Mr Market gets his Groove on

I have commented over the last week or so on the irrational selling of most of the stocks on global sharemarkets. Stocks have gotten cheaper and yet people still continue to dump good stocks for no other reason than because others have sold and presumably because they might be lonely so they join the flock.

I found this reasoning strange. Why would you sell a company that was providing a good financial return, cheaply simply because your neighbour was selling his?

Dumb right?!

I would have to answer yes and then add further elucidation regarding the "spectacular" 180 degree turn in the US markets Wednesday 23 and say that I find the US market rise and frenzied buying as even more bizarre than the selling frenzy of the weeks and days before.

Why would you buy today as stocks are going up in price, while you were selling yesterday as stock prices slumped?

What has actually changed in one day to turn the market around?

Nothing folks!!

The reason the Dow did an impression of a roller coaster was simply talk of a bailout of US sub prime bond insurers, nothing really material at all except on the negative side.

With this latest depression and irrational exuberance of global markets I am reminded instantly of Benjamin Graham's "Mr Market" parable:

Think of yourself as owning a share in a business in partners with others. One of your partners, say Mr Market, is somewhat of a neurotic who on any given day will offer to buy your share or sell you his at a specific price. His moods can fluctuate anywhere between incredible optimism and overwhelming depression. One day he will nominate a higher price to buy or sell, the next day he might increase it, lower it, or even appear uninterested in whether he buys or sells.

Ben Graham, The Intelligent Investor

The point that Graham makes is that Mr Market’s judgment is formed more by mood swings that by rational thought and that this gives the wise investor buying and selling opportunities. If Mr Market’s price is unreasonably high, then wise investors have the opportunity to sell. On the other hand, if it is unreasonably low, then they have the opportunity to buy.

Right now Mr Market is in a schizophrenic mood and his intentions are not necessarily to be trusted. The important thing is that a successful and careful investor makes her or his own decision, based on their own ideas of the worth of the investment.

I'm still amazed at the utter stupidity of some people who ignore what they have bought when they buy a share in a company. You are buying part or a business, that you own.

You don't buy and sell your business on a day to day basis otherwise you would drive yourself mental and you certainly don't sell it because there are outside negative influences (like the subprime mess and associated credit crunch) that are beyond your control and wont impact on the business to any large effect.

It is time to start thinking clearly before pushing that button.

Related Share Investor Reading

"Mr Market" gets his groove on
A sensible approach to global market volatility
Global Market's dropping and your portfolio
Research, research, research
Watch for dead cats bouncing

From Fishpond.co.nz - Buy Toughen Up: What I've Learned About Surviving Tough Times



Toughen Up - Fishpond.co.nz

c Share Investor 2008

Helen Clark's words ring hollow

Dear old Sir Ed was buried on Tuesday and it is now time to get out the knives and stick them firmly where they belong, in Helen Clark's back.

Sure, the Prime Minister had a job to do in the State Funeral for Sir Ed and she executed her part in an adequate manner.

What wasn't appropriate though was her use of the occasion to make political capital for the sake of polishing her highly tarnished image.

In her eulogy, she mentioned Sir Ed's individualism, his tenacity in the face of adversity, and his ability to take risk, and responsibility for that risk.

Was I listening to a new Helen Clark, one who has turned over a new leaf in the holidays and one who has done a complete 180 degree turn and become a rational, free thinking, truthful, moral, aspirational individual?

I don't think a mangy leopard can change its spots, let alone a collective freedom basher like our dear Prime Minister.

Can you?

Sir Edmund Hillary stood and his achievements still stand for excellence and he achieved his goals in a society that embraced risk, and rewarded those who took those risks.

Clark and her merry band of Socialists punish those who would put their heads above the masses and try to reach their goals, while mediocrity is rewarded to stop feelings being hurt.

One could be forgiven for a slip of the memory by Clark during her eulogy yesterday but it must be remembered that Sir Ed stood for truthfulness, a moral compass that led him in the right direction and a firm handshakes that meant an agreement was adhered to.

Clark's hypocrisy in the face of her empty words filled my bones with a cancerous bile thick with her lies, broken promises and moral free conscience.

Perhaps the largest legacy that Sir Ed leaves behind is his spirit of freedom, the ability to do and say what he wanted, within the bounds of being a gentleman, without the repercussions of the State apparatus coming down on him to put a stop to it.

Helen Clark and the sisterhood put everything in the way of freedom that they possibly can, the epitome of their stomp on the head of freedom being the passing of the fascist Electoral Finance Act, rushed through without multi party consultation at the end of 2007.

I would go as far to say that if Sir Ed was educated in today's education system and our politically correct straight jacketed ways, it would have damped his spirit to such an extent that the individualism and freedom that he was famous for would have been stomped out before he turned 10 years old.

I mourn the loss of a great man, and the passing of all the great things that he stood for.

A collective such as Helen Clark, even though she was a friend of his, is an enemy of all Sir Ed will be remembered for.


Related Political Animal Articles

Electoral Finance Bill: The purpose is clear
Labour's State control out of control
Labour's Socialist peril
Pointing fingers in the playground


C Political Animal 2008

Market Meltdown: I can smell the fear from here

An irrational smell is permeating global sharemarkets at present and it is the bitter smell of fear.


The "Sage of Omaha" Warren Buffett, is a popular
Google search in times of volatile markets, from people
seeking his advice.


Hits today(like they always do on days like these)on the Share Investor Blog are at an all time record and they are mostly from America and they are googling such things like "what would Warren Buffett do?" and lots of related Buffett searches, "market crash", "market meltdown" and "market volatility".

People are seeking reassurance as to what they should do with their stock holdings.

As much as I like to get new readers I'm a bit concerned that this frenzy is gaining a momentum that the current state of global economic growth doesn't deserve.

Now I'm not the right individual to ask when the "bottom" is going to be reached, because I simply don't know but what I do know is people are selling irrationally and they are going to regret it months and years from now.

Allot of the current sell offs are being triggered by margin calls and by traders shorting stocks, that is, betting that share prices will fall, and it has had a momentous snowball effect so far and will probably continue until the buyers come out of the woodwork for some bargain stocks.

Few of the New Zealand companies beaten down so far are in danger of serious real business difficulties and so too global companies, so the disconnect between reality, and the psychological schizophrenia that mums and dads are facing by selling their company holdings at a serious discount is a big one, and only getting bigger as stocks tumble like dominoes.

Don't take this as an endorsement to go out and start buying but I have $NZ50000.00 ready to spend on top ups to my portfolio and I'm feeling like my wife when she goes to the Thanksgiving day dress sales in Dallas Texas, very excited!

So lock up the razor blades, tip the sleeping pills down the drain and use that rope to tie up the bear outside, 'cause its goin' to get turbulent.


Related Share Investor reading

Warren Buffett's The Intelligent Investor
Global Market's dropping and your portfolio
Global Market Meltdown: What is Warren Buffett doing?
A sensible approach to global market volatility

Shareinvestorforum.com - Discuss this topic


Related Amazon reading



The Origin of Financial Crises: Central Banks, Credit Bubbles, and the Efficient Market Fallacy (Vintage) by George Cooper
Buy new: $10.36 / Used from: $7.46
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c Share Investor 2008

Google as a research tool

The power of search engines used for "research" can be
overrated without proper, old fashioned hands-on research
to back it up.



Just a throwaway post for what it is worth, but have you ever been so bored or curious that you Googled your own name?

On the Share Investor Blog almost everyone who has had a piece written about them has checked out that piece and their competition has also done similar.

The public relations departments of companies clearly have people who do this, should I be worried?!

I'm not about to tell you here who is Googling themselves(sorry about that, and it gives me an investing advantage) because these shy folk want to keep their anonymity, and that is fair enough, but there are also a number of brokers and serious heavyweight financial institutions who get their info from Google and that has got me wondering about the credibility of the information and expertise that they in turn pass on to their clients.

I would like to think that financial institutions or brokers making decisions with their clients money might like to actually visit the institutions they have been Googling from time to time to get the full picture, and I'm sure that most do but there is a tendency with human nature when a search engine is at your fingertips, to get lazy. I'm guilty of that as I'm sure some of my readers are.

So, you know important companies are listening and reading what we all say about them online so give them a chance to hear what you have to say and it might just make a difference somewhere along the line.

You can do that on the Share Investor Blog by either using the social network sites like Digg and Stumble Upon and spreading links from this site and others. Links for most of these sites are located at the bottom of each article or make a comment on this site itself where it says "comment", again at the bottom of each article. Its really easy.

For those of you who have commented, thanks, and for those of you who would like to, I would love to hear your feedback and suggestions, positive or negative.


Related reading from Share Investor

Google: Has it lived up to the hype?


C Share Investor 2008