An Irishman's Diary

Look at some of the companies on the ISEQ index: Adare, Ashquay, Ardagh, Jermyn, Capital Bars, Norish, Reflex, Viridian

Look at some of the companies on the ISEQ index: Adare, Ashquay, Ardagh, Jermyn, Capital Bars, Norish, Reflex, Viridian. Unless you are a scholar of these things, I suspect they mean nothing to you. They certainly mean nothing to me, and not surprisingly: whenever I see the dense type of stock market quotation, something funny happens to my brain, as if it is being invaded by angry bees who've heard I've got their queen locked up in irons in a dungeon there, and are intent on freeing her.

My ignorance of most stock market quotations is therefore virtually invincible. But there are some names I recognise, because I would have had to have been hit by the Mir space station not to have done. I know about Ryanair, CRH, Bank of Ireland, AIB; and though I haven't invested in any of them, I might be prepared to do so because of my generally benign experience of the service they provide. It is, I understand, a basic rule of investment. Go for what you know and like.

Monopoly

What I know, and have known for some considerable time through direct personal experience, is the creature now called Eircom, previously Telecom, and before that the Department of Posts and Telegraphs. And not even brain damage caused by a direct hit between the eyes by an antique Russian satellite would ever have induced me to invest my money in the bastard offspring of the old monopolistic P & T. It was not that the Telecom people (as they became) were not very pleasant; they were, invariably. But they needed to be, because the company reeked of the gangrene of monopoly, which not even fancy name-changes, and calling operators "customer service representatives" could alter.

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You still get the rotten whiff of monopoly culture when you ring a "customer service representative", are put on hold and, after a witless minute of Whitney Houston, are automatically disconnected. You smell the same rank fragrance when you ring for directory enquiries, are put on automatic hold for more Whitney Houston, and again are disconnected. (You'll still be charged for the call, mind.)

There was never in the history of the Irish stock market a company so well-known to the common people as Telecom. Yet sadly, many investors, apparently unfamiliar with the maxim that you should only put your money in what you know and like, invested heavily in Telecom.

Share price

Those who complain about the performance of Telecom shares - led, very conspicuously, by the former stockbroker Senator Shane Ross, and supported incongruously by the republican socialist Tony Gregory - allege, among other things, that the Minister set the share price too high when the company was privatised. In other words, she got a good price for the owners of the company. And who were they, these owners who profited from a high sale price? Look in the mirror. We all profited - why, even the people who decided to buy Telecom on flotation. For they bought what they already owned, but at an inflated price.

Did anyone make them buy those shares? No. Did anyone declare the sale price was too high? Yes, the existing management, still wrestling with the wretched semi-State culture it had inherited. Was there any clue as to how good Eircom really was? Yes. Dial 10, or 1901, or any Telecom service, and wait in vain for service, meanwhile listening to Whitney bloody Houston until you were automatically disconnected. That would have told you all you needed to know about the company you were buying into.

Yet somehow, investors got into their heads that the privatised Telecom was going to be a unique experiment in cooperative capitalism, owned entirely by small shareholders - i.e., the Third Way bilge of Tony Blair. In this they were aided by Mrs Mary O'Rourke's idiotically populist observations that she had no time for fat cats. This is the kind of crowd-pleasing blather Fianna Fail ministers find irresistible, especially when faced with the hornyhanded sons and daughters of toil - on this occasion, the Communications Union.

Mary knew full well as she uttered those words that she is not the correspondence secretary for the Glencolmcille Back-To-The-Soil Collective, but the Minister for Industry and Commerce in the fastest growing economy in Europe. Our success depends on the investments and the enterprise of those sleek and corpulent felines she was so quick to dismiss to such a receptive audience.

Better deals

The truth is that virtually no major company stays in the hands of small shareholders; invariably, ownership of big companies comes to be dominated by large investors, who by their size can often lever better deals for all shareholders than can a myriad of tiny separate shareholders. That is not virtue at work, but the mechanics of capitalism.

This doesn't mean that I don't sympathise with the little people who have lost so much money in Eircom, because I certainly do. But it might serve as an object lesson for them, as a comparable experience did for me 15 years ago, when I gave up my life's savings for investment. Every last penny soon vanished.

Who is to blame? Me, of course. Nobody compelled me to do it. I did what I did freely and voluntarily. But I know this: it taught me never to invest in something I know nothing about.