Forum Archive Index - December 1999

["hugh webber" <hugh.webber@clear.net.nz>]

I think you guys ought to pick your top 10 stocks for the year from those
whose earnings have risen most on a sustainable basis (a bit of judgment
there but a reasonable assessment can be made).

You'll get a totally different answer from the ones mentioned but unlike
those you'll find that in the short/medium/long term their prices haven't
popped like a bubble but gone on to greater heights. If Tourism Holdings
can sustain its fourfold earnings increase (Tourism is a bit cyclical I
concede but overall its trending up and up for NZ particularly with a
weaker dollar and cheaper flights) then that's a guaranteed fourfold share
price increase. 

What would you prefer, a fourfold increase in a tech with negative earnings
based on hot air and blue sky or a fourfold increase in a stock that's
quadrupled its earnings on a sustainable basis? Me, I'd go for the earnings
everytime. (um, I seem to recall there a number of computer stocks (aren't
these the sacred techs?) have gone to the wall already....lets see
Commodore comes to mind on the local scene...) 

I loved Sarah's Buffett extract, very amusing and true. As for the
criticism, it depends whether you have the money to altuistically throw
away for the hopeful long term future or if you're in for a solid
calculable profit for yourself as an investor.

A note on the forum; I see there are several people who have asked quite
reasonable questions and been met by blank silence. (a lot of the regulars
seem to have been having a tech riot instead).Not very encouraging for
their future participation - surely someone can be detailed, maybe a roster
could be set-up to make a short polite answer to otherwise ignored queries,
so they don't just feel totally worthless and rejected.

Anyone who hasn't got 'Making Money on the New Zealand Sharemarket' by
Newman and Briggs for Xmas ought to outlay the $29.95 and read it over the
break. Quite readable and interesting and informative and all sorts of
nostalgia. I note that a number of the unattributed quotes at the top of
some of the pages are actually from Buffett (and incidentally Buffetology
by Mary Buffett is the only Buffett book worth reading, the other two that
came out at the same time are non analytical rubbish) and it shows quite a
bit of influence from Mary's book.
I see it was reviewed by Michael Coote in the Sunday Star and of course
dear Michael couldn't resist taking a potshot at its lack of depth on
technical (chartist) analysis. Personally I think most of Michael's
technical work shows up the severe limitations of chartism - you only have
to read his regular 2 articles in the NBR presumably written on the
wed/thurs of each week to have a good laugh on Saturday to see how wrong
most of it usually is. That's another interesting debate we ought  to have
- on the perils of chartism, bit like astrology really and maybe the techs
are tarot card reading or even the ouija board, never mind I'm not totally
serious.

cheers,
Hugh

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