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The chaotic Wellington City Council recently voted against selling the city’s shares in the Wellington airport. There’s no more rationale in the council owning shares in the airport than say in a chain of brothels. It’s not an appropriate council function.
I was amused by the investment ignorance of some of the councillors who wanted the shares sold to create a rainy day fund against a future catastrophe.
This sort of amateurish thinking reveals their lack of investment sophistication. Here’s why.
The mum and dad rainy day fund mentality is illogical. Why? Because if the rainy day arrives then you will no longer have the funds. On the other hand if it doesn’t then the fund was pointless.
A well-run council with low debt etc will never have trouble raising money should a catastrophe hit the city.
This lack of financial sophistication unfortunately is characteristic of all democracies. That is they attract nobodies with time on their hands as candidates. Truly capable clever people are invariably far too busy to step forward.
This article was originally published by No Punches Pulled.
