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A Whale in the Aquarium Causes Problems

Every now and then you will come across a once in a lifetime investment - that not only feels too good to be true, but also has all the hallmarks of being a true winner. On these occasions, it is very hard not to end up in a situation where one share dominates the rest of your portfolio - and if that share goes on to do well, then of course this is a great result - but the focus on a single share will increase it's dominance on overall performance. These days my largest holdings (based upon current market values) are as follows: 19.2% in a market index (FTSE 100) 18.9% in a single share (hopefully a once in a lifetime winner) 6.6% in a market index (FTSE 250) 3.6% in a single share 3.3% in a single share When it comes to investing there are two schools of thought: Diversify across a mix of shares, ideally via index trackers Focus on high-convention bets where you believe there is low risk and high reward In reality, many of the best investors use a mix of enough diversification - b...
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It Matters Where You Put Your Money

The 2025 autumn Budget threw up a few interesting debates - and one of the most polarising aspects of the budget was the changes to the Cash ISA. In order to 'encourage younger people to invest' the Cash ISA will revert back to a more familiar format, with the amount able to be contributed into a Cash ISA reduced to £12k, but with Stocks & Shares ISAs continuing to have a £20k maximum contribution limit. This means that you can put £20k a year into a Stocks & Shares ISA, £12k into a Cash ISA and £8k into a Stocks & Shares ISA - but not £20k into a Cash ISA. That is unless you are over 65, in which case you get a special carve out. This has triggered a lot of conversion - firstly around the special carve out for the over 65s, but also for the removal of an extra £8k contribution to a Cash ISA - and it is this second area which we will focus on today. And what is interesting about much of the critique of the policy change is the number of people looking to use Cash IS...
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Dislocated Stock Prices - Are They Worth the Trouble?

One of the best opportunities either to make (or lose) money while investing comes about via a stock dislocation. Whilst it has been often stated that the market is in fact efficient, I personally hold the view that the people who hold this view probably couldn't spot an elephant on an ice rink. Whilst the stock market is generally fairly efficient, there are times when either paranoia or exuberance take over - turning a well priced stock into a source of ridicule for all those able to see that the emperor does in fact have no clothes on.  What makes investing really interesting though, is that that there will also be times when those of us 'in the know' will point out that the emperor has no clothes, only to find that he is in fact dressed in his full royal regalia. The great thing about investing is that most of the time you are wrong. Stock Manias - e.g. Tesla? But manias do exist, and the more discussed examples come about through irrational exuberance - where the posit...
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What Does Tesla Actually Want to Be?

When I look at Tesla one thing that stands out to me is how big it's vision is. This is admirable - we do all like ambitious companies after all - but what subsequently puzzles me about Tesla is it's approach to that ambition. More specifically, the amount it allocates to be spent on research and development. To explain my point, let's have a meander through the car world to gather up some rough financial comparisons between manufacturers. At the base of the tree you have your upstart luxury car manufacturers like Aston Martin - and Aston Martin spend a plucky $450-550m a year on R&D in their bid to play a role in the luxury part of the market. The cars that result are pretty, but only serve part of a small part of the wider market. And even within the luxury car segment there are levels - and the top spot within that segment is held by The Daddy of the luxury car market - Ferrari. With a market cap of $76b and an R&D spend of about $1bn, Ferrari have always reaped ...
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If There is a Crash Coming, Should I Care?

At the moment there is a lot of chatter in the news about financial markets with a lot of headlines along the lines of 'Is there a crash coming?' or 'Are we all going to die in some great financial fireball?'. And to be honest, I find these articles a bit tedious, because as soon as the news starts to be dominated by these articles, people start sending me links to them with comments along the lines of 'this is really important'. And when I start to be a bit dismissive, they start to get upset, because the information in these links 'IS REALLY IMPORTANT!!!' But for two quite different reasons, I don't think that the information included is very important. The first is because it is rarely very clear what to do with the information. And indeed I suspect that most of the reflexive responses, such as pivoting to gold, will in the long run prove to be ball calls, made more in panic than based upon any real insight about any given situation. But the secon...
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Does AI Have a Revenue Problem?

Over in the US, equity prices are riding high - with the NASDAQ having almost doubled in the last 5 years, driven on by the success of companies focused on AI. AI is the new exciting game in town - much like the internet was back in the 1990s - and the headlines boast that total AI capex spend is expected to reach a total of around $400bn this year. But if the internet triggered a tech bubble, does that mean we are in an AI bubble right now? Much of this money is going into data centres, with the remainder being focused on the development of AI technologies - but if $400bn is being added on the cost side of the balance sheet, doesn't that mean that at least $400bn needs to be added on the income side, and surely we aren't seeing this money appear in the market? Now big numbers can be challenging to put into perspective, but figures these large are sufficient for it to be possible to see a clear drop off in the net cash generation at the big US technology companies. Indeed, if y...
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