Forum Archive Index - September 2001

["geoff_julie" <gk_jawalker@paradise.net.nz>]

Hi all

 

RE:  my email dated 7 Sep (titled: Overseas Sentiment and our NZ market?).

 

IMO, the horrific and tragic attacks in the US will exaggerate the world-wide downturn already slowly becoming evident.  I watched the GM and founder of Harvey Norman on Thursday night CNBC who was far from bullish on the future.  He was concerned that consumers had stayed away from his stores since the mindless attacks on Wednesday.  In his words - consumers had far more important things to do than rush out and buy a new TV, lounge suite, etc.  I suspect his company is not the only one likely to be affected by the most important economic ingredient needed for profits - consumer confidence.  Without it, people stop spending, sales drop, companies struggle, discount sales occur, redundancies, etc., etc.  In other words the dreaded big "R" (recession) occurs. 

 

I agree with Gerry Stolwyk's comments that one should consider reducing your NZ holdings (I still suggest reducing holdings in NZ top 10 companies, as per my email quoted above) but disagree with Gerry's view that the UK is a better option.  Can't imagine the UK market performing strongly with a major US downturn.  A large part of the UK's economic growth over the last 10 years has been a result of the service sector, especially financial.  A slowdown in markets, investment advice, IPO's, and investment will dampen the UK economy.  Add slowdowns in tourism, agricultural (i.e. foot and mouth, mad cow disease), manufacturing and it doesn't look great.

 

My investment preference at the moment is to avoid the past sexy equity markets (I'm tired of reading how great past returns have been - they are no guarantee of the future returns!).  I admit to being a "trend follower" and have invested in hedge funds as I consider they provide excellent diversification in the current volatile environment.  Their ability to quickly move into assets and sectors not easily accessible to the novice investor (or equity unit trusts) provides excellent leverage in turbulent markets.  The average investor can't possibly hope to invest in the range of markets the hedge funds can (i.e. oil, gold, futures, etc.)

 

Anyway, enough of my thoughts.  Happy investing!