Bull’s Eye: Wretched be the bottom-pickers
Nothing like watching a darling share dive into a brick well, and all the way down you did nothing about it
We were fishing at Ponta do Ouro, storm coming, full of brandy, no bites, tackle snagged and lost after every cast. One last go, then. As I whipped back the rod and let free the line there was a sharp crack and the fully baited rig whistled out to oblivion. There floated the nylon from the tip of my rod. I could see this, but hoped nobody else could. So I stood, rod in the air, line billowing, for however long it took for everyone to tire and suggest we go back to the campsite, hook up with the girls and start the braai.
I have not been teased as much for my shareholding in Esor. How long can any idiot stand and pretend it’s not going to end in mockery? I bought the bastard, watched it stumble, doubled down, doubled down again and felt too foolish to chuck in the towel and take 3c a share. There it is in my portfolio, an 88.95% loss, suspended like a piece of cheap fishing line in the wind.
I am always tickled by the front page of Sharenet, a trading site that gives casual viewers a delayed snapshot of a stock’s activity, for free. Buy and sell prices, a daily and 10-day record of highs and lows, volume and value, plus a handy indicator that shows the deviation of a stock’s daily price from its 52-week peak and trough.
That’s dandy, but the truly fascinating information is in a four-part banner at the top of the website. It shows the most-viewed shares on the platform, which I occasionally think is some kind of spooky algorithmic thing that tracks my own obsession with certain doomed companies. Then I think again and realise I am just one of a morbid gaggle of small-fry investors who have either had their arses burnt or think they are about to bottom-pick the next ten-bagger.
There is nothing like watching a darling share dive into a brick well. And all the way down you either forgot to sell it, ignored your 10% stop-loss rule, or held on in the grip of blind hubris. You couldn’t have been wrong, surely? It must turn at some stage, surely?
Hence the front page of Sharenet. On any given day you will see a shameless banner of the stocks that gouged us so badly: Steinhoff (40% of all views on Tuesday), EOH, Aspen, Sibanye … There was a time when Basil Read was up there, and Aveng, or my personal little hell-hound, Esor.
Sure, the analysts and other smarty-pants told us the construction sector was damned, but the likes of me and my Sharenet mates knew better. We’d get in before the boom, when things were beaten down, and reap some fine spoils.Yes it hurts, but there is some consolation in knowing that professional asset managers also screw it up. The past five years of static local markets means some of them chased stocks or sectors that simply would not play ball. The high-profile falls from grace, for at least one of their funds, include the likes of Investec, Foord and RE:CM. Even Allan Gray has underperformed the general index for long periods.
But unlike us dabblers, fishing around in ignorant faith, the pros have squads of people who work out what fair value should be, and hence which neglected bits of the market are likely to revert to the mean. Trouble is, this strategy is just as likely to come a cropper as any other. When asset managers foul it up, however, they can rely on weighty analyst-speak tropes to deflect attention from the wretched birds’-nests they’ve made of their portfolios. Good luck to them.So Esor, eh? There it lies, trapped in the rocks and bereft of line, hook snarled in dead coral, the sinker perhaps nosed every so often by a big, stupid barbel looking for something to eat.