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10 ways to be a terrible investor in 2017

Trade blows with the investing greats in the gladitorial arena of the market! Or something like that!

We’re always being told that inequality is the scourge of our times. But what, dear investor, are you going to do about it?

By trying to elbow your way into the 1%, you’re only adding to the world’s woes.

Yes you pay your taxes. Yes you’ve set up a Direct Debit to Oxfam.

But wouldn’t it be more helpful if you were less wealthy in the first place?

It’s easier to cut down a tall poppy than to grow a tree. If all the rich became poor the inequality problem would be solved overnight.

So here’s a public-spirited ten-point plan to undermining your investments in 2017.

Money can’t buy happiness – so follow this strategy to get rid of it.

1. Invest in expensive funds

The easiest way to start eroding your wealth is to pay a very expensive fund manager an outrageous fee for delivering returns below what you’d get from a cheap index fund.

Over the long-term, the steady damage done by fees of 1-2% or more will gobble up a big chunk of your returns.

2. Start stock picking penny shares

One danger with using funds is most managers have some clue about what they’re doing. And as they’re paid on performance, they’re going to give it a shot.

Even if you follow a ruinous strategy like continually chasing last year’s hot fund – buying high and selling low – there’s still a danger you could make money, albeit while likely still losing to the market.

Avoid this by stock picking obscure penny shares, ideally listed on the AIM market, perhaps operating in the mining or technology sector.

Real investors know the price of a share doesn’t tell you anything about its valuation, of course. A 3p share isn’t a tinpot outfit if there are ten billion shares in issue.

So look for companies with small market capitalisations – ideally rarely traded and reporting losses for years.

3. Don’t do any research

Once you’ve found a small, loss-making company to invest in, don’t do any more research.

Buy blind.

Okay, at a pinch you might check to make sure it’s on an outrageously hopeful P/E ratio – and perhaps drowning in debt.

But don’t read its annual report or dig into its management or any of that.

4. Trade as much as you can

Adopt the attitude of an inveterate gambler reduced to the fruit machines in the seediest corner of Las Vegas.

Continually shovel money into the market, pull the lever, and if anything goes well, dump it ASAP and swap it for a share that’s down on its luck.

Thanks to modern technology you can now trade via your smart phone on the bus or in the loo at work. Keep your portfolio turning over, racking up costs and working your way into ever more speculative positions.

5. Bet big on tips off Twitter

If you’re a sensible investor used to doing proper research, it might seem daunting to trade so frequently and ignorantly in your quest for poverty.

Happily technology has come to our aid.

Day traders on Twitter are a great resource for finding terrible companies to recycle your money into. Simply chase today’s hot tip and tomorrow move on to the next one!

All the time you’ll be racking up costs and buying dud after dud after dud.

6. Peruse share price graphs and chicken bones

A great way to have absolutely no idea what will happen next to a company’s share price is to study a graph of its historical moves.

Don’t be intimidated by the jargon of chartists. Invent your own price signals by referring to your favourite characters from The Lord of the Rings.

I find a Gollum’s Bottom indicates a perfect time to buy, whereas Gandalf’s Mighty Beard means a reversal is surely at hand.

7. Always keep the news on in the background

In many people’s estimation, 2016 was one of the biggest years for political shocks for a generation. Everything from Brexit to Donald Trump’s victory roiled the market.

Um, except it duly rose after those shocking events, regardless.

Truthfully, it’s very difficult to predict how share prices will react to general news headlines, good or bad.

A barrage of media speculation does wonderfully confuse matters at hand, however, so having the news channel on 24/7 should help you in your quest to lose money.

Another tip is to play gangster rap as loudly as you can stand during market hours.

Motivating songs about whacking your enemies and banking hundreds of Gs by the hour will put you in the right frame of mind for investing in public companies.

You might want to spread the word to your new squad on Twitter, too.

Tweets like…

“Yo yo y’all! Shorties be trippin out of A & J Mucklow Group PLC like dat Nick Leeson with dem runs! Best we ballers be buying $MKLW big style!”

…will go down a treat.

This is especially appropriate if your profile picture reveals you to be a bespectacled 50-something accountant from Maidenhead.

8. Spend your dividends

Studies show that while everyone focuses on share prices, reinvesting dividends makes up a huge portion of the market’s long-term gains.

So needless to say, spend those suckers on beer, crisps, and foreign holidays.

Whatever you do get them out of your portfolio, pronto.

9. Avoid ISAs and pensions

If you’re following this advice you should be consistently losing money and have no need to worry about capital gains.

However there’s always a risk you’ll take your eye off the ball and stumble into the next multi-bagging Amazon.

If you’d invested in an ISA or a SIPP, this would be a disaster, as you’d be forced to bank the gain tax-free when you realized your mistake.

However outside of these tax-efficient wrappers you’ll at least have the comfort of seeing the taxman potentially take a big chunk of your gains.

As a handy side benefit, you could be liable for tax on any dividends you find yourself receiving, too.

(In an ISA or SIPP, those dividends would have to be received tax-free.)

10. Don’t track your returns

Finally, it’s important to avoid properly keeping track of how your strategy is performing.

This gives you the best chance of avoiding learning any uncomfortable lessons, and boosts your ability to delude yourself that you’re doing really well as you steadily deplete your wealth.

Back in Bizarro World

So there you have it – my best stab at helping investors have a rotten 2017.

Of course, some wannabe Scrooge McDucks might decide to do the opposite of everything I’ve written here.

This would very likely to improve rather than hurt their investing. But there’s not much I can do about that!

Happy new year. 😉

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{ 13 comments… add one }
  • 1 The Investor January 5, 2017, 10:50 am

    Morning all! After posting this I remembered I’d done something very similar a couple of years ago, so if you want to see the same old jokes in a different wrapper go here:

    http://monevator.com/how-to-lose-money-investing/

    Happy new year everyone!

  • 2 Pete January 5, 2017, 11:25 am

    @TI Hee hee! Yes I remember that one as well. BTW where are you posting from? The time stamp on your comment is 10:50 am and as I post this it’s only 10 25…

  • 3 Slow Dad January 5, 2017, 1:24 pm

    Thanks, that made my day.

    The gang at the RockstarFinance forum recently put together this list of the worst financial advice ever, but I think you’ve topped it with the funny.

  • 4 Rory January 5, 2017, 2:15 pm

    Amazing.
    Scary thing is I actually know people who follow more than one of the above “strategies”

  • 5 Brodes January 5, 2017, 2:44 pm

    I confess to having purchased a fairly large slug of MKLW last year, while listening to gangster rap. Dr Dre – the Chronic, if I recall correctly. Perhaps that’s why my HYP underperformed the FTSE last year…

    As Ice Cube succinctly put it: “Life ain’t nothing but b*tches and money”. Bet he has a focussed portfolio!

    Brodes

  • 6 brian t January 5, 2017, 5:20 pm

    I’ve actually been pondering the idea that “bad investment” could be a way for rich people to redistribute some of their wealth in a semi-controlled manner. But it couldn’t be through any kind of stock market, though, since the money would just go in to the pockets of other investors. I was thinking of more direct investment, in startups and the like.

  • 7 Notnormalnoah January 5, 2017, 9:05 pm

    Are those two things not negatively correlated? Ice Cube may have hit on a new bonds / equities trade.

  • 8 Maximus January 5, 2017, 11:19 pm

    I thought that was brilliant – thanks!
    By advising the opposite of good investing practice, it also somehow makes the correct path much more obvious… or maybe that’s just me…

  • 9 hosimpson January 6, 2017, 5:07 pm

    Pick penny shares? What, and wait a whole six months – perhaps longer – till the issuer goes bust? Pah! That’s for the folks in the slow lane.
    Trade on margin. That way, if you get wiped out and can’t make the margin call your position will be liquidated. No need to worry about the risk of it turning around in your favour at any point in the future.

  • 10 The Investor January 6, 2017, 8:31 pm

    @hosimpson — You’re right, leverage is severely missing from this plan. Or perhaps I’m saving that for the must-attend financial seminar that I’ll be holding in Canary Wharf for £1,000 a ticket. (No, not that Canary Wharf. A pub in Peckham of the same name…)

    I just sent an email to your email address by the way, just in case you don’t check that account much.

  • 11 Hariseldon January 6, 2017, 11:38 pm

    Very good !
    But not so sure about point 10) Don’t track your returns.

    Not having the spreadsheet that updates prices every time you open it does tend to avoid the need to constantly think about prices and the need for activity becomes less urgent when you manually input prices 2 or 3 times a year……

  • 12 dearieme January 7, 2017, 1:47 pm

    “By trying to elbow your way into the 1%, you’re only adding to the world’s woes.”

    Surely many of year readers are already in the world’s 1%, or can expect to be soon?

  • 13 Dividend Growth Investor January 11, 2017, 7:15 pm

    Investor,

    Those are great reminders on things not to do. Invert, always invert 😉

    I would also add#11 – change your strategy often

    Good luck in 2017!

    DGI

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