If You Ask Me by Martha 'Marti' Knight
August 18, 2011
If I had a bunch of money to invest, it might be nice to own part of a business that is doing well.
Maybe it would be even better to be part owner of several different businesses or companies that are doing well and have excellent prospects.
Would it be good to own some shares in a bank? How about a communications company? I doubt I would like to partake even a little in the prospects of a company that is in the business of buying up iffy mortgages, or one that buys real estate that has been foreclosed on.
Owning a little piece of a company appeals to me more than actually owning a business outright. Thereís so much work involved in owning and running a business! Of course the Rupert Murdochs of this world can own businesses and hire people to run them, people who are really good at that sort of thing. Iíve been half owner of one business, and quarter owner, then half owner in another. I wouldnít care to do that now.
No doubt Murdoch, and Warren Buffet and Donald Trump and other famously rich people, have not only the best people money can buy running their operations, they also have the finest advisors telling them where to park their money, and even how best to give some of it away.
So it would seem that it is a matter of knowing what those good companies are, those businesses that are well run and are the best kind of business to be in right now, the ones that will handle things so well they will be solid and profitable and will make money for their owners.
At some point, that might have been what the stock market was about. If only it were, now!
Fantasizing about all this money I need to park somewhere, I think again about banks. There are lots of banks around, but which ones would be good to own part of, supposing there is any of their stock available? I can think of two or three that I would consider pretty solid institutions.
Their lending policies seem to be rather conservative. It is my impression that they do their due diligence, and arenít in the habit of making loans the borrowers canít repay. They arenít the banks that have wound up owning a lot of real estate they canít sell. They are not the ones mentioned in yards of column inches of sheriffís sale notices.
I know something about the people who run those banks. They seem to be solid citizens, not too flamboyant. Well, actually, one of them is in show business, but not as a big investor in productions that will close out of town after one performance. Heís a good singer, see. And he is in productions that open only 18 miles or so out of town, and then open in town two weeks later, and probably sell out both places. We canít fault his judgment in being involved, at least vocally, in those successful ventures, can we? But I digress.
I would not want to invest in a waterbed company or sales outlet, no matter who is running it. Companies that own and manage time shares donít appeal to me.
No doubt I need someone to advise me, inasmuch as I have so little experience in such matters. A wealth manager, right? (I notice they are called that now. It occurs to me that we donít hear people calling themselves mutual fund salespersons, to mention just one kind of activity that is not mentioned much these days.)
Wealth management has not been a concern, with me, because of my lamentable lack of wealth. But I can tell you, if that situation were to change, I would not seek a wealth manager given to gambling. I would not want him or her phoning or texting or messaging or faxing lightning buy orders and sell orders, in rapid succession, while the market is having irrational, impulsive, emotional fits, as it has been this past week. After all, that is gambling too. People who gamble with their own money are feckless. Those who gamble with other peopleís money are irresponsible at best.
Obviously the companies whose stocks were in play, prices changing radically, were not themselves becoming more profitable or less so by the minute. They were not being operated more wisely or less so, in a matter of moments.
There was no long-range forecast of each companyís business results causing the rapidly changing valuations of their stocks. We kept hearing that the stock transactions were so unpredictable because there was so much emotion in the market.
Emotion! Just what we love to see driving business decisions. ďIím feeling patriotic. Iím going to buy a ton of American Amalgam.Ē ďMy horoscope says travel could be risky today so I am dumping my airline stock.Ē
That is just as smart as betting on a horse with a name like that of our prom date, way back then, either out of sentiment or because we remember that he was on the fast side. Itís as smart as picking a particular slot machine because we have always lost on it before so it is bound to make it up to us now. Itís like me buying Lotto but not the lottery tickets the woodchuck promotes, because of my antipathy for woodchucks.
While the stock market was riding a coaster and the coaster seemed about to leave its rails, corporate profits were just fine. S&P 500 companies were forecasting profits in the high teens. The values of companies as companies seemed divorced from the values of their shares.
Itís a nasty, delusional system, which has operated very badly in the past, and has been a haven for crooks and fools. It has needed major reform before, and now needs drastic reform.
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