Forum Archive Index - January 2003

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

"Hey baby."

"Give me more of your candy."

Those were the phrases that came to mind when summing up my own NZ 
market investment performance in 2002.  34th place in the 'stock 
guru' competition (in the top 10% of competitors) with a performance 
of 20% return after tax is a result I am well pleased with.  The 
amazing thing was, looking back, how easy it all was.

The year started in a cloud of fear with the imminent invasion of 
Iraq, (which still hasn't happened), and the potential meltdown of 
the US market on the horizon.   But amazingly NZers continued to use 
their telephones (TEL), continued to buy power (CEN) continued to 
visit the Sky City Casino (SKC) and continued to buy takeaway food 
(RBD).  Meanwhile overseas appliance manufacturers have decided to 
tool up so they can continue producing world class whiteware (SCT).  
None of those predictive scenarios look that fantastic with 
hindsight.   Yet some would have you believe that the best way to 
handle a 'bear market' from the January 2002 perspective is sit on 
the sidelines and short shares.  While investors ruled by fear did 
just that, I enjoyed what was probably my best ever investment 
performance on the NZ market.

Of course I didn't pick all winners.   The RBD price was knocked 
around by the punters as optimism on the expansion in to 
Australia first blossomed then faded.  Personally I'm not concerned 
and think that the long term business plan of RBD is very much on 
track.  

I got the impression that following the loss of Frucor, a lot of the 
'go go' support for branded food shifted to RBD.  Put simply, there 
were some punters in there who expected too much too quickly.  RBD 
CEO Jim Collier did nothing to quell any fervour.  If Collier has one 
failing it is perhaps being too optimistic with the market 
commentators!    Combine that with the number of RBD shareholders who 
really want the company to do well (I admit to being sucked into that 
hollow updraft myself) and you can see how irrational exuberance 
around RBD might develop.  But will I be holding RBD in 2003?  Most 
definitely!

My other big income share disappointment was Telecom.  I have to 
admit being worried by the deteriorating debt/equity position of 
this company.  I'm not sure that all the Australian write downs have 
been dealt with.  With the launch of 3G cellphones with Hutcheson in 
Australia I see more costs clouding the horizon.  My prediction is 
that Telecom will surprise this year.  But whether that surprise will 
come from finally hitting the right note in Australia (positive), or 
in the form of more Australian writedowns (negative), well my crystal 
ball is cloudy on that score.

We appear to have lost a couple of valued contributors (at least) 
during the year.  

>From the fundamental side of the fence, Hugh seemed to panic around 
NZ election time and sold out of his major investment, Kiwi Income 
Property Trust.  Since then Hugh has been silent, although KIP 
continues to do well.

>From the trader side of the fence (although to be fair calling 
this person simply a 'trend trader' is selling him way too short) 
Peter Maiden disappeared about mid year too.  This was one of his 
last coherent statements:

"Rob puts a pretty compelling story around the risk
premium of stocks over bonds now being zero or negative.
This implies that bonds will outperform shares for the
next decade or longer - even though stocks have
outperformed bonds by 5% over the last 74 years."

I wonder if Peter has now moved fully into bonds?  If *I* had done 
that to my income portfolio at the start of 2002 it would have taken 
me about five years to achieve in the bond market what I have 
achieved with my income investor shares in just one.

Ah well, rest in peace you two.

Income investors were presented with a couple of fabulous 
opportunities during the year, those being to purchase WRI at just 
over a dollar and LPC at around $1.40-$1.45.   I alerted 
sharechatters to these opportunities at the time, so I hope some of 
you got in on them, as I did.  Both shares have since moved 
significantly higher.

As we look into 2003 we are once again faced with the prospect of war 
in Iraq and the possible meltdown of the US economy.  So what will I 
be doing? Probably not investing in US DOW tracking funds, nor in 
Iraq!  I don't expect another year as good as the last from the NZ 
market, but I am sure that just as in 2002, some interesting 
situations will develop.  

Rest assured that if any NZ CEO leaves their pram unattended for a 
while for no good reason, I'll be in there stocking up on candy from 
their baby.

SNOOPY










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Message sent by Snoopy 
e-mail  tennyson@caverock.net.nz
on Pegasus Mail version 2.55
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"Sometimes to see the wood from the trees, 
you have to cut down all the trees."



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