A very worthy initiative by the British Humanist Association to create a counter-point to religious advertising in London set a 5000 pound donation target to fund the campaign. This was exceeded in just 10 hours, with Richard Dawkins matching the contributions. In the few days since then publicity has pulled in a great wave of public support and donations are now at more than 84.000 pounds with the campaign expected to go nation wide instead of being limited to London.
With recent advertising by religious groups using the usual 'you will burn in a lake of fire for all eternity' to scare vulnerable people into believing (and donating) to religious causes it is great to see a rationalist counter point getting massive support. I'm all for respecting the beliefs held by competent adults and don't object to any religious practise which causes no harm to others, but organised religion preying on people's fears, indoctrinating children in non-rational world views or otherwise trying to coerce through threats of eternal damnation should not go un-answered by those of us who hold to reason.
If you wish to support the campaign then donate here
Thursday 23 October 2008
Sunday 19 October 2008
Vacation
I've been overseas in Denmark for the last week, visiting a friend in Aarhus and spending a few days as a tourist in Copenhagen. While the trip was overall very enjoyable it was slightly disturbing to see the contrast between the UK and Denmark. Shopping malls, cafes and restaurants do not seem to have anywhere near as brisk business here in Scotland as they do in Denmark. My money did not go very far compared to previous trips to Scandinavia as I got less than 9 DKK per pound.
Trading activity was limited to three purchases
- 1000 RCG at 42.5p per share
- 1000 IPO at 64p per share
- 2200 BRW at 112.7p per share
BRW is a new entrant, this is a financial company doing wealth management, brokerage services etc. Reasonably cash rich, no debt and with 20 billion pounds under management I feel the company share price has been pushed down too far and offers both an excellent dividend (assuming this is maintained in the face of a potential recession) and potential for strong upside in the share price.
As with the other investments the time scale here is several years. I don't need the money and foresee no circumstance where I'd be a forced seller. Macro-economic indicators right now are pretty awful and while a recession will deservedly shake out a lot of 'bad' businesses it will also knock out some good companies or at least make their share prices suffer through guilt by association.
Looking at the portfolio right now there's no doubt that I would have been better off sitting on the cash and making all my purchases now rather than over the last few weeks, however there is no way to predict the exact moment the markets will turn and by waiting for the 'absolute bottom' I'd very likely find myself in cash during the recovery and thus missing out on the chance to buy in at very attractive price levels. To quote the Economist (vol 389, n 8602, page 107) there is $450 billion of cash held in private equity firms and more than $2 trillion owned by sovereign wealth funds currently 'idle' in American treasure bonds. When sentiment turns and this money is invested into the equity markets there will be some huge and very rapid gains.
Trading activity was limited to three purchases
- 1000 RCG at 42.5p per share
- 1000 IPO at 64p per share
- 2200 BRW at 112.7p per share
BRW is a new entrant, this is a financial company doing wealth management, brokerage services etc. Reasonably cash rich, no debt and with 20 billion pounds under management I feel the company share price has been pushed down too far and offers both an excellent dividend (assuming this is maintained in the face of a potential recession) and potential for strong upside in the share price.
As with the other investments the time scale here is several years. I don't need the money and foresee no circumstance where I'd be a forced seller. Macro-economic indicators right now are pretty awful and while a recession will deservedly shake out a lot of 'bad' businesses it will also knock out some good companies or at least make their share prices suffer through guilt by association.
Looking at the portfolio right now there's no doubt that I would have been better off sitting on the cash and making all my purchases now rather than over the last few weeks, however there is no way to predict the exact moment the markets will turn and by waiting for the 'absolute bottom' I'd very likely find myself in cash during the recovery and thus missing out on the chance to buy in at very attractive price levels. To quote the Economist (vol 389, n 8602, page 107) there is $450 billion of cash held in private equity firms and more than $2 trillion owned by sovereign wealth funds currently 'idle' in American treasure bonds. When sentiment turns and this money is invested into the equity markets there will be some huge and very rapid gains.
Thursday 9 October 2008
Topping up
During the turbulent trading the last few days I've made several top-up purchases, averaging down for the three companies in the portfolio.
- 500 SFR on the 6th of October, then another 750 on the 8th
- 1000 RCG on the 7th of October, then another 1000 on the 8th
- 1000 IPO on the 6th of October, then another 1000 on the 8th
This brings me to a total of 10 trades for approximately 8000 pounds total, with 145 pounds in trading cost. Cash balance is just over 4000 pounds and I am now holding stock as follows.
- 4000 RCG at total cost 2590 pounds
- 3000 IPO at total cost 2446 pounds
- 1500 SFR at ttotal cost 2861 pounds
An additional 1000 RCG, 1000 IPO and 500 SFR may be on the cards if the shares fall farther.
All of these are showing significant loss so far which was to be expected. In an ideal world I would be able to predict the exact bottom of the market then purchase all the shares I want at that instant. In the real world, I'm working full time so may not have access to trade at key times, the limits on trade quantities may prevent large-scale purchases and a rally can happen extremely quickly once sentiment turns. It is also not unknown for online broker services to fail at key moments due to enormous demand.
- 500 SFR on the 6th of October, then another 750 on the 8th
- 1000 RCG on the 7th of October, then another 1000 on the 8th
- 1000 IPO on the 6th of October, then another 1000 on the 8th
This brings me to a total of 10 trades for approximately 8000 pounds total, with 145 pounds in trading cost. Cash balance is just over 4000 pounds and I am now holding stock as follows.
- 4000 RCG at total cost 2590 pounds
- 3000 IPO at total cost 2446 pounds
- 1500 SFR at ttotal cost 2861 pounds
An additional 1000 RCG, 1000 IPO and 500 SFR may be on the cards if the shares fall farther.
All of these are showing significant loss so far which was to be expected. In an ideal world I would be able to predict the exact bottom of the market then purchase all the shares I want at that instant. In the real world, I'm working full time so may not have access to trade at key times, the limits on trade quantities may prevent large-scale purchases and a rally can happen extremely quickly once sentiment turns. It is also not unknown for online broker services to fail at key moments due to enormous demand.
Friday 3 October 2008
Life long learning
Although I've already got a successful career in a multinational corporation I've long been looking at strengthening my CV with a degree in business. It's impossible to say with certainty if this will be a good investment in terms of life-long earnings but I am confident it will help me continue developing my skills and it may open up new career options if I find myself looking for employment for any reason. The networking potential is also attractive, not least as I am living in a foreign country and therefore cut off to some extent from the 'normal' network of people I grew up with and went to school or uni with in my home country.
Looking purely at the financial aspect I expect it will cost me around 4000 pounds over a period of four years to obtain the degree. I will be around 40 years of age when I complete it, with an expectation of working between 10 and 30 years after that point. Assuming I retire at 50, I'd need to earn an additional 400 pounds per year after taxes to break even whereas if I work until I'm 70 (not impossible given the way the government keeps raising retirement age!) I'll need to earn just 134 pounds extra per year to break even.
A recent issue of the Economist indicates a degree in economics boosts lifetime earnings by more than 25% based on data from the Labour Force Survey as analysed by I. Walker and Y. Zhu. Whether or not this can be effectively translated into similar benefits for an adult student who's already been in the workforce for 15 years by the time the degree is obtained is difficult to say, but assuming it boosted my earnings by just 10% it would still be an excellent rate of return.
In numbers, assuming I never got another payrise except to keep up with inflation I'd earn some
280.000 pounds after tax from the time I'm forty until I turn fifty. Double or triple this for longer career spans. If the degree boosts my earnings by 10% then I'd have an income of 310.000 pounds every 10 years, an increase of 28.000 to 84.000 pounds which far outstrips the 4000 pound cost of the degree.
Looking at the opportunity cost of those 4000 pounds, if I invested them today in an account with 7% interest then discounting taxation and using the Rule of 72 it would be double in value after 10 years, double again after 20 years and double a final time after 30 years so that by the time I was retiring it would be worth 32000 pounds. This comes in comfortably below the 84.000 pounds value of the degree from the 10% lifetime earning with a 30 year career.
Looking purely at the financial aspect I expect it will cost me around 4000 pounds over a period of four years to obtain the degree. I will be around 40 years of age when I complete it, with an expectation of working between 10 and 30 years after that point. Assuming I retire at 50, I'd need to earn an additional 400 pounds per year after taxes to break even whereas if I work until I'm 70 (not impossible given the way the government keeps raising retirement age!) I'll need to earn just 134 pounds extra per year to break even.
A recent issue of the Economist indicates a degree in economics boosts lifetime earnings by more than 25% based on data from the Labour Force Survey as analysed by I. Walker and Y. Zhu. Whether or not this can be effectively translated into similar benefits for an adult student who's already been in the workforce for 15 years by the time the degree is obtained is difficult to say, but assuming it boosted my earnings by just 10% it would still be an excellent rate of return.
In numbers, assuming I never got another payrise except to keep up with inflation I'd earn some
280.000 pounds after tax from the time I'm forty until I turn fifty. Double or triple this for longer career spans. If the degree boosts my earnings by 10% then I'd have an income of 310.000 pounds every 10 years, an increase of 28.000 to 84.000 pounds which far outstrips the 4000 pound cost of the degree.
Looking at the opportunity cost of those 4000 pounds, if I invested them today in an account with 7% interest then discounting taxation and using the Rule of 72 it would be double in value after 10 years, double again after 20 years and double a final time after 30 years so that by the time I was retiring it would be worth 32000 pounds. This comes in comfortably below the 84.000 pounds value of the degree from the 10% lifetime earning with a 30 year career.
Thursday 2 October 2008
Additional purchases
I've made three additional stock purchases, the first of which was a top-up of RCG with 1000 shares purchased at 70p. This doubles the size of my holding.
The second share was IPO which commercializes intellectual property through various partnerships with universities. I purchased 1000 shares at 93p, which is a P/E ratio of 8.5. Their results for the first half of the year was 15.8m pounds profit (fiscal year 2007 profit was 30.5m) and they are sitting on 39.5m in cash with no debt. Fair value of their equity investments were 148m as of their interim update, no doubt this is volatile but in the long term I expect it will be a solid investment. One of their most recent ventures is with Xeros and shows commercial potential in both industry and household usage. I'm looking to double or triple the holding in the future.
The third and last was Severfield-Rowen which is a leading British engineering company which has been pushed into deep value fundamentals through association with the building sector. SFR has a deep order book, a history of increasing dividends and relatively little debt. Their interim results were excellent and I expect they'll benefit from construction related to the Olympics and Commonwealth games in the next few years. At P/E ratio under 7 and a dividend yield of 11% this is a solid company at a bargain price and if it continues to fall I'll be increasing my holding.
The second share was IPO which commercializes intellectual property through various partnerships with universities. I purchased 1000 shares at 93p, which is a P/E ratio of 8.5. Their results for the first half of the year was 15.8m pounds profit (fiscal year 2007 profit was 30.5m) and they are sitting on 39.5m in cash with no debt. Fair value of their equity investments were 148m as of their interim update, no doubt this is volatile but in the long term I expect it will be a solid investment. One of their most recent ventures is with Xeros and shows commercial potential in both industry and household usage. I'm looking to double or triple the holding in the future.
The third and last was Severfield-Rowen which is a leading British engineering company which has been pushed into deep value fundamentals through association with the building sector. SFR has a deep order book, a history of increasing dividends and relatively little debt. Their interim results were excellent and I expect they'll benefit from construction related to the Olympics and Commonwealth games in the next few years. At P/E ratio under 7 and a dividend yield of 11% this is a solid company at a bargain price and if it continues to fall I'll be increasing my holding.
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