In History as alas too often at present.
There is the documented story where in the 1930’s 389 children were presented to New York City doctors. 174 of them were recommended to have tonsillectomies. The 215 remaining were again presented to doctors and 99 of those where then said to need the same operation. When the 116 children were shown yet to a third set of doctors, 52 were recommended the surgery. Since even today some 2-4% die in this procedure, some would call this probabilistic homicide at work; as every person which undergoes an unnecessary operation has a shortening of life span.
And while the practice of medicine is getting better, I don’t think it’s the case with the SET brokers here so beward.
Then there is the story of Austro Hungarian Dr. Ignaz Semmelweis which observed some 150 years ago that more women die giving birth in hospitals then on the street (more likely in their homes). He called the establishment of doctors at that time “ a bunch of criminals”. But nobody could act on this as “he had no theory”. Dr. Ignaz entered a state of depression as he could do nothing to stop this horror. It was a sad ending for a man which was punished, humiliated and even killed for shouting the truth only to save others. He ended up in an asylum where he died from ironically the same hospital fever he had been warning about.
To this day, “it is generally accepted that harm from doctors –not including risks from hospital germ –accounts for more deaths than any single cancer.” *
There is a word in the English language which describes the theme when more harm in caused while supposedly trying to help -and its called iatrogenics. And as most of us know, its not something which happens just in the medical field. When Psychologists medicate children for depression, or over hyperactivity or some other invented disease, say like ADHD, this so instead of just letting him/her out of the cage. Not always but far more then these pro’s like to admit, its just a case of nature deficit disorder. Call this the modern curse of many developed countries.
It’s a principal/agency problem and its so very present with stockbrokers as well ; where the ultimate financial interest is their own, not the persons financial or health. I.e. they give you advice for which they are paid for but for which is geared to benefit themselves. Its indirectly sanctioned not just by the brokers but deeply ingrained all the way up the brokers management latter.
Harmful unintended side effects is another way to describe this. No doubt enforcing an understanding of generalized iatrogenics is a tall order here and its all to alive and well…seemingly accepted in the Thai brokerage community. “Those who are wrongful while thinking of themselves that they are righteous” is a proverb from the Koran worth quoting on this. The near total absence of awareness of iatrogenics is appalling in many peoples' view.
Its long been documented without a doubt and over many years that inexperienced investors which are induced to trading their stock accounts loose over the medium /long term. I here have documented for years that overall and overtime individuals investing in values and with patience -with a bias to smaller cap stocks- is rewarding beyond just beating the SET index. Yet to my knowledge no broker or news source ever mentions this outside Thaistocks.com? (Pls. show me I am wrong). When retail investors keep loosing through entrenched iatrogenic biased advise, they never come back and so bad mouth the stock market, instead of the system.
The problem is one of phenomenology which is an observation of a fault with empirical regularity, but without a visible theory for it.
Here below is a letter I wrote (and it got published on Dec. 29) to the Bangkok Post, when I commented how can it be that an economist missed a real, profitable, socially responsible, interesting and viable sector to consider investing next year:
One sector Dr Tientip Subhanij seems to just have forgotten about is the new Thai green energy sector like Wind/Solar and Biomass, which is clean energy for electricity. Thai's electric growth rate surpassed its long term growth rate this year -and the country's total electric usage will so likely double in less then 7-9 years. How will all this new electricity be generated? There are a number of very interesting smaller cap Thai listed companies growing very fast in this new/green industry in Thailand. Interesting investments for retail investors -even while many brokers and institutions may chose to ignore them -strictly due to size.
I think for the many members which have understood this long ago my view for 2013 is very clear and here re-stated:
Favor the Thai green energy sector in 2013, like wind/solar, biomass and clean water. My own choices for this coming year are DEMCO (7.35) UAC (7.75) and HYDRO (12.20), surely there are others but those are my favorites.
The later two trade at p/e’s of around 18 which may seem high to strict value investors until you realize they have near assured earning growth rates of 30% for year 2013 and even higher then into year 2014. DEMCO’s p/e is now less then 10 but its growth rate is around half the other two but likely increasing then as well in 2014.
All 3 should pay a nice dividend with DEMCO leading the way at around 5% on the current market price. I think broker Kim Eng will likely come to their senses in January and re-rate this stock upwards. This same broker will also be doing a public offering on UAC next month, so try to get some as they will include free warrants.
By the way less then 3% of DEMCO’s warrants #4 converted as of the end of this year, so it was plain wrong to dilute earnings per share in 2012 already -just as it will likely be wrong to think the conversion of these warrants in the next few weeks will drag the stock down much. I remain very DEMCO upbeat and this despite its 120% stock price increase in calender 2012.
Best Regards and Happy New Year 2013!
Paul A. Renaud.
www.thaistocks.com
* This from the Excellent book "Antifragile", 2012 by Nassim Nicholas.
