Thomas - Free capital how 12 private investors made millions in the stock market

Free capital a pot of money surplus to immediate living expenses is the raw material with which the investors work. Free capital can also be thought of as their psychological habitat, free from the restrictions of conventional working life as an employee. Free capital also describes the footloose nature of their funds, which can be quickly redirected towards any type of investment anywhere in the world, without the mandate constraints institutional investors often face.

Personal investing can radically change your life. It is probably not reasonable to plan on the basis that it will, but it can; and for each of the 12 investors profiled in this book, it has.

The freedom which investors enjoy from the drudgery of conventional careers is attractive to many people, but possible paths to achieving this through personal investment are obscure to most. Each of the profiles in this book illustrates one such path.

This is not a how-to book or a manifesto, it is a collection of personal stories. But I hope that private investors who read it will, as well as enjoying the stories for their own interest, find some thoughts which can be used to improve their own investment performance.

The people in this book are not high earners who have accumulated wealth primarily through their salaries, nor entrepreneurs who have built and sold businesses for cash, nor trustafarians living idly off unearned inheritances.

Instead the people in this book are principally investors: they have accumulated free capital through their own decisions in the stock market, in most cases starting with modest savings from a salary. The skills and temperament required to do this are different from those required to advance in most careers and organisations, and also different from those of an entrepreneur. Personal investing requires no deference, self-promotion, management skills or tact; it requires only a few good decisions.

It is a field where outsiders can excel: an individualistic game loosely defined by rules which are sufficiently static to make experience valuable, but also sufficiently fluid to keep the game interesting.

The conditions under which the game is played now are not the same as 15 years ago, when it would have been more difficult to write this book. Then, access to real-time prices and company news cost thousands of pounds a year; brokerage and stamp duty round-trip costs on a purchase and sale could easily amount to 3% or more; short selling was almost impossible for most private investors; and market-making spreads were unavoidable on all shares. This book highlights substantial technology-driven improvements in all these areas in recent years, which have facilitated self-directed investing, changing the world of private investors for the better.