My friends all enjoy this story, and now I will share it with you….Cards on the table – the blog title is just to gain your attention, (but it worked, didn’t it)? I only LOST money in the sense that I failed to make £1,260,000 profit. However this is more genuine than most ‘fish that got away’ tales. My fish was actually in the ‘catch net’ for almost 6 months before it escaped! 

Are you sitting comfortably?…..Then I’ll begin;

In 1998 I was raising money to start a new Direct Mail Holiday Business. I re-mortgaged my home and sold my collection of American Comics for £7,000. Unexpectedly, I was able to raise the entire amount needed with a re-mortgage, so I regarded the cash raised from comics as ‘free money’, and decided to gamble it on the stock market. I wanted a high-risk / high-reward share and was aiming for a 10 to 20 bagger; ( i.e I wanted to multiply my capital between 10 and 20 times)!  The stock market was booming at the time, so if you were lucky this was sometimes possible.

I placed my PEP limit of £6,000 cash into a Barclays Self-Select PEP (Personal Equity Plan), so that any gains would be completely tax free. I was closely following three shares waiting for a suitable moment to invest. I was particularly interested in a company called Geo Interactive Media. This was a new company formed by scientists who had worked for and bought Israeli military technology. They had software that could compress video to send over phone lines for the Internet.

There was already a mini-boom in fledgling internet shares, and GEO launched at £2, rising to £2.45. Interest then faded and they started to fall. I kept track of them for 5 months until they had fallen to only 15p. At that price they were valued at less than the cash they had in the bank! The price stuck at 15p for nearly a month. I thought the next move would be either 10p and possible administration, or 20p for a recovery. If the share went up I intended to buy £6,000 worth.

One day I checked the price and it was 19p. This was it! I phoned Barclays and ordered 30,000 shares at 20p or better. The price was 20p, but I couldn’t buy them !!! Barclays said that AIM shares were not allowed in their PEP, however I knew that GEO was now on the main market. Barclays then said that they still couldn’t buy the shares, because GEO was Israeli owned. Only British companies were allowed in their PEP. I wasn’t aware of this rule, but I knew GEO was Israeli owned so I was stuck.

I thought about withdrawing my money and buying GEO directly, but the investment would be subject to capital gains tax. (A few days later I reluctantly bought my second choice share ‘Spring Ram’ which made me £9,000 profit). GEO however had doubled within a couple of weeks, and 2 years later was £42! ……. 30,000 shares x £42 = £1,260,000.

Although I had judged the bottom of GEO shares correctly, there is no way I could have guessed the top, so I console myself by thinking I had ‘only lost £210,000′. I think I would have sold 10,000 shares at £1, then another 10,000 shares at £10. I would have kept the remaining 10,000 shares for the ride all the way up. At £24 the Sunday Times was tipping GEO and predicted they could be £100 by the end of 2000!…..They were crazy, crazy times.

I would have been waiting for that juicy £100 per share, and held on to my remaining 10,000 even though they started to collapse after the £42 peak. I think I would have then sold when the shares fell back to £10. Which makes a total of only £210,000 ‘lost’.

What bugs me is that this is the sort of thing that only happens once in a lifetime, and I’ve used my chance up :O(

John McNally