Forum Archive Index - January 2002

["Chris Castle" <c.castle@paradise.net.nz>]

Snoopy,

Clearly you read my column on Scott in the SST last year. Good on you for
having the courage to venture into the small stocks. You'd be surprised how
liquid they are.

Good idea about acceptance speeches - perhaps I should have explained last
year why the darts landed where they did.........

Regards,

Chris Castle


----- Original Message -----
From: <tennyson@caverock.net.nz>
To: <sharechat@sharechat.co.nz>
Sent: Tuesday, January 29, 2002 10:20 AM
Subject: Re: [sharechat] Stock Guru 2002 - Now Live


> Hi Phil and Co,
>
> Good to see the competition running.  And whaddya know, I'm in the
> lead already?   Does everyone else just want to give up now ;-)?
>
> Actually, I doubt if I'll be there for very long as my portfolio is
> quite conservative.  The sort of thing you might invest in in real
> life, but not the type of thing that will win a competition such as
> this.  But as 'overnight leader' I'll take my fleeting moment in the
> sun and give you my 'yellow jersey' end of the day acceptance speech.
>
> It is great to see so many people involved this year.   And may I
> wish all 400 odd of you the best of luck.  It doesn't take a genius
> to work out that the reason for my strong early showing is the
> performance of Scott Technology.  That and the fact that I haven't
> done anything drastically wrong with my other selections!
>
> SCT is what I would class as a recovery share, but one that has a
> history of good dividend payouts and high ROE when things are working
> for them.  Last year was not one of those years.  With the global
> slowdown, the last thing the mind of many whiteware executives was
> tooling up for a new washing machine.  I selected SCT thinking that
> there might be some sort of recovery in the "production line" market
> overseas before the end of the year.  I was somewhat surprised to see
> SCT shoot up so fast on the first day of the competition.  Obviously
> the recent orders from the USA caught the market napping!
>
> The lesson I learn from this is, "don't put too much faith in your
> ability to time things exactly".  I was certainly prepared for a lean
> few months with SCT!   But I also knew that they possessed the
> marketing and management skills to 'come right', whenever that might
> be.  Second line shares like SCT are often difficult to trade because
> the volume is so light.  You can easily force the price up or down
> quite a few percent with an 'at market' order.
>
> My theory for buying into secondary market shares goes against all
> trader instinct.   You should buy them on the way down, when the
> market has lost interest in them, but only after doing sufficient
> fundamental analysis to know that the price you are buying in at is
> 'cheap'.   Buying on the way down means little competition from
> the share traders.  Often the two or three months following the
> release of a bad result is a good time to pick up such bargains.
> Your secondary share selection may very well get cheaper, but this is
> where you have to have faith in your own homework over and above what
> 'Mr Market' is telling you short term.  By the time the tide turns it
> will be too late IMHO!
>
> I hope that as the competition goes on and others rise to the top,
> there will be more 'acceptance speeches' given.   Perusing the entry
> list is great, but it would be interesting to learn who picked what
> and why too, and what better time to speak than when you have just
> had a good day!  Perhaps we might all be able to learn something off
> our daily winners?   Thank you all for listening.
>
> SNOOPY
>
>
>
>
> ---------------------------------
> Message sent by Snoopy
> e-mail  tennyson@caverock.net.nz
> on Pegasus Mail version 2.55
> ----------------------------------
> "Dogs have big tongues, so you can bet they don't
> bite them by accident"
>
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>
>


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