Forum Archive Index - October 2001

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi Viewpoint,

>
>An investment in a company by way of share ownership is no more than
>speculation on the future performance of that company, in a game
>played against other speculators.
>
>
Ah, so you 'lost' money with your 'punt' in the sharemarket.   
>
> 
>Because very little, if any, of this invested cash goes directly to
>the company any investment in the share market is essentially no
>different from picking horse 3 to win race 4 (or whatever form of
>gambling tickles your fancy)
>
>
Completely wrong.  By purchasing shares in a company you beocome 
a part owner.   Try putting a bet on 'Sunline' at the TAB and 
claiming part ownership of the horse.   
>
>
>cash has
>joined the other cash floating around in the market as speculative
>cash betting on the future fortunes of companies.
>
>
It is not speculative if the odds are in your favour.  In a 
statistical sense your expected return on the sharemarket is usually 
a profit.  The expected return on the TAB, in a statistcial sense, is 
*always* a loss. 
>
>
>As little of the invested cash actually goes to the company any
>emotional attachment to the company is based on how they are going
>to perform in future (just like hoping that horse 3 in race 4 will
>win) and not on a "I own a part of that company" basis.
>Only those investors who have made an actual investment in the
>equity capital of a company have a right (real or emotional) to say
>they own part of a business.
>
>
Eh?   Even a foundation shareholder invests with an eye to how a 
company will preform in the future?   What happens if you buy shares 
off a foundation shareholder?   You seem to be saying that at the 
point of this transaction those shares mysteriously transform from a 
slice of the company into a 'punt' for you the purchaser.  Flawed 
logic. 
>
> 
> 
>That added emotional attachment (of real ownership and not just a
>speculative punt on the future) probably explains, as has been
>reported in the press, what sharebrokers call the 'stupid' behaviour
>of the small investor in the recent large buy up of Air New Zealand
>shares.
> 
>Maybe buying an interest in Air New Zealand at $1.50 previously has
>made them think that a further interest at 30 cents odd is a bargain
>- they see it as an opportunity to increase their ownership of Air
>New Zealand.
>
>
Do you have any evidence that these buyers were existing shareholders 
topping up?   The reports I heard were that many of these 'punters' 
were new to the sharemarket.   Unfortunately for them they really are 
punters, because although Air New Zealand is cash flow positive it is 
not profitable and is heavily in debt, even after the so called 'bail 
out' by the government.  Unlike most shares that make some sort of a 
profit or are at least projected to, Air New Zealand shares are 
the exception.  They truly are a punt.   A punt based on the current 
share price with rather poor odds I might add, no matter what Helen 
Clark said.  SNOOPY

(disclosure: ex Air NZ shareholder)



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