Forum Archive Index - June 2000

["vincent.wang" <vincent.wang@xtra.co.nz>]

I have seen some of you are trying to use the module of Motley Fool to select good stocks from NZSE, I think this is very risky.  Here are reasons why:

 

1. The author of Motley Fool did not say their rules could be applied in foreign stock markets.  Remember the Foolish four are picked from DJ index companies, all these companies are huge and financially sound.  We have seen some of these companies have gone through trouble in their company history, but none of them have been knock out.  This is because their size and strong financial backup.

 

2. Most, if not all, of these companies operate in U.S. and overseas.  Their business are so diversified geographically, their operation risk has been minimized.  How many NZSE listed companies have such diversification?

 

3. The U.S. is a huge country, its organic population(250 millions now) growth would ensure most companies would enjoy future growth, while here we only have 3.8 million people and our population growth in recent years is negative.(recent figures show more are moving to offshore, thanks for the new Labour government!)

 

4. We can assume most of these 30 companies are well governed because they are the top 30 companies in the U.S.  Can we assume most of NZSE listed companies are well governed?    

 

5. We can assume most of these 30 companies have the best skill and knowledge to further improve their business, but can we assume that most of NZSE listed companies have such skill and knowledge?  Ask ourselves, how many Kiwi companies have succeeded in their overseas investment?  (Overseas is the real arena to test your skill and knowledge)

 

6. Ask ourselves how many NZSE listed companies consistently show sales and profit growth in the past 10 years?

 

6. Finally, we need to ask our NZSE security board, do we have the strict rule to punish inside trading as U.S. does?

 

RGDS,

 

Vincent Wang