Friday, September 03, 2004
Stay sanguine, stay sang-froid
I recently sold an item on ebay, the internet auction site. I made a new moniker for internet auctioneering, only people with internet access via care in the community would buy from 'The Artful Dodger'.
My reactions as the auction progressed astonished me. Small increments of a pound or two were met with the cackling jubilation radical Muslim clerics ejaculate on hearing George W. Bush has choked on a pretzel. This is at odds with my response to the same day's news of a 3.5% advance in Ben Bailey shares, inspired by positive comment in the Financial Times' rainmaking Lex column.
That's as it should be. There's no place for emotion in this game and while I'm feeling bombastic, this isn't a game either. A lot more than a pound or two is at stake, if you're seeking expensive or dangerous thrills try stock car racing a Fiat 500 or strap a saddle on a polar bear.
Unlike a week long internet auction, the next day a share price advance can reverse - or worse. Unless the rise breaks my sell target there's nothing yet to celebrate and perhaps confusingly, the rise (on value grounds) only makes a subsequent fall more likely.
So, even sizeable gains ought to be met with sang-froid, as they could be gone by 4:30. Stay sanguine when stocks slip, providing the original investment case remains further falls may constitute call-to-alms, not crisis.
The aggregate consensus that makes the market often resembles certain characters from Winnie-the-Pooh. At the height of excitement players carry-on with the colourful optimism and ebullience of Tigger the tiger but after price falls the same individuals metamorphose into the dour, doom-saying donkey that is A. A. Milne's Eeyore, chronic negativism ensuring even banker investment opportunities are unfailingly ignored.
It's taken years for me to get such a good grip on emotion that I can leave it behind. Excitement, exuberance, despondency and despair will only hinder investment decisions. While share prices vacillate under the control of Mr Market the Manic Depressive an aloof detachment is the best weapon an investor can have in their arsenal. But remember that cash can be handy too.
The Artful Dodger
My reactions as the auction progressed astonished me. Small increments of a pound or two were met with the cackling jubilation radical Muslim clerics ejaculate on hearing George W. Bush has choked on a pretzel. This is at odds with my response to the same day's news of a 3.5% advance in Ben Bailey shares, inspired by positive comment in the Financial Times' rainmaking Lex column.
That's as it should be. There's no place for emotion in this game and while I'm feeling bombastic, this isn't a game either. A lot more than a pound or two is at stake, if you're seeking expensive or dangerous thrills try stock car racing a Fiat 500 or strap a saddle on a polar bear.
Unlike a week long internet auction, the next day a share price advance can reverse - or worse. Unless the rise breaks my sell target there's nothing yet to celebrate and perhaps confusingly, the rise (on value grounds) only makes a subsequent fall more likely.
So, even sizeable gains ought to be met with sang-froid, as they could be gone by 4:30. Stay sanguine when stocks slip, providing the original investment case remains further falls may constitute call-to-alms, not crisis.
The aggregate consensus that makes the market often resembles certain characters from Winnie-the-Pooh. At the height of excitement players carry-on with the colourful optimism and ebullience of Tigger the tiger but after price falls the same individuals metamorphose into the dour, doom-saying donkey that is A. A. Milne's Eeyore, chronic negativism ensuring even banker investment opportunities are unfailingly ignored.
It's taken years for me to get such a good grip on emotion that I can leave it behind. Excitement, exuberance, despondency and despair will only hinder investment decisions. While share prices vacillate under the control of Mr Market the Manic Depressive an aloof detachment is the best weapon an investor can have in their arsenal. But remember that cash can be handy too.
The Artful Dodger
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