Gareth Howlett: You can make the world a better place with your investment

CATASTROPHE fatigue is beginning to set in. The current crisis has been going on (with a brief respite) for over four years and, despite my professional obligation to worry on behalf of my clients, I am finding it increasingly difficult to compose my features into a mask of anxiety when each new day brings a fresh horror.

I know things are bad and they may get worse before they get better. But one day they will get better, and to cheer us up I want to start with one of the great investment pitches of all time: Dick Van Dyke as the elderly banker in Mary Poppins, dancing up and down with excitement as he tries to separate a little boy from his birdseed money.

“Tell him about the ships!” he says; “tuppence, prudently invested” can buy you a share in “fleets of ocean greyhounds … railways through Africa … dams across the Nile” and a whole host of other ways to contribute to and profit from the bustling, growing world.

The pitch failed – the little boy grabbed his money back and fled, triggering a run on the bank – but the old codger was on to something big. The urge to do something useful and creative with money, the union of thrift and ambition, is a strong and deep one.

This is a game that both sides can win. You, the investor, hand over your money expecting to get it back later with more on top; the person who has your money uses it to build and run something which by meeting a demand makes him or her richer and gives you a decent return.

This is the point of investment, to bring together those who have money and those who need it for the benefit of both and for the wider good. Most media attention is hogged by the so-called secondary market, in which investors trade with each other.

These are the daily ups and downs that a stock market index measures. It is called the secondary market because it depends upon and supports the primary market; here, investors put money into a company which that company never has to repay, but the investors can sell their shares at any time.

In this way the needs of businesses for permanent capital to live and grow, and the needs of investors for flexibility and liquidity, are magically harmonised.

This is where it gets really interesting. There are thousands of companies across the world in which you can invest. But where do you start? Through your investment, you can be a research scientist or an engineer, improving lives and making a better, cleaner world with new drugs or new energy technology. You can build roads, schools, hospitals and decent housing in countries where hundreds of millions of people are working hard to pull themselves out of poverty towards better and more prosperous lives.

You can be a software developer in Shanghai or San Francisco or Bangalore, leading what seems to be a permanent revolution in communications technology. You can build cars, planes, ships, trucks and trains, and supply the fuel that keeps them moving. You can run the power stations and pipelines that give us warmth, light and water. You can harvest wheat in Canada and put bread on the shelves in Scotland.

Whether you want to invest in reliable “steady Eddie” businesses that chug along in the bus lane paying regular dividends, or you want a faster ride with new ventures and exotic markets, there are opportunities out there for you.

I’ve recently spent some time helping a client invest in a Scottish business with remarkable new technology for turning wave power into electricity; the whole exercise was a refreshing reminder that there’s more to investment than Bloomberg bingo.

The client’s money goes directly towards keeping the company going until they start making sales, and because lots of competitors are in the race to develop the best equipment, there is no guarantee that our company will win. Of course we want to make a profit, but if we do succeed there will be the additional and very real satisfaction that we have played our part in creating something new and important.

As midwinter approaches and the skies (real and metaphorical) grow darker, it is all too easy to talk ourselves into a state of deep gloom which becomes self-fulfilling.

But the optimist in me remembers that in a few weeks’ time the days start getting longer. The market solstice may take longer, but it too will come.

• Gareth Howlett is fund manager director at Brooks Macdonald