Back again so quickly no one could have noticed I was away.
These are not really ideas for investments but a look at the investment scene while standing a little further back. I was reading the editorial in the Money Observer magazine (I’m full of magazines this week) which provided a thumbnail sketch of what’s going on in the equities market – insurance companies were frightened off equities big time because of the bursting of the dotcom bubble and haven’t recovered their nerve to go back into the market so share valuations are cheap in terms of earnings, earnings potential (and to a lesser extent dividends) and this has presented an opportunity to the private equity houses we hear so much about these days – and to small investors.
This morning’s news was that even Boots is likely to fall to one or other of the private equity houses. I’ve always found Boots a difficult place to shop – too much stock and too few staff. The ‘revolution’ in queuing times that has overtaken the Post Office or M&S seems to have passed them by. It’s not particularly original to say it but Boots losing its stock market quote is a sign of the hollowing out of the range of the UK’s quoted companies.
There’s some other kinds of hollowing-out going on that relate to the aforementioned dotcom bubble. For months I’ve been trying to understand what was meant by Web 2, mainly relying on the Information World Review. I think I’m almost there now but apologies for any inexactitude. So we have a new internet wave composed of Myspace, YouTube, second life and virtual this, that and the other and developing theories about how to make money out of this, most of which seem to centre around advertising. Even blog.co.uk is part of it. Whether all or any of this is going to provide reliable returns in the long term seems dubious; it would represent a colossal challenge of branding and originality. Trying to harness the millions of free agents being original (or imitative) on the internet for profit seems a bit like trying to generate electricity from people swinging their arms as they walk to the station.
Possibly in the long run Web 2 is going to become a bit more like sitting in the café watching the world going by; fine but the owner is going to expect you to buy a coffee now and then. Alternatively, commerce and technology will go a few steps further and make us all a lot, lot more dependent upon the medium than we are now*.
Back to hollowing-out. My point is that I’d be inclined to steer well clear of anything relating to Web 2 (or the internet in general) if I was investing. Instead I would favour raw materials such as oil or metals. Commerce seems to be separating out into a virtual side and a real (or raw) side and much of business is becoming like a ghetto, rich in talent and creativity but poor in substance. The situation is more dangerous because there are some businesses that look traditional and substantial (such as property investments) but which are, in truth, merely a kind of fashion and equally dodgy. So the wise investor sticks with natural resources. Alternatively, with the right kind of knowledge and understanding, one can look at traditional businesses to see if they are being clever in the uses they put the new technology to. But year by year the range of wise investment options is being hollowed out.
*You could imagine how it will be a little further on when we’ll be able to acquire a bit of extra brain power through painless microchip surgical interventions (rather like cosmetic surgery) so that, for instance, a politician could discourse knowledgably on Arctic Monkeys if needs be.
One final item relating to investing: I see that there’s been some speculation in the media that TNK-BP may have been acting as a stooge in an auction of Yukos assets in Russia. This happened just after Lord Browne had called on President Putin. Russian natural resources look distinctly dubious – another kind of hollowing out, I suppose you could say.
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On a personal note, I’ve not been on any good walks lately, mainly because of the way the weather has played out. Today, when I had the opportunity to get out, has been mostly wet down here.
The seedlings have been running riot and my partner has kindly made the little paper pots (80 all-told) to put them in so that’s what I’ll be doing tomorrow, if the weather clears.
Yesterday the steel hooks for the pot rack arrived so the rack is now festooned with kitchen utensils. It looks a bit like a chunky mobile above the cooker but we’re very pleased with the effect – and there’s less chance of sending a sharp knife flying when you take things out of the (previously over-full) utensil jar).
On the work front I’ve been applying for this and that and waiting to hear from my source of contract work (still). I tried out some test questions from a typical Financial Planning Certificate exam and found them OK.
Maybe 'Acting Responsibly' should be the name of the entire blog. Next time I may write something about restitution for the slave trade and I am thinking of adding a story.
