Thanks this website
Thanks this website

In the space of just over a week:

All this demerging – all at once.

This kind of thing is interesting because it suggests that the financial world is filled with spin-doctoring and almost no reasonable explanations at all. The basic idea:

  • Companies merge in order to deliver shareholder value (mostly by firing a lot of people to create economies of scale).
  • Companies demerge in order to deliver shareholder value (mostly by firing a lot of people to create economies of scope).

It seems…oxymoronic.

Like explanations of the platinum price:

  • Platinum prices go down because of oversupply.
  • Platinum prices go down because of undersupply.

And explanations of the stock market:

I guess I should point out that Corporate Finance teams will earn their fees either way; and executives will earn fun bonuses for completing a transaction regardless of the transaction.

But if pressed to be contrarian to my own contrariness, I’d say something like:

  • Well, just after a crisis, companies go on buying sprees because companies are cheap.
  • Then when the crisis is abating, companies sell some of the companies that they bought because companies are no longer cheap.
  • And investment bankers are there to let you know when companies are cheap and when they are not cheap because that is their job.


  • Just after a crisis, shareholders aren’t concerned about specific risks – they’re concerned about market risks and weathering the crisis.
  • But a little while later once the market has recovered, they forget about market risks and start getting fussy about specific risks (like “I don’t want to have to buy eBay shares in order to earn Paypal profits – why can’t I just buy shares in Paypal?”).
  • Enter Carl Icahn and his shareholder activism.

Interesting times.

But it does make you wonder if we aren’t cresting a wave of asset prices?

Rolling Alpha posts opinions on finance, economics, and the corporate life in general. Follow me on Twitter @RollingAlpha, and on Facebook at