Forum Archive Index - October 2002

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

Hi Jefley,

>
>
>Thanks Ben -- what depressing stuff.
>When well dressed turkeys (timber) finally 'fess up to this sort of
>thing, it sure makes a mockery of total reliance on fundamentals.
>Thank goodness for charting techniques, but even then I dislike the
>feeling that I'm relying on trends that could be due to insider
>trading and rumours from the turkey pen. I note the price has clawed
>back from opening -- the Aussies must be a forgiving lot, or maybe
>they are just accustomed to such accountancy foibles...
> 
> 

At the risk of igniting the fundamentals vs charting technique debate 
yet again I don't think the fundamentals have been lying to anyone 
over CLI.  According to Ben's newspaper quote, the fact that property 
valuations have been part of the annual profit is not new 
information.   All that was required to pick this up was to read the 
annual report in detail and this was obvious.

On the focus investment group, when we look at profit we look at long 
term sustainable profit.  One off items such as property revaluations 
are edited out.  The fault is not with the fundamentals.  The fault 
is with people who do a coffee table analysis and take whatever 
fundamental figures the company gives them at face value.  A simple 
examination of the cash flow statement should make any dodgy profit 
claims obvious.  You can't claim 'misleading fundamentals' if you 
don't do your homework properly.

Incidentally, did you know that one of our market stars, Michael Hill 
International, also incorporates property revaluations in its annual 
results?  I found this out only when researching the company last 
week.  I don't expect MHI to be hammered on the sharemarket tomorrow 
because of this finding.  Within the overall context of the results 
the revaluations are trivial.  Nevertheless you would have to read 
the annual report to know this.   It really does pay to have a good 
look at the annual report of a company before you invest.  This is 
where the old tech public libraries are very useful.

SNOOPY




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