We’re always being told that inequality [1] 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 [2] 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 [3].
Over the long-term, the steady damage done [4] 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 [5], 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 [6] 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 [7] 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 [8] 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 [9].
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 [10] 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 [11] 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. 😉