TheChek News Flow

The influence of psychology on investors’ decision-making still largely explains stock gyrations

I’ve lived through (and been schooled by) several significant cycles during my years as an investor. And yet, when I was about two-thirds of the way through writing my last book, a question dawned on me that I hadn’t considered before: why do we have cycles?

After pondering this question for a while, I landed on what I consider the explanation: excesses and corrections. If the stock market were a machine, it might be reasonable to expect it to perform consistently over time. Instead, the substantial influence of psychology on investors’ decision-making largely explains the market’s gyrations.

Everyone knows — or should know — that parabolic stock market advances are generally followed by declines of 20-50 per cent. Yet those advances occur and recur, abetted by the willing suspension of disbelief.

Bull markets are, by definition, characterised by exuberance, confidence, credulousness, and a willingness to pay high prices for assets — all at levels that are shown in retrospect to have been excessive. History has generally shown the importance of keeping these things in moderation. For that reason, the intellectual or emotional rationale for a bull market is often based on something new that history can’t be used to discount.

Consider the FAAMGs (Facebook, Apple, Amazon, Microsoft and Google), which have a level of market dominance and ability to scale up that had never been seen before.

The dramatic performance of the FAAMGs in 2020 attracted the attention of investors and supported a widespread swing toward bullishness. By September 2020, these stocks had nearly doubled from their March lows and were up 61 per cent from the beginning of the year. Notably, these five stocks are heavily weighted in the S&P 500, so their performance resulted in a good overall gain for the index, but this distracted attention from the far less impressive performance of the other 495 stocks.

Or consider cryptocurrency. Bitcoin has been around for 14 years but it has been in most people’s consciousness for only about five. It fits economist John Kenneth Galbraith’s sceptical description of the type of financial innovation in bull markets that prior generations supposedly “do not have the insight to appreciate”. Bitcoin enjoyed a dramatic price spike from $5,000 in 2020 to a high of $68,000 in 2021, before falling back this year to about $24,000.

The striking performance of cryptocurrencies and “super stocks” — as well as tech shares generally — in the last two years had added to investors’ general optimism, enabling them to disregard worries concerning the persistence of the pandemic and other risks.

It’s risk aversion and the fear of loss that keep markets safe and sane. But when bull markets heat up, caution, selectivity and discipline often go out the window. Bullishness tends to exaggerate the merits of bull market winners. This pushes security prices to levels that are excessive and thus vulnerable — because the upward swing doesn’t last for ever.

We often see negative fundamental developments pile up for a good while, with no reaction on the part of security prices. But then a tipping point is reached — either fundamental or psychological — and the whole pile suddenly gets reflected in prices, sometimes to excess. And the stocks that rose the most in the up years often experience the greatest declines in the down years.

Some people may believe that asset prices are all about fundamentals, but that’s certainly not so. If market prices are set by a consensus of intelligent investors on the basis of fundamentals, then why are many formerly highflying tech/digital/innovation stocks down by such large percentages in recent months? Do you really believe the value of many businesses more than halved in this brief period?

The price of an asset is based on fundamentals and how people view those fundamentals. So the change in an asset price is based on a change in fundamentals and/or a change in how people view those fundamentals. Attitudes regarding fundamentals are psychological/emotional, not subject to analysis or prediction, and capable of changing much faster and more dramatically than the fundamentals themselves.

None of the market trends I’ve discussed relates exclusively to fundamental developments. Rather, their causes are largely psychological, and the way psychology works is unlikely to change. That’s why I’m sure that as long as humans are involved in the investment process, we’ll see these trends recur time and time again.

KYIV, Ukraine—Ukrainian President Volodymyr Zelensky dismissed suggestions that his country should cede territory to Russia in return for peace, comparing them to attempts to appease Nazi Germany, as Russia stepped up its attacks in Ukraine’s east.

With the war in Ukraine now past the three-month mark, there is debate among Western officials about what it would take to achieve a cease-fire, and what concessions—including territorial ones—such a deal might necessitate. But despite Russia’s renewed attacks in Kharkiv and other areas of the east, Moscow has absorbed heavy losses in both troops and equipment, raising questions of how long it can sustain the forward thrust of its military campaign in Ukraine.

Poland, the U.S. and the U.K., among Ukraine’s staunchest allies, have advocated taking an uncompromising stance against Russian aggression. Some European Union states have floated the idea of giving President Vladimir Putin an off-ramp that would make it easier for him to justify a de-escalation to his domestic audience in Russia, while a peace plan drawn up by Italy proposed autonomy for Ukraine’s Crimea and Donbas.

Mr. Zelensky forcefully rejected the notion, put forward Monday by former U.S. Secretary of State Henry Kissinger, that Ukraine should forfeit land to Moscow as part of negotiations on a peace deal.

Mr. Kissinger, speaking at the World Economic Forum in Davos, Switzerland, had said that “ideally, the dividing line should return to the status quo ante,” suggesting that Ukraine should allow Russia to retain the Crimean Peninsula, which it annexed in 2014, and swaths of the eastern Donbas region seized by Moscow-backed separatists the same year.

Mr. Zelensky described Mr. Kissinger’s suggestions as on par with attempts to appease the Nazis in the run-up to World War II.

“I get the sense that instead of the year 2022, Mr. Kissinger has 1938 on his calendar,” he said in a video address Wednesday night. “And that he thought he was addressing an audience not in Davos, but in erstwhile Munich.”

In an expletive-filled tirade broadcast on his YouTube channel on Wednesday, Ukrainian presidential adviser Oleksiy Arestovych called those who say Kyiv should relinquish land “crazy.”

“Get lost with suggestions of this sort, that Ukraine should trade some of its territory,” Mr. Arestovych said. “Children are dying here, soldiers are stopping shrapnel with their own bodies, and they’re telling us to sacrifice territory. It will never happen.”

Military analysts and diplomats say the intense battle for the eastern Donbas region of Ukraine makes it unlikely either side will seek a cease-fire soon, since a shift on the battlefield could lead to a more favorable position for talks later.

“For Henry Kissinger to offer some part of sovereign Ukrainian territory as an appeasement—I find it objectionable,” said Bill Taylor, former U.S. ambassador to Ukraine and current analyst at the United States Institute for Peace, which is funded by Congress. “They’re not ready to cede, they’re not ready to give up claim to their territory; they’re ready to fight, they’re ready to win and we should help them do that.”

The Kremlin said that Moscow expects Kyiv to accept its demands.

“These are not territorial concessions,” Mr. Putin’s spokesman, Dmitry Peskov, told reporters on Thursday. “Kyiv must acknowledge the de facto situation and simply give it a sober assessment.”

The exchanges come in the midst of an intensified Russian assault in Ukraine, focusing on eastern parts of the country to which Moscow switched its efforts after failing to capture Kyiv.

Kharkiv, which came under fierce Russian bombardment early in the war as Russia’s forces pushed to seize the city, was heavily shelled Thursday. Nine civilians, including a 5-month-old child, were killed, and 19 were injured in the attacks, said Mr. Zelensky in his nightly video address. It was the first attack of such a scale since Ukraine’s second most populous city began reopening stores and re-establishing communal services after weeks on the front line.

Officials urged Kharkiv residents to take precautions in case of further attacks.

The Russian army also shelled settlements in the Mykolayiv and Dnipropetrovsk regions, local authorities said. Three people died in Lysychansk, a city Russia has been seeking to capture as it vies for control of the Luhansk region, Luhansk Gov. Serhiy Haidai said. Mr. Haidai said attacks on nearby Severodonetsk have left dozens of homes damaged.

Russian forces have been trying to encircle Lysychansk and Severodonetsk as they move to capture the area around the Siverskyi Donets River, pushing back Ukrainian forces that still control the westernmost parts of Donbas, which is claimed by Moscow-backed separatists fighting alongside Russia in the war.

A Ukrainian officer in Severodonetsk and Lysychansk said that the Russians were trying to break into the cities, but without success.

“The enemy has not advanced a meter,” said the officer. “They are taking losses, but unfortunately our guys are, too.”

He said the cities are under constant fire from artillery, mortars, tanks and warplanes that are hitting civilian buildings, roads and bridges, resulting in civilian deaths. Citing the three he said were killed in Lysychansk overnight, he added: “They aren’t picking their targets.”

The fighting spirit of Ukrainian troops in the two cities remained strong, the officer said. Volunteers are helping to keep the troops supplied, he said, “but the main thing we need is fighters.”

Russia on Thursday said it had targeted two ammunition depots in eastern Ukraine and destroyed a signals-intelligence center in an attack that it said had killed 11 Ukrainian service members and 15 foreign specialists. Ukraine didn’t immediately comment on the claim.

Ukraine said Russia was also strengthening its defense lines around occupied parts of southern Ukraine, including in the Kherson and Zaporizhzhia regions, as it attempts to cement its control there.

In Mariupol, a city in southeastern Ukraine that fell to Russian forces after weeks of relentless bombardment, footage posted to social media showed Russian trucks parked in parts of the city center, fitted with large screens and broadcasting Russian TV news, which advances the Kremlin’s false narrative that Russia is defending Ukraine from fascists running the government in Kyiv.

The intensified assault in eastern Ukraine is coming at a high cost to Moscow, which has lost thousands of troops since it launched its invasion on Feb. 24, according to Ukrainian intelligence and Western officials.

The U.S. has assessed that Russia has also lost roughly 1,000 tanks, 350 artillery pieces, 50 helicopters and three dozen fighter aircraft during the war, a senior defense official told reporters Thursday. Ukraine’s General Staff put its estimates of Russia’s losses higher for similar categories.

In Russia, officials took additional steps to shore up the faltering economy. Russia’s central bank cut its key interest rate for a third time since early April, lowering it to 11% from 14%.

The Bank of Russia has now largely reversed a doubling of the key rate that took place after the invasion of Ukraine, a move intended to support a rapidly weakening ruble and limit a surge in inflation as imports became more expensive.

The currency and the country’s financial system have since stabilized, as Russia’s foreign-currency revenues from oil-and-gas exports have surged because of higher prices. But the outlook for the economy is gloomy, with Western sanctions limiting Russia’s ability to import needed goods.

Mr. Putin said Thursday that isolating Russia is impossible and those trying to do so “will harm themselves the most,” in remarks to members of the Eurasian Economic Forum.

“Western countries are sure that any persona non grata who has their own point of view and is ready to defend it can be deleted from the world economy, politics, culture and sports. In fact, this is nonsense,” he said.

In Davos, Germany’s chancellor said Russia won’t win the war.

Conquering the whole of Ukraine is now even less possible than at the start of the war, Olaf Scholz said in a speech at the gathering in Switzerland.

“Our goal is very clear: Putin must not win his war,” Mr. Scholz said. “And of this I am convinced: He will not win.”

KYIV, Ukraine—Ukrainian President Volodymyr Zelensky dismissed suggestions that his country should cede territory to Russia in return for peace, comparing them to attempts to appease Nazi Germany, as Russia stepped up its attacks in Ukraine’s east.

With the war in Ukraine now past the three-month mark, there is debate among Western officials about what it would take to achieve a cease-fire, and what concessions—including territorial ones—such a deal might necessitate. But despite Russia’s renewed attacks in Kharkiv and other areas of the east, Moscow has absorbed heavy losses in both troops and equipment, raising questions of how long it can sustain the forward thrust of its military campaign in Ukraine.

Poland, the U.S. and the U.K., among Ukraine’s staunchest allies, have advocated taking an uncompromising stance against Russian aggression. Some European Union states have floated the idea of giving President Vladimir Putin an off-ramp that would make it easier for him to justify a de-escalation to his domestic audience in Russia, while a peace plan drawn up by Italy proposed autonomy for Ukraine’s Crimea and Donbas.

Mr. Zelensky forcefully rejected the notion, put forward Monday by former U.S. Secretary of State Henry Kissinger, that Ukraine should forfeit land to Moscow as part of negotiations on a peace deal.

Mr. Kissinger, speaking at the World Economic Forum in Davos, Switzerland, had said that “ideally, the dividing line should return to the status quo ante,” suggesting that Ukraine should allow Russia to retain the Crimean Peninsula, which it annexed in 2014, and swaths of the eastern Donbas region seized by Moscow-backed separatists the same year.

Mr. Zelensky described Mr. Kissinger’s suggestions as on par with attempts to appease the Nazis in the run-up to World War II.

“I get the sense that instead of the year 2022, Mr. Kissinger has 1938 on his calendar,” he said in a video address Wednesday night. “And that he thought he was addressing an audience not in Davos, but in erstwhile Munich.”

In an expletive-filled tirade broadcast on his YouTube channel on Wednesday, Ukrainian presidential adviser Oleksiy Arestovych called those who say Kyiv should relinquish land “crazy.”

“Get lost with suggestions of this sort, that Ukraine should trade some of its territory,” Mr. Arestovych said. “Children are dying here, soldiers are stopping shrapnel with their own bodies, and they’re telling us to sacrifice territory. It will never happen.”

Military analysts and diplomats say the intense battle for the eastern Donbas region of Ukraine makes it unlikely either side will seek a cease-fire soon, since a shift on the battlefield could lead to a more favorable position for talks later.

“For Henry Kissinger to offer some part of sovereign Ukrainian territory as an appeasement—I find it objectionable,” said Bill Taylor, former U.S. ambassador to Ukraine and current analyst at the United States Institute for Peace, which is funded by Congress. “They’re not ready to cede, they’re not ready to give up claim to their territory; they’re ready to fight, they’re ready to win and we should help them do that.”

The Kremlin said that Moscow expects Kyiv to accept its demands.

“These are not territorial concessions,” Mr. Putin’s spokesman, Dmitry Peskov, told reporters on Thursday. “Kyiv must acknowledge the de facto situation and simply give it a sober assessment.”

The exchanges come in the midst of an intensified Russian assault in Ukraine, focusing on eastern parts of the country to which Moscow switched its efforts after failing to capture Kyiv.

Kharkiv, which came under fierce Russian bombardment early in the war as Russia’s forces pushed to seize the city, was heavily shelled Thursday. Nine civilians, including a 5-month-old child, were killed, and 19 were injured in the attacks, said Mr. Zelensky in his nightly video address. It was the first attack of such a scale since Ukraine’s second most populous city began reopening stores and re-establishing communal services after weeks on the front line.

Officials urged Kharkiv residents to take precautions in case of further attacks.

The Russian army also shelled settlements in the Mykolayiv and Dnipropetrovsk regions, local authorities said. Three people died in Lysychansk, a city Russia has been seeking to capture as it vies for control of the Luhansk region, Luhansk Gov. Serhiy Haidai said. Mr. Haidai said attacks on nearby Severodonetsk have left dozens of homes damaged.

Russian forces have been trying to encircle Lysychansk and Severodonetsk as they move to capture the area around the Siverskyi Donets River, pushing back Ukrainian forces that still control the westernmost parts of Donbas, which is claimed by Moscow-backed separatists fighting alongside Russia in the war.

A Ukrainian officer in Severodonetsk and Lysychansk said that the Russians were trying to break into the cities, but without success.

“The enemy has not advanced a meter,” said the officer. “They are taking losses, but unfortunately our guys are, too.”

He said the cities are under constant fire from artillery, mortars, tanks and warplanes that are hitting civilian buildings, roads and bridges, resulting in civilian deaths. Citing the three he said were killed in Lysychansk overnight, he added: “They aren’t picking their targets.”

The fighting spirit of Ukrainian troops in the two cities remained strong, the officer said. Volunteers are helping to keep the troops supplied, he said, “but the main thing we need is fighters.”

Russia on Thursday said it had targeted two ammunition depots in eastern Ukraine and destroyed a signals-intelligence center in an attack that it said had killed 11 Ukrainian service members and 15 foreign specialists. Ukraine didn’t immediately comment on the claim.

Ukraine said Russia was also strengthening its defense lines around occupied parts of southern Ukraine, including in the Kherson and Zaporizhzhia regions, as it attempts to cement its control there.

In Mariupol, a city in southeastern Ukraine that fell to Russian forces after weeks of relentless bombardment, footage posted to social media showed Russian trucks parked in parts of the city center, fitted with large screens and broadcasting Russian TV news, which advances the Kremlin’s false narrative that Russia is defending Ukraine from fascists running the government in Kyiv.

The intensified assault in eastern Ukraine is coming at a high cost to Moscow, which has lost thousands of troops since it launched its invasion on Feb. 24, according to Ukrainian intelligence and Western officials.

The U.S. has assessed that Russia has also lost roughly 1,000 tanks, 350 artillery pieces, 50 helicopters and three dozen fighter aircraft during the war, a senior defense official told reporters Thursday. Ukraine’s General Staff put its estimates of Russia’s losses higher for similar categories.

In Russia, officials took additional steps to shore up the faltering economy. Russia’s central bank cut its key interest rate for a third time since early April, lowering it to 11% from 14%.

The Bank of Russia has now largely reversed a doubling of the key rate that took place after the invasion of Ukraine, a move intended to support a rapidly weakening ruble and limit a surge in inflation as imports became more expensive.

The currency and the country’s financial system have since stabilized, as Russia’s foreign-currency revenues from oil-and-gas exports have surged because of higher prices. But the outlook for the economy is gloomy, with Western sanctions limiting Russia’s ability to import needed goods.

Mr. Putin said Thursday that isolating Russia is impossible and those trying to do so “will harm themselves the most,” in remarks to members of the Eurasian Economic Forum.

“Western countries are sure that any persona non grata who has their own point of view and is ready to defend it can be deleted from the world economy, politics, culture and sports. In fact, this is nonsense,” he said.

In Davos, Germany’s chancellor said Russia won’t win the war.

Conquering the whole of Ukraine is now even less possible than at the start of the war, Olaf Scholz said in a speech at the gathering in Switzerland.

“Our goal is very clear: Putin must not win his war,” Mr. Scholz said. “And of this I am convinced: He will not win.”

DAX:

MDAX:

SDAX:

* Auto Trader Raised to Neutral at JPMorgan; PT 601 pence

* Norbit Raised to Buy at Arctic Securities; PT 35 kroner

* Henkel Rating, Estimates Cut at Jefferies Following 1Q Warning

* Sonova Now Preferred Name in Hearing Aid Sector at Jefferies

Sweeping overhaul would allow firm to escape conflicts of interest with consulting business that dog the industry

EY is working on a split of its audit and advisory operations worldwide in the biggest shake-up of a Big Four accounting firm in two decades, according to three people with knowledge of the plans.

The proposal, which is still being thrashed out among EY’s upper echelons, is a bold attempt to escape the conflicts of interest that have dogged the industry and brought regulatory action from the UK to the US.

EY and the other Big Four accounting groups which dominate the industry globally — Deloitte, KPMG and PwC – have been fiercely criticised over a perceived lack of independence in their auditing of companies’ accounts because of the fees they also generate from consulting, tax and deal advisory work.

The firms have rebuilt their consulting arms since initially selling them off after the collapse of US energy company Enron in 2002, which led to the demise of auditor Arthur Andersen and reduced the Big Five to the Big Four.

Senior partners at EY have been discussing their options for a restructuring of its global operations, according to three people with knowledge of the matter.

The plans envisage an audit-focused firm being separated from the rest of the business, the people said.

Such a move would result in two separately-owned businesses and would represent a far more significant change than the more limited operational separation of the Big Four’s UK audit and advisory functions agreed after corporate scandals at retailer BHS and outsourcer Carillion.

The exact structure of the shake-up remains under discussion, one of the people said, and any overhaul would require a partner vote and broad agreement from the individual national member firms that form EY’s global business. The potential split was first reported by Michael West Media.

Mergers and acquisitions within professional services firms are notoriously difficult to pull off because of the need to build consensus among the individual partners that own and run the businesses in each country.

EY, which employs 312,000 people in more than 150 countries, is structured as a network of legally separate national member firms, which share a brand and technology as part of a contractual agreement.

EY’s leaders are still trying to find an exact structure that “works for everyone”, one of the people said.

The process could take “many months” and it was not yet certain that a dramatic restructuring would proceed, the person said but acknowledged the changes would be significant if they are voted through.

“We want to lead the profession on a new path,” the person added. “We do realise that it will change the profession.”

A break-up would be a sharp change of position by EY, whose previous global chief executive Mark Weinberger hit out in 2018 at calls for the Big Four to be broken up over concerns about a lack of competition.

EY did not immediately respond to a request for comment.

Leveraged private investment vehicles do not look like natural owners of national telecoms infrastructure businesses

National security now depends on internet connections as well as military hardware. No surprise then that the UK government is using newly enshrined powers to investigate the acquisition of a putative 18 per cent of BT shares by French billionaire Patrick Drahi. A standstill preventing his vehicle Altice from launching a takeover bid for the UK telecoms business expires next month.

There is no reason to suspect Drahi of any wrongdoing. He is a telecoms investor of many years standing. But it is reasonable for the UK to take a closer look at his stakebuilding exercise in BT, whose subsidiary Openreach runs the telecoms network most other operators plug into. State hacking and controversy over telecoms equipment made by China’s Huawei have highlighted risks to national communications networks.

Big telecom operators, usually incumbents that began life as state-owned monopolies, are seldom foreign-owned. Fears of that eventuality prompted governments to retain blocking votes after privatisation. The UK gave up its golden share in BT in 1997. 

True, telecoms champions in smaller countries have succumbed. Portugal Telecom was acquired by Altice for €7.4bn in 2015. Denmark’s TDC is partly in private equity hands. Mobile operators switch owners with abandon; half the UK networks are now owned overseas.

Altice is however a worthier target for the scrutiny of the UK’s new state M&A watchdog than Newport Wafer Fab, a small semiconductor group bought by a Dutch subsidiary of China’s Wingtech.

The National Security and Investment Act’s mandate does not explicitly extend to the technicalities of Altice’s interest in BT. Altice says it owns the shares outright, without sharing any other detail. But the investment vehicle’s acquisitive strategy and its buyout from public markets has left it with a hefty debt pile - €28.5bn at the end of the third quarter 2020, prior to delisting, or five times gearing. 

That would make it harder to fund a cash outlay of more than £3bn required to buy 18 per cent of BT. This has triggered City speculation whether Altice is partially relying on derivatives and stock borrowings.

There is nothing wrong with leveraged private investment vehicles. But they do not look like natural owners of national telecoms infrastructure businesses - particularly one embarking on a costly build-out programme.

Former KPMG partner and ski chalet bankrupt sues law firm over job loss

Graham Martin claims Herbert Smith Freehills caused him to lose his job by tipping off KPMG about his debt problems

A former KPMG partner who went bankrupt after investing in French ski chalets is suing law firm Herbert Smith Freehills for allegedly causing him to lose his job by tipping off KPMG about his debt problems when he asked for legal advice.

Graham Martin, a partner at KPMG Singapore, asked Herbert Smith to represent him in July 2017 after lenders secured a worldwide freezing order against him and sued for debts of £3.26mn linked to his investment in three chalets in Chamonix.

Martin has filed a £22mn legal claim against Herbert Smith in the High Court in London after it shared details of his risk of bankruptcy with KPMG — a client of the firm — which he alleges caused him to lose his job.

In court documents seen by the Financial Times, Martin said Herbert Smith had opted to “please and procure favour” with its long-term client KPMG “rather than comply with its duty of loyalty” to him. Martin accused Herbert Smith of breach of fiduciary duty, negligence and breach of confidence.

Herbert Smith, which turned over more than £1bn in the year ended April 2021, is among the largest international law firms based in London.

The firm said: “We are confident that Mr Martin’s claim has no merit and the firm will defend it vigorously.” It will file its defence to the claim next month.

According to the claim, Martin hired Herbert Smith in a personal capacity in July 2017 to fight a legal action brought against him by lender Creditforce after he borrowed money to develop the chalets, which later contributed to his bankruptcy.

Martin, a restructuring adviser at KPMG Singapore, asked Herbert Smith partner John Corrie to defend him in a High Court hearing about the freezing order.

The lawsuit alleges Martin told Corrie he did not want KPMG to know about his financial situation until he had reached a settlement with Creditforce, but that on the same day that Martin sent him papers relating to his debts, Corrie told KPMG’s London office about his client’s debt problems and subsequently told them that the freezing order was in place.

KPMG then passed this information to its Singapore office, including the risk Martin would be made bankrupt.

Martin’s legal claim summarises Herbert Smith’s position as being that Corrie explicitly received Martin’s consent to tell KPMG that the firm was intending to represent him regarding the debt issues — something Martin denies. Corrie is not named as a defendant in the case.

After KPMG Singapore was told about Martin’s financial situation, he was called into a series of meetings with the firm’s management, at which he requested time off, before he was stripped of his leadership positions, according to his claim.

Martin, who reached a settlement with Creditforce in this period, said he attempted suicide after being removed from his leadership roles.

He claims he was left with no option but to resign in February 2018 and that he could have kept his job if he had been able to break the news of his financial situation to KPMG himself after he reached a settlement with his lender.

He was subsequently made bankrupt in June 2018.

Corrie, Martin and KPMG declined to comment.