Martin Banks, Personal Computer World 07/85 - checked

''Um, look; I say old chap, would you mind awflly telling me exactly what the stakes are with this game. If you could also give just a teeny weeny idea of what the rules are... you know, so that I can get some idea of what I'm supposed to be doing. I would be most awflly grateful, old bean.''

The man who asked the question wore the most immaculate pin-stripe suit you have ever seen. The creases looked as though they had been specifically imported for the job from Gillette, while the carnation in the lapel simply oozed with Baby Bio. Here was a wealthy individual, someone of influence and power. Indeed, someone in the 'City'.

''Look, I don't mean to be a bore, but exactly which casino am I in'', he asked. ''If I don't find out soon I won't be able to have a little flutter before lunch.'' With the utmost tack and charm, the man next to him whispered closely in his ear, ''respected sir, this is the London Stock Exchange, and the rules are quite simple.

You try and guess which companies are going to have the right looking results as quickly as possible, so that your stake, sorry, investment in the company's future can make a pile, sorry, maximise its potential, in the shortest possible time.''

''And what are we gambling on, sorry, investing in, today, pray tell'', said the sharp-suited smoothy.

''Well sir, this week it is the computer business...especially anything to do with personal computers''. The reason for this, the smoothy was informed, was because the personal computer business was currently growing like a rocket. ''Their revenues are positively shooting up sir,'' said the other man, ''and that means that their share prices are really hot. If you buy some this morning, they should have turned in a handsome profit by this afternoon''.

The smoothy was by this time becoming interested. A profit that could be made over lunch, without any intervention in the play on his behalf, seemed to good to be true. ''This,'' he declared knowledgeably, ''is better than roulette''.

There was however, one thing bothering him. ''Look,'' he said, ''I know nothing about personal computers, how will I know which one to back?'' The other replied that such trivia was not worth worrying about. ''You don't have to know about things to gamble, sir,'' he said, ''just be quick to sell if it looks dodgy.''

Is this an unfair scenario? Well, I'm sure that there are thousands of earnest persons in the financial institutions of this land that feel it is; who feel that they are doing a grand job investing in high technology. In some cases this is so, and some valuable support is being given to individuals and small companies up and down the country.

The troubles start however when the companies start getting bigger than small. That is when they start attracting the interests of the big investors: the high rollers of the stock market. There are many people who feel that the stock market is a Good Thing when it comes to providing funds for companies. At this point I feel I should declare a personal prejudice - I don't.

Some of the chief reasons I don't feel the stock market has a place have been well to the fore in recent months. The personal computer business has been cut to ribbons, or at least the bits of it which are on the market, by the ravages of the gamblers of the city. Actually, it is possibly unfair to gamblers the world over to call such people by that name. Gamblers are generally a brave lot; foolhardy sometimes it is true, but brave. The city people are rarely brave.

They would argue, quite rightly, that a gamblers bravery would not be appropriate when they are the handlers of other peoples' money, and hereby lays the major problem in the stock market business. For example, somewhere out there is my own pension contribution swilling around in the pot. I certainly don't want it disappearing down some black hole of a failed company, so the fund manager better be good. In this context however, good means cowardly.

There is nothing intrinsically wrong with cowardice: there are, indeed, times when it is eminently sensible. Those times however, can usually be related to events that are understood by the 'coward'. The trouble with the stock market is that it patently doesn't understand the personal computer business, which suffers some rare, if not unique problems.

These include rapid fluctuations in revenues, speed of market development and change, and the problems of configuring new products using a technology in which virtually anything is possible. The interaction of these and other forces make the industry difficult to track and predict for experts, let alone the laity of the city. Their response has been, once one company has got into difficulties, to simply dump the lot, just in case.

Acorn, for whatever reason (well charted elsewhere) got into problems, rapidly followed by Sinclair. Now everything that is 'personal computer' is bad news. ACT actually grew in the last year, both in revenue and profit. The City's response was to knock something off the share price, just in case. Micro Focus got penalised for re-arranging its accounting practice so that there was no doubt about what it had actually made at year end. The city thanked it by bombing the share price, even though it still ended up in the black.

It does seem that anyone who, when starting a computer company, has dreamed about floating it on the stock exchange has been risking a nightmare based on other people's timidity. Even if the company has been floated and you, as major shareholder, are now a 'millionaire', rest assured you are not. Just you try and sell the shares in your own company. ''What", all the City slickers will say, ''do they know that we don't'' and promptly they will bomb the share price.

The stock exchange is a casino, but one with a difference. In this one, it is the 'gamblers' who always win; its everyone else who loses.

end