Making the right Lin-vestments


STOCKS and the stock market as a whole are odd beasts. Sometimes, no matter how hard anybody tries, they won't budge, unable (or unwilling) to overcome inertia. At other times, all it takes is a mere whisper of fact or fiction and investors will be scrambling to buy or sell shares.

There's no formula, but clearly, this is true with stocks as it is with most other situations you need a great story to really get things moving.

The Jeremy Lin phenomenon the so-called “Linsanity” mentioned by StarBiz's Jagdev Singh Sidhu in the footnote to his Making A Point column on Thursday is a good example.

Lin is a player with the New York Knicks, the US professional basketball team with a strong fan base but a dismal track record in recent years.

In some ways, he's the antithesis of the NBA (National Basketball Association) star. He's Taiwanese-American, nowhere near seven feet tall, a Harvard economics graduate, and in his own words, “not going to do anything that's extra flashy or freakishly athletic”.

His first year in the NBA, with the Golden State Warriors, was forgettable because he was given few opportunities to play. Then he joined the Knicks last December as nothing more than a back-up option. And that was the role he was given; throughout the team's first 23 games, he was actually on court only 5% of the total time. Then Feb 4 happened.

The Knicks had been on a losing streak, and on that day, the coach decided to let Lin stay in the game longer. The point guard (essentially the playmaker) drove the team to a win.

In return, he was given a starting place. The Knicks won their next six games, with Lin having a prominent part in each victory. That sparked “Linsanity.”

Suddenly, it was not just the Knicks fans who were raving about him. Because of his Chinese roots his parents emigrated from Taiwan he acquired a huge following in Asia, and it's still growing.

Perhaps the most remarkable aspect of his popularity is the extent to which the business and finance community has found him interesting. The Wall Street Journal and Financial Times have articles on him. And if you tune in to Bloomberg TV or CNBC at the right time, you'll be staring at images of Lin.

Much of this has to do with the fact that the Knicks are based in New York, a financial centre and a major media market.

But also, people can't resist the story of the under-appreciated nice guy showing the world what he can do when given the chance. Apparently, even the stock market loves that story.

Madison Square Garden Co (MSG), the Knicks' owner, has seen a rise in its stock since the team began its Lin-inspired winning run.

The Wall Street Journal reported that in an email, an analyst attributed a spike in the Taiwan Stock Exchange to the moment in a Valentine's Day game when Lin grabbed victory for his team through a three-point shot with just seconds left to play. Coincidentally, MSG recorded its all-time record closing price the same day.

Maybe the analyst was only half-serious. Are we expected to believe that a stock market can jump when a ball falls through a hoop?

Then again, people have bought and sold shares (and lost money on many occasions) for reasons more trivial and intangible than this. Isn't it always better that investors are motivated by actual performance than by rumours of good things to come?

Executive editor Errol Oh predicts that when “Linsanity” runs out of steam, Jeremy Lin will become an investment banker on Wall Street, earning a mind-blowing salary and obscene bonuses.

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