Forum Archive Index - September 2003

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

Hi Gerry,
 
> 
> this ought to be a growth stock. 
>

I agree.    That is why I was happy to buy a parcel of shares for $2.08 
last year.   And if they had fulfilled their promise it would have been a 
good decision too.  However, there are a few things I have learned 
about Mr Market.  He will always be there tomorrow.  Some days he 
gets wildly ecstatic.  Other days he is manic depressive.  

You can take advantage of these moods of his.    But you can never 
tell him what mood he *should* be in.     You just have to accept the 
mood he *is* in and take it from there.    So I assume no growth.  If 
growth happens, it will be nice bonus.

If Mr Market decides to price RBD as an income share, and prices it 
like that, then we just have to accept it and adjust our startegy 
accordingly. 

>
>Investing for dividends is in my opinion a dangerous tactic.
>

It could be if the dividends are not sustainable.  The task is to figure 
out if they are sustainable to minimise the danger.

> 
>There is no guarantee that it will keep its present price, low as it
>may seem to many.
>

Of course not.  But at some stage the price will go so low that the risk 
will be worth taking.  If I see the equivalent of a perpetual 12% bond 
that is enough to do it for me.  The market always regresses to the 
mean return eventually.  Provided you can stand the short term market 
fluctuations (and I can) the risk of loss of capital is minimal over the 
medium term.   That makes it a low risk investment in my books

It is far too risky *not* to be in it at that yield IMO.

> 
> I wouldn't be in this stock, too much risk; there are better stocks
> with a lot more capital appreciation around.
> 

How low would the price have to go before the risk got low enough for 
you?

SNOOPY

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