Skip to main content
#
A Clear Direction
rss feedour twitterour facebook page linkdin
home
Financial Advisor Brisbane - AdviserScott Keefer - A Clear DirectionBuilding Investment PortfoliosPortfolio Management ServiceUpdated ContentContact Us - Brisbane Financial Planning
A Clear Direction Financial Planning logo

 Financial Happenings Blog 
Thursday, November 01 2012
I realise this is a bit of a strange title but I came across a fascinating article in the Wall street Journal which I had to share – Can you trust your stockjobber?. 


Researchers led by financial historian Larry Neal of the University of Illinois have replicated all the holdings and trades in the Bank of England, the East India Co. and the United East India Co., the Royal African Co., the Hudson’s Bay Co., the Million Bank and the South Sea Co. –the dominant companies at the birth of British capital markets three centuries ago.

The share registries survive, so the scholars were able to match virtually every investment with the person who held it – encompassing 5,813 investors during the 1690s and 23,723 by the end of the period.

These people included everyone from dukes and other aristocrats to “stockjobbers,” or brokers, along with merchants, apothecaries, glassmakers, drapers and goldsmiths – and up to 27% of them were women.

The researches concluded that investors were:

  • underdiversified, with 86% of them owning shares in only a single stock;
  • chased performance, with rising prices leading to higher trading volume;
  • underperformed the market as a whole, earning lower returns and incurring higher risk.

Women appeared to be more conservative than men.

The WSJ article then goes on to compare those investors with investors today suggesting there is very little difference as investors today:

  • underdiversify, holding an average of only three stocks;
  • chase performance, with rising prices leading to higher trading volume;
  • underperform the market as a whole, earning lower returns and incurring higher risk.

A lot has changed in the world over 300 years but human nature has not.  Smart investors can learn from the errors of history to better structure investment portfolios today:

  • be well diversified;
  • don’t chase performance rather invest in asset classes that haven’t been doing so well lately;
  • avoid an active management approach to investing.

Regards,
Scott

Posted by: Scott Keefer AT 03:00 pm   |  Permalink   |  Email
 
Scott Francis' articles in the Eureka Report 
Request for Information 
If you have questions, or would like more information, please go to our Contact page and leave your name and contact information.

Plan Well, Invest Well, Live Well! Financial advice providing a clear direction

A Clear Direction Financial Planning and Portfolio Management ABN 85 147 572 870

Level 19
10 Eagle Street
Brisbane QLD Australia
Ph: (07) 3303 0269
Email: scottk@acleardirection.com.au

Authorised Representative (398444) and Credit Representative (403292) of FYG Planners Pty Ltd AFSL/ACL 224 543.

ASIC - Financial Advisers Register

All content of this website is copyright © A Clear Direction Financial Planning Pty Ltd, 2017

FYG Planners Pty Ltd & A Clear Direction Financial Planning Privacy Policy