I've been thinking about the share market

[Clockwork]

The Big Short gives a unique insight into the dealings that led to the global credit collapse of 2008, and continue to affect global financial markets. It is downright frightening to read what incompetance and fraud exists in the upper levels of world financial markets, and by embarking on a foray into the stock market you stand to become a pawn to such traders.

This is my biggest concern, I think the odds are stacked against the little fish, I even suspect we are encouraged to jump in to share trading simply to provide a food source for the bigger fish.

[Winston001]

To really understand shares and capital markets you need to read about them, and keep reading. Benjamin Graham is the font of wisdom but for simple common sense, Warren Buffet (who learned from Graham) is very readable.

Our discussion here for example tends to focus on recent events when really you need a 100 year (or more) overview of sharemarkets.

The Global Financial Crisis is simply the latest in a long string of boom/bust surges in economies. What's interesting about the GFC is it was caused by a global property bubble, not equity markets.

[Naki Rat]

To really understand shares and capital markets you need to read about them, and keep reading. Benjamin Graham is the font of wisdom but for simple common sense, Warren Buffet (who learned from Graham) is very readable.

Our discussion here for example tends to focus on recent events when really you need a 100 year (or more) overview of sharemarkets.

The Global Financial Crisis is simply the latest in a long string of boom/bust surges in economies. What's interesting about the GFC is it was caused by a global property bubble, not equity markets.

Good advice except that what is unfolding on world economic markets presently is largely unprecedented and therefore past experiences are unlikely to be an accurate indicator of the vagaries of current economic trends.

[short-circuit]

I think the odds are stacked against the little fish, I even suspect we are encouraged to jump in to share trading simply to provide a food source for the bigger fish.

Well duh, ya don't say

[Winston001]

...I even suspect we are encouraged to jump in to share trading simply to provide a food source for the bigger fish.

No government, business journalist, or economist I've heard of has ever said the average person should get into share trading.

That is not investing.

[Jeremy]

No government, business journalist, or economist I've heard of has ever said the average person should get into share trading.

That is not investing.

Because horrifying things would occur to the government if the average person was clued up enough to invest on the sharemarket.

[avgas]

Because horrifying things would occur to the government if the average person was clued up enough to invest on the sharemarket.

Heh I giggled here.
Had an argument with a boss once as I told him quite bluntly we could run quite fine without the beehive. He (in his 60's) said "But we need the govt". I agreed and said as a whole we are too stupid to operate as a whole without them. Heaven forbid people having to put money where there mouth was

Now back to topic.

Clockwork I have scanned through what others have said and what you have said.....and clearly there is a disconnect (no offense to others on here, as everything they have said is right).

Perhaps you are missing a clear fundamental.
- There are no (geographical) boundaries to business or investment

Markets exist so that something of perceived value can be traded. Share markets exists so people can "invest" in a chunk of business. They can be investors locally or internationally. They can be 1 person, or a whole global enterprise. A healthy share market is the sign of a good economy not because it shows the sharks are making money - but because people outside NZ invest inside NZ.

Think of it like income tax. A high national amount of income tax is good. Not because of the benefits and how it will help the govt and the needy. Not because it redistributes the wealth. But because it shows a majority of Kiwis are making good money and living good lives. If income tax (total) is low (like in South America) in comparison to its population, it shows people are poor.

Share markets are shown the same way. Its funny because many people are now investing in China and are happy with 4% return. Why? because the return of 4% is offset by the fact that its a consistent 4% for 20-50 years. When I was in China, every second person I saw was on a computer looking at the stocks.

We all have to trade somehow. Stockmarket is just a way we can show trades in a business. There are few limits of who can trade where. It is global.

As for share trading. There is someone who does this (trading) in every walk of life. Hell its the price of milk in NZ. Don't judge the stock market by the share traders, judge it by the companies your INVESTING in. This will give the most consistent return.
The banks will take your money and do it anyway.

But never invest anything ANYWHERE you can't lose. This includes banks.

[Clockwork]

Thanks for taking the trouble to reply folks. Maybe I misunderstood when successive Governments (by this I mean Treasury, Reserve Bank etc) have made comments to the effect that Kiwis need to save more. I'm pretty sure the Thatcher Government in the UK was definitely looking to increase domestic participation in the share market, perhaps I just imagined that our current Government shared this philosophy.

Certainly the media's obsession with world markets and share price indices gives the impression that the value of the share market is directly proportional to its productivity. I guess I have just been questioning if this bares any credibility

Regardless, if the Government wants to "liquidize" their own assets, they are going to need a large injection of funds from (presumably preferably, Kiwis). But even the floats they are proposing are simply the speculative type of investment I was trying to define in earlier posts. These businesses already exist and will not grow by virtue of their sale, any money raised by selling them will not increase the Nation's productive capacity.

All I guess I'm asking is, is this really the sort of saving/investing that we need as a nation? I suspect not but I'm open to being persuaded otherwise, I'd just like to see the the arguments.

[Indiana_Jones]

Would it be wise for a person to buy shares?

I have no idea how it all works

-Indy

[aprilia_RS250]

Regardless, if the Government wants to "liquidize" their own assets, they are going to need a large injection of funds from (presumably preferably, Kiwis). But even the floats they are proposing are simply the speculative type of investment I was trying to define in earlier posts. These businesses already exist and will not grow by virtue of their sale, any money raised by selling them will not increase the Nation's productive capacity.

The gov't is not selling the assets (partially btw) to "make them better". They're selling the assets to fix their own "gov't" books. When you're borrowing 1m a week, and your tax take is lower you need to raise some funds, hence asset sales. Nothing changes with the how the asset functions, merely only ownership structure.

[Clockwork]

I'm not questioning the Governments motives for selling them (although I don't agree with them) I'm questioning the perceived benefits to the nation of buying them.

[aprilia_RS250]

I'm not questioning the Governments motives for selling them (although I don't agree with them) I'm questioning the perceived benefits to the nation of buying them.

Well wouldn't you prefer to have an option?

If the govt doesn't sell assets then you as a tax payer indirectly own the asset and the revenue from the asset goes to govt accounts and they decide what to do with it.

Once the govt puts the asset up for sale, you have the option to buy in. If you think the price offered is tasty then yeah dip in, otherwise do nothing.

So given the govt will put up the asset for sale it gives you an option to decide how much of this asset you want to own. Also as the govt sells the assets they use the funds to reduce their debt, again this is good for you as you know you won't be chased by the govt later on and have your taxes increased to help lower debt burden.

If you have ever done an accounting course you know that Assets = Liabilities + Equity. What the govt is technically doing is reducing the Asset part and simultaneously reducing the Liabilities part, why? Because the Liabilities part is getting too big for the govt. Key has looked at the books and probably shit himself. Someone's done some sensitivity analysis and gone, "hold on, we're loaning millions a week from China etc at super low interest rates, what happens once the world starts improving and yields go up given NZ's revenue won't dramatically change" . What you need to do the is start reducing your debt burden.

So the impact of not selling any assets and continuing to borrow and facing interest rate hikes will more than likely cost us more in the future than not doing anything...

[Clockwork]

I'd love to debate your points further but that's the subject of another (now deceased, thread). I'd prefer to keep this thread on topic and hopefully more philosophical than political.

Cheers

[avgas]

The benefits are simple.
Local control. Not govt control, not overseas control but local control.

You could argue that the govt answer to the people and selling the assets on the market will mean the average person gains nothing.

But how much are you paying for rego now?
The govt stopped listening a long time ago.

People don't just buy shares on speculation. They buy because they want to invest in a companies ideas. Or they buy to get some form of control over the company.

Wouldn't you like a bit more control over your power bill? That can be arranged. Simply buy some shares and you then get invited to a shareholders meeting. Then just take a loud voice.

Unfortunately it works like this in most situations:

- Shareholders

then

- Management

then

- Stakeholder concerns (customers etc)

So if you don't have investment, its very hard to get a point across to many companies. Not impossible, just hard.

[steve_t]

Is anyone considering buying shares in Tardme?

I have what I'd consider a small/modest share portfolio. I also have mortgages and business loans. Hindsight tells me I'd have been better off putting the money towards reducing these loans but I'm hesitant to 'realise' any losses I have made over the last few years. As long as I hang on to the shares, the losses remain paper losses.

BUT the thing I realised was that buying shares invests your money into someone else's business. If you're a business owner, why would you invest your money in someone else's business when you could be investing in your own?