There can be no doubt about it; most of the “businessmen’ are far too clever for the shareholders and investors in their organisations, especially the smart and sharp ones involved with Hanover. I am astounded, amazed even, to discover that the shareholders are considering another offer from the company with serious intent. An offer that sees some 25% clipped off the value of their investment, the only benefit to be had is to be had by someone other than shareholders! Bruce Sheppard probably had a point when he suggested that shareholders were essentially too ill informed/incompetent to be allowed to make decisions and needed “minders’.
He’s probably right.
Therein lies the problem for the government, of whichever persuasion, our investing public is generally financially illiterate, actually incapable of informed action. Most people with a dollar to invest, and I include myself, are unable to extract much sense from the deliberately obscure prospectus documents and company returns and so are totally reliant on translators/advisors, usually commission driven. Who could forget the advisors directing traffic to Bridgecorp and others as they slowly sank to insolvency, being paid up to twice the common commission rates for the service – pretty well everyone I wager . Not only can the sharp practice boys rely on our illiteracy, they know we have the memory span of worms.
It didn’t happen in Real Estate. Even under the much maligned 1976 regime the public was well protected and the Agents/salespeople acted by and large with transparency and honesty. Added to that, the public is generally well informed in matters real estate and well able to make informed decisions. Crucially, the public can make risk assessed investment decisions and be comfortable with them.
Bubbles, booms, price increases, the public preference for bricks and mortar as an investment are not the result of tax inequalities or incentives, any number of countries with capital gains taxes are evidence of that. People invest in real estate because it is a very smart and safe thing to do – when the same can be said for the share market, finance companies and industry, people will invest their savings there.
It is worth remembering that whilst a large part of the inheritance of a generation has been vaporised recently, real estate held up well and will continue to do so.
Simply , when investing in vehicles other than real estate is the more attractive option ,that is where the money will flow but it will take infinitely more than tax fiddling to put lipstick on a hag.