Give Everything Away!

Pfäffikon SZ, Switzerland – Finally there is movement to be seen on the international markets. The continued upward trend will likely surprise many. ING has gladly used this sentiment to perfectly time the IPO of insurance giant “Nationale Nederlanden”. A crown jewel to many, but I certainly don’t see it that way. It’s been a long time since I last saw ING in my portfolio overview.

No NN
The correlation between ING shares and the Dutch AEX index is humorous and I know the diverse option construction like the back of my hand. Still, that alone is never reason enough to get involved with such a stock. Similarly I will pass on Nationale Nederlanden. Pandering potential shareholders with inflated dividends does not appeal to me and I’ve had my doubts about their business model for quite some time. What’s more, I never participate in IPOs; I loathe them.

Draghi – not a Wizard
In reality it was the week of Mario Draghi of the ECB, which is starting to become a pattern. Draghi usually puts in extra effort in the month of June. The latest decisions on interest rates as well as the introduced range of measures are nothing short of historic. The ball now lies with the commercial banks. Will they provide you, as entrepreneur, with extra liquidity? The temporary side effects are increasing share prices and a declining euro. But Draghi is no wizard. The economy must stand on its own feet, which is still a far way to go, despite several positive news items.

Another side effect could be that your bank will soon set you up with some unfavorable interest rates as compensation on your deposits. The straight forward advice your banker will provide you with is: investing in stocks. A great example of “first level thinking”.

Donations
Perhaps a donation fits your purpose. In order to accumulate extra donations certain so-called volunteer and development organisations are performing all sorts of contortions. Apparently donations are under pressure, now that the decrease in wealth in the eurozone has materialized. A remarkable speech was given by the managing director Farah Karimi from the Dutch Oxfam Novib last week. The charity wants governments to go after the rich elite in order equalize the differences in wealth. A remarkable plea coming from an organization reliant on, among other donors, the Ford and Gates Foundations.

Rich Get Richer
The reason the rich elite is growing richer is because they correctly apply the factor of compounding. It’s for good reason that Albert Einstein called “compound interest” the eighth wonder of the World. “He who understands it, earns it… he who doesn’t… pays it.” Over the past several years the rich elite have been spending the majority of their wealth on philanthropy. Investor Warren Buffett, together with Bill and Melinda Gates are one of the pioneers of this initiative via The Giving Pledge. In the mean time the list of philanthropists has grown to an impressive length. The relatively young Sheryl Sandberg, who earned a fortune at Facebook, is the last on this illustrious list.

Negative interest rates and a stock market at an all time high. As an affluent European citizen you have a lot on your mind nowadays. Why further torture your mind, why not give everything away. In the end, money is nothing. Even Oxfam Novib will be satisfied.

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 no position in the above shares and has no intention of doing so in the next 72 hours.