Monday, March 3, 2008

Herald Poll and Political Animal commentary

http://www.dontvotelabourcartoons.com/gallery/cartoon18.jpg
c Stan Blanch 2008



While in her own mind and those of her Labour party colleagues, Helen Clark is still the preferred Prime Minister , the all important voters are thinking something else entirely.

This morning on Newstalk ZB Aunt Helen blamed "volatility" in the polls, when talking about the loony Greens support wavering wildly since the Heralds last poll and by implication the idea was that the poll was not to be trusted. She had another go at the paper for its poll accuracy.

This and the polls of the last 10 weeks cannot be ignored by the former high flying minister.

A definite trend has emerged and the outcome looks like a hiding for the Labour party not seen in generations.

Voters could be forgiven for forgetting about party allegiance's and voting for a winning party, National, least they waste their vote on the big loser.

Hitch your train to the wagon Abner, cause its on a non stop trip to Wellington to take out the trash.


Key Joins his party at No 1 position

5:00AM Monday March 03, 2008
By Audrey Young, NZ Herald


John Key (right) has overtaken Helen Clark as New Zealand's preferred Prime Minister.

John Key (right) has overtaken Helen Clark as New Zealand's preferred Prime Minister.


National leader John Key has overtaken Prime Minister Helen Clark in popularity in the latest Herald-DigiPoll survey, and his party has extended its lead over Labour to 18 points.

It is the first time since May last year that Mr Key has been ahead of Helen Clark as preferred prime minister, although his lead is only two points.

National has been ahead of Labour since Mr Key became National leader in December 2006 but apart from a surge in his popularity in May because of his role in the anti-smacking-bill compromise, Helen Clark has convincingly led the preferred prime minister polling. That has reinforced the view that despite poor party polling, she is Labour's strongest asset.

But in the past month, Mr Key and the National Party have both gone up 7 points in the survey.

Mr Key is preferred by 46.3 per cent of decided voters and Helen Clark by 44.3 per cent in the poll, conducted between February 11 and 28.

In January, Helen Clark was ahead of Mr Key by 10.5 points.

New Zealand First leader Winston Peters polled 3.3 per cent. Trade Minister Phil Goff, often tipped as the next Labour leader, scored no support as preferred prime minister.

The gap between the two main parties is so wide and coalition partners so limited for Labour - the Greens are below 5 per cent - that National could easily govern alone if the poll's figures translated to votes.

National is on 54.5 per cent (up 7 points), 18 points ahead of Labour on 36.5 per cent (down 2.2).

In the January survey, the gap between the parties was only 8.8 points.

Gender bias between the two leaders persists - men disproportionately favour Mr Key and women disproportionately support Helen Clark as prime minister.

The poll shows that voters aged over 60 have a strong bias towards National and New Zealand First.

It also shows that New Zealand First supporters have a strong preference for a coalition with National over Labour (90 per cent v 9.1 per cent) and that Maori Party supporters are not overwhelmingly disposed to a Labour deal - 57.1 per cent of Maori Party supporters would favour a deal with Labour, but 42.9 per cent would favour a deal with National.

The poll was conducted after an intense political start to the year in which both leaders made "state of the
nation" speeches and announced policies on youth crime, education and training.

Polling began after both leaders visited Waitangi, where Mr Key's meeting with Tame Iti received top billing, as did Helen Clark's aversion to Te Tii Marae.

Helen Clark hinted at media bias, saying last night through a spokesman: "Obviously the Leader of the Opposition has had a lot of publicity since the beginning of the year." She believed Labour polling was holding up and was reasonably close to the 1999 result - 38.74 per cent - when Labour took office.

"The important issue now is who has the best plan for the future," she said.

Mr Key did not believe he'd had more publicity than Helen Clark at the start of the year "and in fact she got enormous coverage from the [Sir Edmund] Hillary funeral ... not that that was political."

He believed they both received extensive, though contrasting, coverage at Waitangi.

He said he never thought his hongi with Tame Iti would damage him in the eyes of the voting public.

"I thought the mood of the nation has moved on and they started looking at Helen Clark fighting the battle that has been and gone and I think they responded positively to me wanting to engage and make a day of national celebration rather than harbouring some sort of historic dispute."

Support for the Greens is showing some volatility, falling to 4.4 per cent from 9.1 in the previous poll and 3.5 in the one before that.

New Zealand First is down 0.7 points on 2.1 per cent.

Falling below the 5 per cent threshold means neither party would win seats in Parliament unless they won an electorate.

Mr Peters has not yet confirmed that he will try to regain his former Tauranga seat, won last election by National's Bob Clarkson.

The Maori Party polled 1.5 per cent (up 0.5), United Future 0.4 (up 0.4), Act 0.4 (down 0.3) and the Progressives were unchanged on zero.

Tax cuts remain the issue most likely to influence votes, 20.7 per cent of those polled listing it top.

* The poll was of 734 respondents, and results presented are from decided voters only. The margin of error is 3.6 per cent.


Related Political Animal reading

Helen Shoots herself in both feet

Colmar Brunton Poll and comment

c Political Animal 2008

Sunday, March 2, 2008

Buffett dines out on a good result: You can too!



The enduring brand "Coca Cola" is one of the companies that
has made Warren Buffett's investment portfolio such a rip
roaring success.


*Get the latest Warren Buffett letter to shareholders here- Direct PDF 464 KB
*In blog format

*letters going back to 1977 also available here



Let me pick out some of my favourite parts from warren Buffett's latest letter to Berkshire Hathaway(BRK-A) shareholders. Gems of investment gold for readers to take on board:


"Insurance float – money we temporarily hold in our insurance operations that does not belong to
us – funds $59 billion of our investments. This float is “free” as long as insurance underwriting breaks even, meaning that the premiums we receive equal the losses and expenses we incur. Of course, insurance underwriting is volatile, swinging erratically between profits and losses. Over our entire history, however, we’ve been profitable, and I expect we will average break even results or better in the future. If we do that, our investments can be viewed as an unencumbered source of value for Berkshire shareholders".

That 59 billion that Berkshire Hathaway has isn't profit or retained earnings it is cash flow that has come in directly through the company's many insurance business.

That shows the importance in business that cash flow has and what you can do with it. In Buffett's case he has spun-off proceeds from the big money earner to use to buy other businesses. This is something I do with my share portfolio. The big dividend payer(around 15% net annual div) Sky City Entertainment(SKC) I have used consistently to buy share holdings in other companies I like, the NZ$20000.00 I receive in annual dividends from SKC and my other portfolio holdings have helped build my holdings consistently.

Nowhere as big as the Big Buffett Boy's portfolio but who knows, I could get there in the end.

Buffett and his business partner Charlie Munger have strict criteria when picking businesses to buy:


'Charlie and I look for companies that have a) a business we understand; b) favorable long-term

economics; c) able and trustworthy management; and d) a sensible price tag. We like to buy the whole business or, if management is our partner, at least 80%. When control-type purchases of quality aren’t available, though, we are also happy to simply buy small portions of great businesses by way of stockmarket purchases.

It’s better to have a part interest in the Hope Diamond than to own all of a rhinestone.
A truly great business must have an enduring “moat” that protects excellent returns on invested
capital. The dynamics of capitalism guarantee that competitors will repeatedly assault any business “castle” that is earning high returns.

Therefore a formidable barrier such as a company’s being the low cost producer (GEICO, Costco) or possessing a powerful world-wide brand (Coca-Cola, Gillette, American Express) is essential for sustained success. Business history is filled with “Roman Candles,” companies
whose moats proved illusory and were soon crossed".

I simply love the idea of what Buffett calls a "moat" business and the importance he places on that moat being retained as long as possible so as to achieve spectacular returns.

It is hard to pick a moat business in New Zealand but one that I think fits his criteria somewhat is Goodman Fielder(GFF), the Australasian food giant, that I have a small holding in. While not as moat worthy as Buffett's large shareholding in Coca Cola(KO) or Gillette, GFF is more like Buffett's shareholding in the company, Kraft Foods(KFT).

Plenty of brand strength, easily understood companies and steady, if not solid cash flows.

People have to eat!

While Buffett commented on the sad state of Americas trade imbalance with the rest of the world, especially China, pointing the finger at overspending US citizens on credit, he also looked for the long-term in his country's economy:


"At Berkshire, we will attempt to further increase our stream of direct and indirect foreign earnings. Even if we are successful, however, our assets and earnings will always be concentrated in the U.S.


Despite our country’s many imperfections and unrelenting problems of one sort or another, America’s rule of law, market-responsive(capitalistic) economic system, and belief in meritocracy are almost certain to produce ever growing prosperity for its citizens".

Very true, but longer term China is going to finish first, if it doesn't return to that other "ism", communism.

The United States must turn its hand at being a much larger exporter, its goods are in high demand overseas and its lower dollar makes China a very big opportunity for them indeed. Their protectionism when it comes to trade must be lowered dramatically.

Now while Buffett's politics are more to the left of centre and mine are more truly capitalist, I would give Buffett more benefit to himself for his success in life rather than his "start in life":

"At 84 and 77, Charlie and I remain lucky beyond our dreams. We were born in America; had

terrific parents who saw that we got good educations; have enjoyed wonderful families and great health; and came equipped with a “business” gene that allows us to prosper in a manner hugely disproportionate to that experienced by many people who contribute as much or more to our society’s well-being.

Moreover,we have long had jobs that we love, in which we are helped in countless ways by talented and cheerful associates. Every day is exciting to us; no wonder we tap-dance to work. But nothing is more fun for us than getting together with our shareholder-partners at Berkshire’s annual meeting. So join us on May 3rd at the Qwest for our annual Woodstock for Capitalists. We’ll see you there".

Buffett is wrong, the "business gene" that he talks about is inside everyone. While Warren may have been lucky in business and investing a few times, it is what he learn't for himself that made him the success he is today.

He studied, worked hard and had the stick ability and long-term goals to be able to achieve what he did.

Most of us are capable of the same.


Related Share Investor reading

Warren Buffett's 2007 letter to Berkshire Hathaway highly anticipated
Warren Buffett 2007 Letter in Blog Format
Global market meltdown: What is Warren Buffett doing?
The Intelligent Investor: Book review



Related Amazon Reading

The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition)

The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) by Benjamin Graham
Buy new: $14.95 / Used from: $10.74
Usually ships in 24 hours


c Share Investor 2008



Saturday, March 1, 2008

Warren Buffett's 2007 letter to Berkshire Hathaway shareholders highly anticipated

http://johnfenzel.typepad.com/john_fenzels_blog/images/warren_buffett_1.jpg
Warren Buffett's Legendary letters to Berkshire Hathaway shareholders
will be even more poignant in 2008. Investors around the world will be
looking for words of wisdom from "The Sage of Omaha" given the current
market and economic turmoil.


Berkshire Hathaway Annual Letter to Shareholders 2008 - Read the latest Berkshire Letter; out 28.02.09.

Berkshire Hathaway Annual Letter to Shareholders 2007




*letters going back to 1977 also available here


Warren Buffett's letters to Berkshire Hathaway shareholders(BRK-A) are legendary long winded things.

The release of today's letter in a few hours will be perhaps more anticipated than most. Market turmoil, credit crunches and the like will see investors flock to read what he might be doing at this time and where he might be heading and indeed where he sees the world economy going in the short to medium term.

These opus' of Buffetts generally run on for 20 pages or more but they usually contain more than their fair share of sage advice from the worlds most successful investor the world has ever seen.

I anticipate that he will see opportunity rather than negativity, as assets retreat in value and he can see these assets fall into his mantra of businesses as "value investments".

Berkshire had an investment gain of over US$12 billion dollars in 2007 and the share price over the last year increased from just over $100,000.00 to just over $140,000.00.

You can read the whole Warren Buffett letter here but I would just like to quote a very illuminating piece from its 21 very interesting pages:

" I made an even worse mistake when I said “yes” to Dexter, a shoe business I bought in
1993 for $433 million in Berkshire stock (25,203 shares of A). What I had assessed as durable competitive
advantage vanished within a few years. But that’s just the beginning: By using Berkshire stock, I
compounded this error hugely. That move made the cost to Berkshire shareholders not $400 million, but
rather $3.5 billion. In essence, I gave away 1.6% of a wonderful business – one now valued at $220 billion
– to buy a worthless business.

To date, Dexter is the worst deal that I’ve made. But I’ll make more mistakes in the future – you
can bet on that. A line from Bobby Bare’s country song explains what too often happens with acquisitions:
“I’ve never gone to bed with an ugly woman, but I’ve sure woke up with a few.”

You wont find many CEO's detailing their mistakes in company reports, especially with such, candour, humour and a willingness to take responsibility for them.


Related Share Investor reading

Berkshire Hathaway Annual Letter to Shareholders 2008 - Read the latest Berkshire Letter
Berkshire Hathaway Annual Letter to Shareholders 2007
Warren Buffett 2007 Letter in Blog Format
Global market meltdown: What is Warren Buffett doing?
The Intelligent Investor: Book review

Related Amazon Reading

The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition)

The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) by Benjamin Graham
Buy new: $14.95 / Used from: $10.74
Usually ships in 24 hours


c Share Investor 2008

Friday, February 29, 2008

Sacha Cobern's column a slap in the face for Deborah Morris-Travers

Sacha Cobern has this week sparked debate from those sensible people with commonsense, who believe smacking a child should be a valuable tool in a parents toolbox and that government have no business putting their sticky beak noses in our business. The fear that parents now have over the anti smacking law, has already led to many parents labeled as abusers for lightly smacking their kids and has undermined the authority of good parents all around the country.

I am aware myself of two cases of children telling on their parents and these two accounts haven't hit the media like others have, probably because parents want to keep things secret for fear of being labeled abusers by do gooder socialists. There are bound to be more of these undisclosed cases.

Sacha's piece has sparked a violent, incoherent, high minded and intellectually offensive outburst by a former minister of Parliament, Debra Morris-Travers, an employee of the State backed Barnardos, a former advocate for children but now an extension of the Labour Party propaganda machine.

"If anything, that side of the debate has been too earnest and intellectually-based and that's why so few people seem to understand what has driven the law change.

The media's refusal to give coverage to the evidence and research supporting the law change is the only reasonable argument for a lack of intellectual rigour in the debate".


Morris-Travers contends that she practices what she calls "positive parenting" so by exclusion labels parents who smack negative and clearly criminal for "assaulting" their children by lightly smacking them.

In another poke at the average Kiwi she labels them as too stupid to understand the "intellectual debate" over the repeal of section 59, when it is clearly very simple, parents need to be able to correct their children's behaviour with every reasonable tool possible. Nothing complicated about that.

Like Helen Clark she blames the media for it not revealing the facts supporting her case. The reason none have been forthcoming is that those "facts" do not exist.

Read both and then decide for yourself who is talking garbage and deserves a smack on the behind.


c Political Animal 2008




Sacha Coburn: Smack on the hand worth time in jail

5:00AM Tuesday February 26, 2008, NZ Herald
By Sacha Coburn

I agree with Bob McCoskrie and Larry Baldock. Eight words which churn my stomach as I write them. When left-leaning, social liberals like me are forced to align with the fundies speaking in tongues and organising petitions, you know our little country at the bottom of the world has gone mad.

I want to smack my daughter. At least twice today I'm likely to threaten it and may even make meaningful preparations to carry it out. Send her to her room. Get the wooden spoon out of the drawer. Enough to be arrested for an attempted smack, I'd have thought. Is it wrong to fantasise about a night in the lock-up?

"You mean that in solitary I'd be by myself for 23 hours in a row?"

Smacking my son was a parenting strategy of last resort and was immediately effective when dealing with defiance and dangerous situations. I've never smacked in anger and never without issuing a final warning first. I'm a text-book smacker. Pin-up girl has a certain ring to it.

But now, with my precious Portia, aged 2 years 8 months, my tool box is looking a little empty.

"No," she says. "I won't put my seat belt back on." Try reasoning, Aunty Sue B suggests. "If we crash, you'll get hurt."

"No, I didn't."

Try praising the good behaviour, says Aunty Cindy K.

"Mummy loves it when you wear your seatbelt."

"No! I love Daddy!"

Wait out the bad behaviour, advises Aunty Dianne L.

Good idea until my phone rings: "Hello Sacha, are you coming to get your son from school today? It's 5.30pm and the cleaners are going home."

"Not yet," I reply. "Just wearing Portia down, should be there by midnight."

Scare her, suggests my guardian demon.

"If you don't put it back on, tonight I'll close your bedroom door and leave the light off." Cue screaming, but still no seat belt. What kind of parental monster uses fear of the dark as a legitimate tool?

The problem for me is that I love the law and the democratic process. As a lawyer, I understand the benefits of obeying the law and the potential consequences of disregarding it. I want to parent within the law and I want to be able to use smacking as one of many parenting tools.

I'm a bloody good parent; well-read, patient, on the Board of Trustees even. I know that clothes driers are for clothes only and that I shouldn't leave my child with the man next door who's on bail awaiting trial for manslaughter. I understand the food pyramid and surely I get brownie points with the Greens for breastfeeding both babies past 12 months.

I don't believe smacking is for every parent or every child. I don't believe that it's an effective tool once children get beyond four or five. I wouldn't insist that you smack your child, but I don't believe Parliament fixes anything by taking away my right to smack mine.

Sue Bradford told us that we had to stop treating our children as property. They are people too, with their own minds and their own rights. Illuminating stuff. But the police officer who pulled me over and asked why my child was wandering willy-nilly around the backseat didn't buy it. I am apparently totally responsible for her well-being and behaviour, but not to be trusted when it comes to making parenting decisions about how to develop her sense of right and wrong.

Perhaps the most frustrating aspect of the whole smacking debate is the lack of intellectual rigour evident on both sides of the issue. To continue the rhetoric about child abuse and smacking having any casual link is absurd - as all of us who were smacked-not-beaten as children can attest. And to suggest on the other hand that God gave us the right to smack is equally offensive - he also okayed some other pretty dodgy ideas.

The obvious victims remain. Children who are violently abused in their homes are no more protected than they were before the law change. But my own daughter is undoubtedly a victim too and our whole family suffers the consequences of her strong sense of self-above-all-else.

She has, in the past six months, learned that there are few sanctions I can impose on her that are meaningful enough to deter her from her intended course of action. She knows that if she screams loudly and for long enough she might not get her way but, by golly, there'll be a flurry of action around her. In short, she has learnt that behaving badly works.

How ironic if, in years to come, the lack of corrective smacking in childhood is raised in mitigation of criminal offending.

* Sacha Coburn is a Christchurch businesswoman, lawyer and mother.