Here's how you can learn from my mistakes
June 1999. Millennium bug fever was gripping the world and dotcom companies were on steroids.
Starbucks had just taken the British high street by storm and the sharemarket was frothing like a grande cappuccino. A Kiwi working in the UK financial services industry had money to invest.
With £3000 burning a hole in her pocket ($9000 at the time), what wise decision did she make? Was her professional talent and prowess evident at an early age? The investment decision needed to be snazzy. It had to reflect the moment and it needed to be wrapped in a tax-free vehicle called a PEP to protect it from those pesky British capital-gains taxes.
On the horizon appeared the funds management gurus from Framlington. Suited and booted with Colgate smiles, they arrived in the office to explain why retail investors needed a slice of their new NetNet fund in portfolios.
It was hard not to be impressed. They were mirroring a US fund from Munder Capital Management that had already made 300 per cent gains by investing in internet and technology companies.
Bets and Blunders of Tech Stocks
The fact that Munder rhymes with Blunder and NetNet rhymes with BetBet was not going to put this young investor off. With hindsight the rhymes turned out to be a leading indicator.
Yes, this is a personal story. With the application form written out in my husband's name, our first proper investment was made on June 23, 1999.
It was clear I needed to disown this thing if it went wrong.
By March 2000, rose-smelling megabytes were in the air. Every pound invested was worth £3.13. With the Kiwi dollar continuing to weaken, the units could have been sold and $30,000 wired home to New Zealand.
Did I do that? No, because investing is for the long-term, not nine months. This was a global theme that would play out for decades. Did I diversify the gains? Certainly not. The young are invincible with time on their side. No need to take the sensible advice dished out to 50-year-olds.
Japan Drove Up
A year later there was more money in the bank and the next big thing rocked up to the firm's investment conference on a Harley Davidson. No kidding, the fund manager flew in from Tokyo, jumped on a motorbike at Heathrow and slung his leathers over the chair.
Save & Prosper Japan Growth was the next £3000 order of the day.
Again in a tax-free wrapper and this time in my own name. A year to the day, June 23, 2000, diversification from tech stocks to a Japanese single country fund took place. Savings did not prosper. It's no wonder JP Morgan took over and rebranded.
Bursting of the Bubble
What happened next? Ka-boom, the tech-bubble burst with mess everywhere. Unit prices fell faster than lemmings off a cliff. By October 2002, every pound invested in NetNet was worth 23 pence. It's bad enough that the original £3000 became £690, but the reality was a paper loss of £8700 (at the time $28,500).
Stubbornly I have always refused to sell this fund. The contract note and valuations remind me of many lessons that should never be forgotten.
Fifteen years later in 2014 and owned by AXA, NetNet finally returned to par. Now in 2017, every pound is worth £1.92, so it's almost doubled.
I'm not suddenly turning smug though. With the depreciation of the British Pound, the units are worth $10,000. The original capital investment back in 1999 was the equivalent of $9,000. That's a $1000 gain in 18 years. Not a number to add to my CV with any pride.
As for Japan-in- a-leather- jacket it had a similar fate. Just over a year later in 2001, it had halved in value. In 2010, ten years later, valuations were still arriving at half the value. Last year I noticed it was getting closer but still had a £600 shortfall to make up. That's a failure to recover 18 years on.
Let's not even bother considering the currency losses on top.
Today the tech-bubble is a mere blip on the charts of a well-diversified portfolio, making the old adage "it's time in the market, not market timing" ring true. What this masks is that high-risk funds on their own can have spectacular gains and catastrophic losses lasting decades.
Blowing up a little bit of your own money never hurt any financial professional. The biggest beneficiaries are our future clients. No surprise that capital-protected funds became my forte.
Janine Starks is a financial commentator with expertise in banking, personal finance and funds management. Opinions in this column represent her personal views. They are general in nature and are not a recommendation, opinion or guidance to any individuals in relation to acquiring or disposing of a financial product. Readers should not rely on these opinions and should always seek specific independent financial advice appropriate to their own individual circumstances.