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From: | "tennyson@caverock.net.nz" <tennyson@caverock.net.nz> |
Date: | Sun, 03 Aug 2003 11:56:21 +1200 |
Earlier in the week someone asked if Tower was a good buy. Here is what my broker said about TWR last week: "The risk with this stock is that we are looking for a recovery situation *and only time will tell*. BUY for anticipated recovery and possible takeover." (Note the emphasis between the asterisks is mine) Then yesterday Morgy made the following comment on AMP. "The problem with fundamental analysis is you can be right but it still doesn't help if the share slides, ask anyone who was still buying into AMP when the analysts were recommending 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" It's not too often that I am 'on side' with Morgy but in this case I would go even further than him. From an investment perspective IMO the previous results of AMP are completely worthless. The AMP business has changed so much (they are in full retreat from the UK market) and public perceptions of fund managers have changed so much (many conservative traditional 'do nothing' investors are questioning their fund management commitment, after past 5-7 year performance has shown sticking money in the bank would have been a far better option than using managed funds) that forecasting future results from any past 'fundamentals' is virtually impossible. Switching back to Tower, I think that professional analysts and spotters of situation shares, GPG, must be ruing the day they bought 5% of Tower at some $4 per share. The best my broker can come up with as a longer term recommendation for Tower is: "and only time will tell" In my view, Tower, AMP and all the other big player wealth management companies listed on the stock exchanges absolutely stink - as *investments*. This is not to say you cannot make money if you buy into this industry. Indeed I am sure some will do very well. My argument is that you cannot make a sensible *investment* decision without having some reliable model of business cashflow forecasts. The future of AMP and TWR will depend on the net proceeds that people put into them and people's perception of where the listed investment markets will go relative to other investment classes. Can you look at how much people will invest in the sharemarkets by considering what happened over the last ten or so years? I think not. Will future investment performance of the markets relate in any way to the boom and bust NASDAQ bubble behaviour of the last ten years? I think not. From an investment point of view investors in this industry are flying blind IMO. Buying shares in AMP or TWR cannot even be classified as investing, by my definition of investing. Personally I think the outlook for the sharemarkets is quite good. Perversely because the bulk of investors 'get it wrong' my view is that we will see the whole wealth management industry underperform, while unsophisticated investors chase yesterday's winners like residential housing and high risk term deposits from finance companies. In my view people will not put their money into the sharemarkets when they are cheap which means that both TWR and AMP will continue to struggle. Investors will continue to pull money out of these companies forcing them to sell fundamentally sound underlying investments at poor prices, leading to further poor returns and another wave of fund management withdrawals. In my view, the winners in this market will be the boutique fund managers who are not weighed down by the millstone of bad investment history, and those dealing with the least sophisticated investors of all and are least likely to change ships in mid stream- the banks (who deal with those who invest their funds only with the bank they know). IMO, AMP and TWR are strictly for the punters. Yuk yuk! SNOOPY discl: no AMP or TWR shares held -- Message sent by Snoopy on Pegasus Mail version 4.02 ---------------------------------- "Q: If you call a dog tail a leg, how many legs does a dog have?" "A: Four. Calling a tail a leg doesn't make it a leg." ---------------------------------------------------------------------------- To remove yourself from this list, please use the form at http://www.sharechat.co.nz/chat/forum/
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