Koornwinder Convention. Grand Hotel Amsterdam, 2010
TV-show 'Anno Joosten' 1995
Circles of Knowledge Conference
Marlborough College 2011
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From as far back as 1987, Herma Koornwinder has warned about outdated investment models and, from the early 1990s, the unpreparedness of the financial world for what she described as the coming ‘tsunami’ of the digital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. The media have borne witness to Herma's warnings on numerous occasions and she is grateful to them for giving her the opportunity to publicise her alerts. Today, Herma continues to express concerns publicly about the failings of banks, pension funds and other institutions which have contributed to the global financial crisis.
Head and shoulders
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.>>
The Hallelujah effect
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
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? >>
Providing a better grip on the situation
'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
'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.’ >>
Numerous answers possible to what private investors should do, but... one thing is clear: value of advice is extremely relative
Numerous answers possible to what private investors should do, but… one thing is clear: value of advices is extremely relative.>>
Like a railway guide
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.' >>
Hunt for the promising stock
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. >>
Be alert to bearish breakthrough
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. '>>
Groundbreaking theory for financial markets
'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.'
'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.'
'The market actually has a memory. Rates do not fluctuate at random, but in waves.'
'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. '>>
Beursplein 5, Letters
'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.'>>
Against the current
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. >>
New fund for technical analysts in the pipeline
Het Financieele Dagblad
'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.' >>
Technical analysis warranty accountant versus the non-believers
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.
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.'
'Public funds are very poorly managed. Profit can be improved dramatically by using investment technology.'
'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’
Modern management theories should enter the investment world, according to Koornwinder... 'Money that does not move is dead money - a waste of supply,' she confidently states. >>
'Invisible' economy casts its shadows forward: Accountant confirms reliability of Koornwinder's stock market predictions
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.' >>
Analyst Koornwinder pleads for renewal
'Banks should do more than just innovating their corporate organisation. They need to focus on investment research and investment innovation as well.'
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
'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
According to Koornwinder, both fundamental and technical analysis have shortcomings which prevent reliable prognoses. >>
Lesson for pension giants: Investment expert develops very lucrative method
'Most investors and banks use obsolete models... 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.' >>
Anno Joosten TV show
HK: ...if my alternative approach enables the pension funds to yield a mere one per cent extra in returns, it would be a very interesting product for them. Because the Netherlands is trying to find a way to be able to continue to finance its care system. Well, this is possible if the pension funds change their approach: to not invest solely in the Netherlands, but start investing globally.
AJ: Do you actually mean to say that if the pension funds would make better investments our pensions would be better?
HK: I think it would improve our lives. We’d simply have more money.>>
KGMN makes active investing possible
'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.'
'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.'
'The electronic highway, electronic investing, the digitalisation 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
'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
Mrs Koornwinder: 'Biggest mistake by analysts is not to search for the reason why.'>>
Interview with Mrs Herma Koornwinder, Dutch stock market guru
'A turning point in my life was when I discovered how poorly investment companies and pension funds are investing their money. The Netherlands should not let the threatening international tidal wave of knowledge technology drown it. We need to play a leading role in the financial field in the Digital Century we currently live in, just like we did in the Golden Age with our ships.' >>
The zapping investor is emerging
'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...' >>
’Investor needs to be much more assertive': Investment analyst Herma Koornwinder is annoyed by the attitude of 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?
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’
'But times are changing. Recently, Professor Dr D J van Duijn, 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.'
'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. 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.'
'It is my vision that global investing, in particular active investing, will provide the financial means to fund such a 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 nor spreading the risks will consistently lead to good results.' >>
New investment technology vital to finance effects of ageing and high-tech unemployment
Erasmus University Rotterdam:
'We are at the threshold of major social changes, similar to those during the Thirties of 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.'
'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.'
'The digital age and its 'emerging sciences of complexity' is already casting its shadow forward over our society. Furthermore, I would like to make an appeal for a Ministry for Information Science and Technology.' >>
Rabobank Groningen and environs provides insight into investments
Own edition Rabobank
Put simply, it is because she introduces techniques of the 21st century into the 20th century. >>
Koornwinder takes first step towards investment fund: Challenging KGMN method within reach of private investor
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'.>>
'Spreading of portfolio does not reduce risk at all'. Investment analyst Herma Koornwinder overthrows investment profundities
De Tijd (Belgium)
'Another observation is that the markets are all but efficient...'
Another investment profundity, 'diversity to reduce the risk', finds no favour in the eyes of Koornwinder.
'I strive to track and eliminate the risk. The profundities currently in use in the investment world only add to 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'. >>
Investment business is, just as in nature, subject to seasonal changes
According to Koornwinder, predictions do not come true because the wrong models are used.
'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. >>
The dissident vision of Herma Koornwinder
According to the accountants, Koornwinder succeeded in outperforming the leading stock market indicators by a lonmg 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.
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.
She warned about the consequences of ageing about six years ago, without any result. But today, one cannot open a newspaper without reading about it. >>
Herma Koornwinder: Old stock market wisdom is obsolete
'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
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. >>
Professionals await their buying moment
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. >>
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
According to Koornwinder, prognoses fail because people are using faulty models. >>
Stock market gurus divided about stock hype
This is why the stock specialist emphasises the importance of an expert analysis, which is currently lacking in her opinion. >>
'Investing too risky for individuals'
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.' >>
Outdated knowledge equals impotence
Or will the individual investor lose his way due to the increasing complexity of the financial markets? 'Digilliterates will certainly lose from the Nintendo-generation.'
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.>>
Waiting for the Nintendo generation. Investment advisor Koornwinder: We need people with courage
'Electronic trade, e-trade or e-commerce is the future. Computers will take over the thinking processes, as is already happening in the US.'
'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. >>
Investor of the 21st century is an e-trader: Koornwinder foresees digital flash economy
'The world is changing, and investing is changing with it as are investment theories. 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.' Koornwinder foresees so many changes in the 'diginomy' that she believes there should be a ministry of ICT.
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.'
'It would mean a tremendous source of prosperity for 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.>>
Frits Spits radio show Time For Two
We are dealing with a flash economy, the digital era. And if we simply continue – and that is a crucial mistake – valuing listed companies in the same old way, in other words by their book value, we are valuing them in the wrong way.'>>
Small investor holds his breath
Dutch stock market expert Herma 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.' >>
Investing on the crest of a wave: 'Diginomics' makes old investment models obsolete, says Herma Koornwinder
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.
'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.'
'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.' >>
Index Portfolio: Word Definition
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".' >>
The deciphered future
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.' >>