Wednesday, October 15, 2014

Hardly a lesson learned… a $1m plus education fail

Another day another failed prosecution. Hardly news. Hardly surprising…. but hardly anything learned either.

Media analysis of the SFC debacle is busy writing lazy headlines full of melodrama while the major lessons are being lost.

Just so we are clear…. the Janet and John here is:

  1. no “guru” is infallible. Having an old Volkswagen, a folksy “way”, and being a “good joker” is not enough and never was.
  2. this applies to Buffett as much as anyone else. Buffett’s greatest attribute is probably the fact that he is the world’s least deluded investor. He does not kid himself – ever.
  3. If you do not use your brain and do some homework you will lose your shirt or (regrettably) lose the taxpayers shirt. And you deserve to – big time.
  4. There is always risk – every time. If you can’t see it that just means you are blind to it. It’s there. Look for it till you find it. If you can’t find it invest elsewhere.
  5. don’t whinge, moan and blame the government – bond holders did it with Equiticorp, investors were “saved” with SCF (which the judgment now says there is little evidence did anything wrong (so can I have my tax money back then?). Its poor logic and pathetically dim.
  6. As the promoter of the awful Deposit Insurance Scheme himself (the beaming RH Cullen) said  “You lost, eat that”.

As for governments:

  1. The rat always smells the cheese. If governments say “come to Santa” the kids will flock. Deposit guarantee schemes always produce “too big to fail / not pay / hand out”. Come to Santa policies are just silly – that’s all. Do stop – its my money you are wasting.
  2. Less is more. It is pointless – utterly pointless passing laws you can’t, won’t or don’t have the bottle and competence to enforce. The Serious Fraud here is that taxpayers spent over a million on a failed prosecution which helped no one (legal fraternity aside).
  3. Do not, ever, try to save investors from risk. You can’t, you look silly, you delude them in a cruel hoax – and you still lose everyone’s shirt. Also – note – it doesn’t even get you votes for heavens sake.

So use your brain, face risk, get educated… it needs to be part of our culture.

I have long argued that if the average Kiwi knew as much about investing as he and she know about power tools, DIY, various “Idles”, and My Kitchen Rulez then we wouldn’t have a retirement problem.

DIY being in our genes does plenty for Placemakers, Mitre 10 and Bunnings and close to nothing for our kids and your retirement.

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