Yasser Arafat and sound financial advice

Oh, but I couldn't resist this:

Arafat's extraordinary financial mismanagement extended beyond personal corruption... It appears that donor money intended for services and infrastructure in the Palestinian Authority was devoted also to speculative schemes divorced from both Palestinian interests and the principles of efficient investment management. Through the incompetence and profligacy of an unaccountable leader, the Palestinian Authority lost millions of dollars by taking large and illiquid positions in software and telecommunications companies in the late 1990s...

Here's the same Oliver Kamm dispelling a few "superstitions" about investments in, erm, software and telecommunications companies in the late 1990s:

"The Internet share price 'bubble' shows the irrational, speculative nature of the market"

All stocks are priced according to the market's estimates of their future earnings. We don't have reliable knowledge of what the earnings of, say, ICI will be. But we do know what ICI's earnings have been in the past and can make a reasonable estimate of the likely range of possible future outcomes.

Internet stocks have no historic earnings. Information about their future earnings is minimal. That is why their stock prices are so volatile.

But we do know that the Internet has huge growth potential. Those Internet companies that survive the next five years are likely to have achieved a commanding position - perhaps as dominant as the one Microsoft has built in computer software.

We don't know which these companies will be. But there is nothing irrational about paying an apparently high price for a company that might be a new Microsoft.

It being the season of goodwill and all, I grant you that Arafat's investments do not look amongst the wisest. But hindsight is a wonderful thing.