Caroline Ritchie: Rebuilding means now's time to invest

Who really runs the sharemarket - media or investor? This long-debated question got another validity airing as last week's markets plunged and panicked on the avalanche of fear generated by non-stop media reports about the end of the world in the east.
News to invest by has changed almost beyond comprehension. If you were rich 100 years ago you would have had a daily newspaper. The news would have been compiled by pony express and telegram - making it a day or two old before it hit the printing press. Radio came along and you could, unless you were working in the fields, listen to reports as they came to hand, or to the six o'clock news.
Television saw the start of people sitting at home all day becoming informed instantly of current events as addictive live feeds were beamed in. Now, in 2011, with our iPhones, laptops, televisions, radios, Reuters screens, You Tube, Twitter, Facebook, broadband, WiFi and the tendency for absolutely everyone to be an expert on everything, we've overloaded ourselves.
Global media conglomerates know fear sells better than anything, and really big disasters are even better for scaring the pants off people and investors.
Last week the Japanese stockmarket plummeted more than it did in 1987, driven by the obvious but also by people still nervous from the last onslaught of negative news that occurred during, and contributed to, the global financial crisis.
The yen soared last week as currency traders took the view that the nation would have to sell off vast swathes of international assets, repatriating them back to yen, to pay for the reconstruction effort.
Stocks on other markets that effectively have nothing to do with Japan got hammered. Fear was back in town and greed was stuck hiding in the bunker. The facts so far suggest that the Japanese earthquake will actually have less effect on their economy than our quake will have on ours, despite the scale and horror.
One positive aspect that comes out of all the reporters jostling on live-crosses to tell us about the most awful disaster story of the day is that it creates opportunities. Barring a complete Doomsday scenario, which looks unlikely, right now is exactly the time to buy into the long-term businesses you have always liked.
The rebuilding of Christchurch will add badly needed jobs and boost demand for raw materials. The reconstruction of the cities affected in Japan will have the same effect, on a bigger scale. Things look dreadful now - but this, as time has proven over and over again in the investing world, is the time to act. It is the dip we've all been waiting for.
Caroline Ritchie is an NZX Advisor for Forsyth Barr in Napier and holds an NZX Diploma, BCom and BSc. For sharemarket advice contact her on (06) 835 3111 or caroline.ritchie@forbar.co.nz.
The comments in this note are for general information purposes only. This article is not intended to constitute investment advice under the Securities Markets Act 1988. If you wish to receive specific investment advice, please contact your Investment Advisor. Disclosure Statements for Forsyth Barr and any of its Investment Advisors are available on request and free of charge.