Forum Archive Index - July 2003
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Re: [sharechat] Averages by macdunk
> the essence of what you're saying is that your portfolio of
> five shares is likely to grow at a compounding rate of 15% (as per WB
> screening criteria) starting today and for the next 10 years -
> property is likely to underperform such total return. However, the
> rate of 15% assumes that the purchase of shares is made at a point
> when Mr Market goes a little bit funny (peculiar), and this may not be
> happening now or in the foreseeable future.
> what five shares you would choose if the bet were accepted?, and
> whether you'd buy them today?
> I suppose that only very few shares would fall in WB's category, and I
> can only think of WHS, MHI, AIA, POA, POT, LPT, and SKC. You've
> analysed some of these in the Focus discussion group and come to the
> conclusion that, at today's price, none would seduce WB. Perhaps only
> WHS and MHI are at a relatively interesting price. So... what would
> you do?
Good point you raise there Pat. You are right of course. It is not just
a matter of dipping into Warren's bucket of favourite shares and pulling
out the five best ones. The timing of your share purchases are critical
as ultimately it this timing that makes the difference between an
average return and a great return. The problem with trying to time
purchases is that it is very difficult to predict when the market will
plunge to give you that once in a lifetime purchasing opportunity. The
only solution I can offer is to always have some cash aside and be
ready for that unexpected price plunge event.
So what five shares would I choose? Well those gateway utilities
(AIA, POA, LPC) are getting up there a bit in price, so I think I would by
pass those for the time being. MHI? I think the other retailer you list
(WHS) offers significantly better value.
WHS is the most obvious first choice.
I think because of that impressive yield I would have to throw in SKC.
The conference centre in Downtown Auckland proves that SKC hasn't
run out of ways to leverage on that downtown Auckland casino site.
I don't think I could leave out WPT, particularly with that price gap
between WBC and WPT which with trans tasman tax reform surely
can't last. Those banks seem to be relentless money generating
Selection number four is another cross listed Aussie: TLS. It is going
to have to be politically dressed up so the Australian government can
sell the 51% they still own. And if you still believe through all the
difficulties they have had that Telstra is an Aussie icon, it has hardly
ever been cheaper.
And my final choice is ... drumroll.....
A war-chest of cash. I would want to have that money available to
cash in on whatever unexpected opportunity presents itself in the next
year or so. Or perhaps I would stick my 'cash' in WRI shares, as
14% is a lot more than I could get in the bank! Might as well make that
money work while I am waiting.
How does that sound? Enough to make Macdunks house tremble all
the way to its foundations do you think?
discl: hold WHS, SKC, WPT, TLS and WRI
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