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.

 

How to use your home for Investments

Welcome to Finance and Fury Today we have Jayden here, and we will be talking about using your home for as an investment and as a forced savings account. You can start turning the bad debt into good debt. Through paying down the loan quicker, and then redrawing on the...

How do I make an Investment Strategy?

Welcome to Finance and Fury, today’s episode is a flow on from last Monday’s Investment philosophy episode and narrow down into an Investment Strategy. To invest properly, your investment beliefs need to expand into a strategy, an implementation plan. So Today: Expand...

Furious Fridays: When $1 could buy you a pair of patent leather shoes – Is it true that all fiat currencies eventually become worthless?

Furious Fridays When $1 could buy you a pair of patent leather shoes: Is it true that all fiat currencies eventually become worthless? In today’s Furious Friday episode, we’ll be running through the historical life cycle of fiat currencies. This episode is thanks to...

Say What Wednesdays: Swiping left and swiping right – living in a cashless society

Say What Wednesdays Swiping left and swiping right - living in a cashless society Welcome to Say What Wednesday! Today’s question comes from Katherine. “I heard a story on Hack the other day about Sweden becoming a cashless society – Can you explain this further? Is...

The Cash Bill – stabilising the financial system for negative interest rates, Bail Ins and more, all at your expense

Welcome to Finance and Fury Last Monday's ep – Cash Restrictions Bill – Went through black economy and outline of regulations Today – Go further into implications of this – along with other considerations such as bail-ins and negative rates why bill needed – not for...

Furious Friday: Could gender pay gap regulations hurt women more than help them?

Furious Friday Could gender pay gap regulations hurt women more than help them? Welcome to Finance & Fury, the Furious Friday edition. Today’s episode is all about the drive to equality. A recent proposal by the Labour Government is to force equality through...

Say What Wednesday: Considering refinancing your mortgage with a smaller online lender?

Welcome to Finance and Fury, the ‘Say What Wednesday’ edition. Today I’m here with Jayden! Today’s question comes from Gavin, “Is there anything to be considered when looking at refinancing mortgages with smaller lenders that run their business online like...

Is Bitcoin the future of money?

Welcome to Finance and Fury, the Furious Friday edition Been talking about monetary system – today dive into Crypto currency Crypto currency – means nothing - has to do with individual coins/tokens/whatever –   Preface – Don’t have as deep an understanding on the...

The Election Battle between those who pay tax, and those who don’t

Welcome to Finance and Fury Today will be a quick update for the upcoming election and policies in response to the budget plans released last week. This election is becoming a battle for votes among salary earners. In the past we have talked about class warfare...

Which Vanguard ETFs are best to diversify into?

Welcome to Finance and Fury, The Say What Wednesday Edition This week the question is from Dan I am 21 and have about 70k in a term deposit and 5k in VHY and VGS ETFs. I am wondering whether over a period of 20~50 years I would be better diversifying into VAE or VGE...

Pin It on Pinterest

Share This