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Monday, September 29, 2008

880 million reasons to diversify one's portfolio

Chavez wants nuclear power:

"In Venezuela we are interested in development of nuclear energy, of course for peaceful purposes, for medical purposes, for purposes of electricity generation," Chavez said at a political rally.

"Brazil has various nuclear reactors, so does Argentina. We will have ours."

Chavez noted that Venezuela, which is a member of the oil-producing cartel OPEC, developed a nuclear reactor decades ago but abandoned it under pressure from the United States.

He said Russian Prime Minister Vladimir Putin had offered help with a reactor, adding that "we already have a commission working on this issue."


"Of course for peaceful purposes" - Oh, to see the look on Condi's face when she heard that. not quite worth the threat of nuclear obliteration, but still - you got to love a wind up. Chavez is a sort of Winston Peters of South America: mischievous, arrogant, friends with lefty autocrats, protected by bullies and surrounded by eternal enemies and their proxies.

The other alarming news this morning was the Cullen Fund's (much expected) drop in value during the period of recession or near recession in the West - preceeding this month's financial turbulence that will register negatively in their next report - was quite some hit. The press reporting:

The New Zealand Superannuation Fund, which has been operating since 2003, had an after-tax loss of $880.75 million for the year to June, compared with a $1.09 billion profit last year.
The result represented, pre-tax, a negative return of 4.92 percent. The before-tax loss was $716.46 million.
[...]
It is the first time the so-called Cullen Fund, nicknamed after architect Michael Cullen, has lost money.


Ouch. This is the nation's retirement fund we are talking about here - so this hurts us, in particular future us:

By law the government can't draw on the fund till 2020. By 2025 it is estimated that the fund will be worth $109 billion.

Well if we had bought Euro denominated securities - back when our dollar could get 58c Euro then we may have been in a better position. I hope the Guardians made some wise calls. Our medium-long term exchange rate with the Euro is more likely to average under 50c.

8 Comments:

At 29/9/08 1:24 pm, Anonymous Avenger said...

Following the example of the historian cum-Minister of Finance, who disqualified Key because his past employment with Merril Lynch, then this NZ Fund multimillion loss make Cullen forver unsuitable to hold office.

Infamous words from the bad Dr. Cullen that have come back to haunt him.

 
At 29/9/08 4:05 pm, Anonymous Aj said...

Current loses have to be put in the perspective of the gain made over the last few years. The sooner people realise that almost all asset values are going to fall back to historical normals over the next year or two. Probably, below normals, thus making for excellent buying opportunities. Dollar coast averaging, folks.

 
At 29/9/08 4:32 pm, Blogger Truth Seeker said...

They most definitely made some wise calls of they would have lost a LOT more than 5%.

 
At 29/9/08 4:39 pm, Blogger Truth Seeker said...

That should be "or" they would have...

 
At 29/9/08 5:01 pm, Anonymous Anonymous said...

Your future retirement funds relying on the ponzi scheme of the global sharemarket...yeah good luck with that lol!

 
At 29/9/08 5:36 pm, Anonymous travellerev said...

Just think of John Key making his money out of bonds and derivatives on Wall street while you vote him in you National voters you.

 
At 29/9/08 5:51 pm, Anonymous Anonymous said...

It never ceases to amaze me that people honestly believe that an investment made (by anyone, never mind a government) should NEVER drop in value. The politicos jump on to this and tote their ignorance that there would be any safer way to invest cash any other way.

It is the same when the world interest rates fluctuate. The politicos seem to think that a country should be immune to what's happening around it.

Get real New Zealand. We are darned lucky that we still have a fund! Many small countries have been financially snuffed outright over the decades.

Just think back to the time when the NZ$ dropped in value to less than 0.5$US. The saber wrattler-politicos moaned that NZ was about to disappear into oblivion like so many other small countries had done at the time.

Well, it didn't happen. And it's not going to happen this time either.

 
At 29/9/08 10:36 pm, Anonymous Anonymous said...

"Just think of John Key making his money out of bonds and derivatives on Wall street while you vote him in you National voters you."

We are and you can see the approval from the poll results.

 

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