Smart generation of investors rises
Self-taught investor Murray Salt laughed when he heard the Financial Markets Authority’s annual survey showed investor confidence was up.
‘‘Generally I would say if confidence is very high in a sector you should probably be looking to get out,’’ he joked.
Salt, a former headmaster, owns the James Street Preschool and Nursery in the Christchurch suburb of Redcliffs.
As an investor he thinks longterm, and sets a long-term strategy, so rises and falls in investor confidence don’t faze him.
The FMA survey, released today, shows 65 per cent of respondents were ‘‘confident’’ about investment markets, up from 56 per cent in 2016.
Salt’s investment philosophy includes harnessing the power of ‘‘dollar cost averaging’’, which means buying shares in all phases of the markets, regardless of whether prices are rising or falling.
The investor confidence of people like Salt is based on the belief that in the long term history will repeat, and markets will rise.
That means short-term volatility, as market rises and falls are known, doesn’t dent their confidence.
Robert Todd, a property valuer from Invercargill, is another selfdirected investor who cultivates a long-term strategy.
‘‘My principles are to choose either good companies, or good products to invest in, and to be realistic that markets go up, and down, and there’s always going to be an element of volatility, and you have just got to accept that,’’ he said.
‘‘It might not be comfortable every year, but you have just got to stick at it.’’
Rob Everett, the FMA’S chief executive, was pleased with the results of the investor confidence survey, particularly the fall in the proportion of people who expressed no confidence in markets.
Part of this could be the ghost of the 1987 sharemarket crash fading from the New Zealand investing psyche, he said.
‘‘Since the survey started five years ago the portion of investors who said they were not confident has shrunk from 32 per cent to 20 cent.’’
While continued high returns were playing a part, Everett said: ‘‘All these scores show we are starting to see a shift in the public’s historic mistrust about markets and financial services.’’
Even market jitters hadn’t derailed investor confidence.
‘‘Prior to 2015 confidence built quite steadily and then, with market ructions last year, it dipped,’’ Everett said. ‘‘While market performance has been broadly positive this year, there’s been plenty of upheaval and uncertainty from Brexit and other international events.’’
Investnow’s Anthony Edmonds said confidence and knowledge about investment had increased significantly in recent years, especially among the young.
‘‘We have been blown away at the confidence and knowledge young people are accumulating about investment issues. People are catching on to key principles like looking through market volatility, the importance of taking a longer-term view, and diversification’’.
Edmonds attributed the increase in knowledge and confidence to the growth of Kiwisaver.
Despite the high levels of confidence, just four in ten people said they knew the FMA by name, and they were more likely to be wealthier, older men, living in Auckland or Wellington.
Everett was philosophical. ‘‘The broader awareness that there is a regulator, and it is watching, is what we want to see.’’
The survey found two-thirds of respondents felt confident financial markets were ‘‘effectively regulated’’, compared to 17 per cent who were not confident they were.