This article originally published in The Northern Daily Leader on 26 May 2012.
One of the most important tasks facing expectant parents is that of choosing the name of their daughter or son. It’s a great conversation for long car journeys or overseas plane travel as there are literally millions of alternatives to choose from. Do you go for traditional and common, quirky and different, or just the plain ridiculous (hello Pilot Inspektor, the unfortunate son of actor Jason Lee)?
My wife and I are back in the name-picking business, following the revelation that baby number two will be making an appearance in late October. However, there’s some disagreement about the baby’s name if it turns out to be a boy. She likes Thomas, Sam and a few other relatively innocuous names. On the other hand I’m pushing for Rocky – that way he’ll have no choice but to become either a boxer or a rugby player when he is older. And as the father of an elite athlete, I’ll be able to bask in the reflected glory. (Actually, I keep insisting it has to be Rocky just to wind her up – it’s surprisingly easy to do when she’s pregnant, dangerous too).
Choosing the right name for your baby can be important. Research has shown that schoolkids with names viewed as being ‘low status’ performed more poorly in maths and reading. It was found that teachers were teaching children differently based on the connotations of their names. It may not surprise you to know that companies listed on the stock market also show similar patterns. Around the time of the dot-com boom, companies which changed their names to something internet-related saw an average increase in their share price of 53% around the time of the change. Six months later their share prices had increased by an average of over 80%.
When the dot-com boom subsequently collapsed, many companies changed their names to remove any reference to the internet or dot-com, hoping for the same benefits as before, but in reverse this time. As an example of investor stupidity, the strategy worked amazingly well. Companies who removed internet or dot-com references from their name saw an average 70% increase in share prices. The moral of the story is that investors, on the whole, can be dumber than you think. Investing based on the name of the company is not a strategy – in the long run the financial viability of the company is more important than its name. Just like with people, it pays to look through the name before forming an opinion or making a commitment.