Forum Archive Index - May 2000

["Mike Hudson" <mikehudson@clear.net.nz>]

John

I have just caught up with this discussion and my initial  question is the
same as Neil’s; what are your investment objectives? Do you want to

a) Get rich slowly and accept a tolerable level of volatility and risk
b) Get rich quickly in which case you also have risk of getting poor
quickly.

I have made these assumptions

1. You have a reasonable amount of money invested and looking at your
existing portfolio there is a degree of conservatism that suggests that you
are more likely to fit (a) above but some of your holdings suggest that you
also are not averse to some risk and excitement.

2. This is the sum total of your equity investments and you don’t have
chunks of money invested overseas.

3. You are debt free as the best investment you can make is to pay off your
mortgage and other debts.

So here are the thoughts of Uncle Mike

ADV:  If you must be in an NZ tech stock I suppose this is the one to keep
despite the EW presence - hold

CAV: Good yield, should benefit from lower dollar - hold

CEN: Defensive stock, possible play by major shareholder – sell half

CGB, EPH, SPE: Speculative shares in questionable NZ tech market, for
traders only – sell

FFS: Overpriced according to most experts but looked what happened to FLP,
play on FCL restructuring – sell half.

GPG: Good performer over the years, cash rich, selling below nta and waiting
to pounce . Not a NZ company and gives offshore exposure – hold

LNN, NUF. Solid companies that also operate overseas –hold

NPX. Don’t know anything about them  but brokers seem to think they are
worth about $3.60 – hold

PRG:  Personal distaste for anything involving E W – sell

RBD: Going nowhere – sell (although I haven’t taken my own advice)

RCH: Not may companies make money in China and there are better exposures to
the NZ construction industry – sell

THL: If any industry has good prospects at the moment it must be tourism -
hold

STU: Possible profits on sale although likely buyer, FLB, has other
priorities at the moment – better exposures to construction industry – sell

This would free up $54,000 which I would invest as follows.

FLB: Good fundamentals plus possible FCL restructuring gains.  $14000.

AIA: Almost a monopoly, earnings growth, sell down of local body
shareholdings (to Changi) could be good for price. $10,000

GPG: Don’t underestimate Sir Ron. $10,000.

This would give you a fairly low risk portfolio which should give solid if
unspectacular growth in the medium to long term. If you don’t like these I
would also look at TEL, FEG, WPCTA, WHS, CAH, WAM

The fun part is the remaining $20,000. You open an online account with a US
broker and play  Wall Street. Don’t waste your time with the mickey mouse
Australasian  tech sector. In the USA you have

- About 10,000 stocks to choose from (and that does not include the OTC and
pink sheet stocks)
- Huge amount of info available
- More transparency
- Low commissions

Just a few more ideas to add to the pot, I bet you wish you hadn’t started
this now.

Disclosure: Own CEN, GPG, RBD, FLB, AIA, TEL, FEG, WHS, CAH ,WAM (among
others)



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