Beware of boom-and-bust stock market listings

It has been such a confusing couple of weeks on the market and the Gloria Gecko of Warrington has been back on my case again after an absence of several years.

Yes my mother is back, on the investment prowl and delighted to hear that Anchor Butter has now listed on the Johannesburg Stork Exchange, alongside Clover Margarine. She wants to know how she can get in early on Lurpak and get what her friend Margery calls a Popsicle. I advised her that the IPO term was a ‘pop’, that the spread was too thin and there was likely to be some churning, she said “stop being so stupid are Ian, they all need a great degree of churning to firm up”, and if Coronation Milk could do so well and have so many PEs why was I so allergic to buying into dairy? I asked if she was referring to Carnation Milk and if so I would get her some on the way home.

She said she was a little worried that Anchor claims to be “The fastest growing ‘something’ in the universe, but she was willing to take a punt, then retorted that no one would believe the spin as it was the same hype used by the likes of Parmalat in their prospectus, which then went sour and she lost a whole year’s housekeeping money. At that point I went rather blank, took a pill and had to sit down.

I realised I had brought a ‘butter knife to a bun fight’, and no one knows her unsaturated fats better than Maggie Kilbride, secretly known as Ma, but you need to be in another province to get away with Ma, rather than her preferred Mum, that is unless you want a good slap on the upper thigh. Often my investment conversations with Mum are rather odd, such as “a little bit of knowledge is very dangerous”, but that is her to me the guy in financial services!

Confused? Well so were many of us embroiled in the listing boom of 1998 – 1999, not just the Chairmen and CEOs but many of those who piggy backed or parasited off the people with the real dreams and genuine ideas. I think I was 22 and Alec Hogg 21 at the time of our first-ever stock market listings and that’s only a slight exaggeration; say nothing Alec! Many of the companies were solid and had clear visions for their future. But to be honest if you found four chairs and a matching table it was deemed a good ‘grouping’ and people would buy the stock. For goodness sake, there was even a listed flea market.

We must now beware another round of such “boom” and then “bust” listings, but the markets correcting may put an end to them before they even get started. We should all stick to quality companies, with solid track records, stocks that are liquid and substantial and please ensure that you always seek out some independent professional advice. Avoid those who make unsubstantiated and seemingly improbable statements, because if you put heat to butter it melts – and please never listen to my Mum!

Then finally there is the rand. I would just like to say “stop it!”, the tune ‘slip sliding away’ comes to mind, despite the best “Stalsian” attempts of Gilly Marcus and the Reserve Bank. I had a nightmare the other night where the rand had strengthened to R5 to the dollar, but the interest rate was at 30% and the economic landscape looked rather like a bad hair day in Sierra Leone, after a Tsunami. I awoke, or so I thought, sweating and unnerved, with my lovely wife standing there next to the bed dressed like my Mum and holding a tray of hot toast asking, “Butter or margarine dear?”

I really need to get a new job and/or a new therapist!

 

Ian Kilbride is the Chairman of Warwick Wealth Limited and the Spirit Foundation (formally known as the KIDS Foundation). He is an Englishman by birth, but has lived in South Africa for 25 years, has two South African sons and a South African step-daughter and son. He does, however, apologise for having an Australian wife, but it does at least make for fun Saturdays in the Kilbride household when the rugby is on the TV!

This article by Ian Kilbride first appeared on:
BizNews – Thought Leaders on September 29, 2014.

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