Forum Archive Index - June 2003

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

So you want to hear about my investments that didn't go to plan?    

My biggest disappointment of the century so far must have been Air 
New Zealand.    It was looking to become the number two player in an 
Ausralasian airspace duopoly and then....

Well I have written all about it before in a post that is archived as part 
of the 'Learning to Invest' series, titled 'Air Ansett Affair' IIRC.    Of 
course when I made my first investment into that company I had barely 
heard of Buffett and what he had to say about airlines.  I saw AIR as a 
top brand name with a good high yielding payout in a growth industry.

I was probably a little naieve about the debt position of the company 
focussing on things like debt equity ratio, which looked OK, rather than 
looking at the long term ability of the company to repay its debts which 
told a different story!  

The crazy thing was I was looking to boost my holdings in the tourism 
sector when the AIA float came to the market.    And I picked AIR as a 
better investment that AIA!   LOL!   Well, it did have a better yield and 
a more respected brandname  ( Auckland International Who?, this was 
1998 remember ).    Then again it was really after 1998  that things 
went badly off track for AIR.

RBD?    Yes that has been a little disappointing.    My big mistake 
there over the last year was believing all the marketing hype put out by 
the management that Australia and Starbucks were going to launch the 
company into the stratosphere.   If you look back on the focus 
investment board under RBD you will see archived there a post 
suggesting RBD may get to $3 quite quickly (how embarrassing now!).    
But if you believed the hype then buying shares at around $2 like I did 
last year made sense.    

If I'd paid more attention to the focus investment principles of only 
investing in companies that have a solid record of profit growth over 5 
years rather than just a *promise* of the same I might not have been so 
keen to jump in.   But unlike other shares I have invested in, I have 
picked up my holding in RBD in bite sized chunks over the years.   My 
average entry price is now $1.45 which is not too far away from today's 
market value.  And the dividend yield is still good!   Much better than I 
would have had if I had tucked that same money away in a term 
deposit at the bank.    So while a disappointment, I would hardly call 
RBD a disaster.   I'm quite happy to keep holding them.

Anyone else got a dog tale of the century to tell?   Given that we can 
often learn more from our mistakes than when things go right, it might 
prove an interesting discussion topic

SNOOPY








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"You can tell me I'm wrong twice, 
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