I’ve spent more than a decade watching private investors’ money circle the drain.
Not because of bad luck or market collapses — although these, of course, don’t help — but through wilful and often repeated enthusiastic purchases of absolute rubbish.
Junior mining companies that scrabble around in the ground for years and achieve nothing. Lifestyle companies such as these — run primarily to maintain the owner’s personal needs — while not technically frauds, certainly feel like them when investors realise they have been taken for complete mugs.
Or crypto treasury companies (those that exist solely to buy crypto) that trade at multiples of their net asset value.
Unfortunately, this cumulative destruction is now threatening the London market itself. The London Stock Exchange is shrinking. Retail investors coming into the market increasingly buy global ETFs (this is sensible, but still a factor in the City’s decline), and the investors who remain are often putting money into the wrong stocks.
The London Stock Exchange lost 88 companies in 2024. There were 64 bids in 2025, 51 of which completed within the year. And just two IPOs in the first three months of 2026. UK stocks are dirt cheap. Private equity knows it. Companies are being taken out faster than they can be replaced, with the last remaining constituent of the FT 30 index, Tate & Lyle, founded in 1935, announcing a recommended offer by US company Ingredion last week.
It’s little surprise that UK households’ direct ownership of stocks has halved in two decades, falling from 23 per cent in 2003 to around 11 per cent in 2022. This is despite the pandemic boom where Furlough Freddy and Fiona piled into the market.
The UK holds the lowest proportion of wealth in equities of any G7 nation at 8 per cent, but stuffs 50 per cent into property and 15 per cent into cash. And the direction of travel is worse, not better. Financial Conduct Authority data shows 35 per cent of UK adults now hold investments, down from 37 per cent in 2022.
While studies show that Gen Z are keener investors than their predecessors were at the same age — and, in the UK, are more bullish than ever — I suspect most are buying ETFs. And for those who do buy equities, where they get their information from is crucial.
One of the main problems we face is how we talk about stocks. Go on any bulletin board or social media platform and the most-discussed stocks are moonshots: “exciting” companies whose value is just about to take off for whatever reason. Their tech may work, but probably won’t, and is clearly not understood by many of the people pontificating about them online.
They are almost always guaranteed to be two things: unprofitable and non-cash-generative. That means these companies will almost certainly rely on external cash injections to keep the lights on (and the handsome director salaries paid).
Often they’re small-caps listed on Aim. And this isn’t a criticism of the junior market: it’s working exactly as intended. It exists to give smaller, higher-risk, earlier-stage companies access to growth capital. This is a legitimate part of the market that’s needed. The FTSE 250 companies of tomorrow are all small companies today.
The issue isn’t that Aim exists but that retail investors treat it like a roulette wheel.
Even now, the Winterflood Retail Access Platform raised money 10 times in 2025 for bitcoin treasury companies listed on Aquis — a platform even more junior and illiquid than Aim. So illiquid that IG has suspended new position openings as it may stop offering Aquis to clients. Many of these raises had no institutional backing, which says it all.
I am all for freedom of choice when it comes to investing, but when investors put money into speculative companies on illiquid markets, it rarely ends well.
Investors need to take responsibility. Nobody is forced to buy an early-stage mining company with claims over land in a faraway country. And nobody forces people to buy the latest Telegram tip. But this misallocation of capital means that real businesses, the profitable, cash-generative and boring ones, struggle to get the valuations they deserve.
This isn’t helped by the UK’s abject failure across successive governments to nurture an investing culture. The UK has a financial education crisis where school leavers can name five Tudor monarchs but struggle to explain free cash flow or the merits of investing.
The Savvy Squirrel campaign, launched by financial institutions and the Treasury to promote investing, is at least a step in the right direction. But it’s hardly going to change the investment culture in the UK any time soon.
A lack of financial education isn’t the only problem. Brokers floated vastly overpriced dross in 2020 and 2021 that often fell in value or even went bust. MADE.com, Parsley Box, Deliveroo and THG were all high-profile IPOs that failed to deliver value for shareholders.
Naturally, this has dampened retail investor appetite for the market. When retail investors take a big hit, they don’t often rush back. But stockbrokers have a job to get the best prices for clients, and if there are happy buyers, then it’s not as if any crimes were committed.
Ultimately, if British private investors can learn to identify quality companies that have actual business models rather than a perpetual dilutive share-selling scheme, with management that makes sensible capital allocation decisions, then quality companies will get the valuations they deserve. Investment is increased, which improves the attraction of listing, the City picks up and more tax is paid.
But if we can’t shift the mindset of the proportion of UK retail investors who pick stocks like they’d pick horses, and the government and LSE do not get serious about financial education, the exodus will continue. Private equity will cherry-pick the quality companies, which will have their primary listing in New York. And we’ll be left with the rubbish: the shells, scams, and the seventh drill programme that works 100 per cent of the time 1 per cent of the time.
Michael Taylor is a professional UK equities trader and makes YouTube videos
