Forum Archive Index - May 2000

[neil.selman@gfmb.co.nz]

Ben

Thanks for the info re Telemedia.  I just want to pull you up on one point.

I understand that you liked what you saw of Chris Jones and Telemedia, but then
you stated "if I had any available funds, I would invest in Telemedia today".
My concern is that, just because you just found out that Telemedia is a good
company, doesn't automatically make it a buy.  Not that I subscribe to the
efficient market theory, but it would say that the market already knew and
reflected what you just found out.   Ie the share is appropriately priced.  Now
before you make a buy decision, you have to determine if the share is
appropriately priced.

"You should only buy if the current share price offers a substantial discount to
the intrinsic value of the company" (a bit of Buffetology).

I know that it isn't easy to value relatively new start up companies, but a
valuation must form the basis of your decision making.  Then when any new news
hits the market you adjust your value drivers and determine a new valuation and
move rationally.


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