Closer Look: Same Game, Different Names

(Beijing) -- The end of a listing freeze on mainland stock exchanges has reinvigorated investor appetites for new shares. This comes along with the intention of many company founders to cash out of newly-listed companies. When such demands intersect, sparks are bound to fly.

In his book, Behavioral Finance, James Montier uses a large amount of data to show that buying and holding newly-issued shares may lead to negative earnings compared to overall market performance. Of course, this phenomenon is not specific to a new share, but new shares in general. Warren Buffett holds a similar view on new shares. He once said, "If you don't feel comfortable owning something for 10 years, then don't own it for 10 minutes."