Latest Cases - June 2016

I stick and hold through thick and thin...

Thursday, 30th June 2016

Good afternoon, friends,

In this issue of Punters’ Verdict….

  • Out & dazzled by the sunlight….
  • Business as usual – pretty much….
  • Advice from the owner of Royal Mail….
  • Stick and hold through thick and thin….

Out & dazzled by the sunlight….

I climbed slowly up 130ft of metal ladder – my lead boots ringing out on each step.

At the top I paused to unlock the heavy cast-iron lid. I heaved it open cautiously. For a few moments I stood still and listened intently for signs of danger.

Then, just after dawn this morning, I bit the bullet and emerged from the underground bunker.

The dazzling sunlight hurt my eyes. I was totally exhausted. It is not easy to climb so far wearing a gas-mask and a chemical warfare suit. I just lay there under the wide-open skies on grass sodden with dew – like something freshly-born or something about to die.

It was good to breathe fresh air again – or at least what passes for it in 21st Century Britain….

I’d been down that hole this past week with little more than a half-ton of dried beans and rice, a 3-month supply of fresh water and a primed and fully-loaded Kalashnikov rifle to keep me company.

But I needed to get out. I needed to find out how England had fared against Iceland in Nice on Monday. I had to break cover. I had to get back on the surface of the Earth. Now, I expected to be attacked at any moment, slaughtered, torn limb from limb and consumed – raw – for my protein content.

I looked around to take in the scenes of carnage and devastation I’d anticipated. I searched the horizon for signs of rampaging hoards. But nothing did I see.

The birds were singing. The sun was climbing higher in the sky. One or two early-morning cars were travelling the pot-holed country roads.

It seemed little had changed in Britain. It was just as I’d left it last Friday morning when I’d learned of the British public’s decision to vote for Brexit and bolted for the safety of the bunker.  

Like all the other garbage spewed out during the run up to the EU referendum – by both sides – it seems dire warnings of instant and irreversible economic catastrophe and an immediate return to the stone-age were mere politically-strategic exaggerations (at best) or dirty lies designed to strike the fear of God into voters (at worst)….

Business as usual – pretty much….

Of course, there is still and always will be time for the sky to fall in. But right now, as I see it, very little of lasting importance has happened.

Cameron is going. Corbyn won’t be far behind him and may even beat him to the door. I reckon I can live with those consequences.

The buffoon, Boris Johnson, is favourite to be the next Prime Minister. That’s something that can’t be allowed to happen. Health Secretary Jeremy Hunt is considering throwing his stethoscope into the ring too. Ditto.

There’s quite a bit of wailing and gnashing of teeth from the likes of Blair, Mandleson, Branson and other luminaries on the Remain side of the debate.

They want to remain in a union that is patently undemocratic. And many of their brethren are crying out for another referendum. They don’t want to accept the result of last week’s democratic vote.

For people who talk so much and at such volume about democracy, you wonder how committed they really are to the concept or whether they know what the word actually means.

London is out of step with the rest of the country. The North is merely delighted to have had the opportunity to stick its collective fingers up at the Metropolitan elite.

The young are pointing fingers at the old and accusing them of robbing the future. The old are saying the young don’t know what they are talking about and need to grow up.

The Scots are outraged. The Irish are deeply unhappy. The Welsh are busy doing their own thing. Everybody hates the English. It’s pretty much business as usual in this United Kingdom of ours.

The markets are back on their feet too – for the time being at least. The legs might not be completely steady. But the patient is up and out of bed. Last night stocks and the pound had both bounced back.

Even US President Barack Obama was tuning in to the new order of things yesterday and warning against ‘hysteria’. He says little will change in the wake of last week’s referendum result.

I’m not sure he was saying that this time last week. Or anything remotely like it. But, as they say, a week is a long time in politics.

Advice from the owner of Royal Mail….

Now I’m no Warren Buffet, ladies and gentlemen. But I do have a few shares. I’m a player in the market. Not a big one. But a player nonetheless.

For your information, among other things, I happen to own Royal Mail. Or at least a fractional proportion of its common stock.

That’s right, sir. I’m one of the capitalist dogs who shafted the taxpayer when the government floated the Royal Mail business on the stock exchange.

I won’t argue with you. Royal Mail was sold off cheap. Damned cheap. Buyers couldn’t have got it much cheaper if they’d been wearing masks and carrying guns.

The public got stiffed. No doubt about it. The price of stock rose sharply from the get-go. Investors like me saw their holding increase in value straight from the opening bell on the first day of trading. We got a real bargain.

Some players got out with a quick turnaround profit. Others like me stuck around. Whatever – the public purse (as is so often the case) was the big loser at the card table.

I make no apologies for it. It makes a change for me to be the shafter rather than the shaftee. It’s not an experience I’m particularly used to. But, I have to report it feels pretty good to be the guy skating in on the grease. 

To be honest I wasn’t sure it would pan out that way. I had my suspicions. But I didn’t know for sure. I went in on the basis of my own unique and peculiar contrarian assessments.

I applied for shares because I reckoned – and still do - that the retention of the ‘Royal’ connection confers a commercial edge.

The business won’t be allowed to fail or falter as long as it carries that Royal connection or connotation.

And that Royal connection – however tenuous – ensures that doors to prosperity and preferential treatment will always be ajar. The ‘Royal’ thing is very good for business – even now that the business is publically owned.  

Stick and hold through thick and thin….

So did I rush out and head for my broker’s office last Friday morning all panic-stricken and breathless?

Did I seek to liquidate my holdings before the fabric of the nation and the standing of the markets were completely rent asunder by the result of the EU referendum?

I did not. I didn’t even look at the share price. I haven’t looked at the share price any time since.

I couldn’t tell you what price Royal Mail stock is trading at this very morning. I don’t know and I’m not in the slightest bit interested.

When I buy a stock I buy it as though I’m buying the actual business. I’m in for the long-haul. I buy because I reckon there’s value to be extracted. And I’m going to stick around until that value has been extracted – whatever happens in the meanwhile.

I’m not looking to sell my holding tomorrow, next week, next month, next year or even 5 years from now. I’m not a day trader looking to profit on short-term price fluctuations. I don’t give a damn about price fluctuations. They don’t concern me.  

Stuff happens. All the time. Prices go up and prices go down – sometimes drastically. The value – if it is there at all - remains. It rises and it falls at a much slower rate and with less frequency than prices.

The price of the stock is one thing. The value in the business behind the stock is something else entirely. It is foreground and background.

The long-term value is what I am focused on. Not the short-term ups and downs in price.

Events. Panic. Fear. Turmoil. Chaos. Uncertainty. Terrible ups and downs. These things are all part of life and always have been. Like fashions and fads, bad times and good times come and go. Things rise and fall. It’s the natural order of things.

My stock-market strategy is to sit tight through thick and thin. To stick and hold. To play the long-game. And to look past short-term events and the turbulence they generate.

I aim to hold on to what I’ve got, to keep on taking my dividends each year and to keep on reinvesting them in a few more shares. Brexit doesn’t change my thinking one iota. 

But what do I know? That’s just my game plan. I just do what I do and hope for the best. Like I say, I’m not Warren Buffet. I just share my thoughts because it is good to give.

But one thing I would say is this: if I’d sold stocks in a blind panic last Friday morning, I’d be reviewing that decision today and wondering if I hadn’t perhaps been a little hasty.  

Maybe it’s the folk who took the opportunity to buy those shares on the cheap who will be whistling softly and contentedly to themselves this morning as they shave in the bathroom mirror.
I’ll be back with the Verdict next week.

The Judge

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