum with a three-year-old daughter, and I want to start investing£300 a month for her. should I do it in my own ISA or a junior ISA? What are the pros and cons of each option?

31:51Lee Boyce: It's a good question, Simon. I speak to a fair number of people, parents and grandparents, about their JISAs or ISAs. So I would summarize it like this. A JISA truly is your child's money. So although you control the investment until they're 16 and they will get their hands on the money when they're 18. So it's protected until they're 18, but then it's theirs. So you've got a long run up to do all the financial education and that piece. And well done for thinking ahead and saving for your child. Sometimes when their child is 18, parents are a little nervous about them getting access to the money.

32:31Lee Boyce: The advantage of a GISA is I think it's a better a story to tell grandparents if they can also contribute to a JISA and it's genuinely your child's money. It's not yours. In terms of the ISA allowance, we've already got quite a, you know,£20 ,000 is a fair amount of money to put into an ISA. So if you're not using the JISA, you know, use up your ISA because otherwise you could pay tax on the income that's coming in if you keep it in your name. I quite like the JISA. I think they're useful. They set up a good savings habit and give children some sort of financial education, if you like. But it is their money, for good or for bad, when they're 18.

33:14Lee Boyce: Welcome back. Finally. I was trying to think of an analogy. And the only thing I could come up with here was, you know, the Christmas buildup in supermarkets that starts around August. Finally, Simon, Lee, finally, the moment is almost upon us. So I feel like, you know, it's the sort of last pod before the budget and we should probably just, you know, have a bit of a rundown of what is likely to be in it because we've been toing and we've been throwing and we've had so many things come out that, you know, everybody's getting confused. Simon, should I time you? 60 seconds. No, you can have more than 60 seconds.

33:52Lee Boyce: But what's going to be in the budget? Maybe. I mean, you don't know, but like, you know, what's your best guess?

33:58Simon Lambert: Well, any number of more than 100 things that have been suggested could actually be in the budget, apart from the things that appear to have been ruled out. But you never know what they might not have been ruled out. I mean, God knows, to be perfectly honest. Look, what appears to be most likely is that Rachel Reeves. Well, OK, let's just paint a picture of the last couple of weeks. Rachel Reeves and the government spent an awful lot of time softening us up for income tax rises where they were going to break their manifesto commitment not to raise income tax national insurance or VAT which has morphed since they made that commitment in their manifesto into a not raise taxes on working people they had cooked up an idea it seems initially after it looked like they were just going to raise income tax to claim that they weren't raising taxes on working people by putting income tax up by 2p but lowering national insurance by 2p but only for basic rate taxpayers because if you earn more than 50 000 pounds a year you're not a working person they softened people up to this to the point where people had completely accepted that it was going to happen then mystifyingly they then leaked that appeared to leak i don't know whether they definitely leaked it but it definitely looked a lot like a leak that it wasn't going to happen At which point the bond markets went nuts because it looked like the government had lost complete control over what needed to be done in the economy.

35:19Simon Lambert: And actually raising income tax is probably the best way of raising some money if you need to fill a black hole, which Rachel Reeves, after wandering around pointing out Tory black holes for so long, has been caught out by her own black hole. The government then had to leak out the fact that it wasn't going to raise income tax because the OBR forecast appears to be better than expected in order to calm the bond markets. and what now appears to have been leaked out is that they're going to continue the income tax threshold freeze which will be enough to fill some of the black hole and then they're going to do some tinkering around the edges.

35:49Simon Lambert: Exactly what that tinkering around the edges is we don't know. There's talk of cutting back on salary sacrifice for paying money into your pension. There's rumours of some kind of council tax stroke mansion tax thing that won't actually probably greatly affect people who live in mansions, but will affect people who live in family homes. And then maybe some other kind of tinkering around the edges that will just about shove enough money into the spreadsheet to deliver Rachel Reeves more fiscal headroom than she left herself last time. And then we're just going to hope for the best before we have to have another budget.

36:25Simon Lambert: Lovely. That was longer than a minute, but that's the best summary of where we appear to be right now.

36:31Lee Boyce: No, Simon, it's fine. I appreciate that. Lee, I feel like I should give you a say if you want one ahead of the budget, a last gasp comment.

36:42Georgie Frost: What's that period they have before a general election? Is it Perder? Basically, I'm tight-lipped now. I can't say anything else. The speculation has gotten to me. It's shaken me to my very core, the to-ing and fro-ing and flipping and flopping. Let's just wait and see now, Georgie, I think. I don't want to add any more noise to what's being said I'll tell you one thing for certain though I am so fed up of hearing the term black hole why can't we look into the light into the white hole the future of Britain improving it instead of keep talking about this flipping black hole it's just so negative do you mean the sunlit uplands yes let's go there

37:27Simon Lambert: the sunlit uplands We were going to get those, weren't we? Thanks to a major event in Britain's past. The Roaring Twenties. Yeah. Oh, God knows where the Roaring Twenties went.

37:37Lee Boyce: That's going to be the title of next week's pod, is it? The Roaring Uplands. OK, we'll do that, shall we?

37:42Simon Lambert: If I could say two things on this before we stop talking about the budget. We've tried everything on the budget, guys. Listeners, we've tried everything. We've tried talking about it. We've tried leading the show on it. We tried that podcast a couple of weeks ago where we weren't allowed to mention the budget. And then we sort of talked about GDP and stuff a bit last week. well obviously you have to mention it and now we've left it to nearer to the end so we've done everything we can like whatever your feelings are on the budget whether you're pro budget chat anti-budget chat just a bit ambivalent and mere on budget chat we have tried to deliver for you okay yeah we've tried to do everything we can to please everybody um so forgive us next week you will have to listen to a podcast about the budget just to be 100 clear but yeah you know we've tried everything but i think there are two things we can learn from this sorry experience one delaying the budget maybe looks like it might have been a mistake i think it might have been a good idea to get the budget out of the way we could have learned that mistake from the post election budget we didn't learn that mistake we've made the same mistake twice i think we should avoid making the same mistake three times so if we get to this next year maybe we just look back on this year and the year before and go, do you know what, let's not do that again.

39:00Secondly, if we need to raise money and raise taxes, which we do, I also think we need to cut

39:07Simon Lambert: back on spending, but you know, we do need to raise money, we do need to raise taxes. We should do it in the broadest possible, fairest way. And we should listen to what people who know what they are talking about and experts who have a degree of independence say that we should do. and overwhelmingly they are saying that unfortunately we need to raise income tax because it is the tax that raises the most money, it's the tax that is paid by the most people, it is the tax that most reflects people's ability to pay it. The one thing the Tories did, which they don't get any credit for and they get the blame for a lot of things, but the one thing they did do that they don't get any credit for is they did reduce the tax burden on middle and lower earners by a lot.

39:53Simon Lambert: They taxed the rich more, but they reduced it on lower and middle earners by a lot. But they did it, they probably reduced it by too much. Don't listen to me, listen to the IFS, listen to lots of other experts. And everybody says, unfortunately, we need to raise the taxes that we take in from lower and middle earners if we still expect to pay for all the things that we expect to pay for. And we probably should have just raised income tax. And so in the future, if we learn anything it's do the simplest and fairest thing and try to improve the tax system while you're doing it which you could have sold that argument to people and don't delay the budget by a month for six weeks or whatever it is because it don't work all right then moving on to some

40:35Lee Boyce: better news and quite good timing actually because it's sort of it's about time and it's good news for the government here because finally they're going to do something about this industrial level ticket touting that's been going on. There are plans for a new law that would make it illegal to resell tickets for more than face value in the UK. And it's not just these secondary ticketing sites. It's also on social media as well. And it's not just for gigs. It's live sport. It's theatre. It's comedy. It's festivals, basically any live event. So hopefully no more Oasis style fiasco. But just outline for me, I refuse to get involved with resell.

41:13Lee Boyce: I just I can't do it. I won't do it can't do it mainly because i've got so many bad stories swirling around in my head of how much i'm going to pay how have we got to this situation with like ai bots and all that

41:27Georgie Frost: sort of jazz it's been a problem for the last couple of decades georgia where people have managed to you know build uh systems in which you know to undercut everyone else into the queue you know it's a professional uh you know professional outfits doing this they're scalping tickets getting them at face value and within minutes they're on resale websites for far more money uh than what they were originally put up for and actually you know this is one of the election pledges that labor did have that was i would say a good one um you know restricting this to stop inflating ticket prices on the resale market resale markets good they originally talk about capping costs at 30 above the face value of a ticket but they've gone a step further and said actually the limit of the original cost now what that means is that let's say you bought a ticket for a gig and then actually you genuinely then couldn't make that gig you should be able to sell it for face value you know no harm you know it might be a couple of quid out of pocket from however that ticket is delivered or whatnot but it means a genuine fan can hopefully go and not pay over the odds to go and see their favorite musician and i think you know it's got to the point now where i think a lot of us are fed up and sitting in these ticket queues thousands of uh you know people long i get it supply and demand and all of that kind of thing but ultimately you know i'm taking music as the prime example here the musicians and the promoters don't really end up any better off by the fact that these tickets are going for grossly inflated prices on a secondary website it's not benefiting them it's not benefiting the the person that actually wants to go to the gig and it should be a good move but there's always a but, Georgie.

43:07Georgie Frost: As I say, this has been going on for a very, very long time. There's been promises in the past to really clamp down on this and it never seems to quite get over the line or get there and I know for a fact that Mr Simon Lambert is very passionate about this and has been writing about this I think since I was probably still at school or maybe you didn't know. Sorry, Simon.

43:28Lee Boyce: Simon, I did a little TikTok video. I'm done with the kids, you see. And while they were talking about the resale stuff, the biggest concern was actually the original cost of the ticket and something called dynamic and surge pricing. So when you're explaining the complaining about this resale thing, also, if you would, and ticket towns also explain how that's come about.

43:49Simon Lambert: OK, so what you need to look at is why is the concert ticket market effectively broken? The constant ticket market is effectively broken because the actual sale of tickets is controlled by a small number of large and very influential companies. I mean, you could say it's a cartel. I wouldn't necessarily say it's a cartel. You could describe it as a cartel. Unfortunately, a number of these companies, large American companies, brought the practice of reselling sites over to the UK. And they brought them over in sort of 2006, 2007. So I've been writing about this since 2007. We've been campaigning on this since 2007.

44:28Simon Lambert: I went to Department of Culture, Media and Sport select committee meetings so long ago that I remember when Andy Burnham was the minister and he was at one of them. Like that's a whole Labour government ago. You know, we had, however, 14 years of Tory government in the meantime. Right. And when we first started writing about this, the point that was made to us by people we spoke to into the industry. So, for example, my former colleague, Adrian Lowry, spoke to Harvey Goldsmith, who's like a major UK promoter, right? And he said artists deliberately price tickets below the maximum that they could sell them for.

45:08Simon Lambert: Now, they do that for two reasons. One, they do it to put bums on seats or standing people in standing bits, that kind of thing. They don't want an empty venue. So, you know, artists and promoters, there's self-interest there. They deliberately price them a bit lower for that reason. But they also do it so that fans can actually go and genuine fans can actually go. And they do this because being successful in the music industry is a long-term game, right? If you actually want to have a career in the music industry as an artist, as a promoter, or as someone running a gig venue, then, yeah, you can try and do people over for the maximum amount of money on a one-off.

45:46Simon Lambert: But that's not going to deliver you enduring success. what you need is you need to build that fan base you need to build those loyal people you need them to keep coming and then you can sell them some merch and all those other things and as artists and have earned less money from music sales themselves the rise of streaming and so on they started to rely more on gigs now the problem with the resellers is if you are an artist and you're selling a ticket for 50 pounds and then all of a sudden all those tickets are being hoovered up at 50 pounds and then going on sale for 100 pounds on a resale site eventually you're going to look at this and go well i'm not getting any money from that and if you're the promoter who's taking all the risk on it they're going to look at it and go well i'm not getting any money from that if you're the venue you're going to look at it and go well i'm not getting any money from that and you're all going to say well should we charge a bit more for these tickets so they charge a bit more for the tickets and the prices started to edge up and they started to jump up and constant ticket prices have inflation has been massive over the years and this was the warning that was given to us by people in the industry said this is why we need to crack down on this stuff part of that of course is you then start seeing things like people going oh well can we really say 350 quid can't say 350 quid that's going to sound totally mad we're going to get absolutely crucified for saying 350 quid because bear in mind you know if you're oasis and you're going to put some gigs on it's going to be written about in the press remember there was a few stories about oasis concerts well if they'd have said we're doing some concerts it's gonna be 350 quid they would have been crucified so it's like it's going to be like i think it was 100 it was 80 to 150 but then maybe someone says well you know what like we could probably get a bit more money for some of these tickets there's this new thing called dynamic pricing and like if loads of people are trying to buy it just drives the price up a bit all right okay and look noel has said that i believe noel has said that he didn't sign this off you know um who knows who signed this off but Whoever signed it off made a colossal mistake because the blowback on Oasis was terrible, right?

47:45Simon Lambert: They tried to crack down on people resaling tickets and then immediately the pre-sale tickets and then immediately lost all of the moral high ground due to that. But the reason why surge pricing, dynamic pricing, all of those things have come into the market is largely the blame of the ticket reselling industry. And the ticket reselling industry over the years, we've done so many stories on this, defend themselves. Oh, no, it's just normal fans who discover that they can't go. So it's a bit weird, isn't it, that you'd buy a ticket for a gig and then discover that you couldn't go five minutes later and then put it on sale for twice the price.

48:18Simon Lambert: And it would be a bit weird if like thousands of people suddenly discovered five minutes later that they couldn't go. It is industrial ticket touting and it's bedroom ticket touting as well. I mean, one of the best things about this, very sad, obviously, that he died, was when all those people got caught out by the Michael Jackson gigs. Loads of people bought the tickets to try and flog them on. And then the gigs got cancelled. And they were buying them on the resale sites to then try and trade them. And there's this big thing going on. And people got caught out there. But I think this is, as a lifelong live music fan, I think this is terrible.

48:51Simon Lambert: It's bad for artists. It's bad for fans. It's bad for promoters. The only people it's good for is the people doing industrial scale touting, the reselling sites making money from it. And I'll tell you the other thing that I always find quite interesting is your old-fashioned ticket tout. You know, they're mainly men who have to go stand outside a venue, buy and sell tickets, and so on. If you talk to them about these reselling sites, they hate them. They hate them with a passion. They hate them even more than I do. They just see it as cheating. They're not putting any work in there. They see themselves as providing...

49:26Simon Lambert: They see themselves genuinely as providing a service, okay? You know, they do it in person. They're broking a deal. it's like that kind of honor amongst thieves thing going on and they hate the reselling sites with a passion and actually it's funny those those outside the venue ticket touts like for some of them that is their job they've been doing it for decades right and they see themselves as part of the live music industry so they hate the reselling sites as much as you know everybody else does and the thing i would say about this is a question that came up immediately was well won't this just mean higher prices for all of us and the answer is theoretically no because it's not artists or promoters who are meant to be losing out here although i don't doubt for a minute they're getting some backdoor money from this due to this having gone on for so long they're not going to lose out on money by banning the sale of tickets at higher than face value plus a little bit for fees it will just be the industrial scale touts hiding behind the you know theoretically reputable ticket reselling sites and i for one fully support this and think it is a good idea and think it can only make buying concert tickets in this country better i'm in toronto at the moment i walked past

50:39Lee Boyce: the scotia arena where the toronto raptors were playing and there was um a ticket out outside any any tickets for sale in this really london accent i sort of thought maybe they all go to the same sort of school of you know how to sell tickets he's probably just from downtown toronto but he's got this sort of wide boy accent. I loved it. It just sort of made me think of, like you said, honest hard work, Simon.

51:03Simon Lambert: And actually, just to go back to one of my earlier points, if you are a ticket tout, an old-fashioned ticket tout who works outside the Yankees, if you're a bedroom ticket tout, stop doing it. Stop ruining it for everyone else. If you are an old-fashioned ticket tout, you are self-employed, consider paying some money into a pension because your employer wants to...

51:22Lee Boyce: Good tip, Simon, good tip. finally Lee sticking with the sporting theme Harvey Dorsett of your parish has interviewed a goalkeeping legend for the me and my money feature anything he had to say to teach us all a lesson

51:35Georgie Frost: I don't know why that was such a funny tea he just made me giggle David Tebow man one of my one of my football icons growing up I was looking this up earlier I had the 95-97 yellow shirt goalkeeper shirt of Arsenal AVC on it and those horrible black patterned arms as I fancied myself as a bit of a keeper at that age. I remember I'd gone from a bit of a growth spurt. David Seaman is the latest celeb to come on to the Me and My Money section, which will be published in form on Sunday. So pick up a copy of the paper of Merlin Sunday because that's where it lives. We've had some cracking ones in recent weeks.

52:12Georgie Frost: Irvin Walsh, the Trainspotting author. We've had Griff Rhys-Jones, Ian Woosnam. It's a mixed bag of interesting characters, Georgie, and it's worth going and have a look at them on our website. But we asked David, obviously, the usual set of questions. What would you do if you were Chancellor of the day? Has David seen you've got a pension? I can't reveal that. You're going to have to go and read it on Sunday. But he did chat to Harvey about his Aston Martin and you can listen to it now.

52:44Lee Boyce: Biggest money mistake. I got an Aston Martin in 2000, a brand new one. I paid a lot of money for it. I was so proud that I could buy an Aston Martin, but it was a mistake. After three months, I landed upside down in it. I'd lost the back end, hit a curb, and it spun over, and I landed. Luckily, Tushwood, I didn't have anything wrong with me. I wasn't injured at all. I got stuck in the car. My friend Lee Dixon came and pulled the door open, and I got out, and I just cut my foot in my hand on a little piece of glass that had shattered on the foot. That taught me about new cars, because as soon as you buy a new car and you drive it off the forecourt, but it's lost thousands already, you know.

53:24So I'm like, it's probably like they're going to be the last car

53:28Georgie Frost: that I ever buy brand new.

53:29Simon Lambert: And, well, the answer to this one might be an Aston Martin, but what's the most expensive thing you've ever bought for that?

53:36Lee Boyce: Yeah, it is. It's that, you know, it was that brand new Aston Martin. I remember it was Sherwood Green. It had got a green roof, soft top, and it was my pride and joy. I'd had, you know, a few cars before that, but it was always like leading up to the – because I love James Bond movies. You know, and even when I crashed the car, Lee Dixon was behind me in his car, and he said it was like walking in a James Bond movie, you know, because this Aston Martin is, like, going upside down and then crashing into some trees. So I can't say that my biggest money mistake was an Aston Martin, Lee, but he did have a good point there, didn't he?

54:14Lee Boyce: That if soon as you buy something new, it depreciates immediately it's off the forecourt. but you'll have to wait until Sunday to read that one. That is it. Thank you, Lee. Thank you, Simon. You can keep up to date with all the latest Breaking Money news. Just go to thisismoney.co.uk or download the app. And if you have any comments or questions for the team or anything you'd like them to look into, Simon.

54:33Simon Lambert: You can email us at podcast at thisismoney.co.uk. Send us in your questions. Send us in your comments. Send us in anything interesting that you want to tell us. Or come to thisismoney.co.uk forward slash podcast to join in the debate and read the comments.

54:46Lee Boyce: and if you like our podcast why not rate us wherever you found us it helps other people find us too