The O'Brien Column: Would the last Kiwi firm to leave for Oz please turn out the lights

Friday 15th December 2000

New Zealand investors found out this week why they had a tough year.

Prime Minister Helen Clark's decision not to light up the notable Norfolk pine at Wellington's Premier House this Christmas was in keeping with the current "generally ascetic attitude."

Ms Clark was talking about the cost of lighting the tree, supposedly about $2000, but her interesting comment about the ascetic attitude was relevant to the economy, government policies and the markets.

The Concise Oxford Dictionary defines "ascetic" as "severely abstinent, austere, especially for spiritual benefit; having the appearance of an ascetic."

That was the definition as an adjective. As a noun it was "one who practises severe self-discipline."

Some people could find it difficult to understand how those definitions applied to the government's activities this year, given the regular ructions about things that it, or individual MPs, did or did not do, although it is possible Ms Clark has some of an ascetic's attributes.

It did not take long for the inevitable references to Scrooge and other aspects of Dickens' famous Christmas Carol, including a small cartoon in the Dominion newspaper which had Ms Clark saying, "and I don't want any visits from the ghosts of Christmas past or future either."

All that raised the obvious question of who would qualify as Tiny Tim and Bob Cratchitt in Ms Clark's administration.

There were plenty of Scrooges apparent in economic and investment matters this year, but again it was difficult to see a Tiny Tim or Bob Cratchitt in operation.

Following the Dickensian theme further, it should be remembered even Scrooge finally had enlightenment and the story ended happily, so things could be better for investors in 2001, the year the millennium starts, irrespective of the commercial hype that decided 2000 saw the millennium's commencement rather than its end.

Advantage Group chairman Evan Christian thought the lights were brightening for the company's shareholders when he addressed the matter of Advantage's share price at the annual meeting last week.

Mr Christian said he thought Advantage stock at current prices was "ridiculously under value."

"If you think the internet will change the way business operates, if you want to gain exposure to the digital economy, this is, I repeat, a great time to consider buying shares in Advantage."

His remarks did little for Advantage's price, because it fell 7c in the week to December 8 to $1.25, which was 3c higher than the year's low of $1.22 recorded in the preceding week.

Mr Christian expressed classic counter-cyclical theory, although his comments were related specifically to Advantage.

The theory says you buy when everyone else is selling and sell when they are buying.

There are caveats to that approach, because there are situations where a stock can be such a dog, with little likelihood of recovery and few prospects for profitable operations, that it is best to follow the herd and get out.

Several grossly overpriced high-tech stocks in the US were examples of the philosophy this year. US investors saw brightening lights last week when Federal Reserve chairman Alan Greenspan gave them an early present with his suggestion there could possibly be a reduction in interest rates early next year.

Mr Greenspan is the most powerful figure in the US and world economies, more so than the US president.

It was not known who the next holder of the presidency would be at the time of writing, after the shambles of vote counts and recounts in Florida.

While the president has to deal with a host of complex matters apart from the economy, it might be a good idea from the view of world investment markets if the US Electoral Colleges did what they have the power to do and gave their votes to Mr Greenspan.

He would doubtless decline the office, but that does not affect the economic sense of the idea.

A combination of Mr Greenspan's remarks, lower oil prices and an upward realignment of currencies against the US dollar, at least in the short term, stabilised the US sharemarket and gave hope that the coming year would see less volatility in share prices.

It was noted in NBR Personal Investor (December 1) that, in the New Zealand market context, there would be no more fad bubbles to burst because there were none left.

That is probably applicable to the US high-tech sector. Pie-in-the-sky madness seems to have been removed, as has savage reaction to bad news from established technology companies.

Other matters of interest to New Zealand investors next year could be a revamp of insider trading rules to cover situations that arose this year (although there is a view we should have no rules or even softer ones than exist now), the move of more companies' head offices to Australia and a merger of the New Zealand and Australian stock exchanges.

The last has seen some opposition among New Zealand brokers and other people but it is likely to go ahead.

New Zealand now enters the silly season, perhaps epitomised by the prime minister's ascetic attitude to turning on the lights as opposed to the old request for the last New Zealander to turn them off.

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