Sunday, August 1

Making the eldest cost centre into a hedge fund manager

You remember what I talked about last time about my son getting educated on stock investments? Well, now we started on a new experiment. The genesis of this comes from the last parents teacher association meeting that I attended and the fact that I got him a summer internship at a friend’s software development shop to learn about website design for his business. Anyway, the teachers told us that the students have to make a good cv for the formal internship next year and concentrate on the extra-curricular activities to differentiate himself from the others. He is ok in sports, but not championship / trophy level, he is much better at the mental stuff. He does like playing football and guitar but not to that extent.

Anyway, so the idea was sparked in my head and I fired off an email to some friends asking if they would be interested in investing money in a UK Stock market fund run by Karn, say £200 per head investment, 3 year lock-in period, quarterly investor calls, with an independent investment committee of non subscriber experts and we pay him on an agreed % return basis.

So he has agreed to do so, he is now busy thinking up a name of the fund. Told him to think of a good name, it has to reflect solidity and trust, also explain what it does, but also has to give a frisson of excitement. He will line up the portfolio on and send a spreadsheet around every 3 months, get the independent investment committee to help and guide, and have a quarterly call.

So aiming for him to come up with the first list of stocks for about £1000, about seven people have already signed up, and one friend’s son also wants to invest. I did warn everybody that he is still a kid and he could lose the lot, there could be a double dip recession, there could be horrible returns in the UK, so they have to be warned that this should be looked upon as lost money. That did not worry the friends that much and looks like its a good start. And even if he loses the money, I think it would be an invaluable lesson on how to protect capital at the very least and try to make alpha. I will keep on reporting on the progress of the fund and what kind of returns he is making. Lets see if this experiment works out.

But more importantly, if you had to advice him, what would you say he would invest in? What kind of stocks do you think would be good for a good return over the next 3 years?

1 comment:

Kunal said...

1.Pharma/MedTech.Especially those into generics and antibodies.

2.Mobile phone makers.

3.Clothing. Like Zara or H&M!

Good luck Karan!