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A capital move

This week someone told me that stockbrokers should not be listed.

They are in a cyclical business that gives much of its profit away as bonuses to staff.

Really, they exist to generate money for their brokers who are generally just small businesses in themselves.

But there are a lot of businesses of this nature who go to the stockmarket for capital to do new things.

At least by being listed, brokers get a taste of their own medicine.

Firstly, it is the brokers’ analysts and their very important institutional clients who have created the insatiable need for reporting.

That puts business leaders under a constant microscope, often being forced to account for themselves on a quarterly basis.

This doesn’t leave much room for patient investment.

Secondly, brokers’ analysts and their big clients have displayed a preference for focused businesses where management concentrates on a sector they are good at.

That has discouraged conglomerates or businesses with operations that are markedly different from each other.

It might be easier to analyse these businesses but it doesn’t leave room for the likes of a Wesfarmers which was very much out of favour until the past year when its fundamentally good management practices earned market plaudits.

The conglomerate issue would not affect too many brokers, but for those that reckon they are good managers with a great idea outside the square it does affect them.

As the head of Hartleys, Tim Moore has to face both of these issues.

He has listed to raise capital and then used some of those funds and consequent profits to create a technology business.

Generally, he has been supported by big shareholders who are more patient than all but the real mums and dads who tend to file their shares away for the future.

The recent arrival of Westpac seems to give Mr Moore a little bit more time.

And only time will tell whether he has got enough of it.

Radio days

I WAS lucky enough to spend a couple of hours on the radio with 6PR’s Tony McManus at the weekend, wearing my Business News hat.

It was a real eye opener, not just how talkback radio works from the inside but also to be at the coalface of public opinion, hearing people voice their thoughts on a range of subjects.

Fortunately for me, though maybe not the listeners, one of the early subjects chosen was the extraordinary news that Australia’s economic growth had outpaced the world last year, shrugging off the global doom and gloom.

You might recall that we apparently had the best growth rate in the world, a miracle economy, it was said.

What was interesting was how few people believe these figures.

Many, of course, could not see the evidence of the economic prosperity in their lives.

Others felt the numbers reflected baseless or inappropriate data, like retail spending rather than production.

Perhaps even more interesting was how powerful a subject the economy was.

It sustained talkback for longer than expected and over-whelmed other topics which were raised.

Sprinkled in the economic debate were issues such as our poor service culture, our lack of manufacturing and the gap between the rich and the poor.

Small business and the long hours worked by those in that field also got a big guernsey

Nothing new there, I know, but they are all issues which tell me that no matter how much Peter Costello looks like the cat that got the cream, he has to make sure everyone gets some of that dairy produce.

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