This Bristol-based doctor is aiming to beat the returns on cash by investing in shares and funds
Thursday 21 Nov 2019 Author: Daniel Coatsworth

‘I’m a nervous investor who had dreams of beating the market,’ says John, a 40-year-old doctor from Bristol.

Having first become interested in investing five years ago, his journey began with the study of chart patterns. Books were bought on the subject and he subscribed to an online course.

‘I dipped my toes into the world of day trading and quickly lost money. I soon realised I would never beat the big guys who have sophisticated computers and researchers to guide decisions,’ he says.

John soon decided to try a contrarian approach and pick stocks that looked as if they were cheap compared to historical valuations. He had mixed success and so now invests based more on third party information and his own research such as checking levels of corporate debt.

‘I would like to say I’m now fairly cautious about my approach considering how I’ve been burnt in the past. I look at my portfolio daily and smile a bit when it goes blue and switch it off fast when it goes red.’

NEW INVESTMENT GOAL

John says his new goal is to beat the levels of return one might get from cash in the bank. So far he’s on target with 18% return over four years. An average 4.5% return per year is higher than the best-buy rates on cash ISAs and fixed-rate accounts which are currently in the region of 1.5% to 2%.

‘If I get a big win at any stage, I might treat myself, otherwise this is my retirement fund,’ he says.

The West Country resident’s portfolio is currently structured 70% shares and the rest in funds including one that tracks the FTSE 100 index and a corporate bond fund. ‘I am also one of the Woodford losers, having been attracted initially to the superstar status and now have money locked away in his income fund.’

BEST AND WORST PERFORMERS

The Bristol investor’s current portfolio includes shares in oil producer Royal Dutch Shell (RDSB), student accommodation provider Unite (UTG), train station and airport food and drink specialist SSP (SSPG) and computer games developer Sumo Digital (SUMO:AIM).

John says his best performing investment has been media group Entertainment One (ETO) where he made a 120% gain, capped off by the company receiving a £3.3bn takeover bid from toy maker Hasbro in August.

‘There was a bit of a shock when the share price dropped massively around four years ago. Thankfully I didn’t use a stop loss and remained a holder. Entertainment One asked for more money in the form of a rights issue and this was a nervous moment as things weren’t looking pretty,’ explains John. ‘I took the plunge and bought more shares. With a bit of patience, I’ve seen it rise quite nicely.’

His worst investment has been construction services group Carillion, which collapsed in 2018. He thought the company’s responsibilities to look after numerous properties would mean it would be in business for a long time. ‘When it dropped in price, I still believed in it, and the same when people were saying to sell. This was a valuable lesson in not relying on self-conviction which is based on nothing but a self-perceiving importance of a company.’

This incident has made John pay more attention to the number of people who are short-selling stocks and he says he now realises that companies can still fail regardless of their size.

SPENDING HABITS

He recently bought a house and says he has a ‘fairly large’ mortgage to pay off. ‘The range of mortgages is quite restrictive so I don’t think I’m on the best offer, but I’m much better than the previous situation of renting. At least this money goes into my property… and I can drill holes in the walls!’

John confesses to being a ‘hopeless spender’ where he buys stuff on a whim that ends up collecting dust in a cupboard. For example, his last major purchase was a set of three self-sterilising water bottles for £250. He justifies this ‘investment’ in the belief that one day he might need them backpacking along the Amazon and would need clean water to drink.

He’s more satisfied with his equity and bond investments, saying dividends have gone up and stock valuations have also mostly risen. ‘There is a temptation to go for higher returns. Thankfully the rational brain kicks in and reminds me that higher returns usually mean higher risk. And when we’re talking higher risk with no true fundamentals to back it up then that’s just gambling.’

In his spare time, John has a passion for origami where he makes complex 3D dragons out of folded paper. Such a hobby requires an attention for detail and patient approach which goes hand in hand with investing.


WOULD YOU LIKE TO FEATURE AS A CASE STUDY IN SHARES?

We are looking for individuals or couples who can discuss their experience with investing and some details about their portfolios.

Anyone interested should email editorial@sharesmagazine.co.uk with ‘case study’ in the subject line.

Please note, we do not provide financial advice and we are unable to comment on the suitability of any investments you have made. If you’re unsure please consult a suitably qualified financial adviser.

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