Everyone,
I mentioned I'd have a go at suggesting another possibility for moving forward. I've some ideas below about how we could take things, which I'd welcome your thoughts on.
Principle - two pots of money going forward not one
- as much as previously we had a discussion about having a separate fund some months ago that didn't find much traction, recent events with Carillion seemed to have produced a new appetite for this to actually happen
- I think we should immediately plan for a second fund of money invested on different terms (more risky)
Fund 1 : Less risky
- there is still appetite not to throw everything into risky investments, so we need to consider how we maintain a less risky investment pot of money
- I've grown of the opinion that we should hold all the investments we currently have in a long-term pot and set out our expectation for each and then leave them to get income and exit if and when the expectation is met
- I think we should then consider whether any further money coming into this fund goes towards purchasing completely new shares, further investment in ones we already have or if the money should go into a tracker fund. The options to choose from for a longer-term goal could be:
- 1 - look to grow the holdings to form our own mixed sector fund
- 2 - look to consolidate down to our favoured 5 share holdings and only invest further in those
- 3 - look to exit all our shares and invest in a tracker fund run by professionals
- for a trial period 50% of funds invested in the club automatically go into this fund
Fund 2 : More risky
- this fund is for investing in companies with high growth potential
- dividends are irrelevant to considerations
- each purchase vote needs to have three candidate companies
- each purchase needs to have a stop:loss (protect as best you can against loss) AND either an agreed exit sell: (to immediate crystalise a gain) or a tracking stop:loss (to allow for further profitable growth using a margin), all which are the same for all shares purchased seeing there is one goal for this pot of money
- votes happen as soon as we have sufficient funds AND three candidates to vote for
- purchases will be made immediately an officer can see a majority result on the poll, for the price at the time
- we would need to think about whether it was sensible to set a maximum to invest in any one riskier company and what that value was
- if purchases are still held after 3 months they should be reviewed, with a goal of either selling to recoup the funds or holding for another 3 months
- for a trial period 50% of funds invested in the club go into this fund
Trial period
- I suggest we move all the current money available (read a round amount to make the maths easier for the treasurer) into the new riskier fund to start it off
- trial period is one year
- I will look to lead on reforms for the existing pot (1) of investments
- someone else (maybe Rich) needs to lead on the new pot (2) of investments
- at the end of the trial period we assess how things went and what we take from it, in order to move forward accordingly
I like this concept as it is all about learning about investing and trying different things. I think we'll learn from it, it will settle how we need to then progress as a Club and should be exciting. I think there is enough scope, protection and experimentation for it to hopefully please the majority, if not all members. I think we all need to compromise to agree a way forward that isn't too far in the direction of perceived "safety" or "risk". We can give it a year and then the results might take us in a new direction.
Thoughts very much welcome on the above.