Get Rich with Non-Financial Investments

Looking out of my window I can see a neighbour’s pear tree in their front garden, heavily laden with fruit.

A non-financial investment - this family doesn't want for pears in summer

It’s a fine tree, and along with Macs observing how much better his graden investment has been doing compared to his ISA it seems a good time to think more widely about investment.

Money is a claim on future work, and when we think of savings, or indeed retiring, we think in terms of setting aside a certain amount of money to enable us to do later what we fund today from earnings.

I just can’t do what Monevator is saying there – to replace my salary from investment income, assuming a 4-5% return isn’t possible for me. Think about what it means for a moment. At a 4% return, you need a capital stake of 25 times your annual income. That means if I saved my entire gross income and lived on fresh air, I’d need to save the next 25 years worth of salary. It ain’t going to happen. It isn’t quite that bad as I have significant pension accrued and of course you can lob some of the proceeds of earlier investments into the pot, but I’d still need a long time!

Needing to replace your salary is a simplistic notion, however, which we can easily fall into. The fact that as employees we fund our lives from money we earn blinkers us, so we think in those terms post retirement. We need so much money to be able to retire and live comfortably. That money buys us our heating and food, and hopefully our leisure trips to the Mediterranean, or perhaps to the Moon for the more sci-fi dreamers.

It’s not the only way to have enough to live on. The problem with saying “I need £X to live on in retirement” is that there is a hidden assumption there – that the only way to service your life is by exchanging cash for goods and services.

You can divide your spending into wants and needs. Needs are typically non-negotiable, for instance you don’t normally have much choice about paying for food, or heating, or rent/mortgage. Stop servicing those and the result is ill-health or death. Wants are elective, such as whether to buy a Kindle or an iPhone, or if you are going to holiday in the Seychelles or stay home and read a library book instead. In general, you have to use money for wants, there is no real alternative. You can’t make an iPhone in your garage, or grow a round the world cruise or even a decent restaurant experience in your backyard. However, a surprising number of your needs are amenable to enlightened self-provision. Not necessarily in terms of hard-core survivalist off-gridding, but you can replace some of your needs with home-grown produce and fuel wood.

That means the money you’d otherwise spend out on needs becomes available for wants. For instance, I am a fair-weather cyclist. I save more money on petrol in the summer than in the winter, but it still reduces my annual getting-to-work costs.

It was Mrs Ermine who first articulated to me the concept that any time you can squeeze out of the money economy is valuable. It gives you resilience, and more money to spend on wants or to invest. She learned this since leaving university, because she has a passion for horticulture, and you spend a lot of money on food.

Reduce your dependence on the money economy for needs

In her case, growing vegetables on an allotment was her first introduction to getting away from the money economy. It costs £30 a year to rent an allotment in the UK, which is 1/16th of an acre, which a skilled gardener could feed a family of four on. Now if I tried it I would have a glut of tomatoes in Summer and then a load of stinging nettles, but fortunately Mrs Ermine has the skill and inclination. Only she has upscaled this big-time.

So as long as you grow more than £30 worth of food on your allotment and recover the cost of inputs, you are in the money. As an incidental benefit your veg will taste far better than the same thing would from Tesco, and be better for you as the vitamins won’t have degraded from storage/transit. Field to fork in 24 hours just isn’t possible from a supermarket.

Food is a need, and for every £1000 you don’t spend on food, you can let your cash income fall by £1300, since you neither need to earn that money and nor do you need to pay tax on it.

This extends to other things. For instance, Gumtree tells me that if I want to rent a house like mine in the area I live in, that will be £700 per month. That’s £8400 a year I don’t have to find because I own my house outright, and that means my gross income could drop by £11000 compared to if I didn’t have it because I don’t have to fund that. Remember that 30% of that is the tax I don’t need to pay on what I don’t need to earn.

My 12-year old pushbike saves me a little bit – it is fuel I don’t have to pay for.  Other ways to get out of the money economy include a wood-burning stove, we grow biomass willow on a flooded allotment site and also have some firewood from our land elsewhere. That’s again getting out of the money economy – this is money that doesn’t need to be earned to be paid to EDF for gas. In our case it reduces the heating bill.

All these are non-financial investments. Not all non-finanncial investments are Stuff – some are skills. A zone valve on my central heating system failed. We troubleshooted the fault and I replaced this myself, for a cost of £8. To have a heating engineer come in would have cost about £100, and they would probably have taken the opportunity to shoot for a change of my 15 year old boiler. This again is money I don’t have to spend or to earn, but having earned it I will put it to work in financial investments.

Non-financial investments save you more than just money

They give you independence and resilience, because you are doing more for yourself. The Ermines’ nest is less susceptible to the price of veg, because we don’t buy it. However, we are still exposed to food prices for non-veg items, so we have reduced out exposure to food price inflation, not eliminated it. We are a lot less exposed to higher fuel costs, because we have reduced our gas bill with the wood burner. If the Russians turn off the gas to Europe this winter we will still have some heating. I will even still have light, because of a solar-powered LED light project, which has enough capacity to run over the short days.

Non-financial investments are very different from financial investments.

They are illiquid, and hard to analyse. You mustn’t use the same criteria to evaluate them as you would for a stock market investment or a savings account. If you buy a stock, you know how to evaluate its performance – either the total return compared to your outlay, or the income you get from it, depending on whether you target net worth or income.

Most stocks have some residual value after you’ve bought them, whereas most non-financial investments are almost depreciated to zero or negative once you have bought them. So they must be evaluated differently. The clearest case of this was when I was evaluating whether to buy solar PV panels. I could use the money for that, or invest in the stock market. The subsidies are such that you have a break-even point of 8 years hence. However, the equipment has virtually no secondhand value, and would be labour-intensive to recover. So it’s not the same as buying a stock with a 12.5% yield, as this is often presented. There is no return of capital, merely a return on capital. I passed on the solar panels, I’d rather take a return of 4-5% in my ISA and a good chance of a return of capital, or even a long term appreciation.

multifuel log burner

Likewise a wood-burning stove – the installation as about £5k, only £1000 of which is the stove itself. If I move I don’t think the stove would add £5k to the value of the house. I could take it with me, I suppose, but then I’d have to pay 80% of the cost again to have it installed and the chimney lined in the new house.

Non-financial investments reduce your cost base, save taxes but you need a fairly stable life

As the wood-burning stove and the farmland show, this sort of investment ties you down somewhat. It’s a old man’s game, not a young man’s game. I most likely won’t need to up sticks and chase work all over the country, and if I did some of these investments would be either not useful to me, or a positive liability. Look at the number of accidental amateur landlords Britain has, when redundancy meant a family had to move for work but they couldn’t sell their house.

Non-financial investments often tie you down, so you probably want to avoid them till you are in your 40s. Until then the stock market is probably a better friend if you want to escape the rat race. ERE Jacob is probably the canonical example of how to make financial investments work for you and quit young. On the other hand, he lives in a van, and I live in a house. That’s an advantage for him, because he likes change, but it would hack me off no end. But I’m not moving counties, never mind countries, any time soon. Which would hack him off. On the other hand, I get to dig my plants into the ground, whereas Jacob has to futz about with containers.

At the moment I am reflecting on my asset allocation, and marshalling resources for stock market investment. At the same time, however, I am also looking at wider diversification. Trees, for instance – you plant trees in the early winter, when the sap is down, at least if you want to get them cheaply as bare-rooted stock. So the time for ordering is soon. Like other non-financial investments, trees are depreciated to worthless as soon as you get them, and they also do nothing for you for the first three years. But after that you get fruit, and again, fruit that tastes of something rather than the bland visually perfect simulacrum the supermarkets sell us. There’s no substitute for fruit that has ripened on the tree in the summer. But you have to eat it sooner that the typical supermarket fare.

One of the other things that non-financial investments do is hold their value outside of the stability of money. Land and property do not depend on the currency for their value. Curiously enough, nor do shares, as opposed to bonds, though at first glance shares seem to be the quintessential financial investment. This enabled the courageous investor to survive the German hyperinflation with some value intact.Whether nominee accounts would have the same staying power as real share certificates is a different matter. And it’s not to say that the value of shares won’t change – the sort of social and financial maelstrom that would accompany a disorderly currency collapse could well do for many firms. However, the price printed on a share certificate only has meaning at the initial IPO – after that it is the number of shares as a proportion of the total capitalisation of the company that determines the value, even if we are using the gold New Deutschmark to value Tesco in rather than the now worthless old Great British Pounds 😉

The stock market isn’t the first place I’d go for a tin hat if I felt there were a currency annihilation brewing, however…





Doom ahoy, Goldman Sachs is boracic lint

Crikey, it must be bad. Goldman Sachs is cutting back on the pot plants because they cost too much. It’ll be the lattes and the red braces (suspenders to our American friends) next.

It tickled me. These sort of spurious cutting back edicts from on high are commonplace in normal wage slavery. I’ve had senior managers throw hissy fits about the amount we were spending on paperclips, telephone conference calls, travel, coffee and biscuits at meetings, and claiming for sandwiches while on the road.

Some even try and get us to book cheap day returns to London for afternoon meetings. With those tickets you can’t return 4:30 to 7pm. I don’t mind hanging around till 7pm to come back, but only if the Firm pays for the beer. They just won’t do that, even though the difference in ticket price is £30 and I can’t drink £30 worth of beer in two hours. No beer, well, they can pay the £80 for the ticket then 🙂

That sort of penny pinching is just part of life normal business. It always pays to tart up your CV when they start rationing paperclips, however in the rarefied atmosphere of the City image is all. I didn’t think that the Great Vampire Squid would fall victim to cost-cutting tokenism. Surely they could do something slightly shady in some forgotten corner of the world and get funding for the next 100 years of pot plants? Is the spark of human ingenuity waning as GS?  Suddenly you’ll turn round and there will be hobos in pinstripe suits in the City.

* why boracic lint for non-Londoners here 🙂

Heck, you need some gallows humour these days, and knowing that even Lloyd Blanfein’s ambition stops at putting foliage on evey GS desk is it for me. Bond markets are signalling a Japanese lost decade for the West, farmland is the new gold, and talking of the barbarous relic everybody’s buying. Oh and it looks like Mr Market is feeling depressed 🙂 Meanwhile, over in Euroland there seems to be a deathwish of exploring every single bad idea under the sun. Apart from that everything’s shipshape…

And the vampire squid is feeling the squeeze. We’re done for…

For all that, there is something that made me think of this record

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In many fields of human endeavour, when things are going wrong, people gradually surrender as the bad news keeps coming. This seems to be happening continually at the moment. There are very serious things wrong with Western capitalism, and every day seems to bring more of the litany of bad news. Too many of our structures have failed us under the loads we added to them.

However, as the lady says, the finest hour is the one that comes between the edge of night and the break of day. Humans are often indolent, and only when enough has fallen away will enough people recognise the fact. Most people live lives of quiet desperation, the actual movers and shakers of life are few and far between. So even more has to fall away before enough people are galvanised to change direction, and a turning point is caused.

There is still a long way to go to reach the low-water mark IMO, and Britain will be a much poorer place before that is reached. However, though I’ve taken the piss out of GS in this piece, there’s also something good about it. Some part of me wonders if this trivial example of Goldman Sach failing to keep up the image is the distant hoot of the owl signalling that there are forces starting to stir that may starting to arrest the fall, and curb some of the excesses that led us astray. It’s an ill wind…

Yay, bloodbath on the markets again

It’s all red on the screen again. Now one jittery near-death experience could be called careless, but two is a conspiracy. This ship is going down 🙂 There are only two stocks in my ISA which are in the black, MRCH because I bought it damn cheap last year and it’s still got about 7% to fall before it’s below the waterline, and TSCO who are about to fall into negative territory for me.

So what’s a chap to do, eh. Could sell everything and get into gold and the Swissie I suppose. Unlike the more cheerful among us, I expect a depression for the Great British Public, though not necessarily for companies, who seem to be increasingly decoupling themselves from the state of the nation. So it looks like the Autumn Sale is back on, in spades.

I still have some space in my ISA, but would have to break into a savings account to load it up. And since I’ve already bought last week (most of which has bombed slightly) I might as well wait until I get paid before hitting the market again, as I want to spread myself out to after October with purchases.

However, what I do want to do this time is attend to the diversification/asset allocation

August asset allocation

I’m heavy in finacials and pharma, which isn’t surprising as I have gone for the two representative companies from each of those sectors which is my target – with the other sectors I’ve either only got one company or nothing at all.

I could do with upscaling utilities. An oil company or two wouldn’t go amiss, I will start with RDSB but not just yet. Something like ULVR would be nice, but they’re too dear at the mo and the yield isn’t up to much either. Utilities such as the HY favourites SSE could join NG. The contents of the two ITs give me some exposure to the sectors I’m missing, and fortunately both are weak in financials.

Something else that is puzzling is what the hell has happened to emerging markets? I used to have a Brazilian ETF but sold it a while ago, it’s now down 16% on what I sold it for. L&G Global emerging markets fund which I’m buying in small bits over the months is down 13% since last month. Emerging markets are meant to the the new dawn, a bulwark against the torrent of bad debt swilling out of the burned-out West. At the moment these guys are drowning even faster that the rest of my ISA, which tends to be heavy on FTSE100 firms.

So here’s to the bloodbath continuing, at least till I have some more money to lob into the great sucking force swilling around the plughole. It is always hard. at times like that to remember that the sturm und drang does eventually quieten down. Those emerging markets boys had better get their act together though, I think it’s going to be a long hard slog for the West to crawl out from the wreckage…

End of recession for companies, Depression for the people?

It struck me once again as I was in Canary Wharf for a meeting, just how different the City of London is from anywhere else I’ve been in the UK.

Canary Wharf Tube Station in London's nouveau-riche financial district

Where the rest of the UK is mired in recession and the jobs outlook is going from dire to desperate, the animal spirits in the financial district seem to be even more on the up than they were last time. Which is pretty remarkable given the near death experience of last week on the stock markets. I even got out at London Bridge and walked through the original City of London where the old money lives just to make use that this wasn’t a Docklands thing.

Tower Bridge. A gratuitous quick blast of the tourist thang, just for the heck of it

Well, I couldn’t resist the tourist shot, though I should know better as an ex-Londoner. However, looking back south from London Bridge I spotted The Shard

The Shard going up south of the river

and as I entered Bank and St Mary’s Axe, home of the Gherkin’s monument to the essential masculinity of finance I get to see a shedload more cranes.

How you get to clean the windows of the Gherkin - looks like the hard way
How you get to clean the windows of the Gherkin - looks like it's the hard way

It isn’t quite like watching the skyline of Berlin from the Intercontinental Hotel looking over what used to be East Berlin in the early to mid 1990s, but construction is doing very well in London, and that’s not counting the Olympics work.

Construction galore in front of the Nat West tower


and of course the serious looking guys on their mobiles

guys on mobiles - 1
guys on mobiles - 1
guys on mobiles - 2
guys on mobiles - 2

and a quick proprietorial hello to one of my new purchases, with that wonderful juxtaposition of the olde worlde and the new reflected in the glass.

Aviva HQ
Aviva HQ in the City of London

Ok, so it’s not like I’m Warren Buffett and my vast shareholding in AV. probably bought a stack of pens but there we go 😉

The overall feeling I got in the City of London is that things are going well. This is a small bubble – even on the train as I was leaving it’s easy to see that other parts of London have boarded up shops which can’t all be due to the recent rioting, and as I returned to Ipswich I saw the signs of severe economic distress all around – boarded up shops, abruptly stopped construction works from 2007 and the like.

There’s a split happening, where FTSE 100 companies seem to be doing okay just as the Great British Public is losing their jobs, and being exposed to serious inflation, rising fuel and travel costs to which there seems little end. Hence the title – firms seem to be doing okay despite the consumer heading towards ever-increasing straitened times, I’d go as far as saying running towards Depression times of multi-year decreasing economic experiences.

The contrast between all that construction in the City, the sharp suits and pencil skirts, the purposeful mobile-phone working on the one hand and the slack-jawed chavs hanging around listlessly in the High Street in Ipswich was striking. I don’t normally see the town centre on a workday, and Ipswich isn’t particularly disadvantaged as a town. It doesn’t feel like the prognosis is good for many UK citizens on the economic and the jobs front…

The Market’s been like the Grand old Duke of York’s men this week

What a rough old week it’s been on the markets. Share prices just like the Duke’s men, when they were up they were up, when they were down they were down. Barmy. You couldn’t make head or tail of it, other than that people were having the bejeesus scared out of them as the mood swayed from total panic to near euphoria.

There have been days where nearly everything has been a sea of red on my screen, and today everything is on the up. I took the opportunity to hop in and buy TSCO, AV. and BA., which diversify me into two sectors I haven’t been in before. I’ve now only got about £3k space left in my ISA. Going forwards I’ve got space for about five more shares and then I have to follow SG in buying more of what I have got already.

Now obviously there are a lot of people that are nervous. What are their fears? And what makes me so different to them…

I share many of the fears. The slowdown in the West will probably turn to depression – we have used all our ammunition up fighting the banking crisis and there’s not much more left. All the tightening of government, corporate and household budgets will result in too much money chasing too little economic activity. We’re guaranteed a big hunk of inflation to craftily lose some of the wealth, and I expect in real terms the net worth represented in my shareholdings to fall, even if the nominal value stays the same. There’s a precedent for this – the FTSE100 in the last ten years hasn’t been a barnstorming success like it had been the previous decade.

I’m not sure I am looking for the same as other investors. This isn’t about winning or getting ahead to me. It is about attempting to lose less. The value of the currency is being destroyed, in an attempt to devalue existing commitments, and also to cover up the fact that in Britain and the West in general we have become decadent and lazy. In itself that wouldn’t be a problem. However, it means that we can’t afford the standard of living we are used to and have expectations of, because we can’t be arsed to put in the work, as a nation.

That’s shown analytically by Tullet Prebon’s Project Armageddon report (hat tip to Monevator for this gem). The strapline ‘thinking the unthinkable; might there be no way out for Britain’ sums the prognosis up pretty well. A larger and larger section of British citizens are content to live off the wealth created by fewer people. Author Tim Morgan is rabidly right-wing (to the extent he makes me look like a bleeding-heart liberal!) but it’s hard to disagree with his stark summary of the issues Britain faces, and the issue is one of attitude and habits, which are hard to change, possibly taking generations.

the gravest problem – the concept of entitlement

Despite the appalling mismanagement of the New Labour years, Britain remains the world’s eighth largest economy (though it has now fallen to 37th in terms of per-capita income).

Reflecting this, British citizens enjoy high quality health, education and welfare systems, combined with strong provision of other basic services.

The problem which has emerged over the last decade, and can in large part be traced to Labour’s doctrine of moral absolutism, is the widespread assumption that individuals and, by extension, Britain as a whole, have an entitlement to these advantages, when the reality, of course, is that they have to be earned on an ongoing basis.

It’s why we have to hire non-Britons to pick the fruit and veg in the fields of our green and pleasant land, and a little bit of this attitude is why we have had rioting in London’s streets for the right to have the right sort of footwear and a flat-screen TV, while elsewhere in the world people have been rioting to get rid of autocratic leaders. People sense the austerity to come, and try and hold on to what they have by any means possible. For the rich that means the numbered Swiss bank account and tax evasion on a grand scale, for the middle classes that means the skewing of government policy to try and keep house prices up and to hang on to their child benefit, for the working classes it means the cash in hand jobs, and for the kids it means a chance to nab a free TV and get some excitement at the same time. As the man from Tullet Prebon summed up, we got here via

Worse still, the legacy of moral absolutism and entitlement has created a political landscape of warring interest groups which gravely compromises Britain’s ability to find unified solutions to its problems.

The debasement of the currency will gradually make imports dearer and Britons poorer, to accommodate our reduced productivity, and governments will hope the change is gradual enough that people won’t pin it on them. Some of this malaise applies to the rest of the developed world, which of course hammers our chances of exporting our way out of this.

I am well into the last third of my working life. I have earned most of the money I will have, so the focus for me is to lose as little of it as possible. These macroeconomic problems will destroy some or perhaps much of my wealth, and is why I have diversified into non-financial assets and tried to screw down my cost base as much as I could.

The problems I fear are the large scale macro issues – peak oil and the like. The Tullet Prebon report was interesting, because I had not seen the scale of the nearer term malaise in Britain. My social circle is from a narrow section of society. I don’t personally know anybody who is unemployed. I know people who to me look underemployed, but they do this as an elective lifestyle choice to have more time, which is different. They are doing this at the early part of their careers in a similar way to my search for a way to be able to retire early at the end of my working life.

I will probably never be able to use the benefit system, because as long as the stock market doesn’t fall to 20% of its value my net worth will be over the  capital assets threshold for getting JSA. I am happy enough with this, I don’t particularly expect other people to fund my lifestyle. However, it does somewhat hack me off that the general indolence will trash money as a store of value.

Equities are diversification for me – my non-financial assets are to hedge the downside, but equities are there to hedge this sort of world-view. I don’t share the view, but I can’t say it’s impossible that we might find leadership that will stiffen the British spine, and as a nation we pull the nose up before the ‘whatever’ crowd puts the economy in a tailspin.

So I share the fears that made the stock market dive. But since this part of my assets is there to hedge the rosy world-view then it is only logical to get in there and buy. So I did. I’m getting close to my ISA limit and will soon have to consider either converting my cash ISA or possibly venturing outside ISA territory with more growth-oriented stocks. Either way it would be rude to ignore the opportunity to pay less for more, which acknowledging that Mr Market may well be feeling in a much sicker mood and the harbingers of Depression start to become clearer. Which is why I haven’t loosed all my firepower at the market yet. I don’t know whether the Grand old Duke of York’s men are up at the top or down at the bottom of the hill at the moment 😉

A long, hot summer of rage and bad temper

Along with the mayhem in the markets there’s aggro on the streets of London. It’s apparent that there is a lot of weak parenting about in the UK.

We’ve seen rioting in the UK before, Brixton in the 1980s and the like. Though the methods were repugnant, there were real issues then. Whereas now, the chavs are rioting for iPhones and branded trainers, FFS. I mean, what the hell are they going to tell their grandchildren in 20 years? “Well, son, yes, I remember the summer of rage in 2011. We were so pissed off and hard we stormed the Sony Warehouse for some TVs and then looted the iStore to big up the ‘hood with some badass flat screen TVs and gadget bling“?

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This old lady puts it pretty well, though if you’re easily offended by bad language it’s probably not for you. She gives it straight, and curiously enough it seemed to work, at least for a few seconds.

On to more cheerful subjects, well, there’s been a lot of bad temper in the markets of late, with the FTSE diving to 4800 at one point. Shorting my company Sharesave shares has worked well for me. Yesterday I think I had the pleasure of seeing a loss on every single stock in my ISA apart from Merchant’s Trust who are still a comfortable way over par. The ISA as a whole is a shade under 5% down. So I added Tesco, apparently for less than Warren Buffett paid for it. If 3.61 is good enough for him it’s good enough for me, and at that price they almost scrape my minimum dividend target fo 4%.

I added another couple of shares in areas I didn’t have before, indeed this crash has done my diversification no end of good. It’s hard not to succumb to the temptation to add to some of what I have already, which have so far paid out reliably. I am seriously thinking of moving my cash ISA into my S&S ISA to get some more firepower in this hot summer. Buying income has got a lot cheaper all of a sudden.

Now of course this crash isn’t without reason, there’s an awful lot twisted badly out of shape with Western economies, the prospects of slow or no growth, the horrendous sovereign debt, the appalling mess that is the Euro, where they must either go forward in the United States of Europe or back into individual currency blocs.  There’s a hell of a lot to be scared of.

And for all the resurgence of today, I figure this bear market has still got a fair way to go down yet. Which is jsut as well, because I have some way to go. I aim to be fully invested into my ISA by the end of October, and the bears could give me the chance to save up enough to be able to do that by then 😉

I’m all for a long hot summer of rage in the stock markets. In real life, however, I think we could do without any more. Hopefully the chavs have got their iPhones and running shoes and the Met will reclaim the streets.


Dr Doom predicts Perfect Storm in 2013, maybe opportunity knocks

Well, he would, wouldn’t he, after all you don’t pick up the moniker Dr Doom for nothing. 2013 is when the SHTF according to Nouriel Roubini, as private debt that got transformed into sovereign debt falls out of the sky to give us all a sore head. He’s pretty definite on that 2013 date, pointing to a synchronised slowdown across all world economies. He also predicts a Chinese credit crunch as they end up sucking up some of the Fed’s largesse. I’m probably with him on that, I don’t do China even though everybody else does because I can’t understand it, their demographics stink, even in my lifetime and I’ve already taken the indirect fallout from one property bubble, thanks, I see no reason to repeat the experience by choice.

For a different take on this we have Niall Ferguson on Consuelo Mack in March. Basically he says after 500 years of giving everybody else the shaft we are going to take it. I paraphrase him a tad, but he say we have got lazy, we don’t work hard enough and all those chaps stage right in China, Taiwan and Hong Kong work far harder. He’s sort of like Oswald Spengler but with a more beguiling presentation. We’ve also become lazy at school and university because we were scared to tell the dimwitted that they were, er, dumb because it might impair their self-esteem.

Me, I say one swallow doesn’t make a summer Dr Doom. You did get it right in 2007. I’m probably more bearish in the medium term than you are, mate. I agree that the second dip is on its way – we kicked all the crap into the air first time.

I’m going to buy into that sucker. Starting tomorrow with a small spread of £1k. I’ve never bought into a crash before, though I have bought on the way out in April 2009. It’s almost undoubtedly too early, but I have to learn how to tackle the uncertainty and the fear. these are firms that have been on my watchlist for a while, and one has a remarkable NAV discount, the other has a yield and a track record of steady dividend growth even through the last recession, indeed both continued to improve divi through the recession.

Over the last year I’ve become better at being fearful when others were greedy, which is why I have a fair amount of cash available in my ISA, as I’ve held off buying of late. I am going to study the previous recession/first dip, and some of the basic technical indicators, to try and modulate my future  purchases with the market. This is the anathema of index investing, it’s a naked attempt at market timing. I figure Mr Market is going to be mightily pissed off over the next year or so. Hopefully he’ll be offering some bargains. The time will come to smell the fear as the western word dices with depression, and become greedy but with mindfulness.

On this first £1k I’m bound to lose money in the coming months, but I have to break new ground and learn to overcome the fear if I am going to take advantage of opportunities to come. At the moment all the newsflow is full of Dr Doom like prognostications, a torrent of money flowing away from the stock market. A small ermine stands at the side, and needs to gauge how to slip into the raging stream and swim against the tide…

I can be more sanguine about taking on this crash, because I’ve seen success from taking on the market in 2009, and also because of diversification. Owning my house,  and having non-financial assets explicitly to hedge against a financial depression means the stock market is only a part of my net worth. It isn’t necessarily going to stop me being hammered in it – it is easy to screw up. It wouldn’t be the end of the world, I’ve been there before in the dot-com bust. Market crashes are a great opportunity to get more for your cash – the tragedy is that all around the feedback is that this is all trash and you want to be getting out. Been there, done that at the turn of the century. Let’s try it the other way this time.