Rob at Polity points out National’s intensely unstrategic view about investments and asset sales. It is almost as if they wanted to waste taxpayers funds eh?
“Buy low, sell high” intones the finance industry. Search out a down period in the market, biding your time. When the prices are low enough, swoop in and buy all you can afford. Wait patiently as a later market upswing carries the value of your new possessions higher and higher. That is the path to financial security.
So if you are, say, a national government full of people steeped in the teachings of market finance, and you come to power during a down period in the market, and all the projections – including yours – point to the market improving, what should you do? Let’s ask New Zealand’s National government:
“Sell, sell, and sell! And for God’s sake don’t buy anything!”
Heckuva job, Billy.
In a down market where all the indications said “buy,” National sold our assets, and refused to invest in the Super Fund. Those decisions have cost New Zealand billions of dollars. The asset sales have fallen more than $2 billion shy of target, and cost another hundreds of millions to sell. And the Super Fund has been making returns of 21%, far exceeding the Crown’s cost of borrowing.
And, to add insult to injury, National will only start investing in the Super Fund again once the budget is in surplus, which will only happen when the global economy is in full effect, at which point the equities will be expensive again.
National’s economic plan: Sell low, buy high.