Forum Archive Index - August 2003

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi Macdunk,
 
>
> Last Sept we both agreed that farmers were being hit hard, 
> and I asked the question why you were holding wri 
> and I had sold out I also pointed out that I
> bought more poa shares.
>

I held on to WRI because even though farmers were being hit in the 
pocket, WRI was still good value.   Just to give you some idea of how 
cheap it was, I *still* think WRI is good value at $1.40.    There is no 
way I would sell at anywhere near $1.40.   Just because next year's 
result is not going to be as good as this years result, that does not 
mean you should expect the share price to go down, as many casual 
observers of F/A seem to think..

On the other subject, I have no criticisim of you buying into POA.   I 
haven't studied it in detail, but it seems to be a fine company.    I am 
more curious as to why based on fundamentals that you would even 
consider selling!

>
> I also posted that I sold my kip shares
> because I thought I was falling In love with the bloody things and
> that they made me about 18pc over the previous couple of years. 
>

So you sold Kiwi Income Property Trust because you had had a good 
run out of them.   Well I can't criticise anyone for making a good profit. 
But you seem to assume that just because KIP had had two good 
years that in itself was a reason to sell.    If you are happy with what he 
management team has done for you in Kiwi, and they were paying you 
a good dividend, then why sell out?

I have mentioned before on this forum that I don't like listed property 
for most investors, because most homeowners have enough of their 
wealth tied up in real estate anyway.   If I had held some I might have 
been tempted to sell KIP at about that time too.   But this would be 
nothing to do with any share price trend.  It would be because I 
considered the property market had peaked.

>      
>  Later on I posted that pwc was on a long downtrend and I was waiting
> to buy at the bottom.    I did that and am sitting on a good gain In
> share price and as you say what If Interest rates go up? To that my
> comment would be a five min phone call and they are gone.     
>

I wasn't suggesting that a rise in interest rates would necessarily 
torpedo the Powerco share price.   I was just curious as to whether you 
had considered that prospect.   I haven't studied the company closely 
enough to know what real effect such an interest rate rise might have.

>
> We can all make mistakes but with the right buying and selling
> systems In place It Is almost risk free. 
>

But for many having a buying and selling strategy that works *and* 
they can stick to is quite difficult.

>
>     I made 30pc out of wri  sold out and watched the share price
> stagnate for ten months that means I picked that one dead right.
>    
>

Except that while the share price was 'stagnating' it was paying a 15% 
dividend.   IOW looking at the share price only would give you a 
misleading impression of the overall picture.

>
> I am not Interested In trying
> to beat what the bank pays If that was my ultimate goal I would give
> It all away.   I still think that property for the switched on
> Investor leaves shares for dead.   The reason I play the market Is for
> the challenge of doing something new that makes me think and If you
> think I will be happy with an 11pc gain then It Is obvious you don't
> know me. 
>

11% is not just 'beating the bank'.   It is *doubling* what the bank will 
do for you!  And it is a performance almost 50% better than the Cullen 
fund is planning to achieve.

Macdunk, you have told us that you make most of your money in 
property.    That is fine, so in one sense the sharemarket is a sideline 
interest for you.   IOW, it would hurt, but you could probably live with 
every share that you held an interest in going bust.  That means you 
have a high risk tolerance.  That may be OK for you, but I would 
suggest that for most people, following a strategy such as yours -with 
their savings that were going to fund them through retirement- would 
be too risky.

>
> The reason I said pwc was a better short term prospect than
> wri Is that most of there customers are not going broke like wri
> customers are.  
>

That is an exaggeration.   Thre is no mass bankruptcy of farmers on 
the horizon.   I accept there may be mass whinging, but that is not the 
same thing.   Except for last year, farmers have always done that!

>
>The conclusion Is snoopy with hindsight I made my 20pc
> on poa after the wri sale and you are happy just to beat the bank.  
>

But I have *also* made a 15c dividend and a 12c share price gain 
since WRI were last $1.30.  Funnily enough that is also around 20%, 
so we are even.   Except that I have avoided the brokerage that you 
incurred by churning your portfolio, so I am probably slightly ahead.

As you will have seen over the two full years that 'Stockguru' has been 
running, I have done far better than 'beat the bank' .  I have greatly 
exceeded my return targets of around 12% for each of the last two 
years ( I reduced the target this year to 11%) .  My reason for setting 
such a low (in your eyes) target is that it focusses my attention on 
slightly less risky opportunities.   I am sure I could focus on looking for 
50% plus deals in a calendar year like Gerry does, but I am also sure 
that if I did so then more of them would go bad.    The reality is most of 
the share buying I have done has had a very high success rate.    I 
prefer to go for the slightly lower return, with a greater security of 
retaining my capital.  It is a style more conservative than most of the 
posters here.   But then in my favour I *am* still here.   

>
> Next time It might be your turn who knows I know Its fun competing so
> don't rubbish my system I learned some of It from you.  
> 

I'm not rubbishing your system.    I'm just suggesting it might be even 
better if there was a bit more F/A thrown in there with the other 
ingredients.


Regards,

SNOOPY

--
Message sent by Snoopy 
on Pegasus Mail version 4.02
----------------------------------
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bite them by accident"


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