Benjamin Graham, author of The Intelligent Investor and co-author with David Dodd of what is deemed to be the investment bible Security Analysis, talks about the emotional side of money. He makes the point - much more relevant in today's age of computer- driven investment programmes - that it is people, human beings, who make markets: "The stock market is nothing more, and nothing less, than the aggregate decisions of human beings."

In most areas of life, people tend to make decisions on the basis of emotions, and emotions are stronger than reason. "Motivated by fear or greed, or both, investors frequently buy or sell shares at foolish prices, far above or below a company's intrinsic value". In other words, investor sentiment has a more pronounced impact on share prices than a company's fundamentals. Graham stresses the importance of being alert for those times when other investors' emotion-driven decisions present you with a golden opportunity. He understood the emotional quicksand of the market and held that true investors can be recognised by their temperament as well as their skills, citing three key traits: true investors are calm; true investors are patient; true investors are rational.

Very few people are aware that the legendary investor Warren Buffett was so taken with Graham's ideas in The Intelligent Investor that he applied to Columbia Business School so that he could study directly with Graham. When Buffett graduated from Columbia with a Master's degree in economics, Graham invited his former student to join his company. And Buffet, today the world's richest man on the back of his investment savvy, says: "As long as you feel good about the businesses you own, you should welcome lower prices as a way to profitably increase your holdings".

For some, such an opportunity arose again last week when the MSE index - now 37.2% below its March 2006 all-time high - saw its two largest constituents, HSBC Bank Malta plc (HSB) and Bank of Valletta plc (BOV) plumb depths of 46% and 51% respectively below their all-time peaks.

BOV spent the early part of the week dawdling between €4.75 and €4.70, stumbling badly to €4.60 on Wednesday, where it stayed till Friday's penultimate deal effected at €4.62 - 2.7% down for the week. It accounted for just over 20% of the week's equity turnover by value, with 54,269 shares changing hands for a value of €253,239. At the end of the session, best bids totalled 1,000 shares at €4.621, with offers for 9845 shares at €4.70.

HSB was stable at €3.80 in the early part of the week, dipping to €3.75 on Thursday to close Friday at this level, 1.3% lower. Total turnover for Malta's largest capitalisation stock amounted to just 37,256 shares for a value of €140,750. At Friday's close, there was outstanding demand for a mere 34 shares at €3.74 with offers for 1,000 shares started at €3.76.

Interest in Go plc (GO) continues to dwindle as the price meandered from €2.74 to €2.70 on Monday and Tuesday, hitting €2.695 on Thursday. A thin stream of sale orders saw the price tailspin to a low €2.604 on Friday with the final 100-share deal pulling the price back up to a 2008 closing low of €2.65, to end the week 3.3% down. For those with Maltese Lira nostalgia, €2.65 translates into Lm1.138 - a price last seen on August 1, 2003.

The week's volume amounted to 23,356 shares for a value of €62,345. At the end of the session, best bids totalled 2,449 shares at €2.605, with offers for 520 shares starting at €2.696.

International Hotels Investments plc (IHI) was stable around €1.073 in very thin trade, which totalled just 6,515 shares over the three days in which it was active. On Monday, the company announced an increase in share capital through the issue and allotment of the 16,112,854 bonus shares. The issued share capital of IHI at the end of May stood at 553,212,831.

Malta International Airports plc (MIA) too was practically flat, gaining an inconsequential 0.2% to €3.12 on Monday, with all deals transacted at this level for the rest of the week. Turnover came in at just under 28,500 shares for a value of €88,791. At the end of Friday's session, the best bid was for 2,390 shares at €3.12, while the best offer for 1,500 shares was at €3.13.

Fimbank plc (FIM) too was static in a tight range of $1.885 to $1.89. Thursday's strong volume of over 171,000 shares represented the lion's share of the week's turnover of 196,044 shares for a value of €239,275.

Lombard Bank Malta plc (LOM) drifted lower starting 2c down at €3.05 and sank to €3 on Tuesday, only to recover to €3.07 by the end of the week, to end just 0.2% lower. Turnover was an unremarkable 5,669 shares worth €17,179. On Tuesday, LOM announced that 533,296 ordinary shares, which represented the Scrip Dividend, were admitted to listing. The issued and paid-up share capital is now made up of 35,048,208 ordinary shares of €0.25 each.

Mid and small cap stocks, Middlesea Insurance plc (MSI) and Plaza Centres plc (PZC) were unusually active this week with MSI topping the charts for the highest value of shares traded at €289,188 - 23% of the week's total equity turnover. All the week's 84,806 shares changed hands at €3.41, 0.6% lower than the previous week's closing price.

PZC too lost ground, falling 1.4% to €1.70 on a turnover for the week of just under 66,000 shares for a value of €112,441.

The best and worst performing equities only traded on one day - Thursday. Maltapost plc gained 3.9% to €0.78 on a single trade for 2,089 shares, while Global Capital plc shed 3.5% to €2.75 in two deals for 2,000 shares.

Simonds Farsons Cisk traded unchanged at €2.71on Tuesday and Thursday, gaining 2c to close at a previously tested 2008 high of €2.73.

In the Government Bond market, turnover by value was low at €900,000 with 42 deals struck in 18 stocks. In the corporate bond market, there were 34 deals for a total turnover value of €269,636. Turnover value in the Treasury Bill market totalled €5.36 million.

This report was provided by J.G.P. Bonello, managing director of Financial Planning Services Limited, of Marina Court, G. Cali Street, Ta' Xbiex, which is licensed by the MFSA to provide investment services, including stockbroking (IS/3608). The company is involved in acting as sponsoring stockbroker and corporate stockbroker. The directors or related parties, including the company and their clients, are likely to have an interest in securities mentioned. E-mail: info@bonellofinancial.com or call 2134 4243.

Sign up to our free newsletters

Get the best updates straight to your inbox:
Please select at least one mailing list.

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to Mailchimp for processing.