Opinion & Analysis
As I sat at my desk this week watching a couple of hot stocks rally in an otherwise flat market, I imagined investors all over wondering whether they should join the party or risk missing out on this year's "next big thing".
OPINION: Nobody likes missing out on what, with hindsight, looks like an obvious buy; and making money quickly is always preferable to slogging it out. But experience has taught me that what seems hot is often not and that short-term sure things are rarely so.
I was interested to read an article entitled "Wall Street's brightest minds reveal their best investment ideas for the next decade," thinking it might provide some longer term inspiration. As is often the case, the headline promised more than it delivered, but there were some interesting ideas nevertheless.
For me, the more appealing investment ideas gathered from a group of traders, strategists and economists for the next 10 years were farmland, the Chinese consumer sector, real assets, water, and yourself.
The idea of owning real assets (such as land) over long time periods is not new and makes sense on the basis that it is limited in supply, it generally produces both yield and capital gain over time, it is unlikely to be disrupted by technology or a new competitor, and it meets one of the basic criteria for human survival (the ability to provide food).
The same logic applies to water as an investment - as one contributor says, the demand for water from emerging economies will collide with inefficient storage and distribution systems in the developed world, and climate change is altering the natural supply areas.
As for the Chinese consumer sector, former Goldman Sachs chairman Jim O'Neill described it as a "no brainer". He says that while the Chinese economy is not firing on all cylinders at the moment as the government is trying to slow growth to a sustainable level, it is nevertheless adding US$1 trillion to global GDP each year.
O'Neill says that "prosperity lives in cities" and China's rapidly urbanising centres are powering the country's economic growth.
As for ourselves being a great investment for the next decade, several contributors had variations on the theme. One said that the best investment is "in yourself, from both a physical and educational perspective".
The brightest idea from one contributor was "practising investment discipline" by conducting regular reviews, rotating assets, diversification and profit taking - back to basics stuff to keep every investor on track.
Another said that the best investment you can make with your marginal dollar (or hour) is "in your intellectual, social, physical and emotional capital".
He suggested ignoring conventional advice about trying to stay rich, and to focus instead on maximising your potential, which is the key to a richer, fuller life. He commented that "for the vast majority of people, time spent in front of the computer searching for next Twitter isn't it".
Contemplating investment ideas for the next 10 years made the hot stocks du jour a lot less interesting.
Carmel Fisher is managing director of Fisher Funds, an investment manager and KiwiSaver provider.
- Sunday Star Times