New Members, Non-Members, Ex-Members

Clubs eh! When you find a club you like, you do everything you can to join it. You want to be seen as part of that team, that club, that collection of like minded people. People just like us. It’s a continuation of our primal defence mechanism. It’s why the great apes form troops. Team up with others, because together we have a better chance of survival.

But once you become a member of a club or group, you then want to keep the outsiders out. You have become different from the others now. Distinct, somehow superior, because you have been accepted and the outsiders haven’t. Take it one stage further and a collection of like minded individuals can move on. We get protectionism, racism, sexism and the like.

You will be glad to hear that this isn’t a blog about toppling statues. It’s not even a blog about the trading block that is the EU. Although it did start off as a group of like-minded countries that banded together for protection, but then became a organised protection racket and has now moved on to trying to punish non-members, even if they get hurt themselves. No, I’m not ranting on about the EU, but there are parallels to be drawn.

our club

This blog is about our club, our tribe. We are all investors. We allow our savings to be used by companies that produce goods and services. Those companies grow and thrive and reward us, their investors, with dividends. Other individuals want to join this honourable club and to do so must buy existing investors shares. We welcome them with open arms, because (hopefully) they will reward existing investors by paying us more for the shares we sell to them. Investment has been around forever and should stand the test of time. So when we are looking to have our life savings take up the slack and replace an income previously earned through our working lives, we continue to be members of the investment club. Probably until our dying day.

It’s unlike most clubs. We welcome new members. The more the merrier. But during lockdown I have become increasingly miffed.

problem members

It’s become clear that there has been an influx of new members. Many of these members do not share our long-term investor goals. They are not investing in the shares of 100 year old great institutions for a decade or more. No, they are gambling on the hope that a companies share price will move by a large amount each hour. These members aren’t investors – they are gamblers.

They don’t care whether the share rises or falls, they bet either way. Get it right, you win. Get it wrong and you lose. You lose everything. They are not buying shares in great companies, they are doing nothing more than watching the prices move and placing a bet.

why the influx now?

The answer in short is TINA. There Is No Alternative. There is no sport. No horse racing, greyhound racing or football. So no sports betting either. I’m not sure how poor Ray Winstone is surviving at the moment without his lucrative Bet 365 adverts. Running throughout every commercial break that all sport is structured around these days. It’s clear where all the gamblers have gone. The have joined that world leading great institution which is the London Stock Casino, I mean Stock Exchange.

“Bet in play” has been replaced. It’s now “bet all day”. The pushers that cater to these gambling addicts have never had it so good. The London Stock Exchange closes at 4:30 each week day. But you can still gamble on the price of a share in the next 5 or 10 minutes time throughout the night and at weekends. IG and CMC markets are companies that have made more profit throughout lockdown than ever before. It’s for good reason. In gambling the bookie always drives the Rolls Royce whilst the gambler loses everything, even his shirt.

I’m afraid gambling is an addiction. Shut off sports and the addicts have to move on.

It’s not just true in the UK. It’s global. Gamblers in their millions across the US and Asia have been starved of their fix and have had to resort to the only casino left in town.

the result

For us long-term investors, our daily valuations have been up and down like a yoyo. How can a company’s value rise 12% one day and then fall 12% the next. It’s the same company! It’s offering the same goods or services it has done for decades. These new members are just not welcome here. However hope is on the horizon.

they think it’s all over…

The premier league is about to restart. Not for the football fans mind. It’s starting again for the TV revenues and the gamblers of the world. Many parts of the US are behind the curve, but hopefully many sports over there must restart soon. I’m hopeful these gambling addicts will return to the beautiful game as their primary source of entertainment and leave our club for good. For Ray Winstone’s sake and for ours. For us long term investors, everyday shouldn’t be a drama.

Enjoy your weekend and I hope your team wins unless its Spurs next Friday.

and finally…

If you are interested in setting up a “bet all day” account, here is the regulatory warning.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

IG UK