Forum Archive Index - April 2002

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi Ben,
 
>
> 
>I thought it would be a good idea to canvass individual investors'
>opinions on the way forward for the NZSE.  Please write to the
>ShareChat Forum or myself personally and tell us what you think the
>NZSE needs to do to succeed in the 21st Century.  Specifically, this
>means how the NZSE needs to serve you, the *individual investor* to
>get more NZers participating in the market.
> 
> 

I think the main reason that many people who have dipped their toes 
in the sharemarket have had such a bad experience can be traced back 
to education, or more precisely lack of it.  It doesn't matter if you 
are an investor or a trader.  If you go in with a little knowledge 
thinking you know it all, you will soon find out you don't.  What can 
the NZSE do about this?

1/ Provide NZSE sanctioned training courses at a modest cost run by 
*independent people* (without a product to sell).  I'm talking about 
something as simple as perhaps a once a week meeting for 10 weeks.  
The sort of thing you might attend for a term as a evening class at 
a local high school.  Make sure potential traders/investors at least 
know the basics.  Maybe give people a discount on brokerage as 
an incentive to attend such a course.

2/ Outlaw the advertising of investments based on the past two or 
three years performance.  Unlike other fields where recent 
track record is important, an investment that has done well over the 
last two or three years will more often than not have a *negative* 
correlation with future returns.  Yet it is amazing how many people 
chase last years winners, or buy into a share just before the share 
price goes into a downward dive..

3/ Provide a standard for new investment prospectuses to measure up 
to.  I'm not talking about minimum legal requirements here.  I'm 
talking about setting up a best possible practice method of doing 
things to encourage new investment opportunities coming onto the 
market to raise their standards of disclosure, future forecasting 
and a quantified look at what happens if things don't go quite 
according to plan (sensitivity analysis). 

4/ Provide on going support to forums whereby newer investors, once 
they know the basics, can be shepherded through periods of market 
uncertainty and avoid making silly knee jerk decisions.   They could 
sponsor that outfit called 'sharechat' for instance ;-)

5/ Provide a watchdog team so that when disturbing trends overseas 
show up (like off balance sheet accounting), a team from the NZSE can 
approach New Zealand's leading companies and investigate local 
companies, so that it can be shown they are not tarred with the same 
disease.   This should allow investors to maintain their confidence 
in local firms whatever the overseas headlines throw up.

How's that for a few ideas? 

SNOOPY



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