Keep cool, says share man

The key to surviving political and financial calamities is to keep a level head, according to Australian Shareholders' Association founder Nick Renton

When Nick Renton bought his first shares, "a listed investment company of some description", Robert Menzies had just been elected Prime Minister, the crusade against communism was in full swing and it would be well over a decade before Donald Horne published The Lucky Country.

It was 1950, the start of a sustained period of Australian prosperity. Since then Renton, 70, has encountered countless political and financial calamities that have thrown global sharemarkets into turmoil.

Nick Renton: an optimist

The key to surviving such events, Renton says, is to keep a level head. "Those people who worry about one-off shocks shouldn't be in shares. You have to take it calmly. I suppose I'm too much of an optimist by nature to panic.

"The market definitely overreacts in both directions," he says of the terrorist attacks on the World Trade Centre.

"Panic feeds on itself, and that's what I think has been happening in the last week."

An actuary and author by trade, Renton has, as they say, seen it all. The 1987 crash "was probably the most serious fall I've ever seen", and John F. Kennedy's assassination, a "terrible tragedy", but "it didn't stop people buying their groceries, like a recession".

But the most "interesting period" centred on Poseidon NL, an Adelaide nickel outfit whose share price soared in 1969 only to sink like a stone, and bringing the entire speculative market crashing with it.

In 1960, Renton founded the Australian Shareholders' Association and has been an active investor since. He puts his longevity down to a fairly simple strategy. "I'm a long-term investor, not a day-to-day trader, and if a share was good value the day before, it doesn't cease to be just because the market has gone mad and knocked everything down 20 per cent."

In many ways it is an old-fashioned, long-term approach recommended by the likes of Warren Buffett.

Renton says he invested in OPSM 30 years ago because he decided an ageing population would need "more and more spectacles" over time, he was impressed with the management and, as a customer, he liked the company's service.

"If a company is well run, or at least if I think it is well run, then I think management will do well whatever part of the economic cycle we are in. After all, companies can be mismanaged in a boom."

Copyright � The Age Company Ltd 2001