RAISING THE ALARM

From as far back as 1987, Herma Koornwinder has warned about outdated investment models and, from the early 1990s, the unpreparedness of the financial world for what she described as the coming ‘tsunami’ of the digital revolution.

1987

Head and shoulders 1987-12-12, NRC Handelsblad

In the period leading up to October 19th, Black Monday, she made insistent phone calls to professional analysts explaining her concerns about the stock markets as all indicators were just a little too negative, yet these analysts were mostly happy and optimistic.

1988

The Hallelujah effect 1988, Mees Bulletin

However, you hardly ever hear the unequivocal announcement of a recession, a depression, a bear market or a crash. A welcome exception to this sad rule is established by Mrs Koornwinder, the interviewee in this section...

Professional analysts too commercial 1988-04-02, De Financiële Telegraaf

But how is this possible? How is it possible that well-paid technical analysts at the banks miss things that Mrs Koornwinder does not miss, based on virtually the same analysis, and that they discard an emerging signal when the facts are pointed out to them?

1991

Providing a better grip on the situation 1991-02-07, Trends

'It particularly helps with mastering emotional responses, because the reality is that visual perception is very important, and this is finally starting to sink in financial circles.'

Technical analysis: Chart guidance in uncertain times 1991-03, NCVB

'In the current uncertain situation, in which the classic economic principles apparently no longer apply, technical analysis provides you with a better grip on the situation. It particularly improves managing emotionakl responses because the reality is that visual perception is very important, which nis now finally being understood in the financial world.'

‘The important thing is that, in a descending trend, one needs to have an alert response to sell signals, since the law of gravity will accelerate the descent. On the other hand, one could miss the boat in an ascending market, since the buy signals emerge one after the other, meaning that hesitation isn’t fatal. Therefore, it is necessary to review the (medium) long-term vision, determine the support and resistance points, as well as the rate targets, and bandwidths every month. Even better would be to refresh these values every week, whereas active investors should do that on a daily basis.’

Technical analysts on USA: Don’t panic 1991-11-19, Het Financieele Dagblad

‘Doing nothing’ can also be a rewarding strategy……

1992

Numerous answers possible to what private investors should do, but… one thing is clear: value of advices is extremely relative
1992-04, Beursplein 5

Like a railway guide 1992-04-23, Trends

You try to gain knowledge of every market, to be some sort of ‘global player’. Why such an extended horizon? 'It is important that one’s picture of the financial world is as perfect as possible.'

1993

Be alert to bearish breakthrough: Stocks National
1993-01 (1992-12), Money

The hotspots? 'Whether it concerns a bullish or bearish trend, there are always indexes or funds that react to the trend in a stronger manner. These hotspots need to be tracked down and subsequently the investor needs to focus on these. Often, the advice is issued to spread the portfolio. However by spreading, you are missing out on chances on better return.'

'Nowadays, one can analyse and combine data using today’s computer technology, so that new information is created.'

'My motto is: cut losses and maximise profit.'

Hunt for the promising stock 1993-01, Arts & Auto

However, we will make an exception for one notable statement. In the NCVB magazine, the previously mentioned Mrs Koornwinder says that spreading to prevent risk is becoming outdated. Why invest in gold, real estate, electronic or whatever, if there are more interesting options elsewhere, she wonders. Instead of spreading, localising promising stock will be the motto of the 21st century. And that starts in the Nineties, says Mrs Koornwinder.

Facts refute negative image: Technical Analysis 1993-03, Effect

The investment world, however, is going through some fundamental changes and is being dragged into the modern world. The arrival of advanced computer technology has made it possible to collect, analyse and combine data on a global level.

Not only does advanced computer technology enable one to track down interesting markets, group sectors and stock, it also helps in managing the aspect of timing. To this end, clearly outlined disciplines should be observed.

Groundbreaking theory for financial markets, 'Active management certainly has a future' 1993-06-18, Beleggers Belangen

• The market actually has a memory.

• Rates do not fluctuate at random, but in waves.

• Waves are caused by an underlying forcefield.

•   The underlying forcefield is caused by the psychology of the investors. To see this, one should
     scan the mass emotion (the waves of pessimism and optimism) in order to expose the
     underlying structure.

• Trend and countertrend are the result of forces that oppose each other. If the upward forces
are stronger than the downward forces, upward waves will be the result and vice versa.

• There are underlying connections.

During the past seven years, it was possible to ensure timely tracking of a number of crashes and rallies on the international financial markets, while even indicating the moment of outbreak, with rate target.

I would like to invite the researcher, who ‘proved’ that nobody is able to systematically achieve more return on an actively managed portfolio than on a stock index, to study the outcome of my analyses. After the cracks and tears we have seen emerging in the stronghold of efficient markets the past couple of years due to empiric work, we can now see a giant rift.

Not only will investing become increasingly important in the Nineties, it will also become more complex. The current economy is characterized by continuous uncertainty. Economists are completely lost. In addition, the rate fluctuations have increased considerably in the past couple of years, and they will only grow in the future. Those fluctuations no longer just concern trade, but more and more speculative responses, as the result of a greatly improved information provision of the financial markets.

Today’s computer-controlled buy and sell behaviour can and should not just be approached based on annual report analysis, acquisition rumors and hunches. Advanced instruments are required. After all, you cannot discover the secrets of the universe using just binoculars, you need a super-telescope. If the investor wants to survive in the ‘software economy’, he needs to be aware of this. Active capital management is very useful, however, only combined with technical analysis, a profession that, just like any other specialism, does not just require knowledge and skills, but also insight and vision.

‘Knowledge explosion’: Letters 1993-08-21, Beursplein 5

‘But we are living in an era of knowledge explosion. Investors often overlook the problems, due to an information surplus, and waver between hope and despair. However, if one has not thoroughly studied the undulations, the cycles, the interacting forces that cause the rate fluctuations, the psycho-social influences, in short, the mechanisms that invoke a trend reversal, one should leave it to the expert – very strong analytic skills, a vast diversity of theories, a good strategy and above all, a VISION, are indispensable.’

Against the current: Beursplein 1993-09-09, Trends

Koornwinder sticks to her credo: spreading is outdated. Why diversify? According to her, the opposite should be done: track down promising stock. That is the trend of the Nineties. Arbed, for instance, rose from 1700 BEF to 4300 BEF this year, whereas EuroDisney dropped from 98 to 50 FRF. A world of difference. This is why Koornwinder tracks stock markets on a global level, and selects winners and losers in 22 countries. Even now that her rate targets have been achieved, she keeps looking for the best bits. As long as her KCG indicators issue positive signals, she will respond to them.

Should, however, the ‘super-cycle bear market’ that has been predicted by a number of analysts for several years announce itself one of these days, she will exit the market with a considerable profit, to re-enter it when the levels are low.

New fund for technical analysts in the pipeline 1993-10-09, Het Financieele Dagblad

Where does she get her vision? ‘Rates do not fluctuate randomly, but by undulating movements and the art is to map these waves’ is her apparently simple explanation. A metaphor Koornwinder likes to use is the tsunami (tidal wave), the terror of the seas that starts somewhere with a small ripple in the ocean.

When studying the ocean, it is no use to look at all the boats separately, she says. In other words, it is no use to have a strictly fundamental analysis of one specific company. ‘No matter how positive the analysis, if the trend is downward, that company will be dragged with it. So the most important thing is to indicate trend movements. Only after that, it will be useful to review individual funds.’

1994

Technical analysis warranty accountant versus the disbelief
1994-11-18, Het Financieele Dagblad

On the other hand, the performance of pension funds could be much better than it is today. Would certain cutbacks even be necessary if those institutional investors handled our money in a more ‘innovative’ way, provided that they were granted permission to do so?

Investment of public money generates too little return: ‘Stock market guru’ Herma Koornwinder is often right
1994-12-17, Brabants Dagblad

Koornwinder was expressing her views very loudly in 1989. 'But when you are trying to convince investors that their investment methods can be improved, you suddenly run into a wall of bureaucracy. All of a sudden it turns out to be very difficult to achieve a breakthrough with a new vision.'

Money is scarce. The government forces citizens to tighten their belts year after year. All of this would not be necessary if that same government, which is so full of new technologies, would have an eye for investment technology. In that case, money managed by the government would generate hundreds of millions more in return. This is something in which Herma Koornwinder firmly believes. She points to the increasingly ageing population. Research by accountancy agency Coopers & Lybrand recently indicated that old-age benefits were starting to become unaffordable. At the same time, every additional per cent of return over capital managed by pension funds would result in a decrease of the premiums by many percent.

Modern management theories should enter the investment world, according to Koornwinder. Take the ‘just in time’ principle. ‘Money that does not move is dead money – a waste of supply,’ she confidently states. ‘Public funds are very poorly managed. Profit can be improved dramatically by using investment technology.’

According to Koornwinder, the economy has seasons and tides, just as the weather and the sea. She believes the trick is to perceive the mainstream. ‘The tsunami, the huge tidal wave, so feared in Japan, starts as a ripple. To be able to predict the tsunami, you need to recognise the right ripples and ignore the others. Just like the tsunami, major events cast their shadows forward. If you manage to get these on your radar, you have come a long way.’

Koornwinder is merciless towards a recent study which claimed it was impossible to systematically achieve good investment returns. ‘Is that not exactly what I am doing?’ she says. ‘I am baffled that institutional investors accept a return that is equal to the index this easily. After all, this means that if the index drops, the performance drops as well. The same people who run outside to save the pillows of their garden furniture from the rain let their money drop in value with a resignation that I simply cannot understand.’

She indicates an editorial comment in an Eindhoven newspaper of 101 years ago, regarding the establishment of Philips & Co. The newspaper wrote: ‘We hope that the Dutch government, and with it the various municipalities, will be open to these new technological developments and that they will promote all other technological innovations in the same spirit. They are worth it.’

‘Just like Philips a hundred years ago, I am now advocating my technology,’ Koornwinder says. ‘We are entering the era of the knowledge technology, the time of artificial intelligence. I am convinced that the results of other people’s explorations will have as much trouble finding willing ears as mine are having.’

Daring prognoses often spot on: Koornwinder advocates ’investment technology 1994-12-17, Eindhovens Dagblad

1995

'Invisible' economy casts its shadows forward. Accountant confirms reliability of Koornwinder's stock market predictions
1995-01-10, Eindhovens Dagblad

Modern management theories need to enter the investment world, according to Herma Koornwinder. Take the 'just in time' principle. 'Money that does not move is dead money - a waste of supply," she confidently states. "Public funds are very poorly managed. Profit can be improved dramatically by using investment technology.'

Koornwinder is merciless towards a recent study which claimed it was impossible to systematically achieve good investment returns. 'Is that not exactly what I am doing?' she says. 'I am baffled that institutional investors accept a return that is equal to the index this easily. After all, this means that if the index drops, the performance drops as well.'

Innovation investment models required: Analyst Koornwinder pleads for renewal 1995-02-25, Eindhovens Dagblad

‘Banks should do more than just innovating their corporate organisation. They need to focus on investment research and investment innovation as well,’ states Dutch global chartist Herma Koornwinder. Koornwinder has been saying for years that banks and investment bodies approach the market in a too unilateral a fashion.

Koornwinder feels it is about time that banks realise they need to start innovating in order to perform well consistently. ‘The traditional work method no longer suffices. We are entering the era of knowledge technology: we can move our way of thinking into higher gear. Old laws and regulations are overruled.’

Self-made stock market guru has solution for pensions: Koornwinder sees possibilities for better fund returns
1995-03-12, Arnhemse Courant

By Jan Smit, Amsterdam

She refuses to accept that the ageing of the population is endangering future pension payments. The return of pension giants such as the ABP and the PGGM can be improved.

Remarkable

This is remarkable since more and more investment experts became convinced over the past years that, regardless of their strategy, they could never beat the indexes in the long term. Professor Malkiel, of the famous American Princeton University, recently even wrote this in his best-seller A Random Walk Down Wall Street. But also, closer to home, in Zeist at PGGM, people believe this philosophy. PGGM, the pension fund of the healthcare industry, with a total capital of 10 billion guilders, the second largest pension fund of the Netherlands, announced last week they are planning to invest 50 to 60 per cent of their money in stock in the future. Currently, that percentage is 32.

But do not think that PGGM will become an active stock market trader; on the contrary. In line with Malkiel’

s philosophy, the pension fund wants to keep bought stock in their portfolio for years, without touching it. Unbelievable, Koornwinder says. ‘They need to do something with the capital they have been entrusted with. They can achieve much better return if they start using the present technological knowledge. But they will not.’

Stock market value

Her secret? Making optimal use of modern knowledge technology. It is what Koornwinder calls the financial revolution. ‘Most investors and banks use obsolete models. They are still talking about the electronic highway, whereas I am already travelling the electronic skyway on the Internet. But they are afraid to do so, it scares them.’ Her motive? Social concern.

New research method tracks down market trends 1995-06-10, Beursplus

According to Koornwinder, both fundamental and technical analysis have shortcomings which prevent reliable prognoses.

Lesson for pension giants: Investment expert develops very lucrative method 1995-06-12, Utrechts Nieuwsblad

By Jan Smit, ANP, Amsterdam

She refuses to accept that the ageing of the population is endangering future pension payments. Of course, she cannot stop ageing itself, but the returns of pension giants can be improved.

‘Most analysts study corporate values, but that is wrong. They should study the stock market value and take into account the economic cycles.’

It is what Koornwinder calls the financial revolution. ‘Most investors and banks use obsolete models. They are still talking about the electronic highway, whereas I am already travelling the electronic skyway on the internet. But they are afraid to do so, it scares them.’

Her motive is social concern. Most economics students are being taught old methods, which no longer apply: ‘In the industrial era, we worked with raw materials. Nowadays knowledge is the basic material.'

‘Most analysts study corporate values, but that is wrong. They should study the stock market value and take into account the economic cycles.’

Dutch stock market guru does know how to outperform the market 1995-06, De Volkskrant

In his authoritative book, A Random Walk Down Wall Street, the American professor Malkiel came to the conclusion that neither technical analysis – predicting rate movements using graphs – nor fundamental analysis – the study of the future development of companies and the economy – helps to achieve a better return than the market for several consecutive years.

The capital managers are proving Malkiel right year after year. The 200 largest pension funds in the Netherlands achieved an average negative result of 3.3 per cent in 1994, whereas the stock market index – in this case the Amsterdam EOE Index – remained unchanged. ABN Amro Asset Management calculated that only one third of the Dutch investment funds that invest in stocks globally perform better than the world index, the Morgan Stanley Capital Market Index.

But there is one exception. In 1989, Dutch Herma Koornwinder took up the gauntlet Goslings had thrown. She is convinced she knows how to outperform the market using her models. Not just in the short-term, but also in the long term. ‘Should pension funds succeed to achieve as little as one per cent more return on their investments, it would be of great social importance, given the ageing of the population.’

KGMN makes active investing possible 1995-10, Management Info

Behind the system of Mrs Koornwinder, a firm belief is hidden. She explains: ‘We have a major problem in the Netherlands. It has become evident that the breakdown of our social security system has begun. There is reason to wonder if the pension funds will have enough financial means in the future to fulfil their obligations.

‘In addition, we will be increasingly active on the digital highway. I believe that our country does not worry enough about a jobless society. The increasing possibilities in the field of automation will lead to a major loss of jobs in the service industry. Routine actions and thinking will be taken over by computers. In addition, certain activities will be outsourced to low-income countries. All of this is possible thanks to the modern means of communication. The question remains if the huge loss of jobs will be affordable in the near future. Because if it is not we will not be able to afford the ageing nor unemployment.’

She continues: ‘And we need to invest more in computer education. In the Far East, some schools work only with computer screens. Here, we have four PCs in a primary school, which are being used only if the teacher feels like it. We need to start exploring; we need to scour the world again for opportunities and possibilities in the Digital Age, just like we did in the Golden Age. Of course, this needs to be funded and that is possible with active investments: no unnecessary risks, no index investments – while making sure that we do not depend on old calculators, because that would be disastrous for the social balance. If we are able to realise a performance increase of one per cent, why not do it?’

Finally, Mrs Koornwinder states that this is not a calling: ‘No, I consider my advocacy for active investing to be a form of social involvement. The electronic highway, electronic investing, the digitisation of the financial world, the hedge funds and the use of derivatives, are part of the reason why the cash flows are laser-beaming through the financial universe. These cash flows can no longer be analysed using the traditional methodologies, which is why people are often wrong and unable to outperform the index concerned.’

A splendid outperformance. Herma Koornwinder, an investment advisor willing to go against the grain 1995-10-20, Management Team

'Maybe economists and investment experts were using an erroneous list of questions, and therefore faulty indicators. Because if pension funds and investors would use better methods, the premiums could be lowered, and the Netherlands would become more competitive and therefore more prosperous.'

Herma Koornwinder, a Dutch guru. Outperforming the market is possible 1995-11-10, Beleggers Belangen

Mrs Koornwinder: 'Biggest mistake by analysts is not to search for the reason why.'

Interview with Mrs Herma Koornwinder, Dutch stock market guru 1995-11, FiscAlert

What do you recommend the average investor whom this is beyond? ‘My advice is to try to outperform the average in a bull market and to avoid large rate losses in a bear market.’

So if I am getting this right, your advice is to invest actively. But how will the investor know when to change his strategy? ‘He needs to find an analyst who has the knowledge to guide this strategy. And I am not talking about the people on the phone at banks who are just repeating the sell and buy list of the top analysts without any feeling with the market.’

Yes, but every bank claims to have the best analysts. ‘This is where the investor needs to become much more assertive. When people buy a car they ask all kinds of questions of the salesman. But when people start investing they are suddenly too shy to ask anything. This needs to change. They should ask about past performances and advice. Such as: what was your vision at the start of 1990, the start of 1991 during the Gulf crisis, on January 28, 1994, etc. In order to start working with a bank or investment fund it should satisfactorily answer ten questions like “what was your vision back then?”’

The zapping investor is emerging 1995-12-29, Algemeen Dagblad

'The zapping investor, one who is constantly switching from one information source to the other, is emerging. He is adjusting his portfolio at lightning speed, with one press of a button, every day, every hour. We are on the threshold of a completely different investment world...'

1996

’Investor needs to be much more assertive'. Investment analyst Herma Koornwinder is annoyed by the attitude of the banks
1996, GPD

By Koert Bouwman, Heeze

Herma Koornwinder is very annoyed by banks and stock houses. In particular by their indolence regarding the ‘explanations’ of their erroneous estimates. ‘Well, ma’am,’ they will say, ‘things turned out a little different than we expected. We thought the dollar and the interest would rise. But alas… the fact that your stock portfolio now generates 20 per cent less profit is your own risk.’

Koornwinder, global investment analyst for a number of institutional investors (pension funds, insurers), believes that shareholders should not accept such statements. ‘The investor needs to become much more assertive. Banks approach the financial markets way too unilaterally. Plus, they use the same methods as twenty years ago, even though very much has changed since then. Think about the derivatives trade and the computer systems that work globally. Cash flows are laser-beaming through the world and can no longer be captured with the “old” models the banks are using.’

The unilateral work method of banks and stock houses results in bad information, according to Koornwinder. ‘Someone can be suffering from a stomach ache while still looking healthy from the outside. Only the scanner can prove that things are looking bad. The same applies to the market, the stock markets and the economy. You could say that the economy has two faces: one face everyone can see on a daily basis, the other one becomes visible through my “world scan” which often deviates from the information provided to investors.’

Mrs Koornwinder decided to seek some publicity since she kept running into a wall at the banks. ‘I tried to get the banks to wake up, but they would not listen. As long as the investor does not ask for different methods of analysis, banks will do nothing. They are content as it is, and they are way too involved in their own internal reorganisations.

‘They accept any foreign theory without any questions asked. When I disclosed my research five years ago, the banks and stock houses responded: “According to foreign reports, this is impossible.” They came to that conclusion without doing any research themselves. We are entering the era of knowledge technology. We are able to think faster and at a higher level. Old laws and rules are overruled. When I submit this statement to banks, they respond matter-of-factly: the investor is not asking for it and chooses dullness.

‘That is nonsense; the only thing the investor wants for his hard-earned money is performance. The fact that a market does not move the way it is expected to is not necessarily caused by the interest, the dollar, etc. There can be many other causes. The investor does not know what is what. If someone buys a fridge, he gathers some information in advance. This is exactly what an investor should do. He needs to be informed that there are faster and better methods of analysis. This is why I am raising the alarm.’ 

Herma Koornwinder: A Cassandra in a digital world? 1996-01, Zonta

According to Herma, we are now on the verge of the fourth mega-trend: the digital community in which current information is available anywhere in the world at any time through the electronic highway. The mutual interdependence of factors will significantly increase. That is why, in Herma’s professional field, it is important to have a wider scientific insight into the cohesion of factors. With that, she beats the stock market indexes and predicts breakthroughs and turning points on the international financial markets.

‘The investment industry needs to change’ 1996-01-26, Beleggers Belangen

By H M C Koornwinder

As we mentioned in the first issue of Beleggers Belangen in 1996, PR agency Van Hilten, organised its ‘Presidents’ Lunch’ for the 22^nd time and invited a number of captains of industry to exchange ideas on the theme ‘External influences, an escape or a challenge?’ One of the conclusions – ‘the excuse book for 1996 needs to be rewritten’ - was heartfelt by Mrs Herma M C Koornwinder (of Koornwinder Global Market Navigation (KGMN).

It is not just the badly performing companies which need to find a new ‘face and excuses book’, the investment industry should acquire such a book as well. Current practice still dictates that when the market does not respond in line with expectations, people are always looking for an excuse: the interest was to blame or an unexpected movement of the market, the dollar, etc. No-one was willing to take the blame.

Useless Indicators

‘But times are changing. Recently, Professor Dr D J van Duyn, of Robeco, announced that Robeco’s indicators are no longer working. And he is not the only one who has discovered that. The same alarming signals are coming from the United States and England.

Analyst Shulman, of Salomon Brothers, wrote in his report Stock Market Bubble or Paradigm Shift: ‘Regarding the stock market, we have been wrong for an entire year. We are starting to think that the valuation clocks we are using are broken. The fantastic stock rally of 1995 is no bubble, but a sign that the valuation paradigm (model) has changed for the third time in 40 years. In other words, the indicators are broken.’

And as icing on the cake, the English economist Paul Ormerod fundamentally criticises common economic science in his recently published book The Death of Economics. According to him, creators of economic models do not deserve the high status they are enjoying at all, because their predictions never come true. According to Ormerod, economic science is still in a primitive state, comparable to natural sciences prior to Newton. He believes that the principles of common economy are completely untenable.

When we also take into account the fact that back in 1900 the Frenchman Bachelier pronounced that, with the analysis of annual reports and rate behaviour, one could not reach an accurate estimate of the market, I am wondering if the current analysis theories will prove to be the failures of this century. After all, it was for good reason that former secretary Van der Paverd of the ‘Vereniging Nederlandse Analisten’ was advocating the professionalisation of the analyst profession in het Financieele Dagblad of November 19, 1993, and stated that analysts should start looking for their own identity. The main task of the analyst is finding ‘new combinations’, said Van der Paverd.

At the same time, however, he pointed to the top of the Dutch banks: ’The bank managers only check if the created analyses will not damage their company, which is very discouraging for many analysts. Stock transactions happen to generate less profit than issued loans. Partly because of that, analysts do not feel like developing new angles.’ Again, these statements date back to 1993, but I believe that it provides sufficient food for thought.

After all, when the ƒ770 billion in pension funds in the Netherlands generates even one per cent more return, the premiums can go down 16 per cent.

Investors are overwhelmed and investment bodies and pension funds are performing badly. We have a big problem in the Netherlands. It has become evident that the breakdown of our social security system has begun. There is reason to wonder if the pension funds will have enough financial means to fulfil their obligations.

I believe that our country does not worry enough about a jobless society. The increasing possibilities in the field of automation, will lead to a major loss of jobs in the service industry. Routine actions and thinking will be taken over by computers. In addition, certain activities will be outsourced to low-income countries. All of this is possible thanks to the modern means of communication. The question remains if the huge loss of jobs will be affordable in the near future.

It is my vision that global investing, in particular active investing, will provide the financial means to fund such jobless society. Therefore, I advocate a completely different investment strategy. The focus needs to be on active investing, looking for opportunities. Neither the Modern Portfolio Theory nor index investment or spreading the risks will consistently lead to good results. This also applies to the ‘growth stock’ trend, the ‘what’s in it must come out’ trend, technical analysis and intuition in particular.

Higher return, major saving

After years of research into the forcefields of the macro-economy, the psychology of the investor and the global flow of capital, I have found it to be more successful to approach markets from multiple angles and in a multidisciplinary way. We are entering the digital era, which enables us to think faster and at a higher level. Thanks to this new knowledge, we are able to better understand why a market is not moving the way ‘one’ expects, and interest, the dollar, etc. are not always to blame.

The importance of success regarding investments is also reflected in a statement of eng. C J van Rees, president of the pension fund of Shell: ‘The job of pension funds is to obtain an optimal return on investment. Anything that gets in the way of that needs to be discussable.’ Hard figures illustrate the usefulness of this statement. After all, when the ƒ770 billion in pension funds in the Netherlands generates even one per cent more return, the premiums can go down 16 per cent. Therefore, it is absolutely necessary to put our heads together.

New investment technology vital to finance effects of ageing and high-tech unemployment 1996-02-01, Pecunia Magazine

We are at the threshold of major social changes, similar to those during the Thirties of the last century when society saw not only the postal carriage being replaced by trains, but also the industrial revolution in the making. The current effects of increasing automation, the change from the industrial to the digital era are just as invasive.

Our factories are headed for a production industry without workers. Routine administrative and servicing work is more and more left to computer. The ‘click & macro’ society working in optima forma. (The presentation of the plan for the future “On our Way to 2000”, communicated by ABN Amro executive Mr R W J Groenink speaks for itself: ABN Amro will trim its office network and at least 700 of their 1,000 branches will be highly automated, NRC Handelsblad, 25.4.1996)). And a large part of the remaining activities will simply be transferred to low-wage countries, which is easy given modern communication facilities. The following figures speak for themselves: In 1994, hourly labour costs in West Germany were DM 44, in the Netherlands DM 35, in Hungary, the most expensive central European country, DM 4.5, and in China DM 0.65 (NRC Handelsblad 16.1.96).

Overall, the Netherlands is headed towards a situation where more investments in clever machines and computers will lead to increased profits with fewer staff. Therefore good business results no longer automatically result in better job opportunities as used to be the case. For example, the overall profits of the top 100 Dutch companies rose from 20 billion to more than 30 billion in the period 1990-1994. In the same period, the total workforce dropped from 1,600 to 1,570 thousand (FD ….). If market conditions deteriorate, employment will drop dramatically, as we currently see in the Federal Republic of Germany (NRC 6.3.1996; FD 21.3.1996).

And as if sharply rising costs for social security as a result of a job reduction are not bad enough, we are also facing a rapidly ageing population. Within 15 years, when the baby boomers will retire, the Dutch ageing of population will accelerate rapidly. Around the year 2040, a quarter of the population will be 65 years or older. The consequences of the ageing of the population are already tangible: health expenses were this year already higher than calculated, and next year these expenses are expected to be about one billion higher (NRC 21.3.96). And let us not forget that in 1995 already one-fifth of the national income was spent on old-age insurance (AOW), health and supplementary pensions.

The high costs that our society will face in the near future are mainly expenses for high unemployment and the ageing population. It is unclear whether the retirement and social security funds, which will have to foot the bill, will continue to be able to fulfil their financial obligations. In 1994 and 1995, retirement funds have increased their investments on the stock market. The importance of good investment results from these funds is obvious. The required funds do not necessarily have to come from cutbacks at the expense of the individual citizen: good investment management can also lead to extra funds. The Netherlands disposes of some 770 billion Dutch guilders in retirement pension monies. According to Mr Frijns, director of the General Public Retirement Fund, premiums could easily be cut by 15 per cent if the returns from such investments could be increased by a mere single per cent. Instead, some premiums are going up as, for example, with the general retirement fund for the metal industry (FD, 19.3.1996).

This does, however, touch upon a subject that will prove to be crucial for the future of our society, ie, the new knowledge technology. Accordingly, the main message of the OECD report about the connection between technology, productivity and job creation as presented at the second G7 Employment Summit in Lille, France, was that ‘technology’ and ‘knowledge’ will be the most important sources of economic growth in the long term (NRC 5.4.96). I do, however, want to emphasise that this country is at risk of missing the knowledge technology boat if we do not make the necessary investments and change our attitude. We already have a shortage of highly educated computer engineers. And while the future demand for computer scientists will explosively grow, first-year enrolments for this subject have been falling since 1988 from 1,200 to about 450.

If we want to change this trend we shall first have to start raising our ‘Nintendo kids’, ie, primary school children, in the spirit of Bill Gates. He is advocating a computer per household. I would like to go even further and advocate a computer for every child. The laptop should become today’s child’s slate and piece of chalk. Keep in mind that there are schools in the Far East that use computers all the time. In the meantime, however, some Dutch primary schools have one or two PCs, but whether these are being used depends on the teacher. In other words: others will not hesitate to grab the opportunities that we choose to ignore. In order to be able to react adequately to the approaching changes we will first need to realise that this is just the first phase of an enormous transformation process and that the digital era will hit us like a tidal wave.

This transformation process will be of unimaginable dimensions and inevitable. We will have no choice but to change with it. In general, our society does not yet fully appreciate the scale of this process: people are either too busy trying to maintain the system, to pay attention to what is going on, or people are sitting at home, defeated and struggling to get by on welfare benefits. But those sitting at home could actually be recruited, particularly those with a solid educational background and experience who were deemed ‘too old’ at the age of 35.

In this respect, I would first like to advocate that students be given more time to finish their education and given time to think and find new paths. The digital age and its ‘emerging sciences of complexity’ is already casting its shadow forward over our society. In the not too distant future economics students will no longer be able to rely on what they were taught and will have to find their own way on the ‘electronic highway’ and in a subject matter so extensive, complex and interdependent that the human mind can hardly begin to grasp it. Furthermore, I would like to make an appeal for:

* A Ministry for Information Science and Technology.

* Observers and spotters who scour the world in search of new possibilities (similar to
purchasers of department stores).

*     TV programmes and special newspaper pages about new developments in the area of
       information technology in order to spread the message widely and limit the chances of
       reinventing the wheel.

* National and regional advice centres to support high-tech and ‘new knowledge’ pioneers.

* A yearly event where high-tech starters and ‘new knowledge’ pioneers can present their
knowledge and expertise.

* Faster acceptance and integration of the ‘new knowledge’.

We are leaving the industrial era to enter into the digital era; the era of knowledge and information technology. We have the opportunity to take our thinking to a higher level and accelerate our actions, resulting in unimagined possibilities. This would, however, mean seizing the opportunities the information era offers.

The ‘Happening’ signals the beginning of spring 1996-02-03, De Tijd (Belgium)

It is almost time for what some like to call the ‘investor’s high mass’. Another extensive programme will be presented on March 16, which will also herald stock market spring. It will be the beginning of a lot of hard work for the participants; clubs have the advantage that they are entitled to at least three representatives to garner their advantage at the various sessions.

The traditional internationally flavoured climax will be provided by Mrs Koornwinder who foresees a ‘revolution on the financial markets’ which will be caused by the advancement of the electronic highway. She insists in all her communications that she is outperforming the markets spectacularly; hopefully, the participants will be able to filch from her just how to go about that practically.

Rabobank Groningen and environs provide insight into investing 1996-03, Own edition Rabobank

Put simply, it is because she introduces techniques of the 21^st century into the 20^th century.

Koornwinder takes first step towards investment fund: Challenging KGMN method within reach of private investor
1996-03-09, Eindhovens Dagblad

Over the years, she has been insistently warning institutional investors with her forecasts. In particular, she tried to convince retirement funds of the reliability of her own investment technology. ‘This is the social aspect of my story,’ she says. “If retirements were able to improve returns on their investments by only one per cent, they could lower premiums by 15 per cent. Some retirement funds welcomed Koornwinder as an advisor but, according to her, ‘some retirement funds have a real problem following off-standard advice, as their own staff stiffly follow the generally accepted opinion’. She said: ‘In mid-January 1994, eg, whilst my indicators were very weak, there was a generally euphoric market sentiment, and in such circumstances it is quite a task to go against all major analysts.’

'Spreading of portfolio does not reduce risk at all'. Investment analyst Herma Koornwinder overthrows investment profundities 1996-03-13, De Tijd (Belgium)

‘Another observation is that the markets are all but efficient…..’

Another investment profundity, ‘diversify to reduce the risk’, finds no favour in the eyes of Koornwinder:

Herma Koornwinder winds up: ‘I strive to track and eliminate the risk. The profundities currently in use in the investment world only add to the risk.’ Herma Koornwinder will speak on Saturday March 16 at the VFB investors Happening about ‘Revolution on the financial markets, opportunities on the electronic highway’

‘Bear market cannot be predicted 1996-09-07, Beursplein 5

The thought alone is enough to make any investor shiver, but a so-called bear market (a strong downturn) cannot be predicted, says strategist David Shulman, of Salamon Brothers, in a recent issue of the American magazine Fortune. The moment one should sell one’s stock cannot be indicated in advance. However, that does not mean that one is powerless as an investor. Fortune provides the investor with a number of tips to make his portfolio more sturdy, or as the magazine itself calls it, ‘bear-proof’.

For instance, the investor should not be on the stock market when he is required to sell his stock during a major downturn. In addition, he needs to keep enough money in his balance to provide for his monetary needs for at least 12 months. The investor can also, if he expects big expenses during certain years, buy state bonds with an expiry date that coincides with these expenses. Furthermore, he should not just invest in stock. Property, raw materials or other investment alternatives might perform better on uncertain markets. Last but not least, the investor needs to have an eye for alternative products and be willing to adjust his strategy because, as Fortune says, it cannot be predicted when the bear will start to growl.

‘Another observation is that the markets are all but efficient…..’

Another investment profundity, ‘diversify to reduce the risk’, finds no favour in the eyes of Koornwinder.

Investment business is, just as in nature, subject to seasonal changes 1996-09-14, Beursplein 5

The following text is Herma Koornwinders’ reaction to the above article ‘Bear market cannot be predicted’ in Beursplein 5, September 7, 1996

It is about time that investment firms started researching what the causes of a bear market are. This is what Herma Koornwinder, since the beginning of April investment consultant of the KGMN Global Portfolio Fund of securities firm Stroeve, argues in response to the statement that such a temporary relapse of rates is impossible to predict. Beursplein 5 quoted this statement from a recent issue of Fortune magazine.

According to Koornwinder, predictions do not come true because the wrong models are used. As an example, she gives the crash of October 1987. None of the thousand shares she studied went up during that period despite theories about cash flows and the quality of management. ‘Because people are failing to predict relapses, they start dispersing their investments. Dispersion without knowing what risks one wants to avoid is, however, futile,’ Koornwinder states.

She likens the situation to that of a family man who takes his children to a tour operator to book a holiday in the sun. The employee advises him to disperse and to send his wife to Tunisia, his son to Greece, his daughter to the United States and to stay in the Netherlands himself. ‘This tour operator would be out of business in no time, while nobody questions this way of dispersion in the financial world,’ says the researcher. She goes even further. ‘When one comes upon a beautiful day in September, one does not book a fortnight at a seaside resort. But a sunny day at the beginning of May is more likely to signal a series of sun-filled days. Just as the chance of a sunny day is next to nothing during certain seasons in nature, there are periods in the investment world that are better avoided for the sake of one’s night’s rest and one’s profit.’

The dissident vision of Herma Koornwinder 1996-10-11, Intermediair

By Jan Smit

The Netherlands is a welfare paradise and it can stay that way if the large pension funds such as ABP and PGGM change their strategies in time.

The result speaks for itself. According to the accountants, Koornwinder succeeded in out-performing the leading stock market indicators by a long shot time after time, both in bull and bear markets. That is remarkable, since in past years more and more investment experts have become convinced that, regardless of their strategies, it was impossible to beat the market indexes in the long term.

Missed opportunity

Even pension funds such as ABP and PGGM are using that philosophy. These large investors invest more and more in stock only to stick with it for years. A missed opportunity, according to Koornwinder. He who makes timely changes is able to generate a much larger return. And, according to Koornwinder, a higher return is necessary to be able to bear the social costs of ageing.

The digital era and the high-tech unemployment resulting therefrom are subjects with which she is preoccupied. The impact of advanced automation, in combination with the rise of artificial intelligence, will be much more dramatic than that of old age, according to Koornwinder, which does not just mean great social consequences, but also consequences for her investment strategy.

To find out why some institutional investors react so slowly, she has studied technology, history and philosophy. Koornwinder was inspired by Plato. In the allegory of the cave, the Greek philosopher tells the story of people who, tied down since birth, were living happily in an underground cave. Should one of these cavemen be taken outside, he would realise, according to Plato, that there was a different world out there. Back in the cave, people would not want to believe him because he was challenging their view of the world. Koornwinder recognises herself in this allegory. ‘It is not that people refuse to accept my ideas, it is just that they are happy with what they have got. But we are on the threshold of the 21^st century; let us use the tools of the time.’

Quivering on the stock market 1996-11-02, Elsevier

The tormenting uncertainty that is keeping doubting investors and aspiring investors awake is: how long will the rates keep increasing? Elsevier asked the opinion of a number of experts (see columns) who work with these thousand-dollar questions every day: ‘What should I do with a 100 grand?’ and ‘When can we expect the turning point of the stock market?’

‘The majority of analysts use instruments they no longer fully support,’ says John Ebbing, of MoneyView On-Line, the electronic stock market editorial office of research agency MoneyView Nederland. ‘We are currently in the phase where everyone is entering the market because rates are increasing, and rates are increasing because everyone is entering the market. Sooner or later, this speculative ride will come to an end.’

Herma Koornwinder: Old stock-market wisdom is obsolete
1996-12, GPD Dagbladen

By Raymond Peil

Investors have little to benefit from old profundities that are still popular in the financial world. ‘The investment world has changed fundamentally since 1987. Ninety per cent of the big money is speculative,’ says investment consultant Herma Koornwinder. In addition, she predicts that the emerging high-tech era will only cause bigger changes.

Dutch Herma Koornwinder is entitled to speak, thanks to her service record. Her model, the Koornwinder Global Market Navigation (KGMN), has provided better investment results on a regular basis since 1989 than the applicable averages. Koornwinder’s vision, that investing has irreversibly entered a new era, was laughed away in investment circles when she first announced it. However, recently, Rabo-CEO Wijffels seems inclined to share her vision. And even Robeco has started a trial with investment models that deviate from popular ideals, after years of struggling.

The Dutch investment consultant considers that to be a minor breakthrough: ‘My models oppose theories that have won the Nobel Prize for economics in the past.’ However, in the last couple of years, Herma Koornwinder has gained more recognition: her nicknames vary from ‘techno-pioneer’ to ‘a tough lady’ or the ‘Dutch Garzarelli’ after the, currently disgraced, Wall Street guru who correctly predicted the stock market crash of ’87.

An important role in the aggressive rate fluctuations is played, according to Herma Koornwinder, by billions that flash back and forth across the Earth at lightning speed, looking for the best returns. The capital flows are growing rapidly: it’s cheap to borrow money, pension funds have huge reserves. Plus, options and other stock-related contracts (derivatives) turn the bumps into a true rollercoaster. The computerisation and digitisation are not exclusively accessible to the investment world, she adds, to paint a picture of the reality we live in. ‘Information technology cannot be stopped. The same way the car made the tilt-cart obsolete or the train or the stagecoach. Society is making a giant leap forward.’

Computers have quickly caught up with time-honoured investment profundities 1996-12-27, Leeuwarder Courant

Investors have little to benefit from old profundities that are still popular in the financial world. 'The investment world has changed fundamentally since 1987. Ninety per cent of the big money is speculative,' says investment consultant Herma Koornwinder. In addition, she predicts that the emerging high-tech era will only cause bigger changes.

1997

Professionals await their buying moment 1997-02-19, De Gelderlander

Koornwinder is mostly worried about the long term. The efficiency transition companies are going through, which is the motor behind profit growth and the basis of the rate increases, has a hazardous side from a social perspective, in the form of high-tech unemployment. The information revolution also creates new jobs, but people are not yet ready for that, she believes.

Investment signals 1997-03, Perspekt (ABN Amro)

'...but she does want to disclose that she disregards the official prognoses of planning agencies. 'Because their interest and growth expectations are way too often wrong.'

A fund according to the Koornwinder system 1997-04-26, Fem

According to Koornwinder, prognoses fail because people are using faulty models.

Stock market gurus divided about stock hype 1997-07-26, Leeuwarder Courant

This is why the stock specialist emphasises the importance of an expert analysis, which is currently lacking in her opinion.

True stock market experts? 1997-07-26, Elsevier

Five professional investors tipped their favourite stock last year. The outcome after more than eight months of mad rate increases.

Herma Koornwinder, president of Koornwinder Global Market Navigation (KGMN), was luckiest. On average, her ‘dos’ were better than those of the others and her ‘don’ts’ performed much worse, just as it ought to be.

'Investing too risky for individuals' 1997-12, Opzij

Soon she discovered that popular theories on successful investing were often wrong. 'People used to say that the stock market will always increase in the long term, despite the bad patches, meaning that there are not many risks if you just wait long enough. This no longer applies. Today, it is better to sell and buy timely instead of keeping stock for a long period of time.'

1999

Outdated knowledge equals impotence 1999, autumn, S@fe (Robeco)

Investing in stock is a hype among both professionals and individuals. Will this trend continue in the next century – aided by the internet, pocket computers, globalisation and rising prosperity? Or will the individual investor lose his way due to the increasing complexity of the financial markets?

Abovementioned developments...

...cannot be dissociated from the current technological revolution. Digitisation has more and more impact on the financial world. If one wants to keep participating in the world of the ‘big money’, one will have to invest heavily in automated trade systems, real-time information sources and modern telecommunications equipment. The physical stock trade has had its day. Some stock markets, such as the New York stock exchange, which stubbornly refuses to let go of its stock floor, are still resisting. But that will not last too long, because the increasing popularity of electronic stock markets such as the Nasdaq in New York and the Easdaq, its Belgian sister, form a serious threat, not to mention the rapid rise of the internet. Equipped with a mobile phone plus laptop, everyone can trade in any stock straight from his chair. As soon as that method has become common, one global electronic stock market should suffice.

Will it ever come to that? The British journal, The Economist, has its doubts. Large institutional investors will never accept such a monopoly. The stock market members’ own interest – read: the generous provision income – also stands in the way of a deep concentration. Plus, the journal wonders, can the trade through one electronic stock market be monitored? The remarks are apt.

More important, however, may be the question whether or not investors will massively dive into the internet in the 21^st century, as everyone is expecting. In the Netherlands, online investing is still in its infancy, contrary to the United States where the first internet broker appeared more than five years ago. Currently, the country has more than seven million cyber investors who can invest with more than two hundred web brokers, a number that is expected to exceed ten million before the end of the millennium. That rise is logical as placing an online order in the USA is much cheaper than through a bank or commissioner. Internet transactions cost seven to 25 dollars, which is almost double that of using traditional methods. Other advantages of the cyber broker era are the high speed and privacy. One mouse click and the deal is executed in no time, without intervention of a trader or advisor.

The same goes for the Netherlands, where the large banks are not to be considered internet pioneers. However, just like their American colleagues in the industry, they have sufficient clout to catch up. The success of the Rabobank is writing on the wall; at the end of last year: 12.2 per cent of all stock transactions of the bank went through internet.

Does that mean that the days of the traditional investment consultant are numbered? Not at all. According to the experts, they will have sufficient right to exist. Cause: the increasing complexity of many investment products, such as derivatives – products derived from stock and currencies. Tempelaar: ‘That requires expertise that goes beyond the average investor’s knowledge.’ The banks, fund managers and other financial service agencies and intermediaries of flesh and blood do possess that knowledge.

Even the major players…

...such as institutional investors and pension funds, have an increasing need for the specialised knowledge of large brokers. Not only has the investment world become much more complex in past decades, investors try their hand more and more on unfamiliar and more risky grounds. Until about ten years ago, Dutch pension giants such as ABP and PGGM mainly invested in bonds and other fixed interest values for security reasons. Because of the more relaxed law and the beneficial stock market climate, they have slowly changed their strategy. Today, the average percentage stock in portfolio is 43 compared to about 15 per cent at the end of the Eighties. Will this trend continue after 2000 as well? Experts do not think so.

Supervisors such as the Government Insurance Board, but also participating funds, are increasingly worried about the question whether or not the future pension obligations are in danger. ‘Responsible managers are already being judged on that,’ Professor Tempelaar says. That same urge for certainty – asset liability – leads institutes to mainly invest in so-called quality stock; renowned funds bearing on the national indexes (the Dow Jones, AEX, CAC-40 and DAX). The result: the return on the portfolio is virtually parallel to the decrease or increase of these indicators. If the market is down, the managers have an acceptable excuse. Due to the disappearance of currency risks as the result of the introduction of the euro, institutional investors will emulate the European indexes more and more in the next century.

Investment strategist Herma Koornwinder is baffled by this attitude. Index investment, introduced by the American economist and Nobel Prize winner Harry Markowitz in 1952, is outdated according to her. She thinks pension funds should be able to get a better return by looking for new models. This would be very welcome, as the rapid ageing of the western population is mortgaging future prosperity. ‘If the pension funds would get even a few per cent more return, that problem would be solved.’ But, to her great surprise, Koornwinder does not see the financial establishment being very active in this search.

However, she remains hopeful. ‘In the button era of the 21^st century, the computer illiterates will most certainly lose out to the Nintendo generation,’ she predicts. ‘They will no longer accept the passive investment method.’

Waiting for the Nintendo generation, Investment advisor Koornwinder: We need people with courage
1999-12-22, Dagblad Rivierenland

Heeze

The world is changing, investing is changing, and with it investment theories. The controversial investment advisor Herma Koornwinder is convinced of this. The financial establishment is struggling with this and they see their large returns being threatened.

The high-tech world of the digital era, by some dismissed as an overstrained hype, provides the tools of the new millennium, Koornwinder believes. ‘One can trade and do business any time, at any place, even with a laptop on the heath. Electronic trade, e-trade or e-commerce is the future. Computers will take over the thinking processes, as is already happening in the US.’ She foresees a future world with floating trains, artificial intelligence and advanced computer and internet services. ‘If senior executive Lou Gerstner can reach 300,000 people through their IBM with one press of a button, a bank can take its clients off the market in dangerous situations with that same press of a button.’

Herma Koornwinder has high expectations of the young, who have the privilege of growing up with computers. ‘Give any ten-year-old a computer and he will work miracles. Just wait until the Nintendo generation takes the floor. We need to try to forget old knowledge and purge our head for the new era. We are being hit by a tidal wave. The economy is changing. We will have a flash economy.

‘The Netherlands is passively sitting on its IKEA bank, watching Big Brother while drinking a beer. We need people with courage and creativity, people who are willing to stick their necks out,’ is something that Koornwinder wants to shout from the rooftops. ‘We have two e-commerce professors in the Netherlands, and we should have hundreds. Our policymakers are people above 50,’ she says, referring to ‘the adorable bumbling’ with the computer mouse of Prime Minister Kok, who mistook the device for a remote control.

Koornwinder’s core themes remain, invariably and inevitably, high-tech and unemployment, ageing and affordability of pensions. ‘For the imminent ageing of the population, we should already have had a plan ready, otherwise it will not be affordable. After all, foresight is the essence of government. Why not invoke a care duty instead of military duty, in which all layers of the population are involved. If the pension premiums also make a few per cent more than with the current investment theories, we can steer the ageing in the right direction, which means that medication does not have to be rationed, that patients do not have to wait in the hallway and that waiting lists are a thing of the past. We can turn pig farms into farm campsites where old people come in with a cane, to leave in Bermuda shorts on a bike.’

Investor of the 21^st century is an e-trader: Koornwinder foresees digital flash economy 1999-12-31, Dagblad Zaanstreek

‘The world is changing, and investing is changing with it as are investment theories. And this will only accelerate in the new millennium.’ The financial establishment is, unavailingly, shrinking from it, as it sees its generous income being threatened.

Koornwinder quotes the International Statistics Institute: ‘Is economy a science? Or are investment experts good at hiding their cluelessness in a mush of numbers, as politicians do with words?’

The advisor sees more issues which are commonly accepted in the financial world, but which she finds too crazy for words, such as investing according to stock market averages, or indexes. At least two-thirds of the index investors achieved less return than their indicator. ‘Investment experts have dozed off.’

Koornwinder also points her finger at the large or specialised banks, such as ABN Amro and Merrill Lynch or Morgan Stanley. Especially in fair weather, they performed well, but during the Asia crisis, the stock rates of these banks were halved within six months, dragging along small and large investors with them due to their advice, including the pension funds that managed about a thousand billion guilders for our old age. ‘It would mean a tremendous source of prosperity in the future if our pension premiums would achieve just a few per cent additional return every year. One should be in clover during good and bad weather.’ Leaving our old-age provision in a nest egg at the index, as we do now, will lead to certain poverty or rationed medication, according to Koornwinder.

The high-tech world of the digital era, by some dismissed as an overstrained hype, provides the tools of the new millennium, Koornwinder believes. ‘One can trade and do business any time, at any place, even with a laptop on the heath. Electronic trade, e-trade or e-commerce is the future. Computers will take over the thinking processes. White-collar activities will be taken over by computers.’

She foresees a future world with floating trains, artificial intelligence and advanced computer and internet services. ‘If senior executive Lou Gerstner can reach 300,000 people through their IBM with one press of a button, a bank can take its clients off the market in dangerous situations with that same press of a button. But one should know what the danger exactly entails! By the way, did any of the banks predict the Asia crisis?’

Flash economy

Herma Koornwinder has high expectations of the young, who have the privilege of growing up with computers. ‘Give any 10-year-old a computer, and he will work miracles. Just wait until the Nintendo generation takes the floor. We need to try to forget old knowledge and purge our head for the new era. We are being hit by a tidal wave. The economy is changing. We will have a flash economy.’

2002

Small investor holds his breath 2002-07-26, Eindhovens Dagblad

‘My clients have a farther horizon. Furthermore, we have advised them not to invest with borrowed money, which means that they are not forced to take a loss now.’ Dutch stock market expert H Koornwinder alerted us to the ‘great danger of banking’ as early as during the bull market of February 2000: because of hyped-up rates, the stock market could collapse like a house of cards at any moment: ‘The complexity of the financial world has become such that it is almost impossible to grasp for the man in the street. In the meantime, the investor loses on three different levels; while the value of his investments is decreasing, his pension premium is increasing because the pension funds are also losing on the stock markets. And investment mortgages are also problematic.’  

It is not limited to just a few investors who feel the pain on the stock market. One in every four Dutch households has invested in stock, according to research by the Dutch National Bank. More than half of the pension capital is invested and one in three mortgages that have been concluded in the past two years have something to do with investing.

2003

Index portfolio, Word definition 2003-08-01, Het Financieele Dagblad

'...the arrival of the information era is undermining the traditional investment models. In this day and age, spreading risks and index investing have been reduced to 'mere static truths'.

Investing on the crest of waves. 'Diginomics' makes old investment models obsolete, says Herma Koornwinder
2003-08-01, Het Financieele Dagblad

The world has changed but the investment models have not kept up with it. Investment expert Herma Koornwinder calls for radical changes.

According to the investment expert from Brabant province in the Netherlands, people fail to make appropriate use of all the possibilities that computer science provides us with, thanks to artificial intelligence: ‘The spread of computerization, the move from industrial society to knowledge- based society, ie, diginomics, has consequences similar to those we saw when we changed from an agricultural society to an industrial economy. We seriously need to take this into account.’

According to Koornwinder, traditional investment models are being undermined by the increase in computer-controlled investment activities that will be the medium in the upcoming era of computerization and computer science: ‘At present, the spread of risk in index investments is still a static truth. However, with information flashing back and forth around the globe like lightning, it is much easier, faster and more effective to detect investment options the world over. Why should one still invest in gold or bonds when there are other options elsewhere waiting to be picked up?’

'Index investments big misunderstanding'

We all grew up with the myth of the Nobel Prize winners Sharpe and Markowitz, according to whom the market is an efficient mechanism. This would imply that in the long run no portfolio can do better than the index as no-one has better long-term information. This makes the index always right, which is actually a serious misconception.

According to Koornwinder, the traces of conventional models can best be seen in the social services. ‘If the performance of retirement funds could be improved by one per cent only, all problems could be solved. They have failed their members dreadfully, losing billions of their premiums. Investing is a matter of trust and this was abused. Long-term investments with the highest possible percentage of shares was mostly their preferred approach, as a result of which we now all have to work longer due to a shortage of funds. This is too much for words!

‘As a result of this policy, the next generation will have to pay higher premiums. It is high time that citizens become more assertive in financial matters and start asking more questions about returns on funds than they did in the past, which I hope to stimulate with my book.’

2007

The deciphered future 2007-10-20, Eindhovens Dagblad

During the following years, Herma Koornwinder kept drawing attention with her defiant predictions. Her criticism of retirement funds and insurance companies remains severe: 'With their traditional methods of analysis they do not succeed in outperforming the indices.'

What Herma Koornwinder has to say is quite something: she is convinced that her research has uncovered an ‘ancient language’. However, she has kept silent about it until she can confirm it. Now that she can, she claims she also has proof of nothing less than intelligent design, a controversial term, not only among scientists.