Giulietta Talevi Companies editor & columnist

Well that didn’t go according to plan. Normally, the last trading day of the quarter sees all sorts of madness — in particular, traders goosing up shares to flatter fund managers’ portfolios, thereby making you, their customer, feel richer when you open your next investment statement.

Alas, the JSE all share fell 1.2% on Wednesday, though the gains for the three months to end-March are still a pretty spiffy 11.9%.

Taken over a year — as global markets began their incredible Covid recovery in 2020 — the JSE’s all share is up a truly frisky 53%.

In fact, if you ignore how much the market fell in the dark days of early March 2020 (and it was brutal), and you take this year’s gains alone and stack them up against inflation — 2.9% — you’ve made a commendable real return. You could almost close the chapter on your stock market year and head off on holiday.

But if the last day on March wasn’t ideal for investment portfolios, it was something of a calamity for UK food delivery company Deliveroo, which chose Wednesday to list its shares on the London Stock Exchange. It received a clattering.

As Bloomberg reports in this article, Deliveroo’s debut “was supposed to be a triumph for the post-Brexit City of London, a deal that would show the world how British markets could lure hot young companies”.

Instead, the eight-year-old business crumbled more than 30% in its first day of trade.

According to this Financial Times article, as many as 70,000 people bought shares in Deliveroo’s £50m public offering to customers, with each limited to investing £1,000. Not surprisingly, one hapless buyer told the FT they were “feeling a bit sick” after Wednesday’s rout.

Though the shares steadied a bit, it still ended its first day as a public company worth 26% less than at the beginning.

According to the FT, “one equity capital markets banker, who was not involved in the deal, said he was left stunned by what he called an ‘absolute car crash’”. 

“It’s completely embarrassing. I can’t remember a time this has happened before,” he said. 

So how did Deliveroo’s advisers get it so wrong?

Deliveroo had, after all, slashed its pre-listing share price to 390p — the bottom of its target — earlier this week. But it seems no-one in the UK investment fraternity is very fond of the dual-class share structure, which gives more voting rights to the founder (in this case Will Shu), even if this structure is pretty common in the US.

Yet this dual-share structure is also something that has been endorsed by Rishi Sunak, the UK’s chancellor of the exchequer, who recently “recommended a series of changes to the UK’s listing rules that would allow companies with dual-class share structures to obtain premium status, giving them entry to the FTSE 100”, says the FT.

Either way, the UK’s largest fund manager, Legal & General Investment Management, clearly wasn’t won over. Nor were others who have raised issues with Deliveroo’s treatment of the roughly 100,000 couriers who deliver its orders.

Has fun died for the market traders?

But if Wednesday was full of thrills — of the wrong kind — for market traders, the rollercoaster will have at least pleased one group: the red-hot Reddit day traders who have begun to encounter an unfamiliar phenomenon: a dull market. 

“I’m annoyed now,” says Blake Parr, 25, a day trader from Oklahoma who started trading full-time a little over a year ago, according to this Bloomberg report.

“There’s not really those two-week runs or something completely tripling in market cap. It’s definitely harder to make money in the past couple of months.”

Shame. Who wants to see shares rise or fall 1% in a day, for goodness sake? A few weeks ago, the moves were multiples of this.

Garth MacKenzie, founder of Traders Corner, says that sometimes, traders just need to wait for opportunities to appear.

“Trying to force trades in a dull environment isn’t a good strategy,” he tells the FM. “It can cost money and can also cause frustration, which dents mental capital.”

Either way, MacKenzie doesn’t reckon the fun has gone out of the market. “Just this week there have been big moves and opportunities in stocks that were whacked by the Archegos fund collapse,” he says.

At the end of the day, he says, trading is a game of probabilities. “You need to find a strategy that gives you an edge, and apply that with careful risk management. Many trades will be losers, and that’s just part of trading. The key is keeping the losers small and maximising the winners. You need to look at each trade as just one step in a thousand-mile journey.”

But the revelation that real wealth is created slowly isn’t exactly going to be music to the ears of the Reddit day traders, who made their name through the steepling GameStop fluctuations earlier this year. Patience was never their game.

*Talevi is the FM's Money & Investing editor.

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