Gambling With the Dutch Consumers Association
Pfäffikon SZ, Switzerland – Due to the extremely low interest rates savers are more or less forced to try their hand at the stock market. In addition, residents of the Netherlands have to deal with capital gains taxes which is a ludicrous tax considering the era that we live in. Thankfully the Swiss view this differently. The Dutch Consumers Association however, ties investing to gambling. Where did they surface that wisdom?
Slippery Ice
“It could go completely awry and not yield anything” warns Sandra de Jong from the Dutch Consumers Association. In my view the Consumers Association is treading on thin ice. After all, since when does the Consumers Association know anything about investing in stocks? Moreover, they are scaring investors without substantiation.
A Lot of Value
The recent market drop in particular has led there to be a relative large amount of value on the stock market. I know of numerous publicly traded companies that are valued at about 50% of their real value. When an investor buys this type of stock without using any type of advanced payment the likelihood of a permanent loss of capital is practically non-existent. This is the core principle to value investing. Moreover, stock ownership can be shielded against market losses through derivatives.
Rich Families
If a potential investor is clueless about all of this, in the Netherlands – but all across Europe – there are outstanding asset managers that can provide guidance. Moreover I would remind you that the richest families of the world are keeping their assets in stocks. Some even completely discard laws pertaining to spreading your risks because they know exactly what they’re doing. The Heineken family in the Netherlands is a good example. In Germany Suzanne Klatten and Stephan Quandt are not selling their BMW stocks, even now their stock package price has dropped after the skulduggery with VW and its diesel engines. What’s more, the Norwegian sovereign wealth fund – the largest compounding machine in the world – is aggressively buying up BMW stocks. Do you think that this incredibly performing sovereign wealth fund is concerned about this recommendation by the Dutch Consumers Association?
Start Now
The Dutch Consumers Association would do well not to solicit advice on subjects they have clue about. Assaying washers, hair dryers and staplers would fit more closely to their purview in my view. Moreover I would recommend potential investors to start building a beautiful stock portfolio with or without a registered asset manager. This is a better idea than piling up a mountain high debt for a house for which you cannot name the next buyer. What follows is the advice from truly wise and legendary investor Charlie Munger: “Just sit on your ass and wait.”
[Reaction by the Consumers Association’s spokesperson Sandra de Jong on her quote “Het kan totaal fout gaan en niets opleveren’. ] ‘That was absolutely not said by me. In name of the Consumers Association I told the journalist [of the ‘Telgraaf’, red.] what possibilities exist today to get the most returns on your savings. Investing in stocks is without a doubt one of the possibilities where the ‘known’ comment has been made is that consumers that want to explore this should also inform themselves about the possible risks. Nothing more nothing less.”
It remains for me to wish you a good weekend.
Jan Dwarshuis is a senior asset manager at Thirteen Asset Management AG, where he is responsible for the Thirteen Diversified Fund. Dwarshuis writes his columns in a personal capacity and is not paid for them. Nor is he paying for his columns to be placed. Professionally, he holds positions in major European, American and Russian stock funds. The information in his columns is not intended as professional investment advice or a recommendation to make certain investments. At the time of writing, he has position in BMW and no position in the other mentioned shares and has no intention of doing so in the next 72 hours.
