Forum Archive Index - December 2000

["P Maiden" <pmaiden@xtra.co.nz>]

Gerry - thanks for your further comments on AIA.

 

A bit of simple charting comes to much the same conclusions.

 

Year end 1998 price was 265 and this rose to 287 at year end 1999. At year end 2000 the price is 313.

 

A simple extrapolation of this data gets the price to about 340 at this time next year. 

 

The current strong positive trend suggests a higher price than this - maybe DF Mainland are correct with their target of 384.

 

The AIA chart also shows what really did happen through 2000 in the market - especially the sentiment change between old / new technology stocks earlier in the year and the subsequent reversal of this sentiment.

 

From the end of 1999 through to April 2000 AIA went from 287 to 227 as the world turned their backs on the solid 'old' economy stocks.

 

Since April AIA has trended up from the 227 to the current 313 - a 38% gain for those who picked the bottom. 

 

'Old' economy stocks started to fight back.

 

This does show that over time the 'regression to the norm' principle does work.

 

As I predicted in a post several months ago tech stocks are drifting down to prices that reflect reality based on ongoing levels of sustainable profitability. That is where the likes of ADV have got to. The ADV price in the future will reflect what levels of profitability they actually achieve - at a realistic PE.  These companies have evolved into 'new old economy' (for want of a better phrase) and will be valued as such.

 

The trend in the AIA price does give me some hope for the dogs (share performance wise) I have in NUF and NPX. Both show strong profit growth and relatively low PEs but this is not reflected in the current share price.

 

Maybe AIA is leading the way in the 'old economy' fight back and as such I better hold on to NUF and NPX and hope that they will be stars in 2001.

 

All the best to all in 2001

 

Peter