Forum Archive Index - September 2000

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

A few comments on the article Ben posted

The article constantly comes back to the fundamental aspects 
of  profitability and dividends and the fact that compounding profits 
determine the ultimate success of an organization.  What we now see in the 
US are prices which are often completely unrelated to realistic profit 
expectations.  That market is driven by price and I suggest that the 
majority of private investors/traders wouldn't have a clue as to P/E or any 
other indicators.  If the price is going up that is a good share to have - 
nothing else. I wouldn't be surprised if the brokers help to pump up prices 
by steering unknowledgeable private investors.

The NASDAQ is a unique phenomenon which IMO must eventually come back to 
some sort of logical assessment - the only question being when..............
There have been constant fears of a major correction, which seem 
temporarily to be more subdued as the over-optimism holds sway 
but..................

All is driven by the so called 'technological revolution' . Whilst the 
achievements in computer development and the Internet are remarkable and 
all look to the success of Microsoft, Intel and others to be repeated IMO 
we are headed for a levelling out which will see many of the high flying 
ideas come to naught.

We can't compare the US & NZ markets.  As has been said before it is like 
comparing cheese with chalk.
We can't use the same principles applying in the US to NZ.  A while ago on 
Sharechat there was constant reference to how the NASDAQ was moving but Ben 
posted (Back to the NASDAQ 1/8/00 ) that it had little bearing on the NZ 
market.  I feel that we have to stick with fundamental measurement is 
assessing NZ shares. If we try the rising price idea (if we can find any) 
and ignore fundamentals with NZ shares we would surely fail.  This has 
happened with some of the 'penny dreadfuls' which seem to be favoured by 
some Chatters.

It is interesting that there are different tax rates in the US for capital 
gains and dividends - with cap gains lower. This could have a bearing on 
some companies not paying dividends but retaining profits ?

BG 


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