Uncharted waters
Gareth Morgan is a man who needs little introduction. He is a direct, sharp shooter known for delivering the facts as he sees them… sugar coating not included. Sandy Galland goes fishing for information on his philosophy on life, success and the flagging wealth of the ordinary Kiwi.
As our multitude of economic woes continue to snowball, New Zealanders have been too slow in responding, says our country’s highest profile economic commentator, well-known columnist, author, television debater, public speaker and biker.
Last year Gareth Morgan was named the 10th most powerful person in our country by the New Zealand Listener. So when I was sent off to interview him, it was a challenge to find questions to ask the man
who has been asked it all… “I have been asked damn near everything,” laughs this down to earth,
self confessed obsessive man who also described himself as “slightly unhinged”.
Press coverage on him is enormous — be it seeking his opinions on the economy, changes to our climate, the political situation in any handful of countries he has toured by motorcycle, or his witty observations and experiences on a myriad of subjects.
He and wife Joanne received enormous media “face time” when the sale of their son’s business Trade Me, netted them $47 million several years ago. Not a bad gain on a $75,000 investment into the then, non-performing venture.
But for the Morgans it has never been about the money. “We have always been happy, even when
we had bugger all. This is a wonderfully solid foundation on which to build.” And their beginnings were humble; the family lived in a house bus, Joanne drove a commuter bus and supported them through the years of study Gareth undertook. Years later and sporting several degrees, including a PhD, Gareth entered the world of money as a research economist with the Reserve Bank of New Zealand.
Today Gareth is CEO of Gareth Morgan Investments and a director of economics consultancy Infometrics which he founded in 1982. “People were always asking me what should I do with my money. A long term business partner pointed out I was looking after my own portfolios and I had to either make a business of it or stop doing it, as my focus was diverted from Infometrics.”
And like a dog with a bone, he drove forward and the investment company was born. Growing rapidly, like so many of his projects, it now manages in excess of a billion dollars in funds and has more than 32,000 people entrusting their KiwiSaver policies to them.
“This really is the final destination for an economist. You take what you have learnt in theory and put
it into practise.”
It’s here where being obsessive pays dividends. “I really am obsessive, I get a project and focus on it intensely. I am often asked why I don’t get some balance, but I can’t let go until I have the closure I want.”
It was this same attitude that has brought about the enormity in the couple’s motorcycle trips. “I just drew lines all over the map and said ‘lets do it all’.
“It was the same with my running. I just ran like anything until my bones went. You have to be slightly unhinged to take things through to the levels I do. Some would say I am crazy, I wouldn’t of course,”
he chortles down the phone.
By now I have the impression of a thoroughly down to earth, self made man who takes nothing for granted and gets immense pleasure frorm the simple things in life. “Nothing I do is about money. It is about philosophy and human behaviour. All the things I get involved in are about exploring another side of human nature.”
The irrationality of man and the madness of crowds fascinate him. It was this that, in the early 80s catapulted him into an intense six month project where he travelled the country to capture the mathematical models of all the horses racing our tracks.
“I didn’t know the front end of a horse from the back, but using mathematical models I did the numbers and predicted the odds. It is amazing learning about the greed and fear of people. They want to win no matter the cost and they do not bet to maximise their investments, just to get a return — any return, and to win. It’s about winning no matter the cost.
“I still see it in the (financial) markets today. People are going for the big hits rather than using the markets for what they should.”
Watching the markets and peoples’ interaction with them is a subject on which Gareth has never been
shy in voicing his opinion. A number of years ago he was quoted as saying: “I don’t think we have a savings issue in this country. We have a very poor quality of investment issues — it is what happens to those savings.”
And his crystal ball gazing has been deadly accurate.
Too much debt
Fast forward a few years and he even more concerned about the economic situation of the average Kiwi. “I have always been worried about the extent of debt held by ordinary people.” Everyone put their money into houses, pushing the prices up. To some extent, these people think they are rich if they have houses and this concerns me.”
Gareth predicts house prices will continue to fall and those thinking they are set up for retirement will have to keep working as their wealth disappears on them. “When I was young, a house was twice a graduate’s salary; today it’s eight times their salary. This distortion in our economy means we lose our young talent as they go offshore to earn. It is just not sustainable.”
Gareth also predicted the worsening global financial situation would “come fast and hurt a lot of people. As a nation I think we have been quite slow to recognise how serious it is. Over the next 12 to 18 months there will be a re-distribution of wealth. A lot of people are going to lose their jobs and as I have previously predicted, the adjustments won’t be nice and ordinary.
“We (New Zealand) are highly vulnerable as we are greatly indebted and we live and trade in the world marketplace which is in a big sag.”
There are many subjects for which Gareth could, has, or may well write a book — the state of our economy being one. Yet for a man who receives so much recognition, he is happy to call a spade a spade.
However, now with his elevated level of fame he is very aware of doing so correctly. “The consequences of my actions are so much greater now.”
As for the future, there is so much to do and Gareth is adamant he will keep going until he drops. “I hope that when my maker comes for me, I say ‘OK, I’m so knackered, let’s go’.”
