Risks, dividends and long lunches: nothing new under the investment sun
So much of what we take for granted in investment and investment theory is relatively modern
There is nothing new under the sun, goes the famous line from Ecclesiastes. This saying comes to mind when one considers the case of what was probably the world’s first-ever company with shareholders (as we would understand the term). The company, a milling firm called the Société des Moulins de Bazacle near Toulouse in France, was formed in 1372 and survived several natural and human-made disasters and a change of business model (it became a hydroelectric utility in 1888) before ceasing to exist in 1946 – not due to any corporate malfeasance or mismanagement, but because it was nationalised by the French government. So much of what we take for granted in investment and investment theory is relatively modern. The concept of limited liability as we know it today and which has propelled modern capitalism was only codified into law in the US in 1811. The UK followed in 1854. Modern option pricing models were first formulated in the early 1970s. Screen trading of shares (as opposed to t...
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