Forum Archive Index - November 2002

["Morgy" <morgy40@xtra.co.nz>]

Harry

Re punting, I was really referring to the numbers that get bandied around on
share sites not strict fundamental investment that you follow. i.e Should be
worth x y z because of this or that projected revenue blah de blah de bla,
several of them quite recently have almost gone bust despite self called
expert opinions on Financial Analysis. Its quite humourous to watch the
share price go down down down despite the bullish scenarios that get put
out.

It doesnt really matter to a fundamentals investor how low it gets because
"they know" what its worth, millions of people are finding this out
currently with their investments in funds management.  It is interesting to
note that these expert fundamental investors who follow the line that
investment is for the longterm buy and sell more than any other investor
group. You may have some comment on that as it is not an area of skill for
me, however I read an interesting article last week which basically said
that they do the exact opposite of what they claim to do, i.e they buy and
sell on sentiment because their jobs are on the line or if they cashed out
as thery have been advised to do from their own TA people since 2000 that
money would transfer to the CD or treasury bonds people in there companies
and they wouldnt have anything to do. Of course given that they are only
human and there companies are there to make profit and we all justify just
about everything we believe in then this is quite logical. In fact its as
logical as buying a downward trending stock knowing the intrinsic value per
share is much higher and keeping that stock despite a dropping value, it is
simply belief in ones own superior knowledge despite evidence to the
contrary. I personally consider this akin to cutting off ones nose to spite
the face, surely it would be preferable to buy a stock that was both
trending upward or was in accumulation phase and had good sound fundamentals
to back this up. This is the point of my reference to Colin Nicholsons site
and I hope that someone out there without "fixed beliefs"  may visit it and
decide for themselves the benefits of a total investment picture.

The main reason why I like Colins method is that it quickly allows those of
us that fall asleep from endless figures to develop a list of potential
candidates for investment on a FA basis and them qualify them further i.e at
what stage of their share cycle are they in and then not buy any stocks that
are in a downward cycle. I think it is an important point not stressed often
enough that at most times the share price is not in sync with the companies
actual performance. One description I have heard to describe this
synchronisation is that there are 3 extremes and at anyone time a companies
performance is moving through these extremes. These extremes are

1. High performance - company is doing above its norm, this is reflected in
profit, revenue, market share etc. It is leading its sector.

2. Average performance - company is performing as expected, profits are ok,
revenue is growing as expected within its sector, results are as expected
within its sector

3. Poor performance - company profits arent what it was, lower than expected
profit, market share etc.

For those of you in business this will be fairly obvious state of affairs,
for the general public this information relating to performance is distorted
as much as possible by the company to keep them in the high performance (or
as close as ) catageory and therefore driving the shareprice as high as
possible.

The share price reflects the public "perception" of where the "current
performance" is going, either ahead of it or lagging depending on how much
info is in the public domain, hence one of the reasons actually watching the
price of a stock can give a heads up on what the insiders actually know.
High or poor performance can often be signalled by the buying habits of
insiders.
If we measure the share performance against the company performance we will
gain an idea of what part of the cycle or how accurate the synchronisation
of price and performance currently is.


Your point of course is "I know the value so I dont care it will get there
anyway", Colins point (and many others) is yeah great,  but why not add some
timing to get the best performance from your capital.

Re LPC, I am surprised you know the lower price as I guessed you wouldnt
follow it as you knew the value was there anyway and would look at the price
longterm i.e once every year or so  :-)
However given that you have you must have realised that your TA timing was
pretty good, come on Harry admit it,  you and Warren want to come out dont
you.


Regards

Morgy




----- Original Message -----
From: <tennyson@caverock.net.nz>
To: <sharechat@sharechat.co.nz>
Sent: Sunday, November 03, 2002 4:12 AM
Subject: Re: [sharechat] Another Gem Phaedrus


> Hi Morgy,
>
>
> >
> >Great follow up charts Phaedrus, clear & concise needing no
> >explanation. I fear for the fundamentalists that you consistantly
> >prove your case week in week out. I can't wait for Buffet to confess
> >he has been a closet chartist all his life.
> >
> >
>
> You'll be waiting a long time Morgy.  Buffett has had his go at
> charts and has given them up as worthless for his kind of investing.
> Buffett doesn't look for tops or bottoms, so charts are of no use to
> him.
>
> >
> >
> >Or if you prefer to punt without using the TAB go to sharetrader or
> >ozestock sites and you will find a whole host of Gurus spouting
> >forth volumes of tripe on company potentials looking for the next
> >best thing, trying to pick stock bottoms.
> >
> >
>
> I suspect you are trolling here, as the ability to pick the bottom is
> a claim I have never heard from any fundamentalist.
>
> Take my recent purchase of LPC at $1.46 for instance.  This was done
> in expectation of a 12% pa return before tax for the next few years.
>
> Shortly afterwards the price dropped to $1.41.  Did this effect my
> projected return of 12% pa?  Not at all!  People who bought in at
> $1.41 will get an even better return.  But so what?  I am very happy
> that there are others out there who will be doing better than me.
> This makes no difference at all to my own investment decision to
> invest in LPC, nor to my own projected return rate.
>
> SNOOPY
>
>
>
>
>
> ---------------------------------
> Message sent by Snoopy
> e-mail  tennyson@caverock.net.nz
> on Pegasus Mail version 2.55
> ----------------------------------
> "Sometimes to see the wood from the trees,
> you have to cut down all the trees."
>
>
>
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