Forum Archive Index - January 2004

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

The last sharemarket crash involved (i) heavy personal borrowing 
against credit cards, personal loans, mortgages to invest in the 
market - not something that's happening now, more a feature 
of the real estate market
(ii) high inflation being abruptly squeezed out by the Central Bank 
and government - not something that's happening now
(iii) the high NZ dollar being caused by high NZ interest rates and 
against all currencies - but now we have it being caused by the 
weak US dollar and only against the dollar US
(iv) a very flimsy set of sharemarket valuations of high p/e's, 
low dividend yields and earnings and a bubble based on "paper 
shuffling" takeovers whereas now valuations are based on solid 
earnings and much lower p/e's.

Hence I can't really see a crash coming for some time.
Maybe worth looking at again in a year or two if the NZ dollar was 
declining, NZ p/e's had become high, and overseas sharemarkets 
growing much faster than NZ.

In the meantime you can't do much better than the opposite to the
Cullen fund i.e. invest your money in NZ in solidly growing NZ coys
- Scott Technology, Hellabys, Contact etc etc...
With a power company like Contact not directly involved in exports 
or imports it doesn't really matter whether the NZ dollar goes up 
down or sideways.

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