For those that don’t know, the MB office has a red strobe light on the ceiling that we call the Pascometer. It is an impeccably reliable buy and sell indicator that relies upon doing the opposite of any Michael Pascoe column. Recently it’s proved its worth in marking the rolling over of the bank bubble and the dollar.
Sadly for the nation it is wailing again, this time for stocks. From the SMH:
Never mind the bulls and bears, it’s the lemmings that continue to rule the market for many individual Australian investors – the mug punters taking themselves for a ride, buying high, selling low and then blaming “the market” for their mistakes.
And congratulations to Wayne, Joe and Tony for helping to talk down perceptions of the Australian economy and its outlook – a contributing factor in the lemmings’ rush.
The juxtaposition of news articles yesterday told the story: more than half a million people have pulled out of the Australian share market over the past two years, presumably scared off by volatility and the steady diet of scary headlines about both local and global outlooks. Meanwhile, Australian share-funds averaged gains of 24 per cent over the past year. D’oh!
…the lemmings confirmed their role in providing a feed for the rest of the market, making even the over-paid index-hugging funds managers look OK, by running away at exactly the worst time. The ASX figures showed 38 per cent of the population owned shares at the end of 2012, the lowest level since the ASX started keeping records in 2000.
It’s an observation by a Fidelity International investment director, Tom Stevenson, that we should buy shares as we do fruit and veg – more of what’s cheap and less of what’s expensive.
Instead, the human herd has a tendency to do the opposite – we like buying shares when they’re expensive and shy away from the market when it’s cheap. That’s what the half-million mugs have done.
On second thoughts, I might need to retract the lemmings analogy as it’s unfair to lemmings – many of us are sillier than that. (And never mind that it’s a myth that they charge over Norwegian cliffs en masse.)
Weeeoooo, weeeoooo, weeeoooo.
