Forum Archive Index - July 2000

[Brian Gale <brigale@i4free.co.nz>]

Hi again John

I've got to get back to you again because I had overlooked the fact that
you had made earlier postings regarding your portfolio.  I feel that
in your last posting you were asking the wrong question when you asked
about selling CAV & LNN and my comments were not really
appropriate.

On examination of your portfolio (presuming it hasn't changed
substantially) 

1. With the exception of FFS, which is your star performer, the only
others to show a gain are CAV & LNN
    the very ones you ask about selling.
 
2. Overall you are down some $9,000 with some quite large individual
losses.

3. The gain on FFS of  $7,500 offsets what otherwise would be a
quite substantial overall loss 

Your selling question should have been related to the bad
performers.....6 of which are showing losses in excess of  20%
ranging right up to 68%.

I repeat the following points, most of which have been covered by other
'Chatters'

1. The total amount you have invested is a considerable sum at $139k,
particularly in this sluggish NZ market. If this is a major part of your
liquid resources it is too high to risk, half would be better on
fixed    deposit.

2. You have too many individual companies to keep track of - again half
would be ample ( from 16 to 8 )

3. It is vital that you keep close track of  the price movements of
your shares and work on some sort of stop loss.  This is not easy
because of  normal fluctuations but you need to set some
level.  A figure of 10% is often muted, but this can be somewhat
tight in certain circumstances, however a 20% loss should  ring the
alarm bells and you should bail out.  Unfortunately you have 6 over
20 % and another 3 over 10% so the situation has got rather out of
control.

What to do ?

1. Nothing and hope the overall situation improves. Some possibly will in
time

2. Bite the bullet and get rid of your deadwood reducing your overall
holding.

3. FFS is showing you a good gain but the prudent investor would have
taken some of the profit on this.
    There is still an element of speculation here. Up to
you.

4. Your portfolio should have a base of  solid  companies (say
half of your holding). GPG is pretty good and LNN , CAV ,CEN not so bad.
You could add PFI which gives good quarterly dividends and is able to
weather the ups and downs. This base may not provide spectacular results
but it should be reasonably stable and give you dividends. Then you can
afford to have a few more risky ones. But watch them like a hawk, working
on stop losses.

Finally on your charting question - I can't see it will be off any use to
you at all. Watch the prices and work on stop losses. You can get all the
basic information you need from the various brokers web-sites including
basic charts of past performance and company reports.

 Best of luck
 BG

At 14:28 12-07-00 +1200, you wrote:
> I guess I suffer from every
> newbies complaint. The when to sell syndrome.
> ETC.ETC.