Forum Archive Index - October 2000

["Philip Robinson" <robph639@student.otago.ac.nz>]

Thanks for the pointers Hugh,

I have no intention of trying to put together a fund or tell people what to
buy. I just want sort out a good way of finding good "Buffet" stocks in a NZ
and Australian context, and the calculations and theory behind it. I hope to
do this with the help of others who have experience in the market and those
who have little like myself. I then want to help people understand and use
the system to pick good stocks, because a many people hear Buffet and they
think too hard like myself or too complex, which it can be but I want to
sort that out.

A lot of what you have said is in line with Buffet eg. commodities and so
will be taking it on board. I would be keen to have you help if you want
when we get going. I have read the books you have recommended and am
currently reading Security Analysis after finishing The Intelligent
Investor.

Cheers
Phil


----- Original Message -----
From: "hugh webber" <hugh.webber@clear.net.nz>
To: <sharechat@sharechat.co.nz>
Sent: Monday, October 23, 2000 7:03 PM
Subject: [sharechat] Focus Investing Group, NZ Buffett Fund & &: CAUTION!


> Well I guess someone needs to say a few words of
> caution before everyone sings Pollyanna so I'll stick
> my neck out again.
> Point (1) if people are new to the game then they need
> to do some reading so they know what its about and
> how to best play it.
> The best two books are 'Buffetology' by Mary Buffett,
> and not so good but adapted to the NZ market 'Making
> Money on the New Zealand Sharemarket' by Frank
> Newman and Phil Briggs.
> When you've read and understood those two you're
> ready to play. Even the old hands and the names fall
> into traps - I note an NBR article that Eric Watson's
> fortune has halved...shades of Aquaria...and if you had
> bought Telecom IR's when launched and paid your instalment
> then you'd have about 60% of your money left.
>
> Point (2) don't mix it all up e.g. Buffetology with chartism
> (technical junk that's worthless in practical terms) with
> new issues and dewy eyed tech speculation and rumours
> about a horse and diversification. Stick to Buffetology its
> the only one that works.
>
> Point (3) expect to take several years to make an impact.
>
> Point (4) decide what your objective is. Most people make the
> mistake of assuming that its to make as much money as fast
> possible - that doesn't work and if it did IRD would destroy you.
> A better one is to go for good sustainable gross yields and to
> take the capital gains as a welcome incidental. You'll do better
> than chasing new issues and techs.
>
> Point (5) stay out of commodities - goods and services that
> compete completely or mostly on price - hotels, airlines,
> forests, & & see Buffetology.
>
> Point (6) Recall an amusing anecdote from a man who got rich
> who when asked how he did it replied 'I always sold too soon' -
> although Buffetology relies on carefully picking the best shares
> (not in a hurry) and holding for years.
>
> Funds don't work because they diversify like mad and achieve
> the lowest common denominator. Buffett sees diversification as
> a way of trying to hide your mistakes instead of not making any.
> Funds do worse than market indexes on upturns and slightly
> better than market indexes on downturns.
> You become a prisoner of the group instead of being able to do
> your own analysis, your own timing and jump when you decide its
> right. You're guaranteed, even starting with the best of intentions,
> to have blistering arguments, lose friends, make enemies.
>
> Hence my advice is to do your own thing rather than trying to start
> NZ Buffett Funds or Focus Investment Groups.
>
> cheers,
> hugh
>
>
>
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