Fools Paradise: Inside ‘the world

26th September 2011

Named after Shakespeare's wise fools, whose job it was to amuse the king while also telling him the plain truth, The Motley Fool started in the US in 1993. The separate UK operation was established in 1997, and there is also a discrete Australian site. In the UK, the firm's media profile is handled by David Kuo, a regular contributor to the BBC and other outlets.

In 2009 a separate site, www.lovemoney.com, was set up to focus on personal finance.

The Motley Fool "champions shareholder values and advocates tirelessly for the individual investor," aiming to provide "solutions for investors of every kind", such as their investment service Dividend Edge.

So, what are they talking about?

 

EQUITY TURMOIL: "Everywhere I look there seems to be significant risk."

Not surprisingly, the boards populated by "the world's greatest investment community" have been much exercised by the recent turmoil on the world's equity markets. Woodie started a "Safe Haven" thread, saying: "I am not looking to make a fortune but every where I look, there seems to be significant risk. Currency: volatile. Property: dying. Oil & gas: I thought BP was a banker, am now at a loss. Gold: many posters are saying it has peaked. Shares: a general bear consensus on TMF boards. Should I just stick my money in the bank and accept pitiful interest rates? At least I won't lose much?"

Rhyst comes back with constructive advice, even if it is tinged with a warning: "All we can be confident of is that we don't know quite what will happen later, either in life or on the markets. So it makes a lot of sense to diversify, to spread risk. Indeed to do otherwise is reckless. Holding more cash than one needs for the short term isn't sensible, since it is being devalued by inflation.

"My own approach is now to hold the bulk of my investments in a high yield portfolio of large UK companies, spread across most of the sectors, generally two companies per sector. This is supplemented by investment trusts for foreign markets… It was a bit of a leap of faith for me to abandon the safety of my bank account, but long term, I felt that I had little choice. Avoid agonising over the volatility of a handful of shares that might hit-or-miss in the UK market. I have form here, having lost over a year's earnings on Marconi, Cable & Wireless and Cammell Laird!"

 

EURO UNCERTAINTY: "I don't know how it will work out."

On a board devoted to macro investment topics, geebee2 brings a personal element to the question of the strength of the euro: "Any reasonable observer has to admit that the euro zone has some big problems. There seems to be a banking crisis, multiple sovereign debt crises…  I don't know how it will work out, but would you really want to be holding a lot of euros with all this uncertainty? Why then is the currency strong against the pound? We just booked our Christmas French ski holiday, and I was somewhat amazed to see the exchange rate. I hope the Euro falls a bit before Christmas…"

You sense from the moniker as well as the reply that emptybarrel won't be shooshing down any fine white slopes this winter: "Why is the euro so strong? Or why is the pound so weak against the euro?"

 

OUTLOOK: "The news is dire, the markets are tanking. Simples"

Brittle stock market values have prompted many boarders to think about safer options, including Government-backed savings accounts. Loglorry is clearly worried that things might get so bad that even the Government could default: "I was contemplating how safe deposits at the Post Office are? Sure, the government would have to pick up any compensation claims under the savings guarantee for the majority of customers but at the end of the day someone has to pay if Ireland goes bust, taking Bank of Ireland and its senior debt with it. That someone is most likely the UK taxpayer, possibly the other UK banks first, but that ultimately means the taxpayer anyway."

RedSturgeon is trying to see some light on the horizon with a thread entitled This I Understand: "The news is dire, the markets are tanking. Simples. What happened to all those cheap valuations? They just got cheaper. I will buy back in at some stage but not yet."

Nigelpm agrees – and he clearly thinks of himself as well-connected: "Well, something has to give with valuations so low. I'd expect to start seeing mergers & acquisitions activity to come back with a vengeance soon. Interestingly, the general word on the street of those I know in corporate finance is that things are picking up rapidly."

The Motley Fool boards' crew betrays mixed emotions. Many are clearly worried sick about their financial well-being, others think they can plot a path through the current turmoil. Some are investment innocents trying to make sense of the bewildering trail of events on world markets, while others are frustrated economists who can't understand why world leaders aren't heeding their sage advice.

Perhaps the last word belongs to the fool in King Lear: "Have more than thou showest. Speak less than thou knowest. Lend less than thou owest."

 

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