What caught my eye this week.
I wrote a big comment under Fire V London’s fascinating post about how a tech billionaire of his acquaintance goes about investing. But then the Blogger comment system thing caused problems, as it often seems to, and it ate my second attempt.
(Perhaps the billionaire could fix that technology?)
The gist was I found myself hugely jealous. Not of the billion quid – bizarrely enough to most of the world, but perhaps not to some of you – but of the billionaire’s lifestyle.
His gadding around the world investing in start-ups and staying engaged with the latest big trends sounds like my dream day job:
David specialises ‘value-added’ angel investing, mostly (or possibly exclusively) in the tech sector. His investments vary in size from $500k to €10m+.
He has 30+ such investments and is reasonably hands-on with several.
My impression is he is looking for visionary, ambitious businesses based in Europe, where he can put some serious money to work – and he is not afraid of being the biggest shareholder.
The only way I can really justify my dabbling in unlisted equities is because I want to try to develop some similar skills to do this. But I know I’m just a baby version of this bloke.
Of course I also need to develop the spare capital to put to work to fund such ultra-risky investing… but that’s where the rest of my portfolio comes in!
Fellow investing junkies can read the whole post here.
From Monevator
A friend asks: Should I put all my money into this can’t lose cryptocurrency venture? – Monevator
From the archive-ator: Coping with the guilt of losing money – Monevator
News
Note: Some links are Google search results – in PC/desktop view these enable you to click through to read the piece without being a paid subscriber.1
Visa apologises after system crash causes card payments chaos – Guardian
Traders with pockets full of crypto quit Wall Street and The City – Bloomberg
Why does it take so long to sell a property? [Search result] – FT
UK house prices slip as market loses momentum – Telegraph
Landlords are selling down a net 3,800 properties a month – ThisIsMoney
‘David’ takes aim at ‘Goliath’ Invesco in row over fund fees [Search result] – FT
Get lucky: meet the competition addicts raking in thousands – Guardian
A judge sides with parents and rules their 30-year old son must rule out – CNN
‘I have lost £50,000 I didn’t have to lose’: cold-called investors stung by wind farm bond scheme – CityWire
The myth of the 20-year old entrepreneur – MIT Management [via Abnormal Returns]
Products and services
RBS/Natwest credit card holders warned spending could be ‘frozen’ under new rules – Guardian
Don’t get thrown off by sustainable fund labels [US but relevant] – Morningstar
The FCA has published an FAQ for customers of bust broker Beaufort securities… – FCA
…UK investor society Sharesoc says write to your MP about the issues raised – Sharesoc
What medical treatment costs in various holiday destinations, and the cost of insurance – Telegraph
“How did Amazon know my new Visa card information before me?” – Guardian
Do you know you can now make peer-to-peer investments in an innovative finance ISA and earn interest tax-free? RateSetter will pay you £100 (and me a bonus) if you invest £1,000 for a year via my affiliate link – RateSetter
Comment and opinion
How about now? – The Irrelevant Investor
Investing is overrated, and other lessons learned over 25 years – Morningstar
Holding through a crash: Easy in theory, difficult in practice – Of Dollars and Data
Humphreys, Rwanda, and why you should invest in frontier markets [Search result] – FT
The Lifetime Allowance for pensions explained – Young FI Guy
Looking behind the obituaries of those frugal and secret millionaires – Humble Dollar
Tim Harford: I can make one confident forecast. My forecasts will fail [Search result] – FT
Playing in traffic – A Wealth of Common Sense
The real reasons people take financial advice – Money Marketing
Investing is no place for ‘Once upon a time’ – The Value Perspective
Robert Shiller thinks Bitcoin will probably go extinct – Dealbreaker
Kindle book bargains
How To Be F*cking Awesome by Dan Meredith – £0.99 on Kindle
Quiet Leadership: Winning Hearts, Minds and Matches by Carlo Ancelotti – £1.99 on Kindle
Successful Self-Publishing: How to self-publish and market your book in ebook and print by Joanna Penn – £0.00 on Kindle
Brexit
Here are 11 Brexit promises the government quietly dropped – The Guardian
The first Swiss lesson for Brexit Britain: Negotiations never end – Prospect
It was a mistake for the Government to equate Brexit with leaving a European customs union and the single market – Evening Standard
Off our beat
Why no-one answers their phone anymore – The Atlantic
Newly created molecule could prevent the common cold – Imperial College London
Obituary: Musician Glenn Branca, 1948-2018 – Wire
Ethiopia already is the China of Africa – Bloomberg
Benedict Come-and-get-some – Telegraph
And finally…
“Churchill sent Keynes a cable reading, ‘Am coming around to your point of view.’ His Lordship replied, ‘Sorry to hear it. Have started to change my mind.’ ”
– Philip E. Tetlock, Superforecasting: The Art and Science of Prediction
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- Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”. [↩]
@TI – Thanks for the headliner! And deepest apologies both to you and to @SlowDad whose comments had been lost in my blog’s Spam box for a few days. Haven’t looked at that Spam box for months – but thanks for alerting me to a potential issue with my Wordpress config. Glad you enjoyed the post.
I think Angel investing for fun is sort of to do with the feeling of doing good, although that’s not to say that as capitalists we might do more good simply owning Vanguard global small cap or emerging markets – the effects will be diluted but still real and collated with other people’s investments. I think if we do chase returns we must be supplying society with what it needs more than iffy things.
Remember gov supports things like vct schemes anyway for those where the tax makes sense
“Why does it take so long to sell a property?” “The average time between offer and completion in England and Wales ranges from 8 to 12 weeks.”
The deep reason is probably that the English are, by and large, an unbusinesslike race whose customs, and solicitors, are dilatory.
“Investing is overrated”: I thought the paragraph under that heading was rather good.
I was much less keen on “I like the idea of merging together as many accounts together as is realistic”. The Investor was recently much sounder on this topic.
Benedict Cumberbash.
Good set of links as usual. Small thing – it is Tim Harford not Hartford. I think your spell check is overhelping… Noticed this before as I am quite a fan of ‘more or less’ but never got round to commenting.
A guy I went to school with (a bona fide genius, got a Ph.D in biochemistry at 24, etc.) started a biotech around 97 or 98. It developed software that helped pharma companies test the stability of a drug’s active component, apparently it’s important if you’re planning to mass produce it. His financing came from a venture capitalist whom he’d met at a conference in Denver. They did well, had a good product, were planning an IPO on Nasdaq, but then the year 2000 came, and… y’know.
Eventually they sold their product to one of the big pharma companies, which netted them a few million (not bad for a 20-something, methinks), still, it was nothing like what they had hoped for before the dot-com crash.
I think if you want to make a killing as a venture capital investor, an exit strategy is as important as picking good ventures to invest in. In my friend’s case, his investor backed the right horse; his problem was that, metaphorically speaking, the bookie went out of business halfway through the race. And when it comes to the exit strategy, quite often it’s who you know, not what.
I don’t know if its really that much fun being a billionaire investor
The reality is there will be a lot of investments which fail or don’t do much and a fair few where you end up in court
These three billionaire investors backed Tamara Mellon after she left Jimmy Choo, it didn’t end well: https://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/12104238/Tamara-Mellon-defeats-trio-of-City-backers-in-bankruptcy-court.html
Then again she did sue her own mum: https://www.telegraph.co.uk/news/uknews/1576496/Mellon-sues-mother-for-5m-over-Jimmy-Choo.html
I enjoyed reading the destiny effect conversation that Merryn’s article sparked. I am a big believer in frontier markets and have always thought the west looks at them from the point of view of a 18th century colonist. This (not deliberate) bias makes a lot of my friends nervy about putting money there.
I have family ties in India and have visited different parts of the country roughly once every two years over last 30 years and the change I have seen over that time, is frankly unbelievable. Mostly good and some of course bad (pollution in cities!) But for most part of those 30 yrs the country grew at just under 10% and stock market has done 35x! My lesson from that experience was to find the next ‘India’ in Africa and hopefully get 30x odd over the next 30 yrs of my life. I am not sure if any African country is in line to become the next India, but I am warming up to the idea of investing in a basket of 10 African +5 S American countries (Emg+frontier) via one or two investment trusts. This region contributes to 10-15% of world gdp so I want to maintain 10-15% of my portfolio as a long term by and hold in this area.
Any thoughts well come.
Regards,
Rishi
@FireVLondon — Ah, that explains it! I get frustrated with Blogger’s sign-in etc at the best of times, anyway. Please keep the missives on how the other half (a percent) live coming! 😉
@Matthew — Well, as purchasers of shares in secondary markets — even the likes of AIM — we’re not directly injecting cash into start-ups, as you know. But I think the liquidity etc provided is more important than is commonly supposed.
@Andrew — Oops, fixed now. (Me or my spell checker has made this mistake before!)
@hosimpson — Indeed. I was quite impressed when one CEO I invested in revealed she was saving one contact for the exit, potentially, rather than to tap up at the start of the journey.
@Rishi — Interesting thoughts. I read an article about Ethiopia recently suggesting it was already “the China of Africa”. Don’t know any way to invest directly there though. One snag with these frontier markets is they are moving so quickly, any targeted investment looks risky (e.g. they are skipping whole telecoms tech generations as you probably know) and yet on the flipside, no tracking available. Which leads us to the rabbit hole of high fee active funds… worth it of course if they do deliver 35x…
Our VC guy is prob a millionaire but certainly not a billionaire.
He put in a few 10s of k very early on and got ~20% equity.
He provides help on the business rather than technical side of things and also helps us tap up further investment – so the value he adds is business/legal and network opportunities for more cash.
He’s got about 3 or 4 on the go at any one time.
He’s on the payroll but he does no more than a handful of hours a week.
He’s working for us under his own steam but he has worked previously in a corporate finance company.
He always goes for tech/miltech type startups.
Point being is you don’t have to have megabucks to get into the game – but you do have to be able to convince bright people that you can add value for them – I think thats the ongoing challenge with this sort of role.
And of course – you need the network in place to put you in touch with potential startup investments very early on (if you want to get in cheap).
@TI – I think demand on secondary markets also supports future issues, so the money indirectly gets there eventually (or so I believe)
Is this the dark side of the dark side – as far as you can get from passive investing?