You may have noticed I added a new AIM Soiree link – I see Philip O’Sullivan fell for this site also! I found it last year, and (a bit of a surprise to me) have enjoyed visiting it regularly since. Take a look, I recommend it – the design has a ’50/60s cartoon vibe (unusual for a finance website!), and it (rather smartly) ranks the Top 10 (& 100) AIM Stock Discussions from across the web.
Why the interest? Well, I’m fascinated at what pops up! Yeah, you guessed, it’s stuffed to the gills with natural resource penny dreadfuls! Oh Lord, fuck a duck… Not too much of a stretch to assume the most discussed stocks are also the most popular stocks to invest in (occasionally to short, but for the overwhelming majority it’s to go long)? And trawling through a few boards, it seems like there are plenty of people out there who believe they’ve got a well-diversified portfolio simply because they own 5 different resource stocks (not all oil stocks, you know ;-))!?! This idea’s even more insane than the stocks themselves. Got any friends like this? Can you help ’em out, buddy, please?!
Btw Judging by some of the comments, board anonymity appears a v good idea – otherwise, we would have heard of quite a few broken legs by now (and not for luck)!
So, how can we put this passionate logorrhea into some kind of context? Foot in mouth, I’ll frame it in political terms: If you’re a bleeding heart pinko liberal, you explain people are just using a little fun money to reach for their rightful slice of the pie. If you’re a foaming at the mouth right-wing-nut, you put it down to people throwing away their life savings (and their children’s education) on a few insanely risky stocks! Maybe it’s somewhere between these two poles? You decide!
I was inspired enough to check out (I’ll admit) a fairly arbitrary snapshot of success – let’s check out the 1 year performance for the current Top 10:
Top 10 Average: (31.8)%
vs. FTSE AIM All Share Index: (19.9)%
vs. FTSE 100 Index: (2.7)%
The numbers speak for themselves..! No surprise there. And no, I don’t think the AIM Index is actually a correct comparison for any investor who aspires to have a reasonable well-diversified portfolio. But I throw it in anyway as another illustration of the predictably poor relative performance of the most popular AIM stocks. Aah, I may be just totally misguided, maybe all concerned have just jumped into these stocks now to take advantage of these collapsing prices? Again, you decide!
All of the above a bit rough? No, I don’t think so – that’s how an intervention goes. If even one person reconsiders their love affair(s) with garbage stocks, and devotes even a portion of their wasted time (thinking/investing/writing about these stocks) to value investing, for example – well, they’d be a lot wealthier!
And I’ve no problem with fun money, but it doesn’t absolve you from doing some basic stock analysis. If you spread the net, and exercise a little patience, you can come across an obscure stock now and again that’s genuinely cheap, has a Margin of Safety, and offers a free shot at the moon. And I mean cheap based on its current (and audited) fundamentals/financials, not some pie in the sky projections..! Find a few of these, devote a small/controllable portion of your portfolio to them, and you’ll have some fun and actually stack the odds in your favour.
So, what’s the ‘temperature‘ of your own portfolio when you check it against this list?
But what about the beam in mine own eye? I confess – there’s one stock on the list in which I own a small stake: Petroneft Resources (PTR:LN) which pops up at No. 43. But I think Hot Tuna (HTT:LN) at No. 27 cancels that out 😉 For some reason, HTT caught my attention enough last year to write about it as my favourite Piece of Shit stock.
There’s little else on the list that interests me – in fact, I rediscovered a small natural resource stock the other day that really is cheap based on current earnings and assets (but I need to research further), and I’m delighted to see it doesn’t even show up on the Top 100. Mmm, interesting! I’m reminded of Philip Fisher and his scuttlebutt approach. Message boards are a form of scuttlebutt, not for any info. they convey but for what they signal. If you own a stock, and suddenly everybody’s talking about it, it might be time to sell…the inverse, of course, may also be true. (I won’t even get into the idea of shorting any of these stocks..!)
And that’s the beauty of the AIM Soiree site, and why I return to it – it’s an aggregator site that offers a v useful investing tool: An Inverse Scuttlebutt Indicator!