Bull markets have certain eternal features. For instance, they all climb a wall of fear and their counterparts, bear markets, descend a slope of hope. This will never change.
However, the details do. The great dotcom boom took a year or two to develop into a frenzy and, having so developed, it then took on a loony phase during which clearly comic capers, for instance originated by the Mirror’s City Slickers, gave populist politicians an opportunity to arrange show trials. They were assisted by the usual panoply of thick lawyers some of whom merely engaged in guessing. Of course, they still got paid.
Nowadays the law is much tighter as to what promoters can state in support of their vehicles and the let out in practice is that compiling the evidence to allow a prosecution is very expensive and time-consuming and usually beyond the intellects of those engaged. I shan’t identify recent imbroglios since defamation writs and revenge misuses of regulatory powers will quite possibly follow.
The general theme is that the novelties revealed by each phase of madness take time to be understood. I suppose, that being philosophical one should accept that nobody knows everything and that conflict is liberty. Therefore, there must always be some conflict going on in a healthy society.
Fifty years ago, the great nickel boom took off in Australia. These promotions were all quoted primarily in Australia and fostered offspring quoted here in London. All right-thinking punters were roped into the party which grew and grew.
After a while punters in London started to realise that these promotions were just that and decided to get out. They therefore decided to sell and then encountered an interesting problem which had never crossed their minds when first they bought: they had never been registered as shareholders in the first place – not through fraud but administrative delays twelve thousand miles away. Accordingly, sensible stockbrokers declined to accept sell orders which were not fully supported in advance by certificates of stock. This would have been extremely frustrating for punters who otherwise thought they knew how to ride a bull market. Healthy bids just melted away.
One small investment company in London, specialising in Aussie nickel stocks and known to me, decided that research was always important and accordingly recruited a chef to provide delicious breakfasts of, for instance, kidneys and claret so that the soi disant researchers could take up the cudgels with enthusiasm whilst recovering from the hangovers generated by the previous nights’ jollifications. This company hung about the quoted lists for some years and eventually disappeared. Quelle Surprise.
Things are different nowadays, but the general principles remain the same. I am here referring to the Covid-19 stocks. Only one or two of these – there are lots of them across the world – will succeed and the skill lies in riding the duds to the point where one has to get out and, with a little bit of a luck, alighting on a winner.
One such might be Avacta (LON:AVCT), now 190p and capitalised at c. £400m, which might have a readily deployed (it has to be lawfully sold first) saliva-based home test costing perhaps £25. There are other tests, but they cost quite as much and quite possibly rather more, based on laboratories and suitable technicians, who take a long time to report results. However, the target market is eager to buy. And, which is important, all the punters can understand all of this.
I mishandled my first entry (at 110p) since I sold at 125p. However, I summoned up the blood and took a stronger view at 150p. Obviously I’ll be tempted to cash in – and perhaps I should – but I will not. I am that greedy.