Well at least they couldn’t scratch their ears….
Apparently the SEC – that is the Yank version of ASIC. You know the organisation that has yet to indict, convict or even spank in a non fun boarding school way anyone responsible for the bacchanalian orgy of theft and misconduct that is Wall Street. Well these clowns have put out a study that apparently says that stock picking should be left to the expert and that retail investors are basically retards.
Whilst I would agree that financial literacy is low in any community, the broad notion that it should be left only to the professionals is what got us into this mess.
I wonder what a study into professional investor would say about the inability of 99% of them to generate any positive alpha for investors and the ability of hedge fund managers to become billionaires whilst simultaneously under performing bonds for the past decade or so.
I was sitting reviewing the farce that is both Groupon and Facebook and marvelling at the ability of markets to destroy shareholder wealth. Although it must be said that anyone who invested in either of these two thinking that they were viable businesses should take their remaining funds and invest in some serious therapy.
After my mirth at other peoples stupidity had subsided I thought it might be worthwhile to actually have a look at the performance of IPO’s over time. On the sales side of investing much is made of getting into IPO’s, Brokers frequently use the lure of being in an IPO to attract clients. In my use of google fu I came across this interesting paper
Whilst it was printed in 1998 I think the basic premises might hold true. T save you reading the entire thing I have extracted what for me was the relevant pieces. The two tables below show the average initial return and then the returns at the three year mark.
Despite the hype it would seem that most IPO’s are not worth the effort and since you cannot truly extract those worth the effort from the rest of the garbage it would seem that IPOs are worth avoiding.
Damien Walters is my current go to bloke for amazing videos of human performance.
Here is a little QAN story. I no longer fly QAN after they damaged one of my cars at valet parking and that when I told them about this their response was to say I was a liar and that I had actually damaged the car and was simply trying to get them to pay for it. Excellent approach to customer service.
Anyway, I have an old QAN voucher left over from a flight we cancelled sometime ago and the voucher is due to expire so since I am heading to Sydney I thought I would use it and this would be my last association with QAN. So I priced the flights I wanted though their website and thought nifty they come in under the voucher price. Each leg of the flight was $633 so I go to use the voucher and you can guess what happens next. The price of the flights magically goes up to $714 – so I end owing these dickheads money.
Is it any surprise that QAN is a perfect subject for a business school looking at how you can ruin a globally respected brand. Once again we have an Australian company that treats its customers with absolute contempt.
And for those dim enough to be holding QAN shares the chart below looks at the relative performance of QAN vs Virgin.
A bit of commentary has been filtering through the gooogle box about how the market looks like this or that and how it should now do such and such. Most preeminent in this chatter is that the Dow seems to have a block at about 13,300 and because the market has not instantly gone to 15,000 that this is the end of the world as we know it. Cue talk of the coming great depression , riots in the streets, civil war and the return of flairs.
Al of these are suppositions based upon either a misunderstanding that markets are not linear in their price action. Or simply an expression of bias as to what the author of whatever jabber piece has been written.
All I see when I look at a chart of the Dow is opportunity. A collapse away from 13,300 is an opportunity. move through 13,300 is an opportunity. And the move to 13,300 has also been an opportunity. The only bias that traders should display is the bias of opportunity seeking.