Saturday, 30 August 2014

"Almost" and "If Only..."

Last week I read an article on Interactive Investor discussing how to invest in the Internet of Things - a world in which everyday objects contain technology that connects them online.

We are beginning to explore this type of technology at work so I know a little about it and I also know that it is definitely a growth area so I was very  interested to read about the some of the companies involved as potential investment opportunities.

The one which really caught my imagination was CSR and the more I read about the company and its products the more I began to wonder if this wasn't "the one" that would finally make me take the plunge and buy individual stocks. If I'd had my CIS funds in my ISA I do believe I would have gone ahead, sold a little of them and bought £1000's worth of CSR, but, not having available cash and not wanting to sell anything else, I just put the company on my watch list for the time being.

This is what happened two days later:

The stock went up by over 30% overnight.

I was stunned. To be honest although I "knew" that things were volatile out there in the market I have had my limited experience of it cushioned by the fact that I have been watching large funds move slowly up and down. This was the first time that I realised that things can actually move very fast indeed at individual stock level. Am I actually really ready for the type of environment where this was possible? Although I consider myself towards the top end of the "prepared to take a risk" spectrum", this has never actually been tested. Seeing first hand what happened with CSR and being so close to actually being in the thick of it has concentrated my mind on what I would actually be letting myself in for . It has given me the opportunity to think about what individual stock picking and its potentially higher level of risk/reward would mean to me.

These are some of the things I came up with:

  • The satisfaction of feeling more directly involved with the company in question. I really enjoyed researching CSR and reading about their development work. 
  • Technology is my "field" so I felt that I would be able to make a genuinely informed choice to invest rather than relying on the recommendations of financial pundits where I sometimes find it difficult to separate the genuinely knowledgeable from the salesmen.
  • I would feel that I am investing more responsibly/ethically by choosing the company and area of business rather than leaving it to a find manager or tracking the whole market. 
  • I would learn far more about the business world and how that works which would be time well spent in preparation for actual retirement because at that point I intend to transform my portfolio into an income-producing rather than capital-building model.
  • Excitement/ Enjoyment/Enrichment due to a feeling of getting things right
  • Potential Financial Gain
  • Loss of confidence if things go wrong
  • Excitement/Over confidence/Too much risk taking
  • Potential Financial Loss
From the list above I guess you can tell which way I'm leaning and I'm pretty sure I knew which way I was going to go with this even before my experience this week. However I'm glad it happened as it really got me thinking about what I would be getting myself into. I know that this kind of thing doesn't happen often but, crucially, I now know how it feels when it does. 

After all, I almost bought, I almost made a fair bit of money overnight. I now know how it feels to have to deal with "almost" and "if only" and it hasn't put me off. 

(btw I still like the look of CSR. Hurry up ISA transfer :-))


  1. If you had purchased shares in CSR, would you have sold after a day to make 30% profit? What a massive opportunity. However whilst I'm a bit like you, ie with a high-ish risk tolerance, I think I'd find this kind of volatility far too stressful and I don't want to get into trading individual stocks. I'm more of a buy and hold kind of person.

    Great that you have found a company that you are interested in - good luck if you go ahead with the purchase!

    1. Hi weenie. No I don't think I would have sold and taken the profit so I'm pretty sure I'm a buy and hold kind of person too. I suspect that if I do buy individual socks it will only be the odd one or two companies that catch my eye, where I can get to understand their business and feel informed enough to get involved.

      I am still watching CSR - they are still on the up and I'm thinking they may well have a good deal of potential.