Forum Archive Index - August 2000

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

Billo wrote

"Dear G.P.T.,                     Thank you for your posting. I am new to the
sharemarketand find the system with access through PC to these news facilities
exciting and informative. I am not looking for an offshore yacht, but anonshore
house. So i have decided to invest $150000 for a year to see whatcomes of it.
After due consideration and advice I went into FFS at .87. Fromwhat I have seen
the sale of FFS must go ahead and the timings you suggestseem good.The value is
there with the company, however building figures are down, andthe profit bulk
seemed to be in a tax write off. I would be very happy tosee a discounted sale
to CITIC at around $1.35."

 

I know that I will get in to trouble for this but may I make a couple of comments about your post.

 

• Shares due to their inherent volatility are a long term investment. If you want to place money for a year term deposits are a better bet unless you are prepared to lose a substantial part of your $150k. You should have at least a five year time horizon for equities.
• I trust that you have not put your whole stake in FFS, or any other share for that matter. You need to be in at least five different  shares
• If you think that CITIC or anybody else is going to pat $1.35 for FFS you are dreaming. Don't be fooled by the asset backing. Do you understand the methodology for valuing growing forests? I don't, but there must be some fairly heroic assumptions in the valuing assets which can't be realised for several years down the track.
• The falling NZ dollar is positive for exporters but this is more than offset in FFS's case by the fact that the massive debt and interest payments are denominated in US dollars.

Anyway, good luck with your investing

 

Cheers

Mike (grumpy as ever) H

 

 

 

 

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