Originally Posted by TaoJones
PS: Somewhere on that list of bad places to get investment advice - probably pretty close to the top - is from strangers on internet forums
. Caveat emptor.
As always, an interesting read from TaoJones
FWIW, I suspect that the term "Investment" itself will need to re-defined. Whilst I have nothing against speculating in the financial markets, IMO a lot of folk (including "proffesionals") have confused "Investment" and "speculation" to the extent that they genuinely think they are doing the former when in fact doing the latter. Indeed, much of what I would consider to be speculating (aka betting) has in modern times been regarded by many / most as investment. But, as I said nothing against speculating - just IMO good to know it for what it is.
For me buying
shares in ICI or GE is speculating
As no matter what research
I do or understand about the markets these companies operate in I am essentially betting that the share price
will go up.....which on the face of it sounds like an investment (if I have taken the time to research
and understand the company I am buying
), however I have a number of issues in terming this as an investment.
Firstly that the share price
will not solely reflect the underlying operations of a well managed company (if indeed they are) but will also reflect the sentiment of the market on both the management and sector both short and longer term - whether real or imagined. Sometimes companies simply fall out of favour with the market (which BTW is not a mechanism controlled by the lord god almighty - quite often it is the output of idiots who do not know any better).
Secondly, that the company I am investing in does not get the money
For me it would be an investment in
the company if they then did something with my money that added value to the company itself. Otherwise to me it is simply a bet on the share price.
which leads onto the third issue, Control. If I buy shares in a company via the market I cannot directly control the fortunes of the Company. Obviously if I had enough money I could buy enough shares to get a seat on the board of GE or Walmart etc. But I don't
and even if I did, life is too short
Therefore whilst putting money into a venture without control would not in my book automatically make it not an "Investment" it would make it a far less attractive investment - as after all I have no interest in simply buying 500 yards of Aviation fuel
for a corporate jet. Not if I don't get to fly in it
Another irritation of mine is management having to respond to markets and not investors by being forced to be "exciting" "innovative", "dynamic" or whatever the current
"Value enhancing" buzz words are - with the end result that essentially good companies end up getting butt f#cked by the market.......as after all, if any company had piled up a sh#t load of cash in the good times in anticipation that bad times always
arrive sooner or later whilst sticking to what it knows best and saying to the market "their is only so many packets of cornflakes that can be sold in our market - which is why the profits do not rise in double digits annually. But we are good at what we do, so won't be diversifying into building ladders to the moon" .......would have been (and was) asset stripped - sorry I mean taken over and restructured to enhance / extract the value
My thinking as to one of the things that Western society will have to rediscover to emerge from the impending melt down is ways to actually use capital to invest directly in real businesses. Succesfully investing in a business making plastic widgets or simply selling them is never going to be easy, and will require folk to actually get their hands on / heads into a business rather than sitting back whilst the speculation in the market rolls on......whilst counting real or imaginary money.
Of course the initial idea of a stock market was as a tool for business to raise capital. and not to provide the runners in a horse race
.....for a betting industry controlled by others........so perhaps things will turn full circle / go back a couple of hundred years - depending on your point of view / degree of optimism
Smile he said, it could be worse.
So I did. and it was.