15 August 2012

A bloated capitalist writes ...

Remember those shares I bought last Thursday at 222 pence each?  This afternoon I sold them at 237.5 pence each.  After allowing for fees and stamp duty, the net return on my outlay amounted to 4.675%.  No big deal, but a better return than I would get from leaving the cash in a bank account.

Of course, I could have delayed the sale in the hope that the value of the shares would increase further.  After all they were over 300 pence earlier this year - which I knew before I bought them.  (You don't think that I buy shares entirely on a whim?)  But let us not be greedy.

OK, so I did all right this time.  But it doesn’t happen like that every time.  And even when I win, I somehow feel that it’s slightly immoral.  On the other hand, some people have a flutter on the gee-gees, others go to bingo; I get my minor kicks from playing the market.

But be warned, it’s a rigged market.  All those pension fund managers, investment banks and hedge funds are playing with millions and are much more able to move the market than me with my relatively paltry investments (even when their chums in the City are not tipping them off on “sure things”).  Then you have the short-sellers, who “borrow” shares (at a cost naturally) and sell them in the hope (or the certain knowledge) that the price of those shares will fall, so that they can buy them back at a reduced price (and then return them to the original owners), reaping more than satisfactory profits by the process.  Nevertheless, you don’t always lose out to the bigger players.

These are my basic rules to gambling.  (1) Never bet more than you can afford; you need to be able to walk away with a smile even if you have lost it all.  (2) Don’t get greedy; people like you and me will never make a fortune - be content with a win, however small.

No comments: