Time to embrace technology world's new frontiers

A recent bout of grisly postautumnal weather has provided the opportunity to indulge in one of my favourite indoor activities at this time of year - namely, lunch.

A short train journey brings me into the City, where I get the chance to absorb some expertise from a couple of delightful chaps who have a few decades of professional investing experience between them.

Like many of my investing comrades, I suspect, I have endured a tricky couple of months at the rear end of 2015. I have watched my remaining banking holdings - Lloyds and RBS - giving each other Chinese burns, and ongoing pressure on the oil price forcing my faithful old soldier BP into the doldrums.

The old chap remains well off the pace, despite having recovered to just below 390p since the beginning of October: I am still more than 10 per cent off, with little sign of an exciting uplift in the pipeline.

REGRETS, I'VE HAD A FEW

The ancient saying goes that one only regrets the things one has not done. My regret is that I didn't back my hunch and top up BP back when the China crisis struck in August, as I lacked the minerals to do so.

So what does the future hold for the sector, I continually ask myself. As liberal applications of gin fail to bring clarity to the picture, I surmise that it's time to ask someone else - and in the spirit of change I will for once name the gents who willingly passed me their wisdom.

GARP, I discovered over lunch with Neil Hermon, the longstanding manager of the Henderson Smaller Companies investment trust, is not a reference to the salacious John Irvine novel of 1979 but is in fact his investing philosophy.

It stands for Growth at the Right Price - which seems pretty self-explanatory, a more elegant version of the 'buy small, sell big' mantra, if you will.

Hermon's view of the market in general is that the coming recovery will be led by large-cap stocks, with smaller caps (though he is 65 per cent invested in mid caps of more than £1.5 billion capitalisation) providing value in the rising market.

That's all very well, but what of the oil and gas sector, I ask. He is quite blunt: 'It is difficult to call when the oil price will recover, but I think it will in the medium term of six months to three years.' Nothing like a cheery outlook, then.

Later I'm treated to a splendid dinner with the cerebral Richard Penney, manager of the L&G UK Alpha fund. His view is bleaker still, with mergers in the sector dominating the oil and gas landscape in the near term.

'I don't want to tell you when they [the big oil and gas players] will start paying a dividend at this point. If I had to guess, I'd say three to five years.'

NEW INVESTMENT AREAS TO EXPLORE

So where to look now for your frustrated freelancing investor?

Penney is a clever investor in what I will call upstream technology. His take on the highly tricky biomed/biotech sector is to buy into the picks and shovels, or should I say needles and scalpels, end of the game.

Molecular diagnostics, he says, is the new focus. For the uninitiated this means using biological markers in genes for diagnosis.

Though he says less than half of his investments are in tech, it is this portion of the portfolio that is his favourite.

As regulars will well know, I am a fan of Facebook and have been in since the beginning; with the stock now well above $105 and looking to stay there, I am already sitting on a 142 per cent profit and it remains my most successful pick.

'There is no doubt social media is here to stay,' says Penney, 'and at the end of the day we don't, as consumers, pay that much for it. It's not in the GDP markers, for example.' So you could easily infer from that that he thinks there is scope for, er, GARP here.

One of his passions is the so-called Internet of Things. Again, for the uninitiated, this is the coming wave of the internet where your washing machine will talk to the tumble dryer, say, or your car directly to the garage door.

A recent Gartner Group reports that the sector will grow at a compound annual growth rate of 35 per cent between now and 2020.

As you would expect from an engineer, Penney bubbles with enthusiasm when talking about where he is looking for growth in the next wave of probable technologies, which includes concepts such as holographic data storage, large-scale carbon capture and storage, and advances in stem cell treatment.

I set out this month to seek new ground upon which to scatter my investment seed and in that respect I think the mission has been accomplished.

If nothing else, when it comes to the post-Christmas clear-out, I think the portfolio might be cleansed of its exposure to sad old oil and gas and enter a new world. Tomorrow's World, perhaps.

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