Forum Archive Index - February 2003

[Travis Morien <travismorien@yahoo.com>]

--- gooner <nickk@quicksilver.net.nz> wrote:
> Travis
> 
> Are these the same financial planners who have lost
> billions in the United
> States in the last 3 years?  Or, are they the ones
> with Tower and/or AMP who
> have blindly told their 'clients' to stay with
> international shares because
> 'one day' they will come right!

Er, no, they were Australian financial planners and
stock brokers, mostly independents.

> 
> There are many Gold stocks that pay a dividend - ie
> earning money.  I can
> show you as many winners in the gold stocks as
> losers.  It depends who you
> believe and I prefer not to believe people who
> invest your money for you for
> a commission irrespective of whether you win or
> lose.  Ever heard of a
> financial planner/fund manager being sued for
> negligence as a result of
> his/her advice?  I haven't but I wish  had.

Yes, if you read ASIC's web site you'll find a number
of examples of advisers not only being sued, but
fined, banned and imprisoned as well.

I'm fairly shocked that you would think that a company
paying dividends is necessarily a sign that:
(1) it is profitable
(2) somehow this contradicts my claim that quite a few
gold stocks are insanely overpriced.

Companies with any cash on hand can pay whatever
dividend they like.  This doesn't mean they are
profitable, it just means they have cash and the best
thing they figured they could so with it was
distribute it to shareholders.  THe company could be
losing huge amounts of money and in fact it is not
uncommon for dodgy management to pay dividends while
the company is going down the tubes, partly as a trick
to convince simple minded speculators that the company
is profitable and partly as a way to slow the price
decline.

And just because a dividend is being paid doesn't mean
the stock is a good buy when the company is trading at
a multiple of the value of all the gold they have in
the ground.  Surely a company with, say, one million
ounces worth of gold and a profit margin of, say, $100
per ounce should trade at less than $100M, how much
less would of course be a function of how soon it can
be extracted and is hence a time value of money
problem.  If such a company was trading at $150M then
clearly the fact it pays a dividend does not mean the
company is fairly priced.

> 
> The tech boom (bust actually) has nothing to do with
> the gold enlightenment.
> Stocks were trading on a p/e of 2000 during those
> times; on borrowed
> millions; with no history of earnings.  Where did
> the 'e' come from?????????
> Bolnisi Gold (BSG:ASX as an example) has a p/e of 8
> and pays a dividend!

And what future profit is to be gained from the mine,
how much gold is left in the ground, what price can it
be extracted, what price do you assume this gold would
fetch.

If you can answer those questions I take my hat off to
you as a fellow investor.  If you haven't a bloody
clue, like many people spruiking gold stocks, then you
are obviously just a "gold is going up, buy gold
stocks" speculator.

If you are a skilled speculator you no doubt have your
plan in place, you know what price you are going to
consider taking profits, or have otherwise figured out
your sell signal.

If you are a mug speculator then you probably haven't
thought that far ahead yet.

> 
> Finally, your claim of the 'stocks you can't tell us
> about' (sssshhhhh)
> sounds like the bloody tech bust.  As a financial
> planner, please share your
> advice with us without the 'no warranty' clauses!

Fund managers don't go revealing the stocks they are
buying until they have completed their purchase
decisions.

Do your own research.


Travis
www.travismorien.com


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