In his article excoriating fund managers
Peter Martin quoted Daniel Kahneman
Kahneman won the 2002 economics Nobel for groundbreaking research into
the way we make decisions. He saves a special place in his new book
Thinking, Fast and Slow for “stock pickers”, who he says attempt to make
much of their money buying and selling from each other.
“Most of the buyers and sellers know that they have the same
information; they exchange the stocks primarily because they have
different opinions. The buyers think the price is too low and likely to
rise, while the sellers think the price is high and likely to drop. The
puzzle is why buyers and sellers alike think that the current price is
wrong. What makes them believe they know more about what the price
should be than the market does? For most of them, that belief is an
illusion.”
JB Hi-fi has been the darling of stockpickers, like Roger Montgomery, who described JB Hi-fi as one of
ten extraordinary companies.
Today's'
announcement by JB Hi-fi was a shocker
JB Hi-Fi shares have plummeted over 11% this morning after the
electronics retailer announced a shock profit downgrade for the first
half of the year, saying price deflation is just too much to handle.
Chief executive Terry Smart announced yesterday EBIT for the first
half will be around 5% lower than last year's, subject to Christmas
trading.
The future for JB Hi-fi at best can only be described as ordinary
"They're in a hard situation. Where do they go from here? Online
sales are up 80%, and that's good, but there's still a lot they have to
deal with."
"In terms of the pipeline over the next few years, there's not a huge amount of products coming up."
The announcement comes after Harvey Norman chairman Gerry Harvey has
continually warned of price deflation, saying it is continually putting
pressure on the company.
Why didn't Roger Montgomery also warn of this?
