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
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 :-))