Interdum stultus opportuna loquitur...

Monday, August 01, 2005

ProRant: It's Arrived...

Note - from June 24th 2009, this blog has migrated from Blogger to a self-hosted version. Click here to go straight there.

UPDATED: RantPro Forum member Seb noted that there would be delays providing the discount to existing RantPro subscribers without a PayPal account who pay by credit card. In the post below, I had intended to mention that I will put a post up on the Forums pointing to a slightly different Subscribe page for Forumites, which will 'point to' a PayPal link that requires an existing RantPro Forums login and password to access. That will be available later today.

As the Rant approaches its 500th instalment and the first anniversary of its naissence, I've finally finished the subscription offering that I have been planning and slowly building for the past eight months.

I have remarked in the past that the standard of research available to small investors in Australia is both excessively-priced, is significantly lacking in quality, and is inherently biased to the buy side. Most 'analysts' have a brokerage background - and strangely, they are actually proud of it. The 'ticket clipping' function completely perverts analytical independence, and the culture of brokerages - being in love with the long side of the market, with no time being a bad time to buy stocks - has a pernicious influence on analysts.

How else do you explain that every man and his dog had a BUY on QAN at or near the top, in a period of huge increases in oil prices and increasing competition? A perfect example is my old stomping ground (InvestorWeb), which changed my rating on QAN (SELL, dated 16 Oct 2001, with the price at $3.48, reiterated at on Feb 21 2002 with the price at $3.94)... it was changed to BUY on 14 May 2002 at a price of $4.87 - 3 days before the all-time high in QAN.

There was no fundamental basis for the change, except that the analyst who took responsibility for QAN got sweaty palms at a fundamentalcall that was underwater; sweaty-palmed "analii" do dumb things, which is why you require analii who don't get sweaty palms if you're going to base your methodology on purely fundamental criteria.

My call was absolutely as clear as a blue sky at the time, and included this phrase -

QAN has few, if any, upside catalysts - except the potential "price pop" which would accompany news of a failed bid for Ansett's assets. Despite the likelihood of a short-term spike, the overall airline climate (and the likelihood of pricing of risk premia into airline debt repayments) is lousy. We recommend that investors take profits in QAN, and revise QAN to a SELL recommendation.

Sure enough, there was a spike - and InvestorWeb clients were encouraged to Buy the absolute top of that spike. Anyone who asked me, got an e-mail that said QAN was being pumped up in order to set the conditions in which it could raise yet more capital... the string of e-mails included this gem from September 9 2002:

More to the point, anyone who BOUGHT QAN after February this year is now UNDERWATER. But the brokers managing the equity raising got their fee... which was the whole point of the BUY recommendations - first, all brokers slap a buy on it in order to try and get on the panel for underwriting, then two big houses get the job and everyone maintains a buy because they have a buy on it!
And as soon as the issue is away (at a discount, of course) the thing is "let go".
There has to be a regulatory solution to this sort of thing - it is yet another part of the investment-banking/brokerage landscape which impoverishes small shareholders.
How brokers can have a BUY on a company which CONTINUALLY has to raise capital, is beyond me. Being an oligopoly dominator is no justification, if it means that the company has to issue new stock (and thereby dilute earnings per share, of course) YEAR AFTER YEAR.

Anyhow - that's just one example. How many outfits had a SELL on NCP (now NWS) - ever? How many outfits questioned the investment merit of CSL? COH? RMD? MST? And yet, the evidence - the fundamental evidence - was as plain as day. But SELL recommendations only help one set of people in the food chain - the client. And for ticket-clippers, the client is the last group that they're interested in. Far better to maintain 'access'.

Well, now there's a new "outfit", and it's got three things going for it:

  • a magnificent database of Financial Report information, plus the tools with which to do sensational fundamental analysis;
  • a handy charting application and screener with which to do technical analysis;
  • integration of technical, fundamental and sentiment analyses; and
  • me.

Four things. It has four things going for it.

Plus, the subscription fee is slightly more than half of what folks pay for 'cut-down' versions of analysis (from 'analysts' who , in the whole, have a buy-side bias). One thing taht will never happen on my watch, is tipping clients into a stock which is both overvalued and overbought

So, waft over to the new site and examine the brief discussion of the methodology it's going to employ. For those with a yen to understand Commodities trading, the Commodities area will provide a comprehensiveset of tools which will suit everyone from novice to expert (and I know, because I was a novice once).

There is a significant discount for the first 50 subscribers (and the same discount will apply for all existing members of the Rant Forums).