You know Ive posted this before but its good knowledge to have and give some perspective so thought I would share again, since inception of the ASX there have been around 37,500 companies listed, and only around 2300 left listed today, so only 6% of all listed companies ever listed on ASX still exist, and of that small percentage of survivors listed an even tinier fraction are profitable, only around 500 currently listed companies actually make money.
Out of those 500 companies that are profitable and paying dividends ( 1.3% of the all companies that have been ever listed in Australia) interestingly but maybe not surprising nearly half of their combined total profits and dividends come from just six companies that are over 100 years old – the big four banks, BHP and RIO,.
That leaves the remaining 75% or so of currently listed companies, around 1,720 companies that are not making money, barely solvent and will probably run out of money at some point which means more capital raises diluting holders and eventually suffer the same fate as the 33,000 other companies over the years that just disappear from the ASX worthless.
Its quite dismal when you look at the reality of it all, but using these stats and facts it just goes to show how hard it really it is to get a winner on the ASX, 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 disappear worthless.
So who are the real big winners, well knowing that most stocks 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.
Usually its these same lead managers, directors, etc, that will then consolidate all shares, do a name change, new prospectus and do the whole thing again, this is what they call life style companies, which is unfortunately very common on the ASX, not saying its the case with IHL, but just some basic research of any company you will find most directors have been directors for decades, they usually try to dress this up as a positive , as they are "experienced" but a quick look at most directors past you will find they were directors of several companies that never made a cent for shareholders but were paying for their life style in the form of salaries and performance rights.
Basically the theme is management, lead managers and brokers win, shareholders lose, its a sobering reality.
The lessons to take out of this in my opinion are not to get too attached to the story, realise that its a tiny fraction of these companies that end up making it, so if you are lucky enough to be in profit on speculative stocks, like a lot of us here were last year when IHL was trading 70cents, might be a good idea to take some money off the table along the way, lets hope we get the chance again.
Expand
