Testing Times

These are testing times. I’ve talked before about my feelings of anger in What Next! and Charlie countered that emotion with her blog entitled Finding Joy. Thankfully this blog isn’t going to be about coronavirus testing at all, even though Bolton seems to have become notorious as a party town, inhabited by gangs of soap dodgers.

No the testing I’m referring to is the daily test we are being subjected to as investors. Everyday, another UK company makes thousands of individuals redundant and declares as upbeat an earnings call as they can. We have seen a gradual fall in the value of our savings over the last few months as it has become clear that the recovery has been kicked down the road somewhat. This year may even turn into a reprieve from death row for countless turkeys.

The Behaviour Gap

The graphic above is what I look to when I get sidetracked. It’s OK to worry and speculate over what could happen but there’s no point really. We need to focus on those things that matter which also lie within our control. It was given to me by Carl Richards when I attended one of his workshops. His financial graphics are powerful stuff.

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Size Matters

We invest in shares of many different sizes. Nucleus for instance is worth about £110,000,000 (£110 million). Together we own £1,250,000 worth of shares (£1.25 million). We therefore own about 1% of their shares. Together we could buy 75% of Nucleus, but that would be putting all of our eggs in one basket.

The largest share in the UK right now is Astra Zeneca at £110,000,000,000 (£110,000 million or £110 billion). So Astra Zeneca is 110,000 times larger than Nucleus. Together we own £2,100,000 of their shares (£2.1 million). Thankfully they have many more drugs in their pipeline, other than the recently stalled Covid-19 vaccine. We own only an infinitesimal amount of their shares between us.

Astra Zeneca is the largest component of the FTSE 100 index. It accounts for 7.2% of the index which in turn tells us the overall size of all 100 shares. The FTSE 100 index currently stands at £1,527,778,000,000 (£1,527,778 million or £1,527 billion or £1.5 trillion)

Comparisons

These numbers tell us something about market indices. If you have been a client for sometime you will remember that the FTSE 100 index is a market weighted index. In simple terms it means that although there are 100 companies on the index, every company is not represented with an equal 1% holding. If you buy the index, £7 in every £100 invested is in AstraZeneca. In fact £24 in every £100 invested would be in AstraZeneca, BHP, GlaxoSmithKline, HSBC and Diageo. One quarter of your investment in just 5 shares alone.

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What next!

Never write anything when you are angry. It’s a golden rule. Nobody wants to hear your rant. So this blog is going to just be a 5 minute read at most, just to show you we are still here.

Masks

I have just discovered that from next Monday if anyone wants to visit us at our office, they will have to wear a mask. What for!

Masks are most probably totally useless in trying to stop something as small as a virus. Why? Imagine a planet like earth, and on that planet there is a little girl with a balloon. Now that size ratio earth:balloon is exactly the same as balloon:coronavrus. The coronavirus is incredibly tiny, it is free to enter and exit at will around the sides of any loose fitting mask and indeed through the material itself. Completely useless. Rant over. Breathe.

The last 5 months.

I decided it was time to look back at every blog I have written since January, to see if I have been spouting irrelevant, incorrect or plain misleading information. I’m happy to say it’s all as relevant and correct today, as it was when I dared to commit it to the keyboard. It took me an hour and a half to read the lot, so if you have time on your hands now we are all under house arrest once again please feel free.

In July I wrote:

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