Sunday, 28 March 2010

Did Jesus return from the dead?

I'm Paul. Personally I think I've been typecast. I always thought of Paul as a serious, intelligent, bald, bearded bloke. Well, last two seem appropriate...

I've agreed to play the part of Paul at a dramatic court case to decide if Jesus really returned to life. If you fancy joining in the debate, join us at Cornerstone House, 4th April at 7.30pm in Cumbernauld, UK.

If you can't make it, post your comments below...

You decide!

Saturday, 27 March 2010

Money for nothing

Is it a bad thing to get money for nothing?

Dan's comments have certainly got me thinking. I do want to be an ethical investor. I want to make money in a way that honours God.

I also want to make a "quick buck!"

Is it possible to do both?

I find this comment about speculating especially unsettling: "It doesn't contribute or add anything positive to society, it just aims to skim off the profits that other people have worked for."

I've been very focussed on trying to build up my savings. I wanted to have a buffer for the situation I now find myself in, being out of work, and also provide for my own and my families future.

Making money on the stock market seemed like a way I could do this while working. This is my perception of the stock market:

1. Companies sell shares to allow them to build up their companies and make more profits. once those shares are initially sold, through an Initial Public Offering, companies do not receive any more money from the buying or selling of shares. Unless of course they release more shares through a rights issue.

2. If I buy shares, I am not buying them from the company. I am buying them from a previous holder of those shares. I buy them because I think the shares in that company are undervalued or that the company is growing in such a way that the share value will increase.

3. If the company grows in value, my shares will be worth more. I can keep those shares as long as I want. If I feel there is unlikely to be further growth in the value of that company's shares, I can sell those shares. Hopefully I will sell at a profit.

I recently bought shares in Ferrexpo PLC (FXPO.L). At some point in the past, Ferrexpo floated on the stock market and used the share capital raised to fund a massive expansion in its operation. Somebody or some institution bought shares in Ferrexpo at that time and contributed to the building up of that company. Then, later on, that shareholder decided they no longer wanted those shares and for whatever reason decided to sell. I'm fairly certain they made a profit out of that investment.

Then, along comes me. Shares can only be sold if there is a buyer. I buy the shares. I now own a piece of Ferrexpo. The company has gone up in value twenty percent since I bought it a month ago. I did not work towards that in any way. But, I did contribute because if I had not bought those shares, the original shareholder could not have sold. I effectively bought all the contribution that original shareholder made, as well as all the risk. I now own a stake in that company and its future. I will sell those shares when I feel I cannot gain any more value from them, but isn't that my right? I can only sell if someone else wants to buy and take on the potential opportunity and associated risk.

To me, this is about seeing an opportunity and taking advantage of it. I have speculated in the past, and don't commit myself to never speculating in the future but I do intend to gain experience and knowledge and become better at seeing opportunities and avoiding danger.

What I have just written has very much been influenced by this debate. There was a time when I was a child when I understood the stock market to be about investing to get dividends and while that still happens, it seems to do so much less as many companies return value to their shareholders by increasing the value of the company and hopefully as a result, the value of the shares.

I am very open to suggestions for how to better invest my money. Is there another way I can get 20 percent return annually?

Friday, 26 March 2010

A job hunting we will go...

"May you live in interesting times." If this ever was an old Chinese curse, someone went and meant it. The thought of my contract coming to an end next week while the UK still appears to be deep in recession is rather terrifying.

Studying and working on my novel have both taken a dive this last couple of weeks as I've begun to spend more spare time job hunting. I need to get back on track with those goals soon but uncertainty over how long it will take to get a new contract has pushed getting a job right to the top of my priorities.

There does seem to be more jobs being advertised which is encouraging. If you know of anyone who needs a Business Intelligence or VBA database/application developer, do let me know.

Wednesday, 24 March 2010

Robert Maxwell stole my pension - I want it back...

I'm still pretty sore that Maxwell raided the Mirror Group pension and my tiny investment. Sure it happened a scarily long time ago but it gave me a sobering insight into what can happen when one entrusts ones life savings to another person.

I only lost a few hundred pounds, unlike others who lost twenty or thirty years investment and yet I've avoided pension schemes ever since with only one exception. Even then, I cashed it in when I moved on from that company.

Interesting discussions on my last post. Is my plan to invest in the stock market simply a gamble? Even worse, part of the same greed that has gotten the global economy in such a state?

I once said in a job interview that I'm not risk averse. I have a strong belief that risk is a good thing (and not just the board game...) I don't see taking risks as gambling though I acknowledge that the two are related.

I have speculated in my purchase of some shares, absolutely! I have to say, I regret some of my speculations, if only because on some I lost money, and on others, I took profits too soon!

But, if I had not been willing to speculate, I would not have had the opportunity to learn from some of those failures and discover a better way of investing.

I definitely want my investment in companies to benefit them just as much as it benefits me. One of the things I am now trying to do, is hold shares for much longer, assuming a company continues to rise in value. But, if the value of a companies shares begins to sharply drop, would it be prudent for me to continue to hold onto those shares?

I don't believe so, but am aware that even recently, I sold shares through what's known as a Trailing Stop Loss and regretted having set it so tight. But, again, that was a learning experience and I'm going to be more careful with that particular tool in future.

While I take risks, I try as much as possible to minimize them. Stocks and shares are not my only plan, I've also been blessed to be able to rent out our old house and in twenty or so years, that hopefully will provide some income. As a landlord I've spent a lot of time doing up that house for tenants over the years, fitted a more efficient boiler last year and still manage to keep the rent at a reasonably low level. Does that make me a good landlord? I don't really care! I do care that the tenants are happy and having been one, know that if I keep the house in good order, they are likely to reciprocate.

But, my ultimate goal with all this is to save enough so that at some point, I can either retire, or more likely, cut down work to an enjoyable level. All without Maxwell's help, or maybe, just maybe, because of him. Perhaps it is time to forgive him... what do you think?

Sunday, 14 March 2010


Goal 3 – To save enough to be able to retire

I finished reading The Naked Trader by Robbie Burns a week or so ago. I found it fascinating and very easy to read. It helps that I've wanted to trade shares since I was a teenager, inspired by Jeffrey Archer's Kane and Abel. The thought that one can make a lot of money by investing has since been very appealing.

I was fortunate enough to work for a Stockbrokers for a while and decided then to start investing for myself. It was a disaster...!

First rule of investing: you need a minimum amount otherwise any profit gets eaten up by dealing fees and tax. I had the princely sum of GBP 250 to play with...

Second rule of investing: Do Your Own Research. I wasn't a broker. I was developing reports and business applications but I was learning how the stock market works and picking up things and thought I could make some easy money. In 2007 I bought 3 high priced, high risk emerging market shares which had gone up consistently for the past year. This was at the height of the bull run. Over the next six months the shares dipped in value and kept dipping. I didn't sell, I thought they would recover, I hoped they would recover. They probably will recover but in March 2009 I sold having lost almost 50 percent of the value. I lost GBP 110 of my initial GBP 250 investment...

I've done rather better since then but have made many additional mistakes. I've sold too early and missed out of some huge share price rises, gotten scared at sudden falls in share price and sold when I didn't need to. Reading The Naked Trader has opened my eyes to the many actual failures I've made when trading and given me some direction for how I plan to trade in the future.

But, if I hadn't had all those failures, I would never have asked for advice, never been told about the book and possibly never read it. Even if I had, I doubt it would have had the same impact.

Failure is something that has been cropping up a lot for me recently. I stumbled across this commencement address by JK Rowling to Harvard University graduates. With all the irony she can muster, she espouses the fringe benefits of failure.

This week in the Open University course I'm studying, I read about the importance of failure to learning and experience. The argument was made that Western society has made failure an unacceptable situation but in doing so has robbed itself of the value gained from being able to fail and learn why.

I still don't have much money to invest with which makes any failure quite painful. Knowing that I can and have learnt from my failures helps, not at the time, but does give me confidence to keep trying. That and my apparent love of high risk, high reward situations!

I now have a retirement plan. It is basic and I'm sure I will be adding to it and modifying it over the next few years but it's a start.

The plan is to save a small amount each week, keep gradually increasing that amount and investing the savings with an aim of making a minimum of 20 percent return on the investment each year. I acknowledge it is incredibly ambitious but as I've already lost one pension to Robert Maxwell and seen other ways of investing getting most of the profits eaten up by fees and incompetence, surely I can do better?

year end invest total invested estimated return
2010 £400 £400 £80
2011 £520 £1,000 £200
2012 £572 £1,772 £354
2013 £624 £2,750 £550
2014 £676 £3,976 £795
2015 £728 £5,500 £1,100
2016 £780 £7,380 £1,476
2017 £832 £9,688 £1,938
2018 £884 £12,509 £2,502
2019 £936 £15,947 £3,189
2020 £988 £20,124 £4,025
2021 £1,040 £25,189 £5,038
2022 £1,092 £31,319 £6,264
2023 £1,144 £38,727 £7,745
2024 £1,196 £47,668 £9,534
2025 £1,248 £58,450 £11,690
2026 £1,300 £71,440 £14,288
2027 £1,352 £87,080 £17,416
2028 £1,404 £105,900 £21,180
2029 £1,456 £128,536 £25,707
2030 £1,508 £155,752 £31,150
2031 £1,560 £188,462 £37,692
2032 £1,612 £227,766 £45,553

My goal: to be getting a return of GBP 45K a year within 23 years. Assuming, inflation hasn't run too high, that might be enough to live on.

So, here's to failure... May all of us be willing to try, willing to fail, and able to use our failures to go on to better heights!