Greetings Fools,

It has been a long journey since I first came to these Boards, I have evolved far from when I first arrived here. I realise I have missed a few years Evolution, but it was because my employer forbade me from writing here. This post should fill in some gaps. If you're in a rush, just skip to the bottom.

You see, I need your help Fools. I need you to help me make a choice, I need your council.

I am not writing this because I want to portray myself as something that I am not, this is simply the way things happened.

My evolution begins

It is 2003, I have just turned 18, I have just become a student and moved from our rural house in Cumbria to Edinburgh. It is December 2003, and as usual, it is cold outside the window of my small room. I am sitting in my room and for some reason I am looking at share results on Yahoo finance. I know that I have a stock market account from when I was 16. I know that people make money though the stock market. I am interested in finance, and how to make money through investing.

I register an account with the Motley Fool. Before I had left for University I had read the Motley Fool UK Investment Guide several times. I had an older account at the Fool, but it is lost in the sands of time. I reregister, I am a Fool. I am CalumoftheNorth.

Despite my lack of knowledge, I begin to invest in shares. Although to begin with I do not understand what I am doing, I begin learning, I want to improve.

To begin with I learned accounting. I bought books and studied in the University Library. Accounting is the language of business and investing. Without speaking the language, it is impossible to learn how to invest, I learn that choosing successful investing has many different approaches. I learn that each method has benefits and disadvantages, and that each number has its own significance. I learn this from the University Library and through my own book purchases. I learn this from the others here. My investing improves as my knowledge broadens.

I am teaching myself, as such my understanding is high as if I do not understand what I am doing or what I am learning, I keep trying until I do.

I only invest in what I understand.

I find the process of investing very satisfying. I grew up well educated, but rural. I do not have wealthy parents, I do not have family connections. I do not need these, the market does not care about these things. The market only cares about what you can find that others will pay a higher value to own. The most likely reason that others will pay a higher value is that the company is generating, and will keep generating more cashflow than the share price would suggest. Inevitably others will realise that this is occurring and will begin to bid up the value of the company. I have found investing to be no more complex than that.

A share price is simply a derivative of a company's business. A company that generates lots of cashflow and profit will underpin a high share price. A company that generates lots of cashflow and profit but has a low share price will be revalued in the future.

The playing field is level in the market as it is nowhere else in life. The market is not subjective, it does not assess you based on anything, the price it offers you is the same as the price it offers to everyone, the law makes the market fair.

I begin investment

I write about my first experiences as an investor in 2004, for some reason, it is very popular, in fact, the most popular thing I ever wrote on the fool.

http://boards.fool.co.uk/Message.asp?mid=9102436

As I learn more about accounting and investing, I can begin to see the nuances in what I am doing, I can begin to see beyond the numbers.

In 2004 I have confidence in my analysis and abilities, and I am still learning. I decide to take my first test of faith. I write about a company in a post and subject myself to the judgement of other Fools. I write about it on the Company board, I am not brave enough to venture into the pub just yet.


Delta - 2004
http://boards.fool.co.uk/Message.asp?mid=8861038&sort=wh...

Then: 	90p 
Now: 	Taken private at 185p

I am buoyed by the reaction and begin to post on the fabled Pub. I will post summaries of all my investment analysis here in the future.

Genetix - 2005
http://boards.fool.co.uk/Message.asp?mid=9111905&sort=us...

Then: 	35p
Now: 	Taken private at 84p

I am now 19 years old. I apply for financial internships, but am not offered interviews. I do an internship in my scientific field. I do not appreciate the significance of this fact until later.

As I read more books and study further, my skills are improving, I am offering more in-depth analysis of investments. I continue to post these on the Fool.

Mothercare - 2005
http://boards.fool.co.uk/Message.asp?mid=9597511

Then: 330p
Now: 525p

As my experience of investing grows, I am getting smarter, I no longer see the numbers but the business behind it. Like an air traffic controller, the numbers on my screen are not just numbers, but an intricate picture.

Amstrad - 2005
http://boards.fool.co.uk/Message.asp?mid=9690034&sort=us...

Then: 	120p
Now:	Taken private at 150p after paying a 30p special dividend

At the end of the year I recount my experience, it is also appreciated on the Fool.
http://boards.fool.co.uk/Message.asp?mid=9800425&sort=us...

The post includes my investment in Corus (2005)

Then: 45p
Now: Taken private for the equivalent of 200p

I also mention another company in my write up that I am very keen on, Global Oceanic Carriers, this will be significant.

Shortly after, I do a proper write up for this company and post it on the Pub.
http://boards.fool.co.uk/Message.asp?mid=9852754&sort=us...

Global Oceanic / The next step

I have not seen an opportunity as good as Global Oceanic Carriers before, that I have clearly understood so well. The company will make enough cash in the first 3 years to pay off the market price. The ships will remain productive for a further 7 years. It is an excellent opportunity.

Initially, I invest the same amount as I have invested for the previous companies that I have mentioned, but I do not feel satisfied with investing this amount. With the confidence I have now in my analysis and the numbers I have created, I feel that this is an opportunity I am not seizing fully.

So, I make a decision.

I will invest seriously in this company. I will put over 3x as much as I have previously into companies into this company. I will stand by my analysis, I will put serious money into the confidence I have in my abilities. It is a considerable amount of money to invest as a student, but it is the inevitable consequence of my development.

After I purchase the shares the price falls by 20%, although I am concerned, I have been in this position before and will keep my investment until the market appreciates it.

Then: 	48p
Now:	Taken private at 170p per share

I sell as the price rises and so do not make all of this profit, but I am affirmed the confidence I have in my ability, I have opened the door to investing substantial amounts based on my abilities as an investor. I decide that I will dedicate my career to becoming a professional investor.

As a result of all these investments, I will finish University richer than when I started.

The next step

I graduate with a 1st class degree in Molecular Biology from my prestigious university, I am now 20 years old. I have no interest in pursuing my science education further, although the logical approaches it has taught me will remain priceless.

I move to London and apply to graduate financial positions as an asset manager. I have no experience or knowledge of these institutions, my stock market experience has not given me reason to be aware of any of them. Despite my numerous applications, there are no jobs available, I am told they have been filled by interns. I am rejected without interview from 14 of the 15 companies, the remaining company offers me an interview for a corporate finance position.

I am as prepared as possible for the series of interviews and assessments. I have one chance but one chance is all I need. I am hired. I later find that of the 30 hires, I am the only one who did not have a financial degree or an internship. But I have seized my opportunity. I have been hired as an investment banker for a major European bank.

Training Days

I am made to attend a training day, it is mandatory for all who did not perform internships at the bank that we work at. It is the first time that I have met others that I will be working with. I am curious as to their level of knowledge. Twenty of us are sent to the London Stock Exchange building for a day of listening to an old corporate finance executive.

After some basic lectures, we are asked to value companies on various metrics. I answer on net asset value, then on dividend growth. These are basic calculations. The next question is to value using P/E ratios, it is the most basic of all. I do not answer the question as I have answered all the previous questions and do not want to be seen as a smart alec.

There is silence in the room, I refuse to raise my hand so the instructor asks others to give answers, they reply with nonsensical combinations.

I still do not raise my hand and so the instructor directs me to give the answer. The lack of answers from the other graduates confused me, surely calculating value with a P/E ration is the most basic of all? I had spent a lot of time running up to the beginning of my employment improving my financial knowledge in anticipation that the others would be at the same level.

Shortly after I am sent abroad to the graduate training program where there are 20 of us from around the world. 16 of the other have studied finance and economics at University. All have performed internships at other prestigious institutions. Several have masters degrees.

For 6 weeks we are taught about finance and investing. It was, and remains, the only time I have ever been taught about finance, accounting and investing. At the end of the course, we are assessed in a comprehensive examination.

Of the 20, I achieve the highest score in the group.

My intriguing colleagues

I learn about my colleagues who choose to work in the financial services industry. I had little contact with others who were pursuing this career path prior to my arrival.

My colleagues are certainly different to me. They are not particularly interested in investing. They are not particularly interested in financial analysis. What they are intensely interested in above and beyond all else, is the accumulation of personal wealth. This is where their passion lies. As such it is an indirect passion, but it is their motivation for the job.

My colleagues will do all the tasks that they are required to do, and do them well as they lead to the personal wealth and status that they are interested in. This is one reason why they do not invest their own money, the task and activity may be the same but it is risky and they do not see the reward as worth achieving.

If you feel I am being disparaging of my colleagues, you are mistaken. They are hard working and motivated, you would be proud to have them as employees. Their motivation is no less noble than any other, and they are stronger for the fact that they have found it. Some of them are like me, but they are rare in the group.

Corporate Finance begins

I return from to the team that I am allocated to work with. Although I was allocated generally, I have been taken by one of the people who interviewed me. A month after I start, my assistant director is struggling with a model for an airline that someone is thinking of acquiring. I ask if I can help and quickly locate the error that was creating the mistake, from my investing I am already very familiar with these models and understand them well.

I ask to take over the model, I have been with the bank for 3 months. My boss seems to recognise my understanding and he agrees. I am inspired to do well in this task, I calculate that the best method of financing the deal is to use the wholesale discount on their new aeroplanes. This I beleive can be achieved through the creation of a separate legal entity (SPV) to finance the bid. This requires switching from purchasing planes to leasing planes.

My abilities to analyse that I have developed through my past give me the confidence to propose this as a solution. It is a novel approach but I create this new and complex structure in the spreadsheet and prove that it works to everyone's benefit.

My boss is encouraged and we discuss the idea with Leveraged Finance, the structure has theoretical value, but the deal does not go ahead.

I have no benchmark about what I am supposed to be capable of or achieving. I am doing the best I can with the knowledge that I have.

However, my assistant director is aware of what I am supposed to achieve. He describes the work I performed on the airline and then writes in my initial performance review:

'...he is able to work on very complicated tasks on which many Associates would still struggle.'

Associates have 3 - 6 years experience. I have been an employee for 4 months. I am assessed at the highest grade allowable as 'Substantially exceeding requirements'

I have seized my opportunity, but fate is against me. My boss will soon resign. I do not realise at the time, but this will be the most complex task that I will perform in the next 2 years. Th bank views graduates as standard and interchangable. There is no reward or promotion for scoring higher than others. We are fungible. I am reassigned to another team where there are many Associates who will do this work from now on.

Carry on Investing

My passion is still investing, with the tools that I have access to at the bank and scraping together the very limited spare time the job offers me, it is much easier to find companies to invest in. I invest in Cineworld and Dairy Crest, unfortunately I am unable to communicate with the Fool due to compliance department concerns.

Cineworld - 2008
I will write about Cineworld later, when I have resigned and am no longer under the shadow of a compliance department.

http://boards.fool.co.uk/Message.asp?mid=11852777&sort=u...

Then:	120p (when I invested)
	160p (when I write on the Fool)
Now:	200p

Dairy Crest - 2008

Then: 330p
Now: 405p

In addition, when the FTSE falls below 4000, I invest in a high beta fund to maximise gain when the index recovers.

DJSC (Dow Jones Small Capitalisation) - 2008

Then: 	1436p
Now:  	1883p

A little more about Corporate Finance

As part of the job I perform we are supposed to be performing modelling and valuation in corporate finance. Our techniques of valuation are crude approximations of analysis. To assess risk we use the Capital Asset Pricing Model. It is the mother of all approximations. But we and our competitors will all use it, and because we will all use it, we will all reach the same answer. Because we will all reach the same answer, it is seen as the right answer. There is a difference between exactness and accuracy.

Businesses are viewed using a machine, we will plug in numbers and it will give us a value. It is important to understand the limitations of the machine, where it is strong and where it is weak. We will not delve into understanding the company, it is the quick, glib answer that we specialise in. We will not try and see the picture.

I am then asked to interview interns who wish to join the bank, it is revealing into the colleagues that were also selected as employees, as most of these were hired following internships.

I ask the first candidate why they are interested in working in finance. He replies 'because of the the challenge and the people.' This response I find a little strange, and ask what it is about the work that he finds enjoyable, after all, he has been studying the subject for several years and performed several internships.

After several seconds pause, he gives exactly the same answer. He is not concerned by the fact that he cannot answer. It takes me some time to understand this exchange. I realise after it is unspoken that he is here to accumulate wealth. No other interviewer would be concerned over his internal enjoyment of the work he would perform. He has no innate interest in finance other than as a means to an end.

We will select him as an intern, and thus, inevitably as a full-time employee. Although around 100 people applied for this position, of those interviewed in this process, 50% will be accepted. The real selection did not occur at the interviews, but in who was permitted to advance to them. These people are the ones that fit the template. One thing that sticks in my head, none of the four that I interview are able to name the Chief Executive of the bank or its share price. I don't think they've seen an Annual Report in their lives.

I am an official Chartered Financial Analyst

While working, I have a secret motivation. I want to work in asset management and so will undertake the required asset management qualifications. I undertake the Chartered Financial Analyst qualification, I have completed Level 1 before I began working, I study and pass Level 2 and then Level 3 in my two years of working. The qualification is of limited use in corporate finance, but is key for asset management.

Each level is a gruelling qualification requiring hundreds of hours of studying, but this also keeps me ahead of my colleagues, I am now more skilled than ever before, to complete the qualification is equivalent to a Masters degree. Others claim they are 'too busy' to do this study and examinations. I am also 'too busy' but I have a passion, and so this will not stop me. I will study at 1am, when my eyes are hurting, I will do everything I can to earn this qualification.

The average age of those who pass the final exam is 35, many work 'market hours' rather than the 9am - 11pm grind that is my corporate finance working week.

I am 23. I have passed.

I complete the CFA 3 exam. I am unique in this qualification with my corporate finance experience and age.

In total I have spent 1,000 hours studying for this qualification.

And so I make my decision. I decide to retire to find work as an investment manager, I feel I have achieved the highest I can in everything I need to make this possible. I am confident from my investment performance that I have what it takes to be one of the best at this.


Performance

So Calum, I hear you ask, cut to the chase! Is there meat in the pie? Are you a lucky man? A one-hit wonder? A volatile soul?

I have compiled my investment result since I bought the shares in Delta in October 2004. As the index I will use the FTSE All-share Total Return.

The results are below, years of outperformance are in bold:

Year		2005	2006	2007	2008	2009	2010 YTD	Compound Return 
CofTN		38%	19%	13%	-17%	55%	25%		202%
Index		21%	16%	4%	-30%	29%	1%		33%
Difference	17%	3%	9%	13%	27%	24%

I beat the index every year in the last 6 years.

According to my calculations, I have made 21.5% annual return on the money that I have invested in my portfolio.

This is equivalent to a 220% total return over the period. The market had a total return of 38% over the same period.

As a 5 year equivalent return (ie. using only the rump of 2005), to compare with the IC/UT funds, I have returned 154%.

There are 520 UK equity Unit trusts and investment trusts in the UK.

I beat every last one of them.

The best UK fund manager over the last 5 years is Harry Nimmo, who manages the Standard Life Inv UK Smaller Companies Ret fund.

He made just 80% over the same period, and underperformed the index twice.

For comparison:

Year		2005	2006	2007	2008	2009	2010 YTD	Compound Return 
CofTN		16%	19%	13%	-17%	55%	25%		154%
Std Life	12%	44%	-2%	-34%	45%	20%		80%
Difference	4%	-24%	15%	17%	11%	5%

For another comparison, the 2nd best 5-year record belongs to Paul Spencer, of the Rensburg UK Mid Cap Growth Trust. He made 77.2% and also underperformed the index twice.

Year		2005	2006	2007	2008	2009	2010 YTD	Compound Return 
CofTN		16%	19%	13%	-17%	55%	25%		154%
Rensburg	14%	34%	2%	-27%	45%	8%		77%
Difference	2%	-15%	11%	11%	10%	17%

Fun as it would be to go on beating the crap out the other 518, I think the point is made.

So?

As you can see, I am not a one-hit wonder, or a volatile risky soul. I worked part time with a fraction of the resources of the professionals.

But they would sell their children to write those numbers that I wrote.

I have beaten them all fair and square, every last one of them.

In 2005, I was 20 years old. I just celebrated my 25th birthday. I believe that I have potential.

You may wonder why I didn't beat the index my more in 2005-7, given the posts that I wrote? The answer is that I hadn't learned through experience to sit on my investments once I had found them. It is a mistake that I did not make in the years after. If you look at my outperformance, you can see how it increases over time. As Warren Buffet accurately wrote 'I make more money snoring than awake.'

I invested in what I understood and what was cheap, it has always worked.

It will always work.

The Pub

In total on Paulypilots Pub, I mentioned 5 companies in 2005/6. Of those 5, 4 were later subject to takeovers.

The exception, Mothercare, now trades at 87% higher than the price I paid for them. You can check all of this if you look at: http://boards.fool.co.uk/paulypilots-pub-share-ideas-51144.a... and scroll through the listings. I think the odds of this happening by chance are around 1 million to 1.

Every single investment that I have bought still currently trades higher than the price that I paid for them.

Without investing in technology, mining or natural resources, without betting the house on one company, I don't believe there are many out there who can equal me on my return.

Many of my former colleagues believe, as they were taught, that superior returns are only possible due to luck. But what is this luck that they refer to? Takeovers do not fall out of the sky like meteorites. The reason those companies were taken over is that they were cash generating businesses that were undervalued.

Cineworld has risen from 120p to 205p, yet it has not done anything special, it has done exactly what everyone expected it to do, and there was little chance of anything otherwise occurring.
Where was the luck?

I suppose it is useful competing against people who have been taught not to try.

The Future

I believed the City to be the place where talent was valued above all else, and it depresses me immensely to find that this is not the case. It looks for a template, it will reject those that do not fit it. It does not care about results.

And so Fools, I need your advice. I feel silly for writing this, but on some measure I may well be the best investment manager in the UK.

I was right about the market, it does not care about anything but your own ability. On that basis, I am above all others.

I could go on in life managing my own money, and if the last 6 years are a guide, become relatively wealthy.

But I do not want to spend my days doing something when I know I could be doing something else and have the potential to be one of the best in the world at it.

I have tried for a year to find work in asset management, I have joined societies and networked, applied for every job out there, but no opportunity has developed. There is a simple reason for this.

Officially, I have no experience in asset management. There is no-one who would have a slightly experienced corporate finance professional for these roles. I do not have the alumni network that is a main source of job opportunities. I do not have a list of internships in 5 different financial companies as the others do.

The market did not care about these things, but the City does.

You may have skimmed this post, but those little links in the text do exist. Please click on one or two.

I am very proud of those links. No-one who sees my CV will believe that I have created this investment return, but you can click on those links and see the truth, you can be like explorers finding buildings in an empty jungle.

Soon I will have been out of work for too long, it makes my parents very anxious.

Should I go back to corporate finance? I have been offered several of these jobs, but I do not want to do them, they are not where my passion lies, but I will have no choice.

Life is not a movie, there are not always happy endings. In life, only Fools can hear you scream.

So Fools, you are the only others who can share my achievements. I hope you raise a glass and don't think I'm arrogant for celebrating them.

So help me Fools.

What should I do?

You are all older and wiser than I am, and I will appreciate your perspective.

Fool on,

CalumoftheNorth