We need more lotteries
Why buying a share should come with a chance of getting (lots of) free champagne.
John and I have been talking about how to get more investors to feel a sense of ownership - that by being in the market they effectively hold parts of a thriving business (I say effectively because there are legal complications - you can’t just go into, say Chapel Down, and help yourself to your share of the stock). This matters - for the simple reason that we figure that people who feel like they own part of corporate Britain might be keener on corporate Britain. This took us on to shareholder perks, importance of. John wrote about it in Money Distilled - and of course we did a pod on it (link below). There are a few good ones still out there (looking at you Chapel Down...). But we reckon there should be many more - along with guaranteed lunch and wine at all AGMs.
That said there is one more element I think the UK’s listed companies should think about: adding in a bit of a gamble along the way. I mean..the Brits will do a lot for discounted booze.. imagine what we might do for free booze?
To get the idea, look back to the late 1860s, when what was then Foreign and Colonial first launched. The trust was mostly invested in government securities at the time - local and foreign bonds. When you signed up you bought certificates to the value of £85 and the trust then had a maximum life of 24 years (it had to be liquidated by 1892). You paid for your certificates in instalments over the first three months from launch and cashed out with everyone else on liquidation - unless, of course, you won the lottery. This was an annual draw of certificates. The winning ones got paid out immediately at £100 - so making a much earlier and guaranteed capital gain than everyone else. It made for a cheap and easy marketing campaign that, looking at the shareholder register, seems to have done the jog of pulling in less experienced punters. By 1881, says historian Nigel Morecroft, the shareholder register, while still jammed with aristocrats, also included tradesmen with occupations such as “leather cutter,” “flax spinner” and “slater.”
You don’t get much of this kind of thing in the stock market these days (some may say its all a lottery but thats a different conversation).
Back to the idea of shareholder perks…. John and I wondered on the pod if perhaps perks should be offered on a look through basis to anyone who holds shares in a fund that holds shares in a company that offers perks. But perhaps even better would be to add in a lottery element. Why not draw 10 shareholder names every year for a case of champagne from a wine or pub company. Ten a year for a fully paid up all inclusive cruise from a travel company, a delightful package of books sent every month for six months from Bloomsbury or, not as exciting but equally useful, a year of free contents insurance from one of the financial companies. That way might lie not just a sense of ownership but a sense of fun too. We could do with that.
Perhaps free bingo cards at the AGM? With our moribund property market, it might be the only chance at the Taylor Wimpey meeting for someone to shout 'House'!
More than that shareholders should get discounted rates. For example 10% off goods and services.
One of my greatest gripes is insurance costs. They are a made up figure. I think all insurances should be advertised. Just like a shop window. Why should someone in Bolton have to pay more than say Chichester? The whole point if insurance is the many cover the few. This has morphed into cross checking e try reason under the sun to mitigate loss or best you down in payout!
I feel the amount if payment must be assured. And not mitigated. So everyone knows what they will get.
That way risk can be mitigated by amount. Like a bookmaker at the horses. They offer a price and as that price becomes too risky they reduce the odds. So punters go to another bookmaker to get a better price.
This is not the same as it used to be now, the difference is the bookie or insurance company has to advertise its odds or charge! And the payout is guaranteed.
Insurance companies spend too much money on fighting payouts. A better system for the public snd shareholders is out there. We just need changes.
With listed companies it amazes me why when they have huge monopolies or as good as one, need to make vast profits. Surely a break even after all gists and dividends should be the target? Profiteering is just that.
Taking too much from the public and withholding that money flow back is causing the harm to our overall economy now. Too much money is bring withheld from its path back. Its rotation of money that makes an economy work. So when money is withheld by instititiobs companies individuals etc then that withholding of money back stops it being SPENT! And it’s SPENDING and a constant money resupply that our economies need! Money should not be held onto. It must be exchanged for work effort and production in the same way it was received! It’s an implied contract that once we SPEND then it should be reciprocated!