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From: | "geoff_julie" <gk_jawalker@paradise.net.nz> |
Date: | Fri, 14 Sep 2001 22:12:02 +1200 |
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!
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