Forum Archive Index - October 1999

["Brent Wheeler" <brentw@bwcl.co.nz>]

Some caution may be called for here.  Apparently cheap stocks could well be
the market's (accurate) reading of systematic risk rather than consistent
"undervaluation" of expected future earnings for individual coys.  Telling
what is what is made difficult in NZ by the fact that some 80% of market cap
is tied up in the top 10 or so shares.

Thus if market risk increases the big names by definition will take the hits
but that may not mean they are now bargains since inside NZ we all play in
the same pool. It is tough to diversify away political (election e.g.)risk,
policy change risk (especially say tax changes) Fed impact on RB thinking
and the like at least purely from within NZ.

Not to deter people just to recall that there is systematic as well as
unsystematic risk.

Dr Brent Wheeler
Director
Brent Wheeler & Co. Limited
AUCKLAND


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