the Ermine gets away with not getting struck off the Royal Mail IPO

I’ll probably get slated as a scumbag capitalist running-dog for this but though I staked £10k on the RM IPO I didn’t get struck off the issue for being a filthy rich bastard, because I used Mr and Mrs Ermine’s ISA allocations and staked £5k on each[ref]in retrospect this was dumb, I should have gone 8k:2k or some such split, to spread my targets and opportunities against political fiddling[/ref]. According to the Grauniad it’s all about the Sids[ref]Something vaguely disturbs me about encouraging Sids into a single, undiversified stock without at least providing them with the background information – which is that if you really are a new Sid to the stock market perhaps you should stag this issue and invest in a FTSE tracker with the proceeds in the interest of diversification. At least they should be exposed to the idea and why some people consider this a good idea. Unlike commercial IPOs such as the Direct Line one Vince Cable presumably owes his electors some duty of care ;)[/ref], and not those disgustingly rich barstewards who regularly play the stock market. The schadenfreude is already dripping from the headline

Royal Mail shares: thousands fail in applications for larger stake

going on to explain

Anyone who applied for more than £10,000[ref]The Guardian confused me with the statement “Vince Cable, the business secretary, said that everyone who applied for less than £10,000 of shares would receive shares worth £749.10” which implied I would have been outta luck. However, according to TD direct “all members of the public who applied for shares, up to and including applications of £10,000 will receive an allocation of 227 shares which is equivalent to £749.10 at the offer price.” so I would have just scraped through but with half as much allocated.[/ref] of Royal Mail shares – an estimated 36,500 individuals – will be left empty handed after the government chose to favour small investors over those who regularly play the stock market.

So There! One in the eye for the 1%. Who of course bought theirs via the institutional offer which covers the majority of the shares but we won’t tell the little people that, shall we 😉

Nice Royal Mail picture, Guardian - thanks for that, saves me from getting wet taking one and if you are going to call be a capitalist running-dog then I'll pinch your pic ;)
Nice Royal Mail picture, Guardian – thanks for that, saves me from getting wet taking one in the rain  and if you are going to imply I’m a capitalist running-dog who shouldn’t have got a look-in then I’ll play true to type and pinch your pic 😉

I can’t say I’m stupendously overwhelmed with two lumps of £750-worth, and an apparent £500 total profit at today’s price but so be it.It’s not a huge compensation for the slow destruction of my cash holdings by the Bank of England’s devaluation of the pound and attendant failure to hold inflation under control for the last five years but I guess every little helps 😉

I suppose RM does fit well into a high-yield portfolio (HYP), and if I could consolidate the two holdings it would be about right for a single holding in my HYP – with the requirements of diversification I target single holdings at a roughly £2000 purchase price.  But I can’t as I don’t have another share dealing account yet. I did consider making even more applications but though I need to split my ISA soon because it is now well over the FSCS limit I avoided doing so because of the retail distribution review.

Can I have my money back ASAP because there’s something interesting happening over the Pond…

Now we have all the Sturm und Drang out of the way about Royal Mail can I have my £8500 back ASAP because our American friends are still playing silly buggers which should be good for share prices if you are a buyer. My ISA is maxed, and I could use some RDSB which has been falling nicely (I have no oilies at all so it’s an obvious hole in my sector diversification). And it’s October, always a great time of year for a jolly good punch-up in the markets. I don’t know what they do for Halloween on Wall Street but it clearly makes ’em nervous this time of year.

And what exactly is the organisation formerly known as the US government doing at the moment? How did they get here, and how the hell do they get out?

The American government shutdown beats the hell out of me as far as getting my head round it. They seem to have a genuinely bizarre case when both houses have been democratically elected, it appears at different times. So the electorate presumably felt a bit right wing when they elected the house of representatives and a bit left wing a couple of years later when they elected the senate. And a bit left again when they elected the president. Or the other way round, God knows.

Now oscillating from a little bit right to a little bit left is fine, it’s how Anglo-Saxon democracies work with first past the post systems. There’s a great big rump of people that always feel one way balanced out against an equal rump who always feels the other way, who are basically deadweight as far as changing things though I guess they are reflected in the two poles, if many of them felt differently the poles would have to shift. There there is a smaller remainder of fickle bastards such as ermines who sometimes vote one way and sometimes another. So the overall direction stumbles like a drunk between two narrow walls, first going one way before the pain gets too much then the other way. And some general directions of the poles go in the same way and the electorate doesn’t get any say in the matter, we need a third dimension for the drunk in the analogy, say going up a hill or something. He doesn’t get a choice about that, so things like State ownership of the means of production is currently out of favour[ref]I think the Green Party is in favour of that “We support high-quality public services run for people not private profit. We will protect the NHS and Post Office from privatisation and return our energy, water and rail networks to public ownership.” but they aren’t big at the moment[/ref] whatever party is likely to get in.

The trouble is that the time-spaced sampling method of the American system means that we have contradictory views of what the electorate wants, because one lot was voted in a couple of years apart form the other. And the system seems to have ended up with these two opposing views glowering at each other, both with veto control. So we have a situation of a couple of alleycats who have come across each other in the night, and they’re a hissin’ and a-spittin’ at each other and neither can pass. Let’s hear it from some alleycats, shall we –

There also seems to be a fair amount of argy-bargy and aggravation within one of the cats, as in the back legs and front legs aren’t in tremendously huge agreement about what to do. It seems to be a uniquely American problem – other countries have it set so all the elections happen at once so parties have to agree and set up coalitions before they get to throw their weight around. I can see why the Americans might want to space the elections out temporally, because of the sheer scale and logistics of the place. But it doesn’t seem to be reflecting the will of anybody at the moment 😉

The stock market has been terribly boring this year, rocketing away from January and no really good buying opportunities, but now the Ermine’s snout is getting twitchy with the scent of a good fight brought on by the Americans, which should hopefully make buying an income cheaper. Hell, I might even be able to diversify with a US tracker is the S&P takes a hammering, and perhaps even the USD. At the moment the S&P500 is just too dear for me. Others markets will take a hit too, perhaps time to consider the FTSE100, which starts off more reasonably priced. It could be like being a stoat in a hen-house 😉



22 thoughts on “the Ermine gets away with not getting struck off the Royal Mail IPO”

  1. The middles classes stagging privatisation IPOs….

    ….government schemes to ramp the property market…

    …workfare on your bike…

    …it really does feel very mid-80s doesn’t it?

    (I’m trying to picture Harry Styles as the new George Michael)


  2. How Low Can You Go seems to fit the musical theme Neverland started 😉

    £250 is nice, but not life-changing, though I hear reports Hargreaves Lansdown went titsup with all the sellers. Maybe I should place a limit purchase order at the offer price for the £1250-worth I didn’t get in my ISA…


  3. As for the US election, you’re missing out one of the reasons – you can all explore with the following game!

    I’m still a bit mystified why the GOP gets more than about 5% of the vote!

    Argh – so many articles in a rush! By the time I can form opinions on them they will be stale! I’ve since see the Flynn talk and I think it has changed how I think about some people. I love encountering things that change how one sees the world!


  4. @Greg – that’s fascinating – thank you. And mad! Federal voting rules varying by state, how, er, comical!

    I’ll slow down a bit – was coming back from the pub last week about 50 yards behind some geezer sneezing like hell. I must’ve got his flu and then got bronchitis so every time I stick my head out into the cold air I get a coughing fit, so I’ve been on the PC snarling and laying out a microcontroller based sensor circuit board, alternately. I have the flu and the bronchitis on the run now – one of the benefits of retirement seems to be a massively shortened recovery time to lurgs. So I’ll slow down soon you’ll be glad to hear 😉

    @BTS could be an easy way to profit 😉 Our Sids do seem to be in an unbelievable hurry to offload their precious shares. It’s only £250 – there’s a divi of £46 coming down the pike, a 20% bump on that profit, though of course the shares may got titsup when the CWU go on strike. It appears I can’t place that particular limit order in my ISA for some reason but I can put a limit offer at say 320p in my trading account…


  5. I did it in 6 minutes 26 seconds… I’ve since discovered this:

    Illinois-4 is amazing!

    The US system is so broken in so many ways it is amazing they managed as ‘well’ as they have.

    Not that I have a particularly high opinion of ours. (I think we should have a House of Lords with low turnover members nominated by bodies like the Royal Society, The Royal Academy, the Bar Council, even the CoE etc, to have considered debate about stuff the Commons throw at them. (No business leaders or media types – they have enough influence over the commons.) It should have teeth too. Perhaps then we might avoid the most crass blunders!)


  6. That’s awesome – and all this from the good people that brought us the Mason-Dixon line and the rectilinear grid city plan with avenues going north south and streets/boulevards east-west.

    Over here these things seem to be decided by these people. It’s got to be said that having the parties in charge of boundary setting sounds like a Really Bad Idea to me.

    Good luck with Lords reform – it seems to be a world of hurt where good ideas go to die!


  7. I, too, got my 227 shares. I think I’ll just wait to see if the sellers and the strikers depress the price enough to make it worthwhile buying some more. I’m mainly interested in RM as a long term dividend stock. And, yes, watching to see if a good entry point comes up for a US ETF.


  8. Like the way that a post about the Royal Mail IPO has lead into a debate about US electoral boundaries, House of Lords reform etc. It’s one of the reasons I keep coming back to this blog!

    I have always found the US fascinating in many different respects. Indeed, one of the things that used to really irritate me about many on the political left was a knee-jerk anti-Americanism sometimes allied with soft-pedalling criticism or worse with regard to the Soviet Union.

    How the US has done so well and whether it will continue to be so successful are moot questions. Of course, it does depend on how you measure success and, even based on material well-being, I have read that median real incomes have stagnated since the 1970’s.

    I suspect that a big factor is immigration and that looks like it will enable the USA to
    avoid or delay the impact of ageing and population decline which is likely to affect Europe, China and Japan.

    BTW If you have any interest in Blues (one of America’s great gifts to the world!), I’d commend Hugh Laurie’s series (what an awesomely talented guy) on Radio 2.


  9. Been reading your blog for the past few months– fascinating! Yours is one of the most well-thought-out, considered blogs I’ve encountered.

    I’m an American and live just across the river from Washington DC, in Virginia. We’re fed up with the posturing of our congressmen as well–and being native to the region, my comment to the rest of the US at least is: It’s not Washington that did this per se, it’s all of you who elected these idiots and sent them here!

    I’m a veterinarian, but my husband is a government worker and was furloughed 16 days. We’re careful with money, so it didn’t impact us as it did some.

    Sometimes I look at the UK’s systems and sigh, and wonder, “what if?”.


  10. I missed out. First time in my life I’ve been lumped in with the fat cats! Hugely annoying, as I was telling all I knew to apply on valuation grounds. And of course to become a fat cat I had to sell a lot of stuff — I didn’t just have more than £10K lying about — so then I had to go rebuy stuff. As well as missing out from the gains in one particularly holding that had previously not moved for months, while I waited to be told I had nothing.

    It basically cost me a few hundred pounds I think!

    Pah. Wouldn’t have happened to Sid. 😉


  11. @Robin thanks for the kind words, and I’m glad this has been sorted. Possibly not for long though if this is to be believed, I hope you guys get ahead with that in future!

    @Monevator That’s raw – commiserations on losing out! I had to sell some of The Firm to make space too, which may have saved me as I didn’t want to sell too much. Hence Mrs Ermine joining the ranks of the Sids.

    I’m beginning to think filling an ISA at the start of the FY isn’t such a good idea – opportunities seem to turn up through the year 😉


  12. @Ermine,
    On the basis that most investors get it wrong,if I were still in a position to contribute to ISAs, I’d look at seasonal trends for retail investment into ISAs and trickle-feed in inverse formation!

    Do new investments into ISAs peaking near the end of the tax year have sufficient volume to move markets?


  13. @GOP I was sort of doing that. Most people wait till the end of the FY, whereas this year I stoked my ISA at the start with a capgains defuse at the start of the year. There’s a general theory that your gain is time in the market not market timing, so maxing at the start of the year makes theoretical sense. But in 2011 when I was saving into my ISA some good opportunities showed through the year, so I’m not sure getting fully invested in April makes sense. Uncomfortably, everyone else seems to pitch in in June!. OTOH they are sucking money out of Europe like gangbusters, which is what I’ve been targeting this year 😉


  14. Lupulco — In my opinion that inforgraphic is scaremongering of the worst kind. Derivative exposure simply doesn’t work like that. Most all of it is netted off against each other, so the total risk is far lower.

    Think of it (ironically, given the polemic often used) like a casino. At any one moment, a hell of a lot is being wagered on the roulette tables. But mostly the players are betting against each other.

    What is the total risk to the house? Far tinier than what’s being risked on the table.

    Hmm, I should turn that into a blog post. It’s a nice metaphor! 😉


  15. @lupulco I’m with Monevator on that – there’s a lot of double counting in there.

    It’s not that I can’t have dark fears about the whole fiat currency and what do we call value. But we’ve done well trading with others – we live like kings compared to earlier generations.

    It;’s possible it all goes titsup, after all my great grandmother saw that happen. Twice. It could happen to me. Or you. I figure I’m now too soft to fight that. Sometimes you gotta be prepared to let it go…


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