Forum Archive Index - February 2000

[Nigel McCarter <n.mccarter@clear.net.nz>]

Hi everybody
Just going back to the value versus trading debate, It is important to work
out in advance, in real terms, what the costs benefits and expectations of
any share investing strategy is.

Have a look at the attched spreadsheet.  The cells coloured rose (for rose
coloured spectacles) can be altered to show differing sets of assumptions.  
The cells coloured grey are formulae that calculate net gains from
dividends and capital gains.
The cells coloured green are the results of the two strategies.

For example, if you think you can make 35% capital gain per year after
brokers fees trading shares put in 35.  Good on you say I.
I reckon I average about 20% per year plus dividends on buying and holding
shares for the longer term, despite my current portfolio looking very sick.

To beat this by trading, I have to make at least 35% average capital gain
on all my stocks. 

Have a play with the assumptions and watch what happens with your holdings.
Then factor in the probability of major volatility in either the trading
portfolio or the buy and hold portfolio and see what happens.

Cheers

Nigel
PS I'm sticking with value trading, cos I never seem to be able to buy
trading shares before the boom.

value v tradeing.xls

Nigel McCarter

Shorten the Odds 
The Short Portfolio
Box 23 019 Hamilton
Phone 64 7 858 2429 Fax 64 858 2689
Mobile 025 274 8560