Its been pretty brutal price action to watch here, whilst I have been in IHL since the early days, it is hard to see the profits decline over last year , basically an 85% drop. It actually lead me to doing a bit of research on the ASX in general to see the history, which I found quite eye opening so thought I would share.
Since inception of the ASX there have been around 37 500 companies listed on the ASX, and only around 2 300 left listed today, so only 6% of all listed companies ever are still listed, and of that small percentage of survivors listed only around 500 make money.
500 companies (around 20% of the current listed stocks, or just 1.3% of the all companies that have been ever listed in Australia) are profitable and paying dividends. Interestingly but maybe not surprising nearly half of their combined total profits and dividends come from just six companies – the big four banks, BHP and RIO, which are all more than 100 years old.
110 other companies listed (around 5% of companies listed today, or under 0.003% of all companies ever listed ) are profitable but pay no dividends.
That leaves the remaining 75% of currently-listed companies around 1,720 companies that are barely solvent and will probably run out of money at some point and suffer the same fate as the 33,000 other companies over the years that just dissappear from the ASX worthless.
Its quite dismal when you look at the reality of it all, but using that info just shows really it is so hard to get a winner, the overwhelming majority of listed companies in any given era are speculative stocks with nothing but hope and hype and almost all will disappear worthless, it really cant be argued as its data backed that 98% of stocks listed dissappear worthless.
So who are the real big winners with most of the stocks that end up worthless, its the lead brokers who make money raising for the company, the management and staff of the company who get paid great salaries along the way, before the company is worthless. Basically the theme is management win, shareholders lose.
Im not saying this will be the case with IHL, its just good to have this knowledge of the reality , realise how hard it is to get on a winner and in most cases 98% infact they wont be, for me the big lesson is we should be taking profits a long the way.
Lets hope we get a chance to take some off again !
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