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EARLIER this week I attended a "showcase" evening at the JSE where investors were introduced to the CEOs of listed companies. The CEOs had about ten minutes each to briefly introduce their companies and if you were lucky you could mingle with them afterwards.
Alas, the recession means no finger foods were on offer, so delegates disappeared quite quickly, but hopefully the JSE will return to its monopolistic, profiteering ways in the not-too-distant future and offer investors a bite to eat.
But I digress...
The JSE doesn't like the audience asking questions because it might puts the CEOs under pressure. If irate shareholders (gasp!) start quizzing CEOs, it might leave a sour taste in the mouth. Still, in light of the fun and games at companies such as Wesizwe and Simmers & Jack in recent months, not allowing question time was probably a good decision for this week.
However, what it did highlight was how the financial community talks "at" - rather than "with" - South African investors. Whether the culprits are the media, the regulators, the market "experts" or the economists, free thinking is discouraged.
Media houses discourage journalists from participating in the market for fear of bias. Company directors would rather that shareholders didn't put them on the spot in public forums and are not wild about advertising their upcoming annual general meetings (AGMs), and - as Fin24.com reported yesterday - South Africa's biggest retail banking group, Absa, discourages the media from reporting on these events.
As for the asset managers, they all insist they add value but statistically 90% of them will not outperform an index - a fact the industry acknowledges. But that doesn't stop them peddling their wares.
This cycle is perpetuated by the media, who have turned economists, analysts and fund managers into wannabe rock stars whose words must be faithfully reported back to the person in the street because he or she is not seen as skilled or educated enough to think for themselves.
Investors must hang on the words of George Soros and Warren Buffett in the hope that they will glean some insight that will unlock wealth for them. With all due respect, George Soros was a gambler and if his bet on the pound had gone the other way, nobody would remember him or call him a legendary investor. Buffett is the name that is repeated every time people put together marketing material for exchange traded funds - does anybody else see the irony in that?
On top of that, the Goldman Sachs debacle has seen some in the media questioning whether Buffett is these days simply a reputation for hire when somebody needs to roll out something and wants to attach some credibility to it.
When it comes to the asset management industry, I am reminded of the Capitec advert on TV that urges South African consumers to "have a look around you - you're probably paying for most of it" when they walk into their retail bank.
For retail investors, look around you. See the picturesque offices in Cape Town or the glass towers in Sandton and Melrose Arch? Consider that hundreds of billions of rands of your money is sitting in the hands of an industry that probably has less than 200 decision-making portfolio managers, who all make a living off your fear.
The financial crisis has highlighted how investors are simply being talked "at" rather than talked "with". When global markets, including South Africa, slide because a regulator dares to question the bully of Wall Street (Goldman Sachs), what does that say about this industry that we are allowing to ride roughshod over our financial affairs?
- Fin24.com
