By Peter Thornhill, Switzer Super Report

Well, as investors, what are we to do? With all the recently self-appointed investment guru's wagging their fingers at us, we have every right to be confused.

First we had Ken Henry, special adviser to the prime minister, castigating those who run their own super funds for having an excessive exposure to 'risky' equities. This was followed by Lindsay Tanner threatening possible government intervention if we didn't wake up to ourselves and reduce the risk in our super funds.

Then a lone voice is raised; Glen Stevens, Governor of the Reserve Bank, suggests that retirees should be seeking better income returns by ignoring the paltry interest rates available on cash and leaning towards the superior income streams available from equities!

Now we have Martin Parkinson, secretary to the Treasury, entering the arena and echoing both Henry and Tanner with concerns about the 'greater' risk associated with self-managed super funds (SMSFs). In the same article Paul Keating came out swinging; accusing super funds of investing too heavily in the stockmarket. Where were all these now negative self appointed financial experts prior to the global financial crisis (GFC)? Why weren't their voices raised then?

What was concerning was Paul Keating's suggestion that a 3% increase in the employer paid Super Guarantee contribution from 12% to 15% be managed within a government longevity insurance fund! From what I have seen of past governments managing money on our behalf, I shudder at the thought.

I can only think that they are pandering to the prevailing public attitudes or, worse still, they are as ignorant as many of the public. Shares are not GROWTH assets; they are income assets just like a rental property or a cash deposit. The fact that too many people focus on the price of shares is a shame but inevitable because of the liquidity provided by the stock market.

Don't focus on price

In many presentations I have tried to curb this unhealthy focus on prices by offering an alternative view. The chart below is the All Ordinaries share index plotted monthly over 32 years. One can see the constant volatility which gives mindless speculators, day traders, hedge funds, computer trading and the media, a fertile environment for spreading their germs.