I live by the sea. Some days we get wild seas. At other times the weight of the water wins and the sea is flat. The tradies who work around the town building the project houses of a new city like the sea. Sometimes they are hard to find on the work sites. Their twin cab utilities disappear as if by magic. If you are new to the area it must be hard to understand why so many workmen pack their tools and call an end to work unexpectedly. On Friday afternoons their disappearance goes unnoticed.
Having lived in the area for over twenty years the only mystery left for me is, where have they all gone? Are they at WinkiPop, Fishos, or on the main beach? Sometimes I come across them miles from town out on the rolling waves upon their surfboards. Each one of them riding a beautifully formed wave, or paddling out to ride the next one. Work waits. The long, hot day has called them from their tools and into the water. On days like this nothing else matters.
Not every day is like this. Some days a bath would have bigger waves. On other occasions the waves have no form. The water is choppy. The wind is possibly blowing on shore knocking the wave down before it can form. Or it is blowing from the east, flattening the incoming tide. Surfers get to know some days are so special the water calls them and some days it sms them not to bother.
Watching the stock market is like watching the sea. Usually it just rolls along. Some investments are up and some are down, week in, week out. It might be mesmerising but you would go mad trying to predict how an individual company was received by investor sentiment hour by hour. The same is true on a daily basis unless you know things before others are informed. The market is controlled by strict insider trading standards to prevent this, but human greed too often prompts people to act irrationally. Nearly always they get caught, yet it doesn’t stop this entirely, and sometimes a rouge gets ahead.
For an individual, acting alone, to think they can out run the market is tempting. However like a gambler on a horse race thinking they can beat the bookies every day, an individual investors is better to stick to the favourites. This is no guarantee though. Sit for a while and you will recall household names that no longer feature on the stock market. Companies are like people. They live and they die. I have no idea how long they last on average, but we saw companies with a two hundred year history disappear in the global crisis of 2008.
Overnight the market fell by twenty-six percent. I know one fellow, let’s call him Andrew, who assessed that it would take too long to recover his losses so he sold all his shares at the bottom of the market. Just to stem the hurt. As it happened it quickly recovered but it took eleven years to rebound to the record high level it had been the year before. Whilst the market recovered many of the favourite companies before the crash simply vanished.
The tsunami that wrecked the share market killed companies, and it ruined reputations, however those who remained invested understood in most cases the fundamental things that made the company good, still remained strong – if they had stuck to their successful business model. These people suffered a paper loss at the time, yet by remaining invested they weathered the storm collecting their dividends as they went.
The share market is unlike the sea quite obviously, but humans seem to be as fickle as the weather in always wanting more. The surfers we have around here are stoic. For a start the water is cold. Even at the height of summer they need to wear wet suits if they want to catch the best waves for hours. They soon learn not all waves are uniform. Frequently they will sit on their boards, out at sea, waiting. They wait for the perfect wave to form and then they paddle like mad until they catch it, and stand riding the crest into the shore. Their patience is like that of Job. They know not to hurry. This is the very thing stock brokers say when it comes to investing. It is not the time you get into the market, but the time in the market that counts.
I am not the person whose advice you should follow when it comes to money. Here is why.
Mum instilled in me a suspicion of money. More importantly it was a suspicion of people with money. She saw nothing wrong with people who who worked having it, she just had me believe that most people with it, (lots of it) came to have it at the expense of others.
Partly she was right – when you only know part of the story.
I have seen people get rich by nefarious means. Withholding payment of debts, or more recently employers benefiting from wage theft from their workers. These are examples of greed personified. It seems improper to read the employment contract of a CEO and remain un moved. How can a board allow excessive bonus payments on short term indicators and think it is right. Today’s example is the Qantas chief earning 275 time the ordinary workers average wage in just one year. (I doubt the shareholders think one man alone is responsible for the turnaround of an airline either.)
A payment of millions after a turnaround may be fair, but it is not equitable if it is gained at the expense of workers being made redundant. This is especially so if the remaining staff have to do the work of two people. These are the times when it is hard not to agree with Evelyn. I imagine she also knew the sea was full of sharks.