nathan:doozy: Registered, but upon reflection probably won't buy any, 6% mortgage, better off paying that down with whatever I might spend on MRP, guaranteed return, no risk investment that is!
It is worth pointing out that property is not a guaranteed no risk return
But yes you are probably wiser to pay off mortgage
doozy: Sorry didn't mean property is, just paying the mortgage in its current format is a return to me :)
My philosophy on buying shares has always been "if you can't afford to lose the money, you can't afford the shares".
minimoke: If you have a 6% mortgage do you think that MRP can pay a 9% dividend (9% less 33% tax for your net 6% mortgage payment). Or do you think MRP can improve on value by 6% in a year – that offsets, roughly, the opportunity cost of not paying down your mortgage. Or is there potential for a combination of both. If you answer “no” to any of these questions then you stay out of the float.
The share market is not a casino. It is an opportunity to buy a stake in a company. Once in, its then for the holder to actively decide when to withdraw - something you can't do easily with your own home.
The share market, like so many things in life has risk. NZ’ers need to become better educated at understanding that risk. It is not risk free – but then again owning a house isn’t as values do go down. Owning a forestry block or putting your money into a superfund are all with risk. Even putting your money in a safe as houses Alan Hubbard / Colin Meads scheme is risky. NZ’ers would much sooner follow the celebrity endorsements than do any real thinking. And then we have that ex school teacher at the helm of Mainzeal – quality board membership there!
So look at Mighty River. This is a politically motivated sale. Do you think the politicians are going to let this sale process fail? What do you think the risk of that is? I reckon it is absolutely zero. There is no way National will allow the pricing of MRP to be such that MRP is worth less at election time than it is at float time. Indeed there is a very strong incentive for them to ensure it is priced at such a low level on listing that it has increased in value at election time. That way the National Voters are happy; National get to say “there we told you so –and the Labour ne’er-do-wells were wrong” and those that didn’t buy in go “:ooooh – those National people knew what they were doing.”
Couple of observations.
In my opinion the share market is exactly like a casino, the only difference is risk/reward ratio and the veneer of respectability that someone else gambling with your money on investments offers.
Secondly the government can't afford to give the shares away for a low price as they are banking on this sale to dig them out of the deficit hole. Making no money gives the naysayers ammo to say it was a waste of time for no benefit. Price them too high and the end point is what you highlight above. I am not sure it is such an easy thing to get right as Facebook recently found out with their IPO.
nathan: Solid Energy invested in bizarre nutty green initiatives like mass biodiesel amongst others. Its a warning to what will happen to the wider economy if (hopefully not when) the greens get in
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