Yesterday I had lunch with an old school friend who was both at my prep and public school who has been something of a success in Internet commerce, so much so that he has written a book about it, Net Profit.
Conversation turned to the state of the markets that have been having a disastrous time. The reasons given for this are the the slump in the oil price and political events in Greece causing panic in the Eurozone. As to the first, you would have thought that this would lead to lower cost – particularly in the aviation sector – but even my beloved Easy Jet’s share price has fallen. As I have said before, there are two variables in any share investment – the market and the company – and, as is happening now, the former can pull down the latter.
My friend had a low opinion of most Chief Executives. He took the view that they look the part, make the right noises but are really not that capable in business or, put another way, exist for themselves than for shareholders. He cited one example of a CEO whose forays into business are little short of disastrous but still garners jobs.
Some investors like funds as their manager has a portfolio of companies and so-called expertise. My friend invested in one well-known company’s global tech fund. In a period when the digital age has created a huge number of successful companies he has witnessed his investment in that fund half. This supports my theory that the best thing an investor can do is not to take the advice of a wealth advisor but to become one. As the market crashes, such an advisor still gets his percentage fee of the total sum invested, irrespective of performance. This is exactly the guaranteed return well above bank rate any investor likes.