Welcome to Finance and Fury, The Furious Friday edition

Today We will go through how the share market changes with economic theory, particularly the theory of Milton Friedman in regards to shareholder value and certain volatility

  • The share market behaviour changes as the thoughts of investors change
  • It is based around Game Theory

To Start:

  • What is the predominant thought of today
  • The returns of a company drive demand, people want shares that are doing well
  • Quarterly reports have a short term focus
  • This can take priority over long term health
  • What is the fiduciary duty of directors?

 

Where does this view come from?

  • Who is Milton Friedman
  • 1962 collection of essays “Capitalism and Freedom”

“There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition, without deception or fraud.”

  • Prices can respond quicker with information being readily available

 

How does this all work?

  • Projected versus actual financial reporting
  • Value is not price, it is what people think the price should be
  • Technically pursuing short term value should maximise long term value
  • Sometimes short-term gains come at a loss of long-term potential
  • What is another view of economic good?
  • Public companies are always exposed to short term investors or speculators who have a clear goal
  • Slight misallocation started to occur
  • The drive for CEO’s to be held accountable with shares as payment, came with an incentive to manipulate share prices

 

This is the sort of market we have to work with

  • Companies with good managers is the number one measurement
  • Long term performances

 

One of the most important parts

  • Don’t panic sell
  • If the company is good, it should recover long term
  • Selling the shares just crystalises the loss
  • Slow and steady wins the race
  • Next best things “in fashion shares”
  • When to get out?
  • Buy and hold well managed companies
  • I looked at the difference between large cap and small cap active managers
  • I outsourced the guessing to people who do this professionally

 

Thanks for listening, if you want to get in contact you can do so here.

 

Why aren’t conservatives conserving anything?

Welcome to Finance and Fury, the Furious Friday edition Today we will be talking about conservatives and why they are not conserving anything anymore. In particular, the new form of conservatives the neo-con conservatives and the noble lie or the big lie. Remember the...

How to avoid getting further into debt and get spending habits back in line

Welcome to Finance and Fury. Credit cards and pay day lenders are on the rise, as some of those out of work are becoming strapped for cash. Today, we look at this further but also look at some alternative strategies to avoid the debt traps. We’ll also look at how to...

The “Australian Berkshire Hathaway” – Is there an opportunity to buy in due to recent underperformance?

Welcome to Finance and Fury, The Say What Wednesday Edition I've been looking at Soul Patt (ASX: SOL) recently as I've heard some commentators refer to them as the "Australian Berkshire Hathaway" but noticed they have underperformed the ASX200 index over the last 12...

What is the biggest mistake the average investor makes?

Welcome to Finance and Fury. In this episode – we will be looking at the most important mistake to avoid when it comes to investing – and that is chasing returns This is where, in some instances, following the trend doesn’t work – as we will go through, in many cases...

Is it time to buy silver? For those who use the Gold to Silver ratio it seems to be, but what factors affect this?

Welcome to Finance and Fury Today – Talk about a Money Illusion and the GSR  Gold has been on a rally – but silver hasn’t gone up by as much The Gold-to-Silver Ratio: What is It and Why Does It Matter? For experienced investors, the gold-to-silver ratio is one of many...

Are sectors of the US share market in financial bubble territory?

Welcome to Finance and Fury. Are sectors of the share market in a bubble, one in particular that comes to mind would be the US tech sector. There have been many bubbles in financial markets throughout history – if enough excitement is generated around some new asset,...

Building a strategy to fit your goals

Welcome to Finance and Fury Today we are continuing from last week, and going through strategies to fit your goals. Some bad news… The workbook will be released next week because there are a few pieces missing, as it doesn’t achieve what I wanted it to. So as a DIY...

Will the market crash in 2023?

Welcome to Finance and Fury. Will the market crash in 2023? Interesting question – one that many people have answered. Every year - Ipsos asked more than 24,000 citizens of 36 countries to reflect on the year gone by and also make some predictions for the year ahead –...

Is it a good time to invest? How to overcome investment uncertainty and start investing

Welcome to Finance and Fury. Things seem to be calming down – markets have recovered somewhat – the US election volatility has been minimal – may see some short-term movements this week This episode – How to overcome investment uncertainty and start investing! The...

The opportunity cost of home ownership

Welcome to Finance and Fury, The Say What Wednesday Edition - Where every week we answer your questions Today's question is from James Hi Louis, Just a question regarding owning your home. Me and my partner would like to eventually own our own home but we are worried...

Pin It on Pinterest

Share This