Forum Archive Index - May 2003

["patrick mcgill" <patrick_mcgill@hotmail.com>]

They do so because:
-     of their approach to risk.  They may be retired and may have been hit 
by the '87 crash and      other down turns and perceive a reduced risk with 
the bonds rather than the head shares;
-     their approach to volatility.  They do not like to see their HLG 
shares dive to $240 from $2.80 shortly after they purchase them.  So you are 
correct about fear of losses;
-      they carefully select them, hold them to maturity and are happy with 
an after tax return of say 7% or so;
-      their portfolio doubles in value every ten years not counting other 
external financial additions;
-      they sleep soundly at night, decade after decade, although the 
returns are not spectacular.

Paddy

>From: "Graeme & Paula Richardson" <chemist@actrix.gen.nz>
>Reply-To: sharechat@sharechat.co.nz
>To: <sharechat@sharechat.co.nz>
>Subject: [sharechat] Bonds vs. Stocks
>Date: Sun, 11 May 2003 21:01:56 +1200
>
>Why are kiwis so keen to provide debt finance for companies through 
>debenture bonds that offer average rates of return for the risk involved, 
>and which also offer the company concerned tax favorable sources of 
>finance, when they will not back companies and buy equity stocks? Shares 
>for several companies have quietly increased over the past year e.g. FBU, 
>HBY, SKC, CEN, HLG, and many are today offering excellent yields. It seems 
>that a fear of short term stock 'losses' are forcing kiwis into trading 
>potentially risky debentures with companies that seemingly cannot attract 
>shareholder funds. Perhaps we are not realising that NZ shares today are by 
>world standards very cheap.
>
>
>Graeme Richardson

_________________________________________________________________
Gaming galore at  http://xtramsn.co.nz/gaming !


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