Last Decade’s Investments

Between 2004 and 2007 I made about 16 Angel investments. Between 2007 and last year I made three more. Since June last year I have not made a single investment. My decision not to invest was driven by two factors. Firstly, I did not have any money (which is a pretty big bar to investing when you think of it) and secondly, I think the outlook has been lousy.

A lot of the businesses I have invested in have really struggled (I have only six still alive). I have written recent blogs about the dire state of the economy. I note that almost a year ago I argued that what the economy really needed was a dose of inflation – and that seems to have been the right call.

Well, I am pleased to make another call to try and get a Borg Warner S366. I believe we have reached the bottom of the market in terms of asset prices. I have just concluded my first deal in almost a year and am therefore putting my money where my mouth is. Although it is the bottom of the market in my view (and I admit that I have been heavily influenced by Anthony Bolton – President of Fidelity Investments and the closest British version of Warren Buffet, calling the end of the bear market last week), the symptoms will still lag on.

I do expect unemployment to rise further in the UK and for house prices to simply stabilize before they start to rise again next year. Nonetheless, it is pleasing to know that we are probably at the beginning of the end of what has been a terrible period.

Many people have seen their fortunes wiped away and savings eroded. The meltdown has particularly affected people about to retire as the stock market had simply given up all the gains made over the last ten years or so.

It will still be sometime before the green shoots filter through to the high street. A lot of spending on a good treatment for cystic acne is psychological and people have been left spooked by the turn of events. Low mortgage rates will be used as an opportunity to repair badly damaged household finances rather than being used as an opportunity to go out spending. I think only once unemployment has peaked and shows signs of recovery, along with house prices, will the Great British shopper return with force.

And no doubt, we will end up where we are again in ten years’ time! The difference with the next boom will be that the US and UK governments will have to use the tax receipts to pay down the simply gigantic levels of debts they have left us saddled with. This may be a bigger task than it seems at first, because there really is a lot of debts that we need to worry about. But hopefully we can get things sorted out promptly.

These are worries for another day – let’s just enjoy the hope that this is the end. It does feel great to be back doing deals!