This past Thursday, I went to lunch at Jimmy Watson in Lygon Street, as is now my custom one day each month.
You see, I have joined what is commonly known as a ‘Bottle Club’ – this is a convivial group of (almost exclusively male) like minded individuals who enjoy fine wine and good company to the extent that they will regularly spend an afternoon together regaling each other about amusing anecdotes and their own personal likes and dislikes in wine, whilst sharing personally selected bottles from one’s own cellar (well, sometimes some do cheat and buy something decent on the way to lunch).
Late in the afternoon, before we moved downstairs to the main bar to kick on for a little longer, one of my fellow bon vivants prodded another about share market tips. You see, the second chap, a retired stock broker, had once tipped a particular company, which had then lost about 90% of its value after the first chap had bought it, and then had gone forward. Timing is everything after all, and we all found this uproariously funny.
After all, none of us are going to bet the entire house on a single company, are we?
The retired stock broker proceeded to give us another hot tip, a pharmaceutical company which has announced a revolutionary new drug. When it was announced, the share price went up considerably late last year, but has now settled down to about 15% of its former value. He is now of the view that the drug is about to enter the market, and the price will recover greatly, making a tidy packet for those of us who might want to take a punt right now.
For various reasons, one of which being that I have never been successfully speculating on any hot prospect, I have not rushed out to buy shares in that tip. But I have added it to my high risk speculative watch list.
It did however remind me of how capricious the share market has been in relation to predictions in recent weeks. At the end of March, I casually speculated about whether the market was going to crash or not, and mentioned that one of the stock tipping pages to which I subscribe was spruiking an imminent period of volatility they were describing as ‘Big Wednesday’ and subscription to another newsletter to help surf through that period of volatility.
The very next week Trump announced his tariffs and the market universally dropped, and that stable of commentators were rather triumphant that Big Wednesday was upon us.
Things have changed since then, and the share market has, for the most part, been falling upward, defying those predictions, probably on the euphoria that comes from Trump starting to walk back his universal tariff plans.
[Another possible factor is the fall in interest rates, which reduces the possible benefits of holding cash, subsequently encouraging people to resume putting their money into shares.]
On the increasing regular occasions that I put on jacket and tie and visit the Savage Club, I like to sit in the Social Room and peruse all four of the major daily newspapers (The Age, The Herald Sub, The Australian and The Australian Financial Review). I think that it was sometime in mid April that a business commentator in The Age wryly commented that we were not in a Bear or Bull market, but in a Kangaroo market. It is simply hopping up and down.
That may well be the case, but it does make me increasingly skeptical about either taking any short term actions which do not involve simply sitting on my current position, nor indulging in making any small punts on hot tips.
Lost For Words! 