Forum Archive Index - May 2002

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi Matthew,
 
My main concern with your request was that you were going to try and 
estimate 'support points' and try back testing of data on the chart 
to try and work out some sort of share trading strategy as regards 
AIR.  Whether such a strategy is valid or useful is the sort of thing 
that would ignite the trading vs fundamentals debate which has been 
done to death here.   I don't wish to get into that at this time.  My 
point was a strictly mathematical one.

If you want the chart for an essay to illustrate a point that is 
entirely different.  I guess if you are looking at the chart to 
explain the factors leading up to the financial crisis then the bit 
after the government injected the money is not relevant anyway.


>
>
> The other recent rights issues were in Oct 96 and Oct 2000. 
>
>


'Strictly mathematically' my argument would be that the chart 
figures should be adjusted for these as well.   However, in these 
cases the amount of new capital was not as great and it wouldn't 
cause quite the same distortionary effect.

Phaedrus has already told us that he regards charts as an indicator 
of what is happening rather than an exact mathematical representation 
of the market.   This I believe is a realistic approach.  The 
charting of raw data should show you whether a trend is continuing or 
has ended, and is sufficient for that.   Where it isn't 
sufficient is when you are looking at medium term trendlines that 
cover the cash issue period.  This is the point I was making.

>
>
>Note though the price was
>long trending down prior since 1999 prior to the purchase of the 2nd
>50%. I still however can't measurably pin the blame on one thing as
>there were various factors all beginning with the Aust Govt and of
>perhaps the conflict of interest on the Air NZ board?
> 
>


As you say there is no simple answer which is why it is such a good 
essay topic.  I would guess your supervisor is more interested in how 
you support your argument rather than the whether it is 
strictly 'right' or 'wrong'.

I notice you said
"perhaps the conflict of interest on the Air NZ board?"

I think that an important 'board moment' was at the time Sir 
Selwyn Cushing was chairman of both Brierley's and Air New Zealand. 
It was in Brierley's interests to offload some of their shares onto 
Singapore Airlines rather than let Singapore Airlines buy into 
Ansett directly.   As chairman of Air New Zealand he was 
ultimately responsible for blocking Singapore Airline's direct 
entry into Air New Zealand.  Perhaps Jim McRae's ego, wanting to run 
the whole transtasman airline from New Zealand, came into it too?   
If so it was odd that the board seems to have by passed Jim over for 
the top job of the combined entity, leading to McRae's abrupt 
departure.   To lose McRae was unfortunate but to let the head of 
Ansett, who was lined up for the top job, slip through their fingers 
as well was unforgiveable IMHO.

Personally I didn't see any conflict of interest between the 
Singapore Airlines and Brierley directors later on as it would have 
been in all their best interests for Ansett to succeed.


>
>
> I think the story of Air NZ will be a case study for all NZ business
> students for years to come as like ENRON possibly will be in US.
> 
> 
>


Agreed.  That's why it has been recorded in the 'Learning to Invest' 
series as part of the 'Out West with the NZSE' sub-series.

SNOOPY



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