What goes up, must come down…

  • 9 years ago
  • 1

..apart from the length of Ms Flack’s ( otherwise referred to as the next Mrs Cheshire’s) dresses on Strictly Come Prancing, or for that matter Kristina’s… and most definitely Darcey’s.  Anyway, back to more mundane matters.  This week, the report of the ex-Treasury minister Paul Myners on the sale of the Royal Mail by the Business Secretary, Vince Cable concluded that the latter had made, “the right decisions”. Indeed, one could conclude that Baron Myners himself had made the ‘right’ decision’ by not castigating the man described as a “raving Marxist”, by Nigel-la Farage on LBC this week, who had himself commissioned the enquiry.  The ennobled gentleman said that Vince had got it just about right in the sale because the dramatic rise in the share price  was not his fault and furthermore, if the share price had dropped after issue, then that also could not have been attributed to Vince and his gang mishandling the first real, proper job that they had to do in their department. The prancing minister does seem to have got away with it and in fairness, he was only ever going to please one half of the political classes.

The report deduced that the undervaluation at the point of sale was £180 million-a not insubstantial amount – although considerably less than the National Audit Office who stated that it was actually undervalued by £750 million.  Now that is a substantial difference of opinion. The share price today is around 400p.  Market forces took over at the time of the sale and the price rose from 330p to 600p.  I am willing to bet that if they had launched at 600p then no one would have bought them and Vince and Danny (they sound like a 70’s long-haired, beatnik pop duo), would have been regarded as blustering fools. (In many quarters this is the accepted opinion of them, but for a variety of different reasons).  So what goes up must come down and so on. I do wonder whether the critics of the sale include those people who bought houses in 2006 in the belief that one could not fail to make money on property, and in 2014 are still not back to where they started.  Market forces my friend.



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