Forum Archive Index - January 2000

["hugh webber" <hugh.webber@clear.net.nz>]

I think Derek asked a very valid question re are there any secure shares
and Michael has just raised a very valid point on the performance of the NZ
sharemarket.

Looking at Derek's one first I think if you want exposure to share growth
(and there are figures around to show that even in NZ in the long run the
sharemarket outperforms all other investments), and if you want NZ
imputation tax credits and liquidity and if above all you want security
then its hard to go past TENZ the NZ Stock Exchange passive fund of the 10
largest shares listed on the NZSE. 
If one share doesn't grow fast enough then out it goes and in with the
former No. 11 and there is a tax ruling from the IRD that as a passive fund
TENZ doesn't pay tax on adjusting its portfolio. TENZ pays out its
dividends received with the attached imputation credits. TENZ is listed on
the stock exchange just like an ordinary share and you can trade it like an
ordinary share. Unlike an ordinary share it will never go sick and die
unless the entire NZ economy and financial system does. The institutions
have now come up with competing products such as the top 40 Index as a
share etc but obviously none will be as secure as TENZ run by the NZSE
itself.

I know there has been a lot of jealousy by the institutions and by some of
the constituent share brokers of the NZSE that they didn't think of it
first and that it was competing with them but hey! lets think about the
investor first. Unfortunately the green with envy parties
have been leaning hard on the NZSE and even forced the NZSE to try and sell
TENZ off but its still going. (altho I note it seems to be very hard to get
into anything on the NZSE website these days and particlarly their TENZ
area).

Disclosure: I don't have any TENZ shares and have never held them but if I
get to the point where share security is my prime requirement I'll be
chasing them avidly.

As for the performance of the NZSE I think its coloured by two things (a)
the long shadow of the 1987 share bubble and (b) Don Brash's monomaniacal
effort to strangle inflation into the negative area at the expense of all
other goals.
If you had stayed out of Brierley (inept management after Ron's departure
and inappropriate commodity type investments) and the Fletcher Group and
CHH (straight commodities with all their problems) and concentrated on
things that some brokers have been consistently recommending such as The
Warehouse and BayCorp and Telecom then you would have done very well. I
think the complaints about the NZSE performance (and a lot of it depends on
what period you pick) vindicates the Buffett approach of doing some
research yourself and making value picks for the long term..


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