Changes in investment strategies
The tension on the Athens bourse in recent days is not due to a mere fall in stock prices. It also reflects a substantial differentiation in investment strategies; it is as if a different categorization of stocks is being established in practice. The fall in profits reported in the balance sheets for 2001 and the even less favorable picture emerging from a careful reading of them are causing a more general concern regarding investment options. Blue chips always have a strong influence on the market’s direction that nobody can ignore. At the other end, the prices of «peripheral» small-caps that usually command small trading volumes are mainly influenced by interested specialists. Between the two extremes is a group of stocks whose characteristics demand a more analytical approach. It has recently become clear that the list of usual risks that stock buyers face should include yet another item: the degree of exposure of a firm and its stock to one big client – the State. Irrespective of performance, as depicted in the balance sheets, this risk is real. Future bargains must be sought in the intermediate category of shares of medium capitalization and which do not depend on State contracts. Even without a high rate of growth, such companies have good prospects if they control a relatively sizable share of even a small market. What is new is that these opportunities are not restricted to the Greek market. Investors should be aware that it is not where the firm is based that counts, but its activities. Another investment strategy that may be worth considering is by picking stocks that the market has devalued due to the company’s internal problems, in the hope that they will be salvaged through some acquisition. Even so, this remains is a risky strategy because the knights on white chargers will not necessarily appear. Laiki has units in Greece, Britain, Australia and representative offices in South Africa and Canada. It expanded into electronic banking over the past year.
