UK Investor Show

The UK Investor Show – can I have something with a bit more certainty please?

Posted on June 18, 2016 · Posted in Chris Mansfield - Blog

The UK Investor Show is an annual event for all of us seeking to find a way for the capital we currently have, to make us more capital in the future. Taking place in the reassuringly imposing QE II building in the heart of Westminster, it’s a full-on mix of events, speeches, debates, stands, and lots, and lots, of potential investment opportunities.

And there were lots of potential investors too. In fact – there were hoards of them. From the obviously well-to-do (or at least trying to look like they’re well-to-do), to the obviously don’t-care-whether-you-think-I’m-well-to-do (who very possibly were the only genuinely well-to-do). And they were all looking for the next big thing to invest their cash in.

So far, so predictable. But after listening to some seminars, and visiting many of the stands, two things became apparent, and I hadn’t expected either of them.

First was the amount of risk that these potential investors seemed happy to take. To me, they seemed to be happy to take a LOT of risk.

Let me explain what I mean.

 

Just before I go into that detail though, it’s worth endorsing the show’s aspirations – there was a wide choice, ranging from investments into films, to media content providers, to Stockbrokers, to Gold Mines. I spoke at length to a company who wanted me to invest in their new ground-breaking software (so complex that they couldn’t easily describe its applications), but when I asked them what the return on my investment would be, they couldn’t tell me – and I was talking to their Financial Director. Shortly after that, I had a conversation with a young gentleman who thought I “looked like the kind of guy” who would invest in a brand new and “fantastic” film production, which looked very much like a lot of other film productions, but was just right for me because it would “definitely suit a high rate tax payer such as yourself, sir”.

There were a number of Stockbrokers and Fund Managers, all of whom seemed to have a magic formula for turning volatile Stocks into dead certs. There was a company offering me the chance to make more than 20% returns from mining investments in countries more usually in the headlines for their political instability, and there were pharmaceutical companies with wonder drugs that would allow me to make my fortune, whilst also doing good in the world.

Now I’m not poo-pooing any of these investment opportunities, I’m sure that there are some people out there who’ve found them highly rewarding. So don’t get me wrong – if my observations sound slightly acid, it’s because when it comes to investing, I’m by nature, risk averse. So my natural inclination towards certainty in my investments, prevents me from giving a glowing endorsement to some investments that appear, to me at least, to carry a high element of risk.

Of course, I recognise that a healthy investment portfolio is a diversified portfolio, so one should always seek to mitigate risk with more certainty, and to mitigate low return investments with higher return opportunities, which inevitably involve more risk. My dilemma is: just HOW MUCH uncertainty and risk should I be prepared to take?

Having established that – let me say that there were elements of the Investor Show that I found both intriguing, and educational.

One in particular stands out in my mind – a presentation in the main hall by Ed Croft, CEO of Stockopdia. His company builds stock selection tools for the use of investors online. And he was extraordinarily frank about the mind-set of the average investor. His claim is that the average investor underperforms the market by as much as 6%. And that’s per annum, so the accumulative effect of that over an investing lifetime is potentially very significant.

He also gave us an explanation of why he thinks so many investors make the wrong decisions when choosing stocks.

His explanation was this: our brains are evolved to take information in and process it in two specific areas: the centre of the brain, which receives information first, is what Ted refers to as “The Monkey Brain”, and the front of the Brain, “The Frontal Lobe”, is the bit that makes us human beings human – it’s where we do all our problem solving, thinking, and apply rationality. Unfortunately, Ted reckons that because all the information arrives with the Monkey Brain first, and because we’re under pressure to make decisions quickly, some of our decisions are made before information reaches our rational Frontal Lobe. Which means we’re making ill-judged decisions based on primitive “fight or flight” instincts.

And it gets worse. Ted says that, even when we do process information correctly via our Frontal Lobe, and our decisions turn out to be more nuanced and therefore correct, our Monkey Brain interprets that as our brain is now unbeatable, so we are encouraged to trust our instincts, and consequently make decisions quickly and more recklessly.

Which might account for that apparent willingness to take such risks.

I said earlier that after listening to some seminars, and visiting many of the stands, two things became immediately obvious, and neither was what I was expecting.

Here’s the second:

At the UK Investor Show 2016, there were hardly any property investment opportunities.

When it’s a fact that the investment portfolios of world’s most successful investors include a significant proportion of property, I would have expected at least that proportion to be represented at the UK Investor Show. I was so perplexed by this omission, that at the end of the show I found one of the organisers and put this point to him. He explained that there was no embargo on property investment providers, it was just that the show majored on Stocks and associated Share opportunities.

Which is fair enough.

However, given that there is no embargo on property investments, and that in my estimation, property is a much less risky investment than many of the investments available at the 2016 Investor Show, I may well book a stand at The Investor Show 2017.

Watch this space.

But if you can’t wait that long to hear about some of the strong property investment contenders to stocks and shares, just call me on 01273 763 900.