We are not nerds and don't need your pity

Terry Bond's Diary of a Private Investor

It's time to dispel a few myths. The private investor - or, at least, this private investor - is not a nerd who spends eight hours a day hunched in front of a computer screen, gnawing his knuckles and watching the flickerings of changing prices. Neither is he or she constantly on the internet or the phone wheeling and dealing, buying and selling shares in order to make a fast buck.

It's time to dispel a few myths. The private investor - or, at least, this private investor - is not a nerd who spends eight hours a day hunched in front of a computer screen, gnawing his knuckles and watching the flickerings of changing prices. Neither is he or she constantly on the internet or the phone wheeling and dealing, buying and selling shares in order to make a fast buck.

I feel it my duty to correct these mistaken impressions because last week an old friend expressed dismay that my application for a new passport described my occupation as private investor.

"What? One of those boring old farts I always seem to get landed with at parties?" he exclaimed. "Well, I pity you. Stuck in an office all day, frightened to leave the computer in case your shares take a tumble. Surrounded by accounts and statistics. From what I remember you can't even add up, never mind understand an annual report."

Ignoring the slight on my mathematical abilities I tried to explain that his perception of a private investor was far from the truth. I pointed out that it can be the most interesting, stimulating, exciting and rewarding occupation imaginable. (I omitted to mention such adjectives as frustrating, annoying and depressing).

But, it is difficult to explain to the uninitiated what makes the lifestyle so appealing because from day to day, week to week, its content is so varied. So here, for my friend's edification, is this week's true diary of a private investor. I have omitted the repetitious parts - taking the dogs for a walk, routine office work, writing, talking with contacts and so on.

SUNDAY: Early morning drive to Bristol for an investment club seminar. Around 350 club members attend, they've each paid £19.50 (snack lunch included) to listen to a series of speakers talking about subjects including the internet, overseas markets, options, strategies and how to identify growth stocks.

It's rather daunting giving a talk at these events because I have a recurrent nightmare that someone will start a question with "as a chartered accountant myself", and then have the most detailed query that I haven't got a hope in hell of answering. Fortunately the chartered accountant did not turn up.

MONDAY: On the dog walk I ponder the future of two stocks I own that are showing a substantial loss. Westside Acquisitions and the oddly-named Ninth Floor are shares I have held well beyond their sell-by date. Why? Goodness knows. They come under the heading of "hope stocks" and obviously my hopes were too high. They will have to go.

Back at the ranch I update my portfolio prices via the Internet. This is a daily task and I use two programs, Finsight (which used to be called Infotrade) and Sharescope. I use Hemscott for real time prices but, lest my friend is misled into thinking I can't tear myself away from the computer screen, the check takes no more than five minutes and I probably do it on average three times a day. Even when the market is extremely volatile I do not watch movements as I don't want to be tempted into a knee-jerk reaction.

Over the weekend two investment newsletters arrived. This afternoon I read them and note their recommendations. I would never rely solely on a newsletter tip but some of them do research their recommendations in depth and provide me with a firm basis for my own enquiries. There's no denying too that they spark off good ideas.

TUESDAY: I have a number of telephone chats with investor friends including an acquaintance in Chester. She bemoans the fact that while her research to identify undervalued growth stocks has been diligent, the shares do not seem to be obeying the rules. In particular she mentions a favourite of hers, Northern Leisure. She has read that this company is in takeover talks with Luminar and my friend can't understand why today's price does not reflect the value of the rumoured offer. I make a mental note to look at the share this week.

Train to London. Luncheon at Brooks Club with my friend Jim Slater. We meet quite regularly to discuss everything from the state of the stockmarket to whether the Chateau Mouton Baron Philippe '71 Pauillac is still drinking well. Jim has earned a legendary reputation as an investment guru and his ability to forecast market movements is uncanny.

Today I find him apparently cautious but in reality decisive. He has an unusually high proportion of his investment funds in cash because two months ago, shortly before the market correction, he sold a substantial number of his positions.

"I could see valuations, particularly in technology stocks, were ridiculously high," he explained to me. "It simply could not continue. Remember, everything eventually regresses to the norm." So, emulating the move of his great friend, the late Sir James Goldsmith, just before the Crash of '87, Jim Slater cashed in a lot of his shares.

Ominously, he is not rushing back into the market other than to buy a handful of traditional "old economy" shares which he believes are attractive enough to warrant ignoring the vagaries of the present market. His shopping list includes Abbey National, Alliance and Leicester, Boots, Whitbread and Northern Rock.

WEDNESDAY: What a stupid boy! After my chat with the Chester lady yesterday why didn't I look at the Northern Leisure situation straight away? This morning I check out the details and it immediately captures the imagination. We are as far away as you can get from high tech and dot.com here, this is the world of late night discotheques, fast-food eating places and themed bars with names like Jumpin' Jaks.

Northern Leisure has combined fast expansion with increasing profits and dividends and the talk is of a friendly merger with Luminar which runs, amongst other things, the Chicago Rock Cafés. The brokers love both companies and the marriage would seem to be made in heaven. If the details published in the Independent last week are correct - one Luminar share plus a 4.5p special dividend for every four Northern Leisure shares - the deal would make today's Northern Leisure price of 159p look very low indeed.

I turn to the news pages on the internet for some more information. Surprise, surprise! The Northern Leisure directors are recommending the deal, which makes the shares worth around 197p. I've missed the boat. But never mind, my lady friend will be happy.

THURSDAY: London twice in a week! This time it is dinner at the recently re-opened Belvedere restaurant in Holland Park as a guest of my old school chum Peter Reynolds. As well as being chief executive of Wilshaw plc, Peter is also a serious international investor. Like most of us he is smarting from the downturn, particularly in his American holdings.

Peter regards the Nasdaq market as a barometer of the future and says he will be pessimistic if it drops below 3200. "There has been a lot of margin trading in the United States in recent months and if the markets drop much further there will be margin calls," he says. "Some private investors will find themselves in serious trouble because they will not be able to honour their obligations. This will have a detrimental knock-on effect, not only in the US but around the world."

Peter Reynolds believes investors should hold fire at the moment. "Let things settle down," is his advice. "There's no rush. Investing is a long term business."

FRIDAY: Portfolio day. Take the phone off the hook and get down to the serious business of examining my portfolio. PEPs, ISAs, Aussie and American stocks, loved ones, forgotten ones, nothing escapes scrutiny. My routine is to look at each share and check the prices and charts to see whether there have been any significant changes. If so I want to know why. I check the news archives to see whether I have missed anything during the week.

This week I decide to hold tight.

terry.bond@hemscott.net

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