Paradox of the bandwagon buy
IT IS a paradox that most people do not want to make an investment when the vehicle represents good value. Hong Kong stocks were not a bargain when the Hang Seng was at 454, but at 9,000 it is a whopping bargain and time to enter to catch up with everyone else.
In 1981 US Treasury bonds yielded 14.5 per cent but nobody wanted them. Today at six per cent everyone seems to be buying.
People now know that US interest rates will always stay low. I don't know who told them that but that is not important; what is important is that they know this.
Today silver, gold, coffee, cocoa, corn, wheat and other commodities are cheaper than nearly anytime so far this century. Rubber, soya beans and other real things are at a bargain, as are silver, gold and platinum. Few want these bargains because they are not the flavour of the month.
Sometime soon the stock markets, especially Hong Kong and the US, will fall and everyone who is claiming there will be a market rise, will say I saw it coming as they did in 1987. Why don't they say it today before the event? The best fund manager THE best investment adviser or manager for your money is you. So-called professional financial advisers who want to advise you or manage your money for a profit to themselves, have nothing more than past history to go on.
Managing your money is too important to delegate; you have to do it yourself.
Can anyone explain why those who say they are qualified to manage your money at your risk with no guarantee are doing this? If they really are qualified to manage your money why haven't they managed their own so well that they don't have to bother managing yours? If a mutual fund manager really can pick winning stocks, why does the fund have 30 or 40 stocks? Which in itself, guarantees you do not get top results.
At best you will only get the average of the 30 or 40. If they are able to evaluate risk and reward, on your money; not theirs, why can't they have a fund with only one stock, the very best one? Most non-professionals can pick 30 or 40 stocks that will give average or even better than average earnings some of the time without the financial adviser or fund manager.
Investing in S Africa SOME investors want to play it safe in South Africa until the election scheduled for April, 1994, is held so they can see if all goes well. But there is a high interest bearing instrument designed for those who think the Johannesburg stock market will fallbefore the election, or for those now invested who want an insurance policy. The instrument is the ELFI BEAR TB 14.
The current clean price is 95.5 financial rand cents plus four financial rand cents for accrued interest. The annual yield is 25 per cent in commercial rand even though you will buy with cheaper financial rand.
The date for interest payment and redemption is April 1, 1994, and you must buy in lots of 10,000 financial rand. This offers a remarkably high yield. What you are actually doing is selling the JSE All Share Index short for five months so it appears worthy of consideration.
You can arrange this through any of the four South African financial houses in Hong Kong. Phone the South African Consul General's office if in doubt.
Leon Richardson is a well-known financial commentator and investor
