Private Investor: Marry the gossip to the trends and it's a golden scenario

Time for a self-congratulatory pat on the back. Last May I wrote this: "Last time I looked, mmO2 shares were heading for 60p, well up on the 48p I bought my last lot at.

Time for a self-congratulatory pat on the back. Last May I wrote this: "Last time I looked, mmO2 shares were heading for 60p, well up on the 48p I bought my last lot at. They ought to have a bit further to go. Even if all the merger talk turns out to be guff, the market generally and the telecoms sector seems to be recovering, post-Iraq and, I hope, post-Sars. Almost a golden scenario, I suppose."

Well I've kept my eye on mmO2 and the last time I had a look they were hovering around the 100p mark, rather more of a gain, albeit a paper one, and rather faster in arriving than I thought possible last year. Trebles all round, I suppose. Despite all the denials last year, which were true at the time, a KPN proposal did eventually arrive. Now there is speculation about mmO2 being looked over by Japan's DoCoMo, Telefonica, Hutchison Whampoa and even its former owner, BT, which would be amusing if a remerger ever came to pass. I don't necessarily think private investors should follow the City's gossip, mainly because by the time they've heard it it isn't worth much, and who can tell genuine intelligence from a ramp?

The key, I think, is to marry the gossip to the underlying trends in a sector such as consolidation. That certainly had to come in telecoms as a result of the wildly expensive 3G auction. This, and a general market and sector recovery is why mmO2 turned out to be such a golden scenario. Let's hope the gossip mill keeps turning.

The gains I've seen on my telecoms shares and other bits of the formerly bombed-out telecoms, media and technology sectors have compensated for the losses I've suffered on the shares which, as I have had to write before, ought to be the solid and secure basis of a portfolio but have proved anything but - Shell and Marks & Spencer. Nothing seems to move the M&S share price, not even the good news. I know that all market players are supposed to be unemotional and rational, but the markets just seem cussed about Marks.

As for Shell, the markets have a great deal more justification for marking down the shares, as the recent sorry saga of mislaid oil reserves and executive resignations shows.

Hanging over the shares - my shares - is the dark possibility of litigation in the US, enough to put off even the most sanguine of investors (me). So it's heartening to see Shell do at least one thing right, and that is its putative re-entry into Libya, courtesy of Mr Blair. Shell says it'll be in exploration and production, and developing liquefied gas facilities. That, we're told, might lead in turn to development of integrated production and LNG export projects. Which means I think that in a decade's time, when North Sea gas starts to run out, we may become dependent for heating our homes on the whims of Colonel Gaddafi, or his heirs and successors, which will be interesting.

It is only heartening to see Shell participate in this initiative in a very narrow commercial sense of the term. The sight of Tony Blair hanging out with Gaddafi, a man whose main talents from what I've read are cruelty and breaking wind with equal force, is horrid. The British Government, in my opinion, shouldn't be dealing with states that sponsor terror, and Libya hasn't properly accounted for Lockerbie. However, once that political decision to engage with Gaddafi has been made there is no point in criticising Shell or any other company for doing what comes naturally.

I know that these thoughts do not constitute a complete ethical code, and to be honest I don't entirely convince myself with it. I know for example that even though the production and sale of tobacco products is perfectly legal I still couldn't bring myself to invest in them, although no doubt some of the collective funds I hold must have shares in those sorts of companies.

Most investors ought to let ethical considerations trouble them some of the time, if only because ethical trends can actually themselves directly affect the companies, even if the business itself is otherwise fine. The cocktail of terror, oil and diplomacy makes me uneasy at any rate. Perhaps the civilising influence of Shell and other western commercial interests will finally bring Libya into the community of nations. I hope so.

s.o'grady@independent.co.uk