Be patient and you will move mountains
what it wants to do. However, he said it was not yet time for board changes.
‘‘I think the idea that does resonate with me is there are good parts of this business that are subsidising bad parts. That shouldn’t be the case. This is not a public services company, this is a company that is there to make money and maximise returns for shareholders,’’ Marais told the Australian Financial Review.
‘‘I think the company’s history is not great but we caught up with Roger and spoke about things like [online business] Trade Me and to be fair we had a good discussion about it and they did [sell Trade Me],’’ Marais said. ‘‘So we shouldn’t complain. ‘‘Is there anyone better? I don’t know. Should we just get rid of him? No.’’ Marais said his main gripe was that ‘‘this thing’’ was not being run the way a business should to maximise returns for shareholders.
Marais, also a shareholder in APN, bought into Fairfax at an average price of 80¢ a share but argues his losses could have been much worse.
‘‘We buy out of favour companies and sometimes they go lower than you ever thought.
‘‘At least we’ve bought them relatively recently,’’ he said.
Fairfax shares, which peaked at A$5.67 in early 2000, closed at A54¢ on Friday.
Marais likes the idea of a merger between Fairfax and APN but is not necessarily pushing for a break-up.
‘‘One must not be too dogmatic about these kind of things because I understand the industry is going through a tough time. You don’t want to be throwing things out just as they are about to turn.’’
However, Marais urged Fairfax to consider the Carnegie-Singleton idea of a merger with APN News & Media.
‘‘We’re shareholders in APN and I’ve spoken to APN separately, and I think everyone agrees that that is a good thing to do,’’ he said. ‘‘Especially in New Zealand. ‘‘It is a tiny country and you have double of everything. Some small towns have two papers.’’
While Hywood ruled out a breakup of the business last year, he has said the company would be a more pragmatic buyer and seller of assets. Fairfax’s decision to sell its remaining 51 per cent of New Zealand online business Trade Me for A$616m last month is a good example.
The company is also keeping a tight rein on costs and is expected to unveil another round of substantial cost-cutting at its halfyear results next month.
It is understood neither Corbett nor Hywood has had any contact from their newest band of shareholders. As one insider joked, they had not even called to offer ‘‘gratuitous advice’’.
Fairfax may have been on a downward roll for the past decade but it never seems to totally lose its allure. Now, as before, there are media moguls in waiting with ambitions to revive this great publishing house. But the question is: does anyone have the answer to the challenges it faces? UNLIKE MOST in the financial media, I am determined to resist the temptation of restarting this column with a review of last year (you were there, so you probably know what happened) or predictions of what will happen this year (my crystal ball is broken). Nor will I write about how to keep New Year resolutions, even though I do think that setting goals is the most important thing that you can do for your finances.
Instead, let’s think about whether or not your financial plan has been working – do you feel like you are getting ahead? If the answer to that is that is ‘‘no’’ and you feel like you are swimming hard but making no headway, you need to know why this is – and you may need some patience.
Author Tim Hurdson once said that we tend to overestimate what we can do in the short-term, but underestimate what we can do in the long-term. This is certainly true when it comes to finance: we are in a hurry to get ahead and are frequently discouraged when there appears to be little progress. Perhaps, your financial plan is working, but it all seems too slow?
There is seldom a king-hit to be made for your finances – no silver bullet that can be fired to get you quickly and easily from where you are now to a good place. Instead, building wealth and getting ahead financially is usually a long (and sometimes hard) haul. I wish I had a quick and simple solution for financial success, but I don’t. Many thrash around looking for a king- hit – but overnight success usually comes at the end of 25 years’ hard work. The quest for a silver bullet (overestimating what we can do in the short-term) leads to almost certain financial failure, however, you will be surprised by what you can do financially if you give yourself time.
There are two main parts of a financial life that require patience: repaying debt and investment. Most of us find that it seems to take forever to repay debt. You make your mortgage payments for a few years and think that you have paid a lot of money to the bank (you have). However, when you look at your mortgage balance, it has reduced by a disappointingly small amount: all that money and you still have a lot of debt.
This is because the mortgage payments that you have been making are made up of part interest and part principal repayments. At the start, interest is the bigger part: initially, the payment is nearly all interest and you are reducing the principal of the loan just a little. Gradually, painfully slowly, the principal owing reduces and as this happens a bigger and bigger part of each payment is comprised of principal repayment rather than interest. The final years of your mortgage repayments are mostly principal repayments: these are the gravy years, but it takes time to get there. The keys are to make those payments as big as they can be – and patience.
When you have repaid debt, you can start to invest to enjoy compound interest. However, again this seems intolerably slow to build at the start. The investments that you have earn interest and, as time goes by, you will earn interest on both the capital that you had originally and the interest you have earned. This snowballs and is as close to a cast-iron guarantee of success that you can get in finance. Provided you do not give up and withdraw in the slow and boring early stages, Einstein’s eighth wonder of the world (compound interest) will do its work to make you wealthy for certain.
Both repaying debt and investment are slow to start and require a lot of small steps – you are unlikely to ever get a giant leap to instant wealth but with patience and time, you are almost guaranteed success.
Therefore, have a look at what you are doing to be sure that it is the right thing – whether repaying debt or investing you need to do so as efficiently as possible and ensure that you are making the most of what you have. Then you need to be patient – you will not seem to make great progress in the short term, but in the long term, you can move financial mountains.