Another reason to ignore Rod Oram

From Share Investor Blog

Make no mistake Rod Oram is a mad bugger. I loathe his socialistic/political slant on business and economics and quite frankly a third form economics student who is deaf, dumb, blind and insulated from reality with a 100 mile layer of pink batts would know more than him about the subject he thinks he is so proficient at.




The man buys carbon credits to offset his "carbon footprint" for goodness sake!

The reason for my vitriol this time?

His nonsensical piece on National deferring payments into the Cullen Fund in Stuff today.

This master of economic sleight of hand wants our Government to borrow billions to fund pensions:

They are wrong on both points. This is a once-in-a-generation time to be investing, particularly if you are an entity with low debt, secure cashflow and a long-term strategy. The great global economic contraction has savaged prices of shares, property, businesses and other assets. Buyers might have to ride out some short-term corrections but they can reasonably expect handsome long-term gains.

Oram would have us borrow to buy investments? Its a MAD, MAD, MAD MAD ... plan! In these current times debt must be lowered. Oram is 100% correct when he says people should buy assets when they are beaten down in value. I have over the years but not with borrowed money Rodney! Higher debt to fund this scheme will increase interest rates for New Zealand borrowers.

In addition to this Oram is really making a mountain out of a molehill on the decision to defer payments to the scheme. What he fails to mention is that the scheme funds a very tiny portion of what is needed for retirees:

Connecting it with superannuation, though, was entirely political. Even Dr Cullen made clear there was no link to future entitlements and future taxpayers were always going to have to meet 89% of costs.

Bill English’s decision not to borrow for the fund will increase that by just 3%.

Moreover, in national-income terms, Mr English’s decision relates to just 0.2% of GDP from 2030.

It is ridiculous to worry about such a number. The smallest economic shock over the next two decades – positive or negative – could double or eliminate it, as could small productivity changes. Matthew Hooton, NBR 2009.

The vast bulk of retirement funding then will come from the tax base at the time and that is where growing the economy comes in and is clearly vastly more important than taxing workers heavily now to fund such a small addition to retirees income in 20 years time.

The best solution of course is for individuals to save and pay for their own retirement. With a taxpayer funded scheme payments are subject to interference from all political colours and with the tiny contribution from the Cullen Fund that is subject to inefficient bureaucracy and cost and inexperienced individuals investing money on your behalf - something that Rodney skirts over without nary a whisper- there is no guarantee that any money will be there when you retire anyway.

Labour would have deferred payments into the fund. That economic dipstick Michael Cullen designed the fund for such economic circumstances as we are suffering under now.

Oram's columns have been quoted by Labour in Parliament ad nauseum recently so it is clear Labour are taking their playbook from commentators like Oram or vice versa:

Hon PHIL GOFF: It made $1.75 billion. There is nobody in this House who does not understand that the best time to invest funds is when the market is at, or close to, the bottom. By the National Government’s theory, New Zealand homeowners should be selling their house now and buying it back when the prices have risen! That is National’s philosophy. Kiwis know that it makes no financial sense, so why cannot the Prime Minister and the Minister of Finance see that? Parliamentary Budget Debate, May 2009.

It doesn't really make allot of sense now does it? Would you borrow right now to buy shares?

The answer, if you are sane, is a clear NO.

Both Labour and Lefties like Oram are politically motivated and economically illiterate. We cant borrow and hope, we must instead grow the economy and accept personal responsibility for funding our own retirement.

Any other way is dishonest and as history has shown us will fail.

Recent Share Investor Reading

• Danny Diab & Restaurant Brands
• "Government Motors" unlikely to survive
• Stock of the Week: The Warehouse Group
• Freightway's Capital Raising more of the same crap
• Stockmarket Education: How do you buy shares?
• Analysis - Mainfreight Ltd: FY Profit to 31/03/09

Discuss this topic @ Shareinvestor.net.nz

Related Amazon Reading


Tell 'em "That's MY Money You're Messing With!": Retirement Funding: Untold risk and mismanagement and how to avoid it by Gordon W Bell
Buy new: $21.95 / Used from: $6.50
Usually ships in 24 hours

c Share Investor & Political Animal  2009

Another reason to ignore Rod Oram

Make no mistake Rod Oram is a mad bugger. I loathe his socialistic/political slant on business and economics and quite frankly a third form economics student who is deaf, dumb, blind and insulated from reality with a 100 mile layer of pink batts would know more than him about the subject he thinks he is so proficient at.




The man buys carbon credits to offset his "carbon footprint" for goodness sake!

The reason for my vitriol this time?

His nonsensical piece on National deferring payments into the Cullen Fund in Stuff today.

This master of economic sleight of hand wants our Government to borrow billions to fund pensions:

They are wrong on both points. This is a once-in-a-generation time to be investing, particularly if you are an entity with low debt, secure cashflow and a long-term strategy. The great global economic contraction has savaged prices of shares, property, businesses and other assets. Buyers might have to ride out some short-term corrections but they can reasonably expect handsome long-term gains.

Oram would have us borrow to buy investments? Its a MAD, MAD, MAD MAD ... plan! In these current times debt must be lowered. Oram is 100% correct when he says people should buy assets when they are beaten down in value. I have over the years but not with borrowed money Rodney! Higher debt to fund this scheme will increase interest rates for New Zealand borrowers.

In addition to this Oram is really making a mountain out of a molehill on the decision to defer payments to the scheme. What he fails to mention is that the scheme funds a very tiny portion of what is needed for retirees:

Connecting it with superannuation, though, was entirely political. Even Dr Cullen made clear there was no link to future entitlements and future taxpayers were always going to have to meet 89% of costs.

Bill English’s decision not to borrow for the fund will increase that by just 3%.

Moreover, in national-income terms, Mr English’s decision relates to just 0.2% of GDP from 2030.

It is ridiculous to worry about such a number. The smallest economic shock over the next two decades – positive or negative – could double or eliminate it, as could small productivity changes. Matthew Hooton, NBR 2009.

The vast bulk of retirement funding then will come from the tax base at the time and that is where growing the economy comes in and is clearly vastly more important than taxing workers heavily now to fund such a small addition to retirees income in 20 years time.

The best solution of course is for individuals to save and pay for their own retirement. With a taxpayer funded scheme payments are subject to interference from all political colours and with the tiny contribution from the Cullen Fund that is subject to inefficient bureaucracy and cost and inexperienced individuals investing money on your behalf - something that Rodney skirts over without nary a whisper- there is no guarantee that any money will be there when you retire anyway.

Labour would have deferred payments into the fund. That economic dipstick Michael Cullen designed the fund for such economic circumstances as we are suffering under now.

Oram's columns have been quoted by Labour in Parliament ad nauseum recently so it is clear Labour are taking their playbook from commentators like Oram or vice versa:

Hon PHIL GOFF: It made $1.75 billion. There is nobody in this House who does not understand that the best time to invest funds is when the market is at, or close to, the bottom. By the National Government’s theory, New Zealand homeowners should be selling their house now and buying it back when the prices have risen! That is National’s philosophy. Kiwis know that it makes no financial sense, so why cannot the Prime Minister and the Minister of Finance see that? Parliamentary Budget Debate, May 2009.

It doesn't really make allot of sense now does it? Would you borrow right now to buy shares?

The answer, if you are sane, is a clear NO.

Both Labour and Lefties like Oram are politically motivated and economically illiterate. We cant borrow and hope, we must instead grow the economy and accept personal responsibility for funding our own retirement.

Any other way is dishonest and as history has shown us will fail.

Recent Share Investor Reading

• Danny Diab & Restaurant Brands
• "Government Motors" unlikely to survive
• Stock of the Week: The Warehouse Group
• Freightway's Capital Raising more of the same crap
• Stockmarket Education: How do you buy shares?
• Analysis - Mainfreight Ltd: FY Profit to 31/03/09

Discuss this topic @ Shareinvestor.net.nz

Related Amazon Reading


Tell 'em "That's MY Money You're Messing With!": Retirement Funding: Untold risk and mismanagement and how to avoid it by Gordon W Bell
Buy new: $21.95 / Used from: $6.50
Usually ships in 24 hours

c Share Investor 2009

But wait there’s more: How I’m learning to love Kiwisaver

For selfish reasons, I have been thinking lately. What I have been mulling over is Kiwisaver and its relation to the NZX and what it might mean for its future. The stocks in my portfolio and yours are going to benefit.

Let’s get this straight, I am dead against Kiwisaver. It is compulsory, inefficient, costly, enormously complex, will have low returns for its participants and is damaging for business.

The big winners will be the Kiwisaver providers, the IRD, who have hired 400 more drones and other government lackeys and the recipients of our largess.

The NZX could be the big winner if overseas experience has anything to go by.

The US and most recently the Australian stock market have benefited greatly from the retirement schemes that run in both those countries. The companies on those countries listed indexes have performed consistently better than our listed companies simply because of the large amount of retirement money sloshing around with no place to go but investment.

True, a lot of retirement funds will be inefficiently filtered through fund managers before reaching the NZX and much of the Kiwisaver proceeds will go offshore to other exchanges but there will clearly be billions going into our stock market.

In the USA their 401ks have helped push stock fundamentals to levels above the Kiwi NZX and in Australia multiples are similarly higher.

The extent of many countries super funds and its contributions to their local economies cannot be understated but as these funds have gotten bigger they have even stretched their economic tentacles abroad, US funds through private equity have bought companies in Australia and New Zealand and other countries while Australian funds have bought up large in New Zealand. The biggest retirement money buyout in New Zealand being the Canadian teachers fund buyout of Telecom New Zealand Ltd [TEL.NZ] Yellow Pages for over $2 million NZ dollars.

How long it will take for the New Zealand super funds proceeds to have an effect on our market depends on the uptake of Kiwisaver by its citizens of course and the impact will also depend on whether Kiwis who start a new job opt out of the conservative 6 providers that are the default ones and whether current employees decide to open themselves up for more risk and more return by going with a provider such as Fisher Funds which is likely to focus on the NZX and ASX and its smaller growth companies.

Certainly there is already evidence that these types of funds have had an impact on our market. Government and quasi Government institutions through agencies such as the ACC and the Government super fund for state employees have helped bolster our market and its listed companies. Mostly the blue chips but also a few middle to smaller cap stocks have been targeted by these funds.

Our market has mostly been a disappointment over the years compared to foreign bourses and the absence, up till now, of retirement funds bolstering the NZX will put our market on more of an even footing, help stimulate IPO’s and channel funds away from the over inflated and the tax friendly property market.

Even though our market has done well over the last few years don’t imagine that it is overvalued as a whole. When you include the extra funds from retirement money that are to come on-stream over the coming years you could be forgiven for doing cartwheels if you are already in the market at the prospects of fund managers pouring mum and dads money into the NZX.

Kiwisaver isn’t a perfect tool or even close to a perfect tool for helping kiwis save retirement money, tax cuts would be a far better and cheaper solution and then we could put those funds directly where we like.

Having said that there are always winners and losers when it comes to Governments meddling in its citizens business and for those that are already invested in the NZX and its fund managers of course, they are the big gainers.


Kiwisaver @ Share Investor

Kiwisaver mediocre substitute for real saving





c Share Investor 2007