Forum Archive Index - February 2003

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

Hi patrick,
 
> 
> I have tried the high yielding shares route.  You are obviously a
> better picker of high yielding shares than I am.  I have had mixed
> results to date. 
>
>

I've had mixed results as well.   Telecom and Restaurant Brands were 
income share downers for me last year.   On a short/medium time frame 
like a year, or even two, I expect some of may shares to be losers.  
The problem is I don't know which ones in advance.  The trick then is 
to try and arrange things so that your winners wipe out the losses, 
and then some.  Sky City and Scott Technology did that for me last 
year.  But I don't regret any of the four investments.  Without the 
benefit of hindsight it could have been TEL and 'the winners' weighed 
down by SKC and SCT 'the losers'.  Overall my result was +20%, but 
that doesn't mean that I didn't have mixed results!

>
>
> You are correct in your comments that the value of Capital Notes can
> go up and down on the secondary market. The term of the notes are
> typically 2-5 years duration so if you hold to end term your return
> is steady (which is what I do) but if you sell before end term you
> are subject to the market rate which may be higher or lower than
> what you paid for them.
> 
>


I agree that over 2-5 years, volatility is less of an issue with 
capital notes.  But I could make exactly the same argument for income 
shares.  Provided that is you don't buy into commodity type 
businesses!

SNOOPY



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