Forum Archive Index - April 2000

["Mike Hudson" <mikehudson@clear.net.nz>]

I can’t believe but Hugh (yes Hugh, the doyenne of value investors and the
scourge of chartists ) wrote

“I suppose that the Nasdaq may be close to its bottom on the trends to date;
perhaps the chartists could tell us what their charts say on that?”

I agree with Hugh on chartists, htey are ib the same league as astrologers.
But I disagree about the Nasdaq bottoming out. it has a good way to go down
yet. Whilst not being as pessimistic as our young (he has to be young doesn’
t he?) friend Ril in London I can still only see further declines. The 7%
collapse took place on Wednesday,  if margin calls are not met within three
days positions are closed out by the brokers which means that there could be
a wave of margin generated sales on Monday. In addition  as Phil said there
will be stock dumped on to the market by Mutual Funds to meet redemptions.

I was fortunate enough to get out of most of my tech holdings a couple of
weeks ago as I had become uncomfortable with the valuations even though
these were the companies that provide the spades rather than dig for the
gold.

Kingston Communications (KCOM, LSE) I bought for GBP 3.04 in July 1999 and
sold for GBP 14.51 which was down from their high of GBP17. They are
currently GBP 7.60 (David Reid ,did you but any of these?)

3v Semiconductor (V V V I , Nasdaq) bought for $8 in August 199 and sold for
$30 down from their high of $38. They are now $20

Securenet  (SNX, ASX) bought for $5.50 in January 2000 and sold for $10.
They subsequently went up to about $13 but are now back to about $8.

These are all excellent companies, well managed, leaders in their respective
fields, and profitable but their valuations had outstripped their worth by
any logical measure. I will be buying back into all three when the time is
right but I think there is some way to go yet. I also sold some holdings in
Korea which had doubled in price in the last six months or so as I believe
that that market is due for a breather if not a correction.

 I remember back in 1987 when Brierlys fell from $7 to $3.60 in a matter of
days, my wife who would make Hugh look like a reckless gambler tried to
persuade me to buy some because she thought they  were half price.
Fortunately for once in my life I didn’t listen to her.  It’s the same now,
just because some of these shares have fallen 30% or more it doesn’t mean
that they are cheap.

I have now reduced the TMT sector of my portfolio from 28% to 18% and what I
have got left is fairly conservative TEL TLSA and SKY. The obscene profits I
made from the above I have invested about half in NZ. I bought FEG, FLB, GPG
and the much maligned FLP investment at $2.30 which was rubbished last week
by some but which doesn’t look too bad now compared with all those silly
local so called tech stocks which seem to be a Eric Watson/ D F Mainland
benefit (sorry Ben). This has increased the NZ portion of my portfolio from
40% to 45%. The balance I am holding in cash until I see what shakes out on
Wall St and London. There will be some good buying opportunities but they
may be a couple of months away.

Good luck
Cheers
Mike H



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