CURRENT CIRCULATION: DATE: ISSUE NO:
7491 16th December 2008 161
Welcome to Health & Life’s free email newsletter service. Tell a friend that we would be happy to add their email address to the distribution list. This service is to provide Health and Life’s clients and those who attended our presentations with up to date information on key financial and practice management issues that may affect your practice. Please do not use this as a substitute to seeking professional advice. Writer in charge: Mr David Dahm BA.Acc, FCPA, FTIA, Ffin, FAAPM, GLFG.
The 2009 Survival Guide Introduction Seasons greetings to you all. The credit boom has thankfully ended and it is back to basics where real people do real work like make food, build houses and look after others. No longer we hope, we have bankers and companies engaged in dubiously financially engineered products on spreadsheets that they themselves don’t even understand and then have them flog off to mums and dads for millions with no real substance or basis. Furthermore we hope it is the end of celebrity sports stars and politicians who are directors of these companies, who don’t have the experience to run a chook raffle let alone a major listed company. Hopefully more normal people like hard nosed experienced no name lawyers and accountants and people who have built their businesses from the ground up help companies through their governance and business woes and we can avoid the sense of entitlement, naivety and largesse that the past boards have enjoyed at the expense of the investor and taxpayer. Anybody can make money in a rising market, you don’t have to be terribly smart or a Wall Street guru. The world sharemarket has operated a game like pass the parcel with a hand grenade. The really smart investors perform well in doom and gloom and this is the real test. Unfortunately many of these high flying bankers and directors will not be in a job to show us their real talents. I am always concerned when financial advisers who bullishly advise people with rhetorical advice to invest in the sharemarket because it is at or near the bottom. All the governments around the world cannot bail out the worlds economic problems overnight, this is a bit naive. The bottom line is a painful purge has to occur before the real problems can be fixed and sustainable companies and company returns resurface in 3 years time from the lessons learnt. I will explain why later. Many financial advisers only make a living from commissions from buying and selling your shares (whether it is up or down) which may not always be a good idea. I am always wary when people are pressured to invest in a downward market which is like catching knives! Below are some ideas that might see you through 2009 and some issues or questions you should raise with your advisers. A crisis is a good thing if it can lead to change for the better so I don’t share the same pessimism that most have. My only rule is invest in things you understand and if not stay