----- Original Message -----
Sent: Wednesday, October 01, 2003 12:20
PM
Subject: [sharechat] Early Warning
Indicators
At risk of accusation of long-windedness et. al.
from some quarters. But that is all healthy stuff - when viewed
correctly. The subject of early warning indicators rattles the memory as
well as one`s feelings of security somewhat.
Let us reflect upon just how
times have changed relative to how a fragile human psyche reacts and
over-reacts to events. The sharemarket, for instance. Starting with the 1960`s
minerals boom in Australia . Who followed the dizzying heights of Poseidon and
Tasminex phenomena in particular? Those were good days to cut one`s teeth
in the face of the unreal .Whether as an emergent winner or
loser . In those days a mineral prospecting license could be taken out one
day. A week later a company prospectus issued to a gullible public sustained
in an ephemeral market. All takes place on few fundamentals other
than sometimes a contrived pipe-dream. A company flotation
follows with over -generous option issue to founding
shareholders.
On the first day of
trading a nervous public mingles with founding shareholders . To one side a
bikey , apparently carelessly, drops from a back pocket an official looking
document. A timid investor picks it up when "nobody "is looking. It has all
the hallmarks of being an official Geological Assay Report following
laboratory analysis of ore samples from the prospect subject of that day`s
share float - By coincidence ! In professional understatement
therein it seems we have a re-discovered King Solomon`s Mines
situation. Within minutes the atmosphere is electrified from a simply
expectant mood. Imagination now rules events.
Hollywood could not
match that type of reality. As they say - truth is stranger than
fiction.
They were heady,
exciting and euphoric times. Motor-cycle gang members, who could not/ would
not and later need not / find work spent their days on the Exchange floor
. They soon adapted to the lingo and market jargon of mining technology
. They were more savvy than the conventional dealers. It was not long before
they up graded their Harley Davidsons for Rolls Royces and the latest
Mercedes-Benz .
That was illustration of
fortuitous events providing market indicators to astute observers in a long
gone era.
By contrast, let
us examine the present and the future in the light of the different
times in which we live.Terrorism is a prime factor now. Their impact is
rather greater , philisophically , as an impending rather than
actual threat ./ Either prospect is equally devastating on a nervous investing
public. The 9/11 disaster clearly was preceded by speculative buying
short on the US Exchanges . The CIA is still attempting to trace and
freeze foreign bank accounts harbouring those ill-gotten returns. Let us
visualise a scenario that just maybe the recent spate of International power
breakdowns were connected and an experimental prelude to subsequent
events.Have the appropriate security and consumer protecting
watchdogs ability to read future indicators and implement controls
against market speculators acting for those terrorist forces? There is immense
potential market manipulative power in the hands of those terrorists for
as long as we allow buying short in anticipation of events of
which those terrorists have total control.
We certainly live in
uncertain times whether as investors or as participants in the very act of
living in a dangerous world. I apologise for the digression.
David S.
See IRG research reports
