Chief Editor

$5.50 is the institutional price offer and so those institutions that take up the script in the current fund raising will be keen to support that price. In fact they are prepared to buy at $5.50 in the expectation that they will make a good profit – maybe 20-30% on a risk reward basis? What will force the price up to these lofty levels?

AMP has been in a major decline for over a year (refer chart below) and existing shareholders are really still there in desperation, having missed the opportunity to exit. Maybe it is not too late to exit albeit with a major loss.

AMP Weekly Chart

Is $5.50 an important figure? I personally don’t think so. Valuations by the professionals vary enormously, so how would I know. What I do know though is the market eventually sorts out the price. That price should be academic to us as disciplined investors, as we will already have exited.

I have learnt from the “hard school of knocks” that once a weekly trend has been broken it is time to go. Never be a missionary for any investment. Over the last two decades we have seen the unbelievable happen and company icons disappear off the bourse – the unbelievable has happened and will happen again. I am not taking a view that it will with AMP but I am saying this is hard cold business and only one thing matters – protecting your capital at the absolute worst.

Over coming weeks I will be writing a lot more on this topic.

Tom Scollon
Chief Editor