Posts by Stephen Judd
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Geoff, do you know Benjamin Graham's parable of Mr Market?
Imagine you are in business with a chap called Mr Market. Every day, he offers you a price to buy your share or sell his share of the business. Some days he is in a marvellous mood, and quotes you a very high price - the next day he can be deeply depressed, and quote you a low one. You are not obliged to take him up on his offer, no matter what...
Graham also coined the proverb "in the short term the market is a voting machine, in the long term it is a weighing machine."
And then there's Keynes (naughty speculator that he was): "The market can stay irrational longer than you can stay solvent."
I think it's been clearly demonstrated that sharemarkets are not perfectly efficient and that the invisible hand is somewhat Parkinsonian. But they are still kinda sorta reflecting reality, with distortions and delays. Rattlesnakes do present a real risk after all...
My approach these days is plod along as a boring, long term, value investor, looking for dividends and earnings above all, and treat everything else as speculation. If other people want to buy dear and end up selling cheap, that's their business.
John: that is a very interesting idea. I fear it could lead to some strained friendships though...
Ben: in truth, I don't believe any particular form of fund should receive breaks - I just think there should be a level playing field. Cullen seems to have been advised that managed funds are where everyone should have their retirement money, and I find that advice suspect.
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*cough* I have plans to start a money-orientated blog shortly, and those OMG! Kiwisaver plunges! stories were top of my list for potential posts.
To my mind the big story about Kiwisaver and the whole PIE regime is how Cullen has given an enormous boost to the fat, happy fund managers, despite all the evidence that shows that they simply do not perform to a level that merits their outrageous fees. Where are the breaks for index funds which research shows to consistently outperform managed funds? Why can't I set up a "Stephen's self-managed fund" of shares selected by me, a la the Aussies, and choose to bypass the fund-management boodle altogether?
I know Gareth Morgan has been banging on about this for a while but still...
Re the American government: once the Dems get the White House and firm control of the legislature, the adults will be in charge again.
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But I fear that my pension fund puts me in basically the same boat as them
Really? Did your pension fund invest heavily in the US finance sector (or fur-bearing trout farms)?
After the 87 crash the Dow had regained its position in two years. Ditto after the 9/11 dip. Markets recover.
Give it a couple of years. One year to go and GWB will be forced to hand over to someone more sensible. If you're not retiring in the next 5 years, don't worry.
(Also, if you keep putting in now, the miracle of dollar-cost-averaging will boost your eventual return.)
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Oh, the ASX has been hugely driven by spec mining/resource companies - double whammy as people fly from speculative ventures and realise what will happen to the OZ mineral->China manufacturing->USA consumption flow if the US stops importing so much. ASX also has some large financial companies with very opaque structures (eg MFS, AFG, BNB) and banks that have already admitted some US subprime exposure. The NZX is far different in composition.
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Ok, here's one theory.
Most New Zealand companies still have real earnings and real assets and pay honking great tax-imputed dividends. Many of the biggies (which therefore weight the index) are utilities in areas where people will not economise much. The best of them are not dependent on bank credit and will survive a liquidity crunch. This is why people like me have been buying companies like, say, Hallensteins. Will people make fewer phone calls and use the internet less next year? Will they use a lot less power? Well then, there is a limit to how far Telecom and Contact and so on can fall before their become brilliant business propositions.
Contrast with 1987 where a good chunk of the NZ market was speculative companies with nothing behind them but shares in other speculative companies.
NZ companies will suffer from fallout from the American mess - credit will be scarce and expensive, and exports to the US will fall with the USD. But they won't go bust. Therefore there is a level at which they are good value. We may be already seeing that level.
Also, a lot of the fall that we have seen is foreign investors pulling out - once they've sold, they've sold.
Finally, as crashes go, this is pathetic compared to, say, 87. Our business writers lack, among other things, perspective.
(I would not like to be a middle-aged American right now, that's for sure.)
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Try having a fiery, but literal-minded, AS teenager, who has perfected the vowel-less "fuck". As far as he's concerned, he's saying "f-ck!", so he's in the clear.
There is a Terry Pratchett novel - The Truth, I think - where a villainous heavy frequently says "-ing!"
As in "It's a -ing mess!"
It becomes apparent as you read that this is not authorial squeamishness, but that Mr Tulip literally says "-ing" a lot. Maybe the boy would like to try a little variation.
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It's basically exploring the idea that Kiwis swear more in the normal run of things
I used to know someone who once addressed some visiting US businessmen more or less thusly:
"Welcome to New Zealand. We say what we think in meetings, we swear a lot, and you can't sue us. Understand that and we'll get along fine."
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In the suburb where I grew up in Hamilton is a bunch of streets all named after classic English poets and writers - Shakespeare, Tennyson, Masefield, Wordsworth, Dryden, and so on. It was known locally as "Poets' Corner". It was not, shall we say, a very poetical area.
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My mum had a couple of Molesworth books, and oddly enough my intermediate school library had several more.
It's a long way from St Custards to Fairfield Intermediate, Hamilton but it somehow worked anyway.
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can people stop obsessing with Key's taste in houses and crabs. Talk about snobbishness.
In principle, I agree. In practise, Paul Litterick makes me cackle (actually some of the comments in his post are also priceless) to the extent that I am inclined to admire the performance before I condemn the meanness.
I'd hate to be on the wrong end of Paul's Lampoon-o-matic.
Apropos Tuwhare: it bugs me that what's going to make me go out in search of a collected works is his death. But that's how it goes with artists.