Forum Archive Index - November 2003

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

Hi Macdunk,
 
>
> With a PE of 27.63 AIA looks like It Is overpriced or Is It?.     
>

IMO a PE for AIA of around 27 is justified now because of the number 
of extra airlines that want to bring extra planes in.   And the 
implications for landing fess and extra passengers that this implies

However, I like to keep one step ahead of the analysts so the question 
I would be asking myself now is what kind of PE would be suitable for 
AIA in FY2005?   If you take the long term PE average for AIA as  21, 
then you might consider it fully priced at around $7 in a years time.   In 
other words there is not much potential gain there for you.

However, it may be that terror attacks in the Northern hemisphere 
means that the 'safe haven' of AIA starts to grow at more than its 
historic rate.    You have to figure out the what prospects you see 
coming up for yourself.     Myself, I find it hard to draw up a scenario 
that will see AIA have spectacular gains over the next couple of years.

>
>bought my first lot after Sept 11th, my second lot after sars, my PE
>for the share Is now roughly one third less, and my yld one third more
>than todays figures
>

Sounds like your purchase timing was excellent then! If 50c was 
lopped off the share price tomorrow you wouldn't have any trouble 
sleeping.

>
>It Is now time for me to buy some more, the share Is still
>trending up  nicely.
>

What you are saying is that you are now prepared to pay a third more 
for your AIA shares than you have paid up to now.    You may not think 
you just said that, but you did.   

>
> The PE means nothing to me, what counts Is profit
> Increases, and expectations of better times to come.      
>

Um, the PE reflects expectations of better times to come.    So the 
above sentence is self contradictory.

>
>Some people
>say I can do better by timing my entry, and others that the PE Is to
>high and represents a risk, but my method Is If It Is trending stay
>with It and Invest more, keeping one finger over the ejector seat
>button.         
>

Sounds like you are in love with AIA.  You will pay any price to get your 
hands on more of her.

>
>The most Important lesson I learned so far Is If In
>doubt get out.   I will never make excuses for holding on to a
>dog through thick and thin It Is perform or get dumped.     
>The only share In my four that Is not on a steep uptrend Is POT
>     

You don't seem to be making any distinction between the performance 
of the business and the performance of the share price on the market.  
They are not the same thing.

A dog is only a dog until it becomes so cheap that it becomes a steal.  
Likewise even the very best business that is listed can have a share 
price that is too high.

SNOOPY


--
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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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