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From: | "vincent.wang" <vincent.wang@xtra.co.nz> |
Date: | Mon, 31 Jan 2000 21:00:24 +1300 |
It is interesting to see the debate on growth vs
yield.
I personally do not think there is a simple rule of
thumb which enable us to pick up the best performing stock among so many
stocks.
Growth companies can become non-growth companies
someday and yield stocks also can become non-yield stocks someday(or
overnight). (the only growth company on NZSE I can identify is
AIA because its monopolistic nature)
Telecom was a growth company 10 years ago, and then
gradually become a yield stock in the past few years. Now, it is neither a
growth company nor a yield stock. It has been caught in
between.
Wrightson, Designer Textiles, LWR, and most
property companies were yield stocks 2-3 years ago. But they have become
either non-yield or low yield now.(except a few property stocks)
Wrightson was not a bad company before they hired G
Kay as their MD, a person without agriculture background,
who suddenly sold the profit making Finance Division and turned a very
profitable company into a loss making company. Why the Board of Wrightson
have made such a big mistake?(most board directors do have good agriculture
experience) When I read the news( of selling Finance Division),
I thought Wrightson must have identified a better investment
opportunity. But I was terribly wrong. The incapability of the Board
and MD was much beyond my imagination.
The above story told us that management might
be an important criteria to choose a stock. Both Air N.Z. and Quanta
are in the air transportation business and both Carter and Fletcher are in the
paper and log business, why Quantas and Carter's performances are better
than Air N.Z. and Quanta's? The answer is management.
Of course, there are so many other variables
involved in the operation of a business, such as macroeconomic, interest rate,
raw material cost change, investors' confidence, competition, nature
disaster....the list can go on an on. This is why it is so
interesting to invest in sharemarket.
But I have to admit that luck is also
important. I bought 12,000 shares of ADV at 20 cents when the company was
in a very risky situation.(again, management issue) But I certainly did
not know its share price would have soared like it has done
recently.
RGDS,
Vincent
Wang
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