sign uplog in
Want to go ad-free? Find out how, here.

Summer KiwiSaver's Martin Hawes says this is a time to hold your nerve and your course. It may nerve-wracking, but to enjoy the recovery when it comes, the only certain way to own shares for the upturn is by having them now

Summer KiwiSaver's Martin Hawes says this is a time to hold your nerve and your course. It may nerve-wracking, but to enjoy the recovery when it comes, the only certain way to own shares for the upturn is by having them now

By Martin Hawes*

Buy in gloom, sell in boom. It is so easy to say and it sounds so logical – but most people do exactly the opposite.

In reality, most people buy when markets are raging, when there seems no limit to gains except the blue sky above. When it seems like the market cannot fall and everyone talks about the gains they are making, there is a general belief that this time it is one-way bet. And so they buy - right at the top.

When the market falls inexperienced investors go through several stage of grief: disbelief, denial, anger and, finally, capitulation. With capitulation comes the sale of investments at a loss.

That people buy and sell at the wrong times is natural. Markets are largely driven by emotion: greed when markets are booming and fear when they are falling. Our species seems naturally wired to work like this and so we forget the logic of buying at the bottom – when we are in deep gloom, we are too fearful to even consider the idea of buying.

One of the very good things about KiwiSaver is that we are effectively dollar cost averaging into the market – we drip feeding our money in, buying at good prices for a times, then bad prices. And so, we get an average price across a time.

Moreover and perhaps even better, most of us cannot get our money out – we cannot sell out, take our money and run. Such a fear-inspired step is usually disastrous because the sale happens just at the wrong time.

However, there is one thing KiwiSavers can do which is nearly as damaging: we can move our KiwiSaver from growth funds to conservative funds. And, regrettably, it would seem that a lot of people are doing just that at the moment.

Most people understand that the difference between a growth fund and a conservative fund is that the growth fund has more shares than the conservative fund – the growth fund could be made up of 70% shares, whereas just 30% of the conservative fund is shares.

When you move from a growth fund to a conservative fund, your manager has to sell shares – in effect, you are selling shares at just the wrong time; rather than buying shares in gloom you are selling them.

We have to assume that markets will recover from the crisis – they always have in the past and although we cannot say when they will recover you can be pretty sure that sooner or later they will. This is the fourth major crash that I have lived through and, although it feels like the worst, both the 1987 sharemarket crash and the GFC felt pretty bad at the time. Nevertheless, although there were people in 1987 and at the time of the GFC who thought that there be little or no recovery, both slumps did end and markets recovered well.

You need to be in the market for the recovery that will inevitably come. I cannot say whether this recovery will be in six months or two years (it may even be longer or shorter than those times) but I am confident that it will come. You need to be well invested when it does and usually that means holding right through the slump.

Of course, there are people who have intentionally moved from a growth fund to conservative with a plan to buy back into growth when we find the bottom. They are trying to protect value in their funds and then profit on the upswing.

These people are trying to time the market. While I understand what they are trying to do and applaud their intentions, they have to realise that precise timing of markets is fraught: no-one rings a bell when the bottom is reached and, to borrow another old saying, only one person buys right at the bottom. That is unlikely to be you. As the market falls, there will be plenty of false bottoms; you will have to pick the right one.

The risk that this strategy runs is that the real bottom is reached and the market bounces hard and fast off that bottom leaving our adventuress KiwiSavers stranded in a conservative fund.

Recently, research house, Morningstar published a paper which showed if you missed the single best month in any one year, returns were drastically reduced. Morningstar concluded that although market-timing may improve portfolio performance, it is difficult and if unsuccessful leads to significant opportunity loss. Selling to buy back in at the bottom is risky and not likely to be as easy as it sounds.

KiwiSavers should adopt a buy and hold policy. For most, KiwiSaver is a long-term retirement savings scheme and you should set yourself up in a fund with the right amount of risk and then hold on. Remember also that you are dollar cost averaging – i.e. you are regularly contributing to your fund and so, at times like now, you are buying very cheap shares.

This is a time to hold your nerve and your course. I know it is nerve-wracking but, more than anything else you want to be able to enjoy the recovery when it comes. The only certain way to own shares for the upturn is to own them now.

*Martin Hawes is the Chair of the Summer Investment Committee. The Summer KiwiSaver Scheme is managed by Forsyth Barr Investment Management Ltd and a Product Disclosure statement is available on request. Martin is an Authorised Financial Adviser and a Disclosure Statements is available on request and free of charge at This article is general in nature and not personalised advice. Summer competes with banks and other KiwiSaver providers.

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.



"the only certain way to own shares for the upturn is by having them now"
I'm sorry. But that is just incorrect, on so many levels.

How about owning, say, Virgin Airlines shares? IF the company survives, what will its dividend policy and share price look like?
"Virgin Australia on Wednesday announced it had suspended 8,000 of its 10,000 workers as it slashed domestic flight capacity....more than 1,000 of the workers it has stood down this week will probably be made redundant" Yes, That s just an isolated example, but its indicative of what we see about us this very Level 4 day.
ALL asset markets have risen to unprecedented levels spurred on by 40 years or more of never-ending debt creation; lower financing costs and a consumer whipped into action by FOMO.
Those days are over. You can wait for them to return if you like. But IF you keep your job; IF you don't see your current assets portfolio deteriorate in 'value" ( the biggest of them being any property you may own or live in) then you MAY have an appetite for investing in the share market - that you can do at any time and be just as successful or not as any other time. why share prices are where they are on any given day; current news and expectations. The Future is already baked into today's share prices. ( and to me, it ain't looking good!)
But "the ONLY certain way to own shares for the upturn is by having them now" is yesterday's, prayer-like thinking.

Say a prayer bw. Pray that we're released in 4 weeks by aunty jacinda, anything longer will mean more pain for companies and shareholders

I am picking that most probably life will not be returning to normal in four weeks.
We may have averted Convid-19 within the country by then, but it will still be present in other parts of the world (rampant in the USA given Trump) so I am expecting our borders at least will still be in lock down for some time more.
Factor in at least Level 2 beyond four weeks.

Totally agree with this.

Absolute, absolute BEST case scenario we can hope for is ONLY a 4-week lockdown, maybe and following that ongoing severe restrictions... gradually easing.

Maybe it will become part of the weather forecast...

*owning very good companies with good fundamentals. Anything with substantial debt and low return on invested capital, forget it. And it could be a way yet before the market bottoms out.

You more than likely correct there P8. Spare a thought for those parents of toddlers right now or more to the point in 3 weeks, it could be "pandemonium". No johnny you cant go to the park, no johnny your friend cant come over, johnny stop hitting your brother. I have already witnessed a police car speeding up the road. And how about those on a diet of fast food... will have to enjoy home delivery of my food bag instead.

I understand that my food bag is limited to existing active customers

Heh. I started working from home on Monday, i'm an estimator and work certainly hasn't dried up. Have had my 3 year old at home all week which have proven a real challenge. Took her for a quick trip down to the dairy on Tuesday for an Iceblock only to receive a stern telling off from my wife .....after she stopped by the Garden Centre on her way home from work to get some lawn food/seed.

Good luck nzdan with the lockup oh I mean lockdown with your wife and child. Look after them well or its going to be a long 4 weeks. For me I am stuck in close proximity with the wife and no chance to go to the bach to escape. There are even cops telling people they cant go for a stroll and making them return home. Police state run by idiots.

I would never buy an airline share. Buy the airports. Auckland and Sydney. They clip the ticket on all flights. These airports have already bounced back. Will the bounce hold?

Investing in a falling market III


Why wouldn't you invest in a falling market? Seems odd.

A couple of years back i think it was Te Kooti was going on about "shorting" the housing market.

The last time I invested in a falling market, a bit over 10 years ago, I made a killing. Doing the same now, quite cautiously though, as this is worse than the GFC, so it is easier to get burned. I am only buying unhedged - my bet is for a falling NZD.

Excellent advice.

My kiwisaver is down $22k. And if it gets to $90K down my course of action will still be the same - do nothing.

(Edit; Sorry! You updated your post to explain your thinking! I hope. Because if your $22k down and you will still do nothing at $90k down, I'm not sure what to say. I hope "I'll do nothing if it gets $150k down either" isn't the answer)

Martin's article explains the rationale for my strategy pretty clearly. I agree with every point. I won't be switching my kiwisaver fund now matter how much it drops.

Good for you! I'd be buying a few Put Options after this rally, just in case. You might want to consider that .........

BW - you havent done the maths.
The markets down what 25% and your friend DD there is 22K down. His KS then was worth about 88k only before TSHTF.

We have to assume that markets will recover from the crisis – they always have in the past and although we cannot say when they will recover you can be pretty sure that sooner or later they will

I'm sorry. But no. Recent history might generally provs me wrong and the financial advisory world in Anglo Saxonia will say I'm out of order, but some things have never recovered. Case in point: the Nikkei and even the China markets (thinking specifically about the Shanghai index). The idea that the West is ready for Japanification is not some goofball idea. What Martin is essentially saying is that the past 40 years will continue for the medium- to long-term without even considering why the developed world in particular finds itself in this steaming dung.

Markets will recover in some way (in fact they recover and recede on a daily basis), but we need something better from the likes of Hawes, Holm, etc who think plodding away in ETFs is all you need to do (still own ETFs by the way, but sold 100% of my primary fund because my intuition was sensing all the bullshit in Aug last year).

No disrespect to Martin, but think for yourself and challenge perceived wisdom.

Everything is turning Japanese. It was the only way - it was just a matter of when.

House prices there still haven't recovered to the 1990 peak have they? 30 years later?

Is the rest of the world catching up with them?

The only question to ask of Mr Hawes is how did he position his portfolios prior to the previous four crashes that he has lived thru . Mr Hawes should be also aware before the stages of anxiety we go thru hope, optimism,belief, thrill, euphoria and COMPLACENCY. Another delusional expert that expects to be rewarded a management fee for non performance.

So Martin, do you think the market has already priced in at least a 4 week shutdown and having our borders closed till maybe July next year and a worse situation overseas. I think almost anyone can time sub optimally time the market at the moment. This is not a normal crash with purely financial causes.

The chances of shares having a sustained rebound in the next 2 months is wishful thinking and it can get a whole lot worse. Give people some credit that they will remember to move it back when they think we are past the worst.

Yep, production and commerce has just started falling. We're going into the recession, not out of it. People expecting it to be over in 4 weeks, 2 months... all delusional.

"Investing in a falling market: The art of catching a falling knife."

"We have to assume that markets will recover from the crisis – they always have in the past"

Only a fool would assume this. Shares have gone, property too (just not showing yet), now they are starting on our cash by helicopter money...billions going out the door this week. OBR next?

This time IS different.

Someone posted over in Aussie to "Transfer your Super balance over to a new provider now! Reason? They rebalance their portfolios once a month and any transfers during the month ( that they are obliged to do on a cash basis upon receiving notice) are done at the last Unit Price struck ie: 29/2/20 - the end of last month"
Anyone know if that applies here, or even if it does there? If so, then shifting providers before they strike the next Unit Price, which will reflect this months chaos, looks to be a sensible move, although it may already be too late - the number of days left this month are few.

Oh. And on that score - the last couple of days of market movements? It's nearly the end of the Month/ End of the Quarter/ End of the Half Year and End of the Year for those who have a bonus struck. Higher is better than lower at a time like this! Especially if that Bonus is paid on a Realised Basis, not a Revaluation Basis ( Those who have been short will want to lock the cash in and be evaluated on a Realised Basis)

Martin my wife has resisted moving both our KS out of conservative for a long time. Good on her.
You have said that moving out of aggressive into conservative is the wrong move now. Fair enough. What about the opposite?

I'd give at least another few months (at least) - things are more likely to get worse before they get better so the stock market will likely fall further yet. If you think you're smart enough to time the market then yes your strategy is probably correct - but what Martin what saying is that is easier said than done.

If you wanted the benefits of dollar cost averaging, and had a fixed sum of cash you wanted to invest, I'd just drip feed it into the market over the next 12-24 months and you'd probably do quite well.

Perhaps you could slowly move from conservative to balanced to growth to imitate the benefits of dollar cost averaging and slowly increase your exposure to the stock market?

I really, honestly hope that the optimism on the NZX the last few days is justified (some shares up 50%).
This would indicate the current situation in the world can recover in the medium term. Again, I really hope this happens, but I am not convinced unfortunately. I see long term effects to play out here.

Martin - any thoughts on RBNZ and government response so far?

Isn't this all early days? The last two crashes each took over a year to play out and for indexes reach the bottom. With this one being so different and hitting on so many levels it seems more like blind optimism to jump into aggressive at the moment. Maybe I'm wrong but as the saying goes "I am not so much concerned with the return on capital as I am with the return of capital" and I think that's how I'll play it for a while longer.

Yes it could take a while to bottom out, despite the bear market rally this week. We haven't even had any data for the first quarter yet, and the second and third quarters are likely to be terrible. No doubt markets will overreact on the downside, but I don't believe they have yet, given how elevated the market was. Having said that, some stocks are down 60-70%, so worth having a look and access each one individually. Financial stocks are being hit hard, as have travel and retail stocks (obviously). Some of those may not survive. Great companies will still survive and thrive, and stocks are a slice of ownership of the company.

Agreed, there are definitely opportunities out there however they do require a sophisticated investor to identify them correctly. Beyond me at this point so I'm sticking to trying to pick the bottom and then going for indexed funds. I think I'll do the same with my KiwiSaver as well - conservative currently then switch to aggressive later.

Anyone else here on Morningstar? The last few years there have been very few 5 star stocks (i.e. those they consider to be BUY), but the last few weeks my daily email update just had lists and lists of them. Bit like duck shooting - too many targets so difficult to focus attention on one. But then like you suggest above, it could be best to just wait until some earnings reports come out. And how do we know those companies will survive what is to come?

Some suggest that if the US falls to 20% unemployment, we may see an 80% in US stocks.

It will be surprising if this isn't the Great Re-set.

If it isn't, it's the curtain-raiser.

I wouldn't have an 'investment' of any financial kind from here on in. Physical yes. Financial no.

Invest in things that will reduce your financial overheads in the future, and your reliance on others. I was thinking about it when we had that big power outage in Wellington a couple of weeks back. Sun was shining and everyone's fridges/freezers were idle. A couple of solar panels just to keep those bad boys going would be a big peace of mind. Water Storage tanks is another one.

""Investing in a falling market"". The wrong way of looking at it - there are many markets and most are falling but there are places where undertakers are doing well. Investors have to think what is ahead and invest accordingly. Of course that can result in following the herd into Tesla and risky tech stocks.
When we get out of this crisis markets will have changed; more online shopping, more Uber Eats, fewer cruise liners, etc - your guess is probably better than mine.
However if I had money I'd place a bet on tourism. After 14 hours of house arrest I'm already dreaming of escape and initially it will be NZ - I'll take those rail journeys that always seemed too expensive and revisit Christchurch in spring and those boozers in Dunedin and cycling (electric bike) everywhere and it will be up market hotels and B&B not camping. Contemplating death will spur big spend tourism.

Good points.
But you may just have a lot less Tourism Providers to choose from. Many, aren't going to make it through this.

Smiggle owner Premier stands down 9000....Virus to damage 86pc of firms

As they go bust the Govt should buy them; put current management on a modest retainer, give the ex-employees a small share-holding to keep them interested and then sell shares to the patriotic public.

Or you could do something verging on the insider trading as the warehouse's leadership team were clearly upto by spiking the shareprice earlier in the week after claiming to be an essential service...naughty naughty...I wonder if that will be investigated as market manipulation? It should be.

"NZX Regulation is not able to comment specifically at this time on the announcement released by The Warehouse regarding its assessment of its status under the recently-announced Government categories of essential services.
A penalty of up to $500,000 can be imposed on a market participant who is found to break the rules of the NZX. A higher fine is possible if they are found to have benefited from the breach."

Liked that Bear photo, a silent reminder of where to.. this current rush. Remember what is the greed/Bull mantra? what goes up... will always go up, up, up and away, the opposite cautioning always portrayed as a looser... Bear.

Oftentimes the Bear has to rise up to get the honey and fruits.

On my desk in front of my mac I have a bronze Wall Street bull on one side and on the other a grizzly bear in dark wood standing upright and somewhat threateningly on his back legs. The bear is much larger than the bull. He's looking at me now with a 'told yer' sneer.

Markets go up, markets go down. If your in it for the long haul, you shouldn't be worried.

' and e

There you go, I found 'em for you. But seriously, you need to do some research before you make such statenments.

What part of my statements are incorrect?

And if you are going to correct my spelling, don't butcher it yourself. *Statements

Also, you are also coming off as borderline stalkerish. If you can't prove that what I have said isn't true, (that goes for what I've said previously as well) then piss off.

ha ha

Wouldnt like to be your neighbour! Especially in these times.

Your advice is way too general. Some shares never recover, and companies that are in poor cashflow health are often picked off by vultures who are buying up controlling interests as we speak. Most of us a fishing behind the net, regulation is so loose.

Chose the right investment for the long hall, then you shouldnt need to worry. It would be wise to monitor it, including the shareholding in turbulent times however.

Go take a pill and be kind in these times.

UBI, wipe student debt, free education, start making things here in NZ, fix up infrastructure, build houses for all, clean up the rivers and plant more trees, more balanced incomes for all. I wonder what direction we will head?

use the pine to build houses and the extra food to feed the poor. Closing our borders until we return to a "norm".


I think the economic consequences of the virus will go on for a long time - well beyond 4 weeks. And i believe that the markets have further to fall. However, KiwiSaver is a long term investment for most and you do not want to miss the recovery when it comes. I agree that Japan is still well below it peak after 30 years but the other three major crashes in my lifetime did see recovery as did most others before I was born. I do think that buy and hold is the best strategy for most KiwiSavers

Thanks Martin - appreciate your views.

Me too, thanks Martin!

Truely boilerplate investment advice typical of that regurgetated by those in the investment industry. Anyone with a thinking mind could steer clear of this mess at least until their job is secure. You don't get a pandemic every day.

Where is the advice about capital preservation? Didn't that used to be Investment 101?

Look at the sum total of your and your employers contributions (what you actually earned and saved), and if the amount in your KS account exceeds that amount - take the money - move it over to fixed interest and wait this one out with your fingers crossed.

I see no reason for 3 straight days of up market in the Dow Jones or NZX for that matter. I think these are computer driven, it just makes no sense. It is though the economic ramifications are not being taken into account. The markets were so overbought 4 weeks ago I think they need to drop another 15-20% on top of the 25% drop for me to hop back in. Waiting on the sidelines for the cat to splatter.
False optimism in not understanding the fundamentals along with computer buying and selling??? Any bailout package has to be repaid somehow.

Probably just a sugar hit from all the money printing; and widespread denial; general rolling repeated lockdowns are going to happen around the world for maybe a year.
I hope businesses are using the lockdown as an opportunity to develop strategies for safer reopening; no direction from above on this whatsoever sadly.
But could be a sign that the Markets think Govts will soon relax and trade blood for money in a macabre compromise.

I have been around the stockmarket for even longer than Martin- I'll be 75 next month- and if this crisis had come out of the financial markets, say the bond market, I would go along with what he says. But for me, the problem lies not in just how far the stockmarket might fall or when it might start to recover, but in trying to guess which companies will be left standing when the dust settles.
I was able to fully retire at 57. I don't pretend to be particularly smart, but I have been lucky. Right or wrong, for me cash is king now. Up to now I have never used capital as income, but with with almost 30% of my total portfolio-shares,bonds and a rental property- in cash, I am now prepared to top up income over the next few years from this capital. I expect to see my dividend income fall by 50%.
Others will pursue very different strategies and I wish them luck.

Early withdrawal of KiwiSaver funds under COVID-19

KiwiSaver is a voluntary, work-based savings scheme, designed to help people prepare for their retirement. The primary legislative objectives of KiwiSaver are to:

• encourage a long-term savings habit and asset accumulation by individuals,
• increase individuals’ well-being and financial independence, particularly in retirement.

The policy drivers for the implementation of KiwiSaver were the perceived low levels of private saving for retirement and a concern that middle-income New Zealanders, in particular, were at risk of experiencing a substantial drop in their living standards during retirement.

However, an IRD study into KiwiSaver, found evidence to suggest that KiwiSaver has not been successful in improving the accumulation of net wealth for its members and that KiwiSaver members actually accumulated less wealth compared to non-KiwiSaver members.

The IRD cost and benefit analysis also showed that each taxpayer dollar the Government spent on KiwiSaver, only resulted in additional savings ranging from 20-38 cents for the target membership.

The study also showed that the primary incentive for people joining KiwiSaver was for the employer contributions.

For those made redundant under Covid-19 and facing long term unemployment, KiwiSaver has become a luxury that is neither consistent with their reason for joining, nor their changing priorities.

This raises an important question as to whether KiwiSaver members should have early access to their funds outside of the current withdrawal criteria which are; (a) reaching the age of entitlement for government superannuation (age 65 but likely to keep increasing), (b) first home buyers, (c) financial hardship, (d) moving overseas permanently (excluding emigration to Australia) and (e) serious illness/permanent disability.

Individual’s best interests can only be served if they get the best possible return on investment applicable to any given world economic scenario. The KiwiSaver rules are currently forcing people to remain exposed to a risky share market producing negative returns or to remain with cash tied up in a fund that isn’t working for them.

KiwiSaver funds have suffered huge losses recently and those losses are unlikely to be recovered in the share market within a long term economic recession.

In the current situation, the cost of debt far exceeds investment returns, so reducing or offsetting debt is a prudent alternative to continued exposure to the volatile share market.

Other alternatives to consider are; diverting KiwiSaver funds into businesses or other investments which are safer or afford more control and liquidity. Some have been forced to retire early and they should not be forced to wait for their retirement funds. Others might wish to invest their funds to re-train or up-skill for new careers.

In summary, my belief is that for many, KiwiSaver is no longer fit for purpose in the post Covid-19 recession. The IRD study showed that even in boom times KiwiSaver was out-performed by alternative investments and that for taxpayers, the costs of KiwiSaver out-weighed the benefits. There is no incentive for those no longer enjoying employer contributions. There are many ways in which KiwiSaver funds can now be put to much better use in order to achieve the original objectives of asset accumulation, individual well-being and financial independence.

If you are interested in pursuing early withdrawal of your KiwiSaver funds outside of the current rules, then please sign my government petition at: