The downside of small companies, the final results of a fascinating contest and the generation blame-game -- all on the boards this week.
A lot of Fools favour investing in smaller stocks, because the potential for rapid growth is greater than for large cap companies -- as Jim Slater famously said, "elephants don't gallop".
But being a small investor in a small company can have its downside. This week oil company Nautical Petroleum (LSE: NPE) announced the placing of nearly 25 million new shares -- or well over a third of its existing issued shares.
But according to WShak, all did not go well for private shareholders...
"Given that the company has an existing market cap. of only £90m, the share placing is clearly highly dilutive so you'd have thought that existing shareholders might have got a look in at a knockdown price of only 125p. The reality is, however, that investors' fears about how a placing might be handled have very much come to fruition and the placing has mostly ended up in the hands of institutions, who probably never had any historical links to the firm."
"... The brutal reality is that, when it comes to junior oil companies, Nautical is the perfect example of why investing in the shares through the market is a mug's game"
Read the rest of the thread to see what other Fools think.
The final (hopefully) results
Just over a year ago globalarbtrader launched a "real money interboard investing contest".
The idea was that the users of ten different boards would choose a portfolio of at least three investments, and then globalarbtrader would put his some of his own money into each of them. A brave experiment to test the collective Wisdom of Fools!
The time came this week to release the final results, which make for interesting reading. I'll let globalarbtrader explain in his own words...
"... the most important thing for me is that your picks just failed to beat the FTSE, with the "legacy" stock portfolios returning 26.1% over a year when the FTSE managed 27.8%. ... I did not however lose my kids future uni fees on a few random punts as some predicted. Exactly half of the portfolios beat the FTSE; all beat cash. It was probably a year when even a monkey could pick stocks and make money."
So, which board picked the best portfolio and which one fared worst? Ah, you'll have to read the post to find that out.
Middle class dying a slow debt
There's been a trend amongst some economic commentators to blame the "baby boomer" generation -- those born roughly between the end of WWII and the early to mid-1960s -- for the current woes of Western economies.
Not only did they benefit from the boom times, and develop enormous collective wealth based on a massive credit-bubble, but as they steadily come to retire over the next 20 years or so, they will suck money out of the economy, and their mass-sell off of assets to fund their 'golden years' will cause an economic meltdown. Or so the theory goes, anyway.
But, of course, there's always more than one side to any argument. As garless posted on 'Economic Markets & Trends'
"I ignore the 'blame it all on those born in the 40s/50s'. We were used to hardship, rationing on chocolate, and learned to save. OK we got free university education, my partner paid it off by teaching for 40 years, I paid it off by being a higher rate tax payer in the computer industry. The moaning kids are now dependent on the bank of Mum & Dad to pay their mortgage but what are their credit card debts? The young will inherit very well, the only problem is Mum & Dad don't want to die yet."
Convinced? emptybarrel wasn't.
"Everything you say is right, but it's also wrong.
"Yes you worked hard, yes you did without iPhones, yes you saved, yes you paid off the mortgage. This is all true.
"But you had MIRAS. And you didn't buy into a UK housing market fed by vast quantities of American credit.
"Yes you competed against American, Japanese and German workers on similar salaries. But you didn't compete against Chinese and Indian workers on 1/20th of your salary
And -- in the immortal words of economic guru Jimmy Cricket -- there's more. Quite a bit more. Read the rest of emptybarrel's post to see what it is
The price of being single
It's often said that "two can live as cheaply as one" -- mortgage or rent and utility bills can be shared. Two people only need one fridge, washing machine, television, etc.
That's fine if the other person you live with is a wage earner. But as Galst0nian pointed out on Living Below Your Means:
"You cannot possibly tell me that it costs less to live with people who have no income but increase your expenses (aka children).
"... Teenagers are like humans who haven't been house-trained. They cost a fortune, not just financially but emotionally as well, they have unpleasant habits and don't smell right. You singles have got it made."
Lest you think Galst0nian an uncaring parent, he does end with:
"Just for the record, yes I do love and cherish my children but that doesn't mean that I'm not counting the hours until they leave. At which point, no doubt, I'll start counting the hours until they phone or come and visit :-) "
Free iPads. First come, first served
Want a free iPad?Tangerinemachine has got some going spare.
Last week's round-up: Where Do Banking Profits Come From?
