Free Capital

Thomas, an actuary and academic, interviewed twelve private investors in the United Kingdom who had accumulated enough capital from investing to stop working, most of them managing their own money full time. The subjects are anonymised or identified by first name and are not professional fund managers.

The value is in the variation. Thomas does not present a single method. His subjects include mechanical value screeners, investors who concentrate in a handful of small companies they research intensively, one who trades on chart patterns, one who focuses on companies undergoing corporate events, and several who use spread betting and contracts for difference for leverage and tax treatment. Some hold thirty positions, others three. Some are highly active, others hold for years. He records how each got started, how they size positions, how they research, what they read, and what they got wrong.

The common features he identifies are more about circumstance than technique: all worked with relatively small capital by institutional standards, which let them buy small and illiquid companies that funds cannot; all had low personal spending relative to their capital; all avoided the career and client pressures that constrain professionals; several used tax-sheltered accounts systematically.

The sample is chosen entirely on success, which means it carries no information about how many people attempted the same and failed. The tax and account structures described are specific to the United Kingdom, particularly the individual savings account and spread betting treatment. The book is best used as evidence that several different methods can work at small scale, and for the practical detail on how the subjects organise their days and their research.