Category: Observations

Joseph De La Vega wrote a book on the Amsterdam Stock Exchange in 1688 called Confusion de Confusiones.

Some of the behavioral insights written in his book are still valid hundreds of years later.Sample this investor behavior

Some people are always unhappy. If they have bought and the prices fall,they are unhappy because they bought; if the prices rise, they are unhappy because they did not buy more. If they have sold they are unhappy because they sold for less than they could have; if they did not buy or sell, they are unhappy because they did not do anything; if they receive a tip and they did not follow it, they are also unhappy. Everything produces unhappiness”

 

I had blogged earlier about the nasty fight between the patriarch Gopal Raheja of the 11000 Crore Raheja group and his only son Sandeep.The matters have become worse with both making damning statements about each other in court.

Adi Shankaracharya (788–820 CE) in his immortal Bhaja Govindam wrote

arthamanarthaM bhaavaya nityaM
naastitataH sukhaleshaH satyam.h .
putraadapi dhana bhaajaaM bhiitiH
sarvatraishhaa vihiaa riitiH

 

Wealth is not welfare

Truly there is no joy in it.Reflect on this at all times

A rich man fears his own son

This is the way of wealth everywhere

 

Isn’t it amazing how human behavior hasn’t changed over the ages?

Korean investors “invest” or “trade” as per various themes.This takes momentum trading to a whole new level.

A MID-SIZED sized Korean semiconductor firm named DI makes products with distinctly un-sexy names like “Monitoring Burn-in Tester” and “Wafer Test Board”. It has lost money in each of the past four quarters. And there have been no changes to its fundamentals that might explain why its share price should shoot up from 2,000 to 5,700 won (from $1.80 to $5.12) in the space of just three weeks—including another 15% gain today.

But DI’s chairman and main shareholder, Park Won-ho is no ordinary mortal. He is the father of Park Jae-sang, better known as PSY (as in “psycho”). “Gangnam Style”, if you haven’t heard, is now number one in Britain’s pop charts and number two in America. Local retail investors—referred with the derogatory gaemi-deul (“ants”) by professionals—are piling into DI shares because of it.

Quite how they expect the horse-dancing YouTube phenomenon of 2012 to help DI sell more of its Wafer Test Boards is a mystery. But convoluted investor logic is of course not a new thing. DI is merely the latest example of Korea’s “theme stock”

One of the most common themes has been the marriage stock. When the son or daughter of a company owner weds a chaebol family member, an unusually generous wedding gift may arrive. Back in 2009, shares in a firm named Bolak ran up from 2,000 won to 9,000 won after the owner’s daughter married into the family behind LG. The effects were short-lived: Bolak shares now fetch a more earthly 3,110 won.

The upcoming presidential election has created another subcategory of theme stocks. Following Ahn Chul-soo’s emergence as a political force about a year ago, shares in his company, Ahnlab, ran up from about 20,000 won each to a peak of 167,200 won. Since he declared himself as a candidate, Ahnlab has been crashing: now each share fetches 82,000 won. Ahnlab’s price-earnings ratio is still 87, mind you.

–from the Economist

 

We Indians were crazy too…anybody remember K10,Realty and Infra booms ?