Forum Archive Index - November 2000

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

Hi

 

I just thought I would update people on the Focus Investor message board.

 

Brain B has come up with our mission (if you choose to accept it) statement:

 

"To empower the every day "mum and dad" investor with the tools of fundamental investment principles used by a handful of the world's most respected and successful investors. Armed with this basic knowledge and discipline the new and reborn investor will be able to make informed investment decisions and feel confident that they can do better than average."

 

Snoopy added some thoughts about DRPs and buybacks and that they may be used to boost cashflow. Buffet liked buybacks when they were used by healthy companies to boost EPS. It can be difficult to see which catagory companies fall under. This is something you have to watch put for.

 

Then there has been some discussion on the definition of certain Buffet criteria:

 

Commodities:

"In general terms it is a primary product (or raw material) that is grown such as coffee, tea, rubber or cotton or an extracted mineral resource such as gold, copper or tin. It also may be something that is (in effect) reared such as wool."
Warner brought up a good point about taking it too literally though and he is right, a company that has a strong market position and have pricing flexibility is a Buffet company whether it makes Trees or ties. The fact is that many commodity businesses are not in a string market position with pricing flexibilty and that is probably where the connection comes in.

 

Upward Earnings

As far as upward growth was concerned there can be little debate about that, but the point was made, and Buffet acknowledged it too, that good companies can have a bad year so we acknowledge that this can happen, but it depends on the level of dysperformance.

 

Mox brought up a good point about buying and forgetting which people seem to have differing opinion on. Some people say that you have to sell sometime to get your gain, but others like me are happy to sit tight. But all seem to agree that time is the importnat factor.

Conservatory financing is a slippery fish and Mox made a good point that ties in with the level of risk/growth you want. The more and more and more growth a company goes after the more risk and (usually) the more geared it will be.

 

Then there was a lively discussion on the two types of goodwill and the big differences that they had. Warner then gave us an insightful look into Frucor and its prospects if it makes forecasts. One can go for safety at the expense of some growth or go for growth at the expense of safety and this is something that everyone has to find a balance with.

 

Well thats where we are at, so if you have a moment drop by.

 

 

Phil

 

PS. I still don't understand SEATS