Stock Market Collapse

So, the sky is falling in, blood on the streets, brokers leaping from buildings in a single bound.... The world is shouting 'sell'.

I think to myself two things: 'What's fundamentally changed in these businesses compared to last week?' and 'buy'.

I don't mind (other than psychologically) if the price drops further - I'm buying for the next 40 years..... though it's nice to buy at the bottom, the only way to reliably do this is to be lucky.

If I'd have bought something last week, I'm even happier to buy it now. If I'm holding something, I'm happy to buy more (if I can!)... what's better? Two cans of baked beans for 20p, or two cans for 10p? Everything else being equal, the latter. So it's a bit amazing to see joe public happy to buy shares when they're expensive, but scared when they're cheap.

Essentially, the share price is (short term) governed by emotion, long term by results. The trick is to buy good business from panicky investors, and then wait, or alternatively be really, really, good at spotting the way they're about to panic and buying the emotion - the latter is virtually impossible to do reliably, in my opinion.

The long and short of it is that I quite like periodic market tumbles, as long as they happen when I've got some cash!

Unfortunately, that isn't really the case right now.

Mizuho Error

A typo has cost the Japanese Mizuho Corporation some 27 billion yen. Losses may rise to 100 billion yen. Essentially, they wanted to sell one share for 610000 yen, but instead sold 610000 shares for 1 yen.

27 billion yen is around 128 million pound sterling at today's rates.


What makes the story particularly amusing is that they sold 42 times more shares than are actually in existence and "since the number of sold shares exceeded the number of existing shares, there is a possibility that Mizuho may not be able to hand shares over to the investors who bought them."

Boringly, it isn't quite that much of a discount as the Japanese market has rules which limit price fluctuations.

Story via Slashdot See also: East Asia Watch and Barking Moonbat