"Instos take a longer view on stocks. Have excellent due dilligence."
quanta - I wasn't having a go at you in my previous post so I apologise for any rudeness, but there are a lot of misconceptions about 'instos'.
some instos it's true actually take a position in a company with the intention of investing in that company, but they do not gamble. It's usually only after companies have an established path to profits that the instos step in. Just like the big miners. When RIO took over Riversdale, the coal outfit, for around $17 per share people here were asking why are they buying them at $17 when they could have bought them much earlier for $1? the answer is simple, Riversdale wasn't nailed down back when it was $1, but once it had been established that Riversdale was profitable then RIO bought - and so long as there were very long term profits to be had RIO had no problem with paying $17.
(I'll bet a lot reading this up to this point are saying ah, Meerkat's got it wrong again....) It turns out however that after all the supposed 'due diligence' on Riversdale that the thing was only worth a fraction of what RIO paid for it - they lost billions. They aren't the only ones, BHP did a another total screw up with the Canadian Magma Copper years earlier, paid top money for it ($5 bn?) and it was a near useless investment after all their 'due diligence'.
you're saying - "but I'm talking about Banks and such, their due diligence is far superior "- but what short memories we have. Where was the bank's due diligence a few years ago when they were all buying worthless pieces of paper based on sub-prime mortgages? Where was ANZ's duty to its clients in the Opes scandal? and the Commonwealth bank who had to apologise to thousands of customers for leading them up the investment garden path?
I'm afraid your confidence in institutions is misplaced if you think they can't go wrong - where they don't go wrong is in playing the middle man for others that's really their forte. They simply grow fat on commissions. Or those banks which issue certain derivatives such as warrants. Doesn't matter which way the stock moves the issuer wins. It's a certain thing, no gamble. Then there's their traditional role as moneylenders, another surefire winner.
so you'll have to forgive my amusement when posters on spec stocks after a high turnover day are all exclaiming about an 'insto' buying - nope. Or if they are, it would mostly be for their clients who it has been demonstrated they couldn't care less about as long as their commission is in the till.They might eventually buy in for themselves, but not before it's been mostly derisked. Oh, someone might find an instance of where some 'insto' did take an early position, but that's way against the norm.
so in my view nothing really beats your own DD and playing stocks you are comfortable with.
And contrary to most of the houns' opinions in here I hope PSY continues its rise, I know how I'll be playing it.....
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