Sorry to contradict you snoopy but you are missing a few very Important points In the macdunk strategy.
Lets take one of your shares WRI for Instance. I will round the numbers slightly to keep the mathematics understandable.
Todays price = $1.50 PE 10.94 Yld 11.44. That Is todays numbers the point you miss Is lets say you bought them four years ago at 75c which means that your PE Is half, and your yld double relative to what to todays figures show. In my original post I likened It to buying a house. I stated that It Is better to pay slightly more than what It Is worth today to get what you want, because next year the price Is right, and the year after you have a bargain. Lets keep AIA figures confined to 2003 and do some more sums. On the 15th of Jan 2003 aia was $5.46 today they are $6.61 with a PE of 26.66 and a yld of 4.97 but hey If I bought In Jan at $5.46 I must recalculate My PE Is lower and my yld higher. My strategy Is to find companies that are Increasing there earning potential, and dump the ones that have ended there run. You are right In one respect, This share wont grow at 20pc pa forever, but for the moment and the next couple of years It will. Good examples of my strategy was wri and poa both made me 30pc pa but when I considered there growth In earnings had stalled I dumped them. Lets look at my other shares to see the pattern. pwc as I pointed out I was going to buy In when they finished down trending. A well run company about to double In size Into a profitable business that was already established and down trending that did not make sense to me. Southern capital whose assets exceeded what the share price told us merged with a very profitable cash flow hire business. HQP as they are now called are selling those prime assets, this might be a fifty pc pa gain for me the way they are trending. The PE means nothing to me or the yeild all I look for Is a well run company that Is Increasing Its profits at a faster than normal rate and climb on board for the ride and ready myself to jump off at the next stop. All calculations must be done at the buy In price, not the price of today as the paper shows. It takes a five min phone call to sell the market and macdunk owe each other nothing.
cheers macdunk |
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