Forum Archive Index - May 2001

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

Some thought provoking items in there (sorry being out of action in
Australia for
about 3 weeks plus other stuff has cut down my back reading - I'm sure
there's 
lots of other stuff I should go back on).
item 1 - lack of a compulsory super system reduces the will to save.
The mass of the population are a fairly happy go lucky lot addicted to hire
purchase,
credit cards, TAB, Lotto who believe they are invincible and that there's
no tomorrow
beyond their present circumstances until they hit about 55 when its too
late anyway.
So I don't think there's any will to save anyway except the old chestnut of
own your
own home, borrowing to the hilt to buy it and then do it up. This is now
becoming 
counterproductive in most places with the population pyramid overbalancing
so that
house prices will decline at an increasing rate as there's fewer and fewer
people to
buy them. Either be wealthy enough to regard it as sunk money and a secure
base
or sell now and take increasing advantage of landlords.
I suppose there is a need for a compulsory super sheme for the mass of the
population
but lets exempt those who have made intelligent arrangements of their own.
There
used to be a separate social security tax for super until a thoughtless
Holyoake
government of the 1960's abolished it and combined it with the money for
DPB's.
Whether one should return to tax incentives for savings is arguable as its
intervention
in the market which distorts the market and makes it less efficient.
Besides which 
the recipients of the tax induced flow - government and AMP & - are not
good at 
investment and make very low rates of return.

item 2 - top management lack the skills to operate large international
companies.
Unfortunately true with one or two exceptions - the Dairy Board and
companies
being exceptions but not available as investments to Joe Public. Also seen
in
the success of Carmel Fishers strategy not to invest in the 10 largest
companies.
Paying them huge salaries doesn't seem to work either....take BIL sans Ron
compared to GPG which doesn't pay Sir Ron a salary at all. Top management 
continue to totally ignore Buffett analysis techniques and findings to the
investing
publics great cost. Its also much harder to make a high percentage profit
on a large
capital base but most management continues to think bigger is better rather
than
more profitable is better.

item 3 - hopefully we will get a reciprocal imputed tax agreement with
Australia in the
forseeable future so that market will then open up. I was looking at an
article in a 
month old Australian Financial Review yesterday that most IPO's in
Australia over
the last year had not flown. That's another wise rule of Buffett's that
Carmel has copied
- don't invest in IPO's. There are occasional exceptions like Telstra but
you have to
be very discrininating.

item 4 - if we can get good prices for timber. Yes, the radiata pine was
supposed to
gallop to the rescue doing a 5th Cavalry act about now. Unfortunately its a
commodity
(read the section in Buffettology on commodities) and it has lots of cheap
substitutes
- non timber ones - so there won't be a rescue from that quarter.

One of the most discouraging things about writing in sharechat is (a) the
people who
don't bother to do the required reading which includes looking back over
sharechat
using the search facility to find what's already been written about
companies (b)
those that do but don't understand it and keep making the same mistake (c)
the 
rate of turnover so that some of the newbies don't even know who the vastly
irritating
and perverse RIL was, god bless his cotton socks. Presumably he's now
advising
all the Brits that they're totally useless and should emigrate to the US.

cheers,
Hugh


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