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Pete
A simple strategy combining
you preferred fundamental investment style and some common sense, just bring
up a chart of WHS and apply the chocolate biscuit test. Its very simple,
put the chart on the screen and ask one of your children or your neighbours
child if you dont have any left at home to look at the chart on the screen, ask
the child is the graph going up or down, the child will simply look at it and
give you an unbiased answer, from there rule a straight edge along the down (or
up) line and wait until the price breaks it, when you think it reversed invite
the child over again and get some more expert advice. This may cost you several
Tim Tams but at least you will get an unbiased view (borrowed from Louis
Bedford, Technical Trader ).
The problem with
fundamental analysis is you can be right but it still doesnt help if the share
slides, ask anyone who was still buying into AMP when the anaylists were
recomending it as an undervalued stock and fundamentally a buy, by the time you
get the numbers they are so old and manipulated that they are almost
worthless
Unless you are day trading
I wouldnt bother trying to buy the bottom of the market, its rather a pointless
exercise, particularly if you have a fundamental bias, you really just
want to know when the crowd is agreeing with your analysis dont you ?.
The modern basis of Buffet
investment is that he holds so much stock and has such a sway in the companies
he invests in that he has the ability to move it in the direction he feels it
should go, particularly in the last 15 years. Have a look at the style Ron
Brierley uses today as oposed to 25 years ago, his secret was analysis of a
company, finding value where it was not shown or hidden on the balance sheet,
now days everyone knows his tricks and and while he is still one of the best
analysts in the business (Gerry Weis is actually his number cruncher nowadays)
he relies on the power of his cash reserves to grab portions of companies rather
than the quiet sneak ups he used to do in the past. Good people at anything
adapt to the ever changing environment, sport, business and particularly
politicians.
I have no beef with
fundamental analysts just a belief that one must adapt a style to ones own
position and the position of the market he / she trades or invests in. In NZ how
many stocks are there to invest in ?, my guess (and I dont follow the NZSE
market) is about 25 active stocks, surely all the news is already in the market
place, if that is true and I believe it is then just follow the crowd and invest
in the stocks you fundamentally believe are good, but only when the crowd
arrives, a bachelor on a Saturday night doesnt drink in a bar with no hope of a
crowd of beautiful ladies, even if it is the best bar in town, he adapts his
method to be with the crowd and the best chance of action.
Regards
Morgy
----- Original Message -----
Sent: Friday, August 01, 2003 7:38
PM
Subject: Re: [sharechat] Re: WHS - What's
happening
> >
> > My current strategy is to
buy in as soon as the price closes above the
> > previous day's close
(That's my feeble attempt at technically timing
> > my purchase).
> >
>
> Thus guaranteeing your final return will be
worse than if you had
> bought the previous day!
The explanation of my current strategy was faily
brief, so I'll elaborate a bit:
You are correct in saying that if I waited until
WHS had closed up, my final return would have been worse than if I
bought during the previous day.
However, no one know's when that "previous
day" will be!
What I do know - is that one technical analysis
theory states that if a share price is falling, then it is likely to
continue to fall until it reaches some resistance level.
So if we apply this theory to the inta-day
trades of WHS shares (see graph below), we see that WHS opened at $4.80
on Monday morning, and closed lower every day until Friday, when it closed
higher at $4.61.
Therefore, using this theory, you would
purchase shares after Friday's close (or just prior to it as I
did).
If I had bought shares at the point when I
fundamentally decided to invest in the Warehouse (which was Sunday) - my
shares would have lost 4% of their (paper) value!
Does anyone want to share how they time their
share purchase after they fundamentally decide to invest in a
company?
> Hi Pete,
>
> >
> >
One thing that concerns me
> > though, is the recent fall in the
share price (It's fallen $0.25 since
> > I've been watching
it!). My question is:
> >
> > Does anyone know if
there is reason behind the recent fall? Is there
> > some
announcement/article that has escaped my research?
> >
>
>
>
> Sluggish consumer confidence figures in the
USA? Don't ask me how
> that directly flows through
to the WHS shareprice - that' s Mr Market
> for you!
>
>
The share price of WOW, Aussie's number one retailer, coming off the
>
top, and an associated flow on effect to other retailers?
>
>
>
> > The cynic in me said that it due to insiders selling out
prior to a
> > (possibly) disappointing annual report.
>
>
>
> We already know this years result will be disappointing,
so that won't
> be the reason. It could be that these so called
'insiders' think that next
> year will also start in a
disappointing way. But you didn't invest in the
>
Warehouse banking everything on a recovery in Australia next year did
>
you?
>
> >
> > My current strategy is to buy in as
soon as the price closes above the
> > previous day's close (That's
my feeble attempt at technically timing
> > my purchase).
>
>
>
> Thus guaranteeing your final return will be worse than
if you had
> bought the previous day!
>
> >
>
>For those who are interested, the fundamental
> > justification
for purchasing WHS is as follows:
> >
> > The current ratio
(i.e. for every $1 of current liability we have $x
> > of current
assets) has been increasing, from 1.63 in Aug '00 to 2.484
> > in Jan
'03.
> >
> > Gearing ratio (a measure of how much long term
debt the company has)
> > has been decreasing, from 0.41 in Aug '00
to 0.365 in '03.
> >
> > The only area of concern is (apart
from the one detailed above) is the
> > return on assets percentage
(how much revenue the company generates
> > from each $1 of asset) -
which has fallen from 14.5% in '01 to 13.5%
> > in '02.
> >
> >
>
> We have already been told about the lack of a
suitable series of
> 'hooks' (read having the right item on the
front of the WHS brochure)
> to get the Australians into the
yellow shed stores week after week.
> We were also told of
the lack of anything to market in terms of
> electronic game
workstations in NZ last Christmas. This is all
> historical data that I think goes a long way to explaining the
> deterioration in ROA.
>
> SNOOPY
>
>
disclosure hold WHS
>
>
>
> --
> Message sent
by Snoopy
> on Pegasus Mail version 4.02
>
----------------------------------
> "You can tell me I'm wrong twice,
> but that still only makes me wrong once."
>
>
>
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