Invest in people

Celticheart Investor

A beginner's guide to trading and investing

I was going to get back to looking at what other tools we have available to us in this blog but something happened to one of my investments, that made me realise the most important thing of all. 

When we invest in any company the single most important factor to consider is the quality of the people running it. In short invest in the people at the top not just in the businesses they run.

The incident I am referring to was a simple RNS or Regulatory News Service
announcement, the London Stock Exchanges service that ensures that price sensitive information from listed companies, and certain other bodies, is sent to all RNS subscribers at the same time.

This one, from "Magnolia Petroleum" was not earth shattering, it was not to say that suddenly we had found masses of oil or gas, it was simply to counter speculation that had been taking place on the various Bulletin Boards of late.

What this did tell me was plain and simple, this company's board of directors listen to the concerns of their shareholders and respond accordingly. 

It is not just this incidence that makes me say, invest in people, look at their track record, are they proven, have they shown previously that they are capable of delivering on their promises. If the company that you invest in have quality people they are more likely to bring value to the company you invest in.

That also extends beyond the BOD to the technical managers further down the line, in the case of an oil company it could be a geologist or  an oil land man who have been in the industry for many years.

I can think of one particular case where the CEO took a small oil and gas company and turned it into a major player, selling it to a national organistation  for over £1.5 billion. The thing is he is now starting again with another venture, wouldn't that inspire you to trust his judgement again. 

Although I have mentioned one particular field, the same values apply regardless of market sector, it is simply a question of doing your research as much into the people involved as the business proposition they offer.

The other value top quality management bring of course is their ability to raise funding, simply because they are trusted by institutional investors to deliver.

I read an argument recently on a Bulletin Board that stated the CEO was not qualified to run the company because he had no hands on experience of the work involved but was a corporate lawyer. The thing is he didn't need to be, that is why he employs specialists that are his skill is in running the business and understanding how the city works.

Richard Branson is not a musician and neither is he a pilot but that has not stopped him from creating fantastic businesses in both the music industry and in the aviation business.

So the message is this, good people build confidence and trust in a company, follow the people that make things happen and you will not go far wrong.


(Note: We will discuss the, complex workings of a bulletin Board at a later date)

Next time:  Stochastic

A cautionary note, trading and investing in shares carries a level of risk, these blogs are only meant as a basic guideline to investing and trading, always do your own research and base your decisions on what you can afford to lose. This blog is not intended to provide financial advice as I am not qualified to do so, it is simply designed to provide information about how the markets work that might be of some help to private investors like myself.

Charting, an overview

Celticheart Investor

A beginner's guide to trading and investing

I think it is worth clarifying at this point that it was not my intention to focus so heavily on technical analysis but as with all things once you follow a path it sometimes leads you in an unexpected direction.

So, before I continue on that journey which is as much a learning curve for me as my readers I would like to take this opportunity to look at things from a much wider perspective. There is nothing more damaging in my opinion than to become so blinkered by charts and graphs that you lose sight of the basic reasons that made you buy into the company in the first place.

What people often fail to see with charts is they are not some kind of oracle that can predict the future but are simply a way of allowing us to identify probable changes in trends and patterns earlier than we could otherwise do so. They are not infallible but if you combine them with the fundamentals and facts that you are already aware of they are a useful tool.

There is a huge difference in charting as used by short term traders to identify possible spikes and retracements and using charts simply as a means of monitoring market sentiment. I am not a trader, looking for short term profits but a mid to long term investor but I still use charting to monitor progress.
That is not to say I will not take opportunities to take profits or topslice (I will come back to that) along the way.

I will continue to look at other tools available for Technical Analysis because I believe the more you have at your disposal the more flexible you can be in your interpretation of share price movement.

Remember that a lot of the analysis tools we have been looking at are "lagging' in that they track movements that have already happened relying on those same repeating patterns to appear in the future to identify similar trend movements. They are not a prediction of the future and cannot see what is going to happen no matter what the most ardent chartists tell you.

The currency of chartists is probability not certainty, if it was the latter there would be no poor chartists around. Ultimately your best friend in investing is your own judgement and research. I cannot stress that enough, if there is one certainty it is that you cannot do enough research, not just into the company but to the political climate it functions in, global affairs and even the environment; something which future investors in oil plays north of the arctic circle are going to have to take very seriously indeed.

Next time I will get back to looking at more specific elements but I thought it worth taking the time out to look at the bigger picture, something we all lose sight of from time to time.


Next time:  Invest in people

A cautionary note, trading and investing in shares carries a level of risk, these blogs are only meant as a basic guideline to investing and trading, always do your own research and base your decisions on what you can afford to lose. This blog is not intended to provide financial advice as I am not qualified to do so, it is simply designed to provide information about how the markets work that might be of some help to private investors like myself.