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Expert comment from leading figures within the business community, on a variety of topical issues across a range of sectors. INVESTOR’S DIARY BUYING ON THE DIP Is there anything more frustrating than discovering you’ve overpaid for a product or service? T hat quiet sense of elation you feel when telling a mate that you persuaded your internet provider to lower their monthly charge from £39 to £32 quickly evaporates when your slightly embarrassed pal tells you that his charge has remained constant, at £24 a month, for the past two years. And he’s with the same provider. And he gets a slightly better package. The price of flights on ‘low-cost’ airlines is another purchase about which people tend to keep quiet. No-one wants to be identified as the one who willingly dropped £139 for a trip when almost everyone else on the plane secured their return journey at a cost of £25. Theoretically, the internet should have improved the chances of us avoiding rip-offs, scams, or over-paying for something, but this isn’t the case. Who hasn’t wondered, immediately prior to pressing the on-screen ‘buy now’ button, whether what they’re about to buy is available at a much lower price elsewhere? Instead of making the transaction process more transparent, it could be argued that the internet has actually made it more opaque and frustrating, because we can’t possibly compare every single price quoted against the same item, even when we know there’s a good chance we’d pay less elsewhere. The irony is that whereas you’re likely to see the same pair of jeans offered at dozens of different prices online, this is rarely the case with investing, especially when a company has suffered from an outbreak of one of those prolonged, social media-led bouts of righteous indignation that causes its share price to plummet. Its temporary embarrassment is startlingly evident as concerned sellers abandon ship in their droves and the company’s value slumps. Companies are often the architects of their own misfortune. Remember Gerald Ratner describing his company’s products as “total cr*p”? Hardly a great PR stunt; it cost Ratner his company. Then there was the decision by Krispy Kreme donuts to advertise a promotion as ‘KKK Wednesdays,’ which, while popular with a handful of folks in some isolated parts of the USA, was not exactly embraced by shocked Americans and quickly dropped. 10 | More than three years ago, it emerged that Volkswagen had been, ahem, amending emissions data on its diesel vehicles to make them look cleaner and greener than they actually were. This was a scandal on an enormous scale, one which cost the car manufacturer billions of dollars in fines, but take a look at Volkswagen’s share price and you will see that the outrage, once it subsided, has had little long-term material impact upon the company’s value. In October 2015, VW’s share price plunged to €92; today it’s €140, an increase of more than 50%. Last year, the company sold a record 6.2 million cars. Remember David Dao, the man who boarded a United Continental plane in Chicago after the airline had over-booked his flight and Mr Dao was dragged from the aircraft by police offi cers? Footage of the nasty-looking incident went viral and attracted millions of views on social media. Continental’s response was less than effective and its share price nosedived. In the week following the incident, Continental’s shares could be acquired for $60.33, but within two months they had climbed to $82, a 35 percent increase in value in the space of eight weeks. Do you note any kind of trend here? Baron Rothschild, the eighteenth century British noble and member of the Rothschild banking dynasty is credited with saying that “The time to buy is when there’s blood on the streets, even if the blood is your own.” Rothschild made a fortune following his own advice in the wake of the Battle of Waterloo, making him perhaps the first contrarian investor. Today’s investors may not be absolutely sure that they’ve achieved the best possible price when buying a pair of jeans online, but whenever a company suffers from a bout of online hysteria which causes its share price to tumble, they can be assured that the price at which they can become a shareholder in the company is the same as everyone else is paying. Granted, it could move lower or the hysteria could last longer than anticipated, but ‘buying on the dip’, while a strategy for the bold, tends to be one that pays dividends.