Morgan’s pet dislikes should extend to bulls

ECONOMIST AND KiwiSaver fund manager Gareth Morgan wants to see cats wiped out in New Zealand. Ostensibly this is because they kill our native wildlife.

Some readers will already suspect a different motive, though. The real reason for Morgan’s antipathy to cats is that he’s afraid of being upstaged by some Kiwi Orlando.

Orlando was the cat that found time between killing sprees this month to beat a group of professional stock pickers in a challenge set up by the UK’s Observer newspaper.

Orlando built his £5000 ($9424) portfolio by 4.2 per cent in the final quarter to outsprint Morgan’s mates and deliver £5542.60 to his investors. The professionals could deliver only £5176.60, though we are not sure whether that is the net return after fees.

‘‘While the professionals used their decades of investment knowledge and traditional stockpicking methods, the cat selected stocks by throwing his favourite toy mouse on a grid of numbers allocated to different companies,’’ the Observer reported.

Orlando’s effortless victory should be an example to us all in many ways, for instance, work-life balance. Orlando managed to both over-deliver on his key performance indicators and play with his favourite toy all day.

It was not Orlando, nor for that matter Morgan, who warned this week that equities might be beginning to get over valued. Rolling out the B-word, ‘‘bubble’’, was Tower Investments’ Sam Stubbs.

It was a timely warning as I had just been reading a bit of analysis from a company called Lighthouse Investment Management called ‘‘Time dependency of bull markets’’.

Orlando’s effortless victory should be an example to us all.

It found that bull marketserformance was almost 90 per cent defined by the duration of the bull market where bear markets are defined by ‘‘fundamentals’’ such as company performance. In other words, bull market returns appear to be divorced from economic conditions and company performance.

Lighthouse also concluded that the current northern hemisphere bull market (1408 days) will get to ‘‘median age’’ in October 2013 and reach an ‘‘average age’’ in April 2014.

Another finding was that as long as no shock rocks the boat, the expected market return is 22 per cent per annum.

New Zealand’s tiny sharemarket won’t buck any significant change in investor sentiment in New York and London, but there are some unique dynamics that will keep interest high, not least the steady building of KiwiSaver and the likely part-listing of state-owned enterprises. There are also a bunch of businesses on the sidelines pondering listings.