By Amanda Morrall
1) What money can't buy
Harvard philosophy prof Michael Sandel is one of the most popular teachers in North America right now. Actually, according to this Guardian books review of his latest "What Money Can't Buy; The Moral Limits of Markets" his course on justice is the most popular class on the planet.
Sandel's moral preachings (er teachings) on money are hitting a chord with audiences worldwide who have begun reassessing our impaired economic systems and the perverse value we place on money amid the push to commoditise everything and every one.
A juicy little read - that is also one of the longest book reviews, if you can call it that, that I've come across.
2) G(girl) 20 power
I was interested to read about this little reported G20 summit (from the Globe and Mail) involving young women from around the world as they try to address on-going gender imbalances around the planet. Women still get paid less for the same job as men, they still occupy a pathetically low portion of seats in Parliament and around board rooms and still get treated like dogs, or worse, in many parts of the world. This report gives me hope of a better, brighter, more gender balanced world in the future. Incidentally, Canada wins the top spot to be born a gal.
3) Never stop working
Another working in old age reality check story from the Age newspaper. Basically, it tells us we can bid farewell to that old ideal of early retirement at 55. The article suggests shrewd savers, for every year they work past 55, can build up three years of savings. That is double what's been reported by Mercer NZ but you get the point; save more, save earlier so you don't have to stress (more than you will anyway) in old age.
4) Never stop saving
New Zealand Herald columnist David Chaplin summarises the week in savings stories and asks whether New Zealanders can really afford to save much more given the low wage economy.
Just to recap, we hit the week in savings mania hard with the Financial Services Council's warning about a 28% tax hike to cover New Zealand Superannuation costs in the absence of some political leadership (sadly lacking) to deal with the demographic time bomb. That was followed by a similar warning from the OECD about the need to extend pension age eligibility, Prime Minister John Key's "she'll be right (well until 2020)" weak response, ANZ's Wealth retirement savings barometer survey and then ASB's saving deficiency report. Pretty sure I missed another report in there some where.
Hopefully one of these messages has sunk in and you'll have done the calculations.
Here, once again, are some calculators to give you a rough idea of the savings you should target given your age and income and desired wealth in old age.
Sorted.org.nz's retirement calculator
5) The $100 billion oxymoron
If you bought in on the Facebook hype you'll want to give this one a pass. William Bernstein, writing for the Efficient Frontier Advisors, explains why puffed up IPOs like what was orchestrated by Facebook are something you want to avoid as an investor. Thank Rob Carrick for this find.
Whenever faced with a novel financial phenomenon, it's always useful to ask "What would Benjamin Graham say?" Most pertinent is his classic definition of "investing" fromSecurity Analysis:
Back in the 1930s, when Ben Graham first penned the above words, it was easy to find securities meeting those stringent requirements. Nowadays, it's a bit harder, so perhaps adding "a reasonable probability of " to "safety of principal and an adequate return" would not be uncalled for. It goes without saying that "investing" requires some computation: with a triple-digit P/E, Facebook will have to grow its per-share earnings by at least a factor of eight to justify its price (taking into account that the calculated per-share earnings probably does not include planned future issuance of shares).
How many Facebook purchasers do you think have exerted the considerable effort of estimating Facebook's future advertising revenues? Using the word "investor" to describe these folks is akin to calling Tony Soprano a Catholic. Joe Nocera got closest to the truth when he opined, "Virtually everyone who bought Facebook on that first day was making a one-day, get-rich-quick calculation. It didn't work out. Too bad." (To which I would add this silver lining: That the speculating public will still blindly overpay for growth and glamour strongly suggests that the value premium is yet alive and well.)
However acute the observations of Graham and Nocera may be, my go-to for general investment wisdom is a relatively unknown writer named Fred Schwed, who in 1940 wrote his only investment book, Where Are the Customers' Yachts? And indeed, on the subject of "investor" anger over the Facebook debacle, he does not disappoint:
The burnt customer certainly prefers to believe that he has been robbed rather than that he has been a fool on the advice of fools.
"Fool"? Most likely. "Investor"? Definitely not.
To read other Take Fives by Amanda Morrall click here. You can also follow Amanda on Twitter@amandamorrall
8 Comments
Quite a few peasants will be saving less in a few weeks as the RUC go up...
The low paid Kiwi, most of NZ, would do best if they learned to walk away from the thieving going on...dump the vehicle and get a bike...toss the fags...heave SKY repeats out the window...grow food and stop buying crap...make beer if you want to drink it...do the same with spirits...
The elderly in wgtn ought to head off down to Parliament and park themselves in the heated House...ditto the homeless.
http://thearchdruidreport.blogspot.co.nz/2012/06/parting-of-ways.html
Yep, Wolly, there's the quick and the others....
The others will always exist PDK...they are part of Darwin's wake up call....trouble is we are lumped with the socialists and pinky green do gooders wanting to bail out the failures and an electoral system that favours the slicing of the pork and the buying of the votes.
I'm inclined to agree. They're the same as the selfish mob at the other end of the see-saw. Just want their turn at 'up'.
The Greens are not Green, they're rapidly looking socialist, which will win votes but not change the system. Maybe it can't be done. Orlov wrote a good wee piece about hastening the collapse being the best approach.
http://cluborlov.blogspot.co.nz/2012/06/fragility-and-collapse-slowly-at-first.html
Im inclined to agree on the greens....I see social issues supporters and then it more nimby supporters than anything else........very little green energy focus or calling out the "oppositions" Though maybe as the arch druid points out the oppositions (left and right) are deluded .....if the greens expend mileage in "fighting" ppl who refuse to know, who ends up losing?
In terms of collapse NZ has a lot going for it.....if only we went and borrowd at 3.5% for 10 years...we could build lots of green infrastruture and I really wonder if anyone would be around to ask for it back.....we have 5 years I think max now.....its looking faster and faster....or closer and closer depending on how you want to think on it.
regards
Its both sides Wolly, whether its right or left, its just a different bunch who want to be in charge of cutting up the cake.. What they dont see or refuse to consider is the cake has not only stopped getting bigger and never will again but its going to get smaller in the next few years......the wailing will be immense....
regards
Morals are the foundations of markets. You can have enough laws and regulations to sink a battleship but if the people feel no moral need to follow them (or feel they are wrong) they are pointless.
We live in an age where everyone does what is right in their own eyes.
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