By DAVID MOON, Moon Capital Management, LLC
I knew things were
screwy in 1999 when a group of astrology-inspired stock pickers held a meeting
in New York City
to discuss various ways to use the alignment of the stars to choose
These astrological systems must have worked; some of
these starry-eyed investors bragged of earning 50% or more in the late
Of course, so did rookie mutual fund managers throwing
darts at a list of NASDAQ companies.
I know an otherwise apparently level-headed guy who,
following the collapse of the first tower on September 11, 2001, bought a case
of shotgun shells ' after going to the bank and withdrawing $10,000 cash ' 'just
In extreme situations ' both positive and negative '
people are motivated to do illogical things they would otherwise never consider.
That's why I wasn't surprised this week to read a story
in the New York Times about stock traders turning to psychics, fortune tellers
and (once again) astrologers to find Wall Street trading
Roxanne Usleman is a psychic in Manhattan. She channels
angels to offer financial advice to her clients and reports that her phone is
'ringing off the hook.'
I'm not sure why a psychic needs a telephone,
The Times article reported that many of the individuals
consulting psychics weren't just seeking financial advice; they were financial
This is the point in the column at which you should
start humming 'The Twilight Zone' theme song.
'You're traveling through another dimension ' of sight
and sound ' but completely devoid of mind and logic. A land of neither substance
nor sanity. A dimension of imagination that lies in the pit of an investor's
I wonder if Rod Serling ever gave investment
In early 2002, Johnson and Johnson was one of the most
widely owned companies in the world. The stock traded at $62 a share. Its annual
earnings were $1.84 and it paid a dividend of $0.70 a share.
Today it earns twice that amount and pays a $1.62
dividend ' yet trades at practically the same price as it did
Why would an investor who was willing to own the stock
then not buy it today?
For the same reason that people turn to illogical
avenues for help: fear.
As the Dow Jones Industrial Average whipsaws back and
forth thousands of points every few days, it takes with it the collective
emotions and psyche of millions of investors.
It also takes those investors' balance sheets for the
same wild ride.
But does anyone really believe that the actual value of
Johnson and Johnson could fall by more than $14 billion in a single
It's not logical.
A young woman named AuroraTower (yeah, right) reads star charts via
her website. For $150, she will answer your questions about love, health or your
MadameTower understands her clients' motives.
Her explanation reveals a bit more honesty than her name: 'People will entertain
the irrational when what they consider rational
David Moon is president of Moon Capital Management, a
Knoxville-based investment management firm. This article
originally appeared in the News Sentinel (Knoxville, TN).