Forum Archive Index - October 2000

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

Following on from previous postings by Sarah, Peter and Steve some 
interesting points are raised and in particular ' Are Chatters perhaps 
concentrating too much on the wrong categories ?'

I would suggest that securities, broadly speaking, fall into three categories:-

1. Sound companies with steady performances, good dividends. No spectacular 
cap gains but no great falls either.  Can be classed as boring but provide 
steady profits to investors.

2. Special or recovery situations, more speculative but could produce good 
capital gains

3. What are commonly called ' penny dreadfuls '  Highly speculative usually 
at low price per share

Of these it is 3 that seems to receive the most attention from Chatters.

Firstly I think the low $ price is an attraction - a 10 cent share only 
needs to go up 1 cent to make a 10% profit and of course you get a bigger 
bundle for your $ outlay.  There is the hope to get rich quick and 
impatience for results, so if the 'pd'  performs smiles abound, however 
because of the spec nature of this category the chance of a drop is 
probably greater than a gain ( people get scared of these stocks very 
easily and down she goes)
But again this tends to be the most exciting category because of the 
inclusion of the so called glamour stocks.hence the attention received.

Looking at category 1....... Out of a total of  49  Top 40 securities some 
21 have shown an increase, or at least didn't fall during the 9 mths to 
date  Ten show a Cap gain of 10% or better. The Top40 Index itself  fell 
nearly 10%.

MON,BCH,WHS,INL,ANZ,UNL,WPTCA,TTPGC,TLT,GPG,SKY,LNN,NCH,TRH,AMP,AIRVB,KIPVB,
FAP  & FFS-FEG which are really cat 2.

It would seem that these should form the backbone to a portfolio but there 
is the danger of  Cat 3 becoming dominant for the reasons stated.

If you wish to see the full listing for the Top40 it is appended as a 
spreadsheet.
I haven't analysed the SCI index which would include the 'pds' , but I will.

BG

COMPARE OCT.xls