Forum Archive Index - September 2003

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

Hi Morgy,
 
> 
> what is your averaged cost per share now over your holding ?.
>

My average entry price is $1.42 ( I think!).

The calculation was made a little complex because on 30 March 2000 
there was a 1:12 bonus issue with imputation credits.

This means if you bought 1000 shares (say) at the float price, which 
was $2.20, then in today's terms you really bought 1083 shares at 
$2.03.   You have to corrrect all purchase share numbers by the factor 
13/12 and all purchase share values by 12/13.    Then you have to 
account for the value of the imputation credit handed out with the 
bonus issue and at this point, being so late at night, my head starts to 
hurt :-).  (I think the effect depends on your own personal tax rate, so 
I'll just leave it out).

>
> Even if it is at $1.25 or even $1 surely this means as per
> my posts of earlier this week you have left a huge amount of money on
> the table only to be back roughly where you where,
>

Taking account of dividends I am more or less back where I started, 
yes.    Actually I am slightly ahead, but still far behind where I would 
have been if I had just stuck all that money in a term deposit at the 
bank.

>
>no wonder you think 12% PA is good. 
>

The DOW was 100 in 1924.    Eighty years later it is somewhere 
around 9500.

That is a compounding rate of return of 'i', implicitly defined as below:

100(1+i)^80=9500

This gives a compounding rate of return of just under 6%.    Add in 
dividends and the figure would go a bit higher.  But DOW dividends 
are low so you wouldn't get anywhere near 12%.

I would say any fixed income stream investment that can consistantly 
outperform the DOW over an 80 year span is pretty special, wouldn't 
you?

> 
>This is the guts of the TA / FA debate, not what is a better method
>but how everyone can inprove their investing skills, so if you would
>kindly advise purchase dates and No shares bought plus the record 
date
>for dividends and dividends earned over this periodof time then we 
can
>have a true accounting.
> 

Which willl prove what?   It will provide a single data point.  That 
doesn't prove anything in any T/A vs F/A debate.    Anyway Phaedrus 
has already beaten me up on the RBD case, last year.   His trading 
technique would have got a better result than my 'buy and nibble' 
technique.  Of course they aren't directly comparable because you 
can't use T/A on an IPO share that has never traded.  Using pure T/A, 
Phaedrus isn't allowed to buy into any float.

>
>Please dont say that the current value is irrelevant because you are
>holding the stock and it could be worth double in the future because I
>could easily post the ENRON chart which clearly states that not all
>stocks rebound to past performances.
>

Au contrarie.   It is the *past* value of RBD that is completely 
irrelevant.  I'm not anticipating RBD will go anywhere near $2.00 again.
I would say $1.35 to $1.40 within the next 12 months might be on 
though.   It is on this basis, and the yield,  I made my recent investment 
in RBD.

I am well aware that with Enron the published accounts were lies (in 
effect).   I have very carefully perused the RBD accounts to make sure 
that I can take account of any similar debt shuffling.

> 
> A worthwhile and interesting case studyI think you will agree ,
> particularly as I do not know the outcome until you post the numbers.
> I am sure you will not fiddle the numbers.
> 

I have admitted on this forum before that RBD has not been one of my 
better investments.  I think part of the problem was that my reason 
became clouded by the RBD spin pirates.  But, as I said in another 
post, you can't build wealth by watching old pirate films.    

I am picking RBD at $1.25 as something that it would not be wise to be 
underweight in, based solely on my view of the outlook going forwards.

SNOOPY


--
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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