Update No. 36 – 04/12/11

The market jumped by 7.62% this week, and unsurprisingly, we failed to keep pace.  As I have been expecting for the last couple of months, the US recovery began to show very real signs of traction as the unemployment rate there fell by half a percentage point in a month.  As for the optimism out of Europe, I will wait before I get too wrapped up in it, regardless of what action is taken there, the recovery will be long and slow.

I found this comment a couple of weeks ago from Roger Montgomery here:

“I’ve always been suspicious of a company that issues a report to the market after the close of trade.”

I’ve said before on my links page, I generally like Montgomery’s methods, though his relentless salesmanship can dull the quality of his message. Nonetheless, he reminds novice investors to focus on the quality of the underlying business, to forget about day to day pricing, market gyrations and focus on business value etc, these are worthy messages.  When it comes to his statement above, however, I must passionately disagree. In fact I wrote a little about it 3 months ago in Update No. 23:

“Talking about the flood of reporting that accompanies the last day of reporting season gives me a chance to get on my soap-box over an issue that really irks me.  This is the reporting of price sensitive information during trading hours.”…

Warren Buffett has also commented on the importance of giving holders time to absorb the information as fully as possible before the market opens, from Berkshire Hathaway’s 2010 annual report announcement:

“Berkshire Hathaway Inc.’s 2010 Annual Report to the shareholders will be posted on the Internet on Saturday February 26, 2011… Whenever we can post our report on a Saturday we will continue to do so.”

I absolutely agree with the sentiments Buffett has expressed on this matter.  Wherever possible, the longest amount of time possible should be made available to report users to digest financial information.  Particularly with business updates, to me a Friday night disclosure immediately after market-close is perfect.  The only exception to this is continuous disclosure related matters such as takeover offers and the like, which should be reported ASAP to keep the market informed.  Scheduled business updates, earnings releases and material of this kind should always be released with the maximum practical time allowed for absorption.

So although I appreciate the generally helpful (to inexperienced investors) guidelines Roger Montgomery provides, I have to say, he is dead wrong in this statement.  – Tony Hansen 04/12/11.

P.S.  I leave for about 4 weeks overseas this week, I will be back in the last week of December.  The next 3 posts I make should come from Washington DC, New York City and Fiji.  I am sure there will be no issue with the Washington & NYC posts, though they may be shorter with just the financial info and little else.  As for the Fijian post (scheduled for Christmas Day) – I have never been to Fiji before, but I’m hopeful I will be able to get the internet access required to get the post away on time.  If not, I’m back in Australia on 27 December and will make the final 2011 update post then.

EGP Fund No. 1 Pty Ltd. Down by 4.73%, level with the benchmark since July 1^st. Since inception, EGP Fund No. 1 Pty Ltd is Up by 3.27%, leading the benchmark by 11.83% all-time (April 1^st 2011).

EGP 20.  The EGP20 index is Down by 7.84%, lagging the benchmark by 3.11% since July 1^st.  Since inception the EGP20 is Down by 18.56%, lagging the benchmark by 10.00% all-time (since April 1^st 2011).

S&PASX200TR  The benchmark index is Down by 4.73% since July 1^st. The benchmark is Down 8.56% all-time (since April 1^st 2011).