Forum Archive Index - November 2003

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

Hi Macdunk,
 
>  
>We certainly have opposite view points on RBD.    What
> I fail to understand Is how anyone can lose 44pc In
>their share price In 18 months, then say They will
>free up more funds to throw at this dog because the
>fundamentals are right.
>

It's quite simple Macdunk.  The lower the price, the better the dividend 
yield, and the more attractive the share becomes.  

And bringing your investment with hindsight comment up to the context 
of today, If you can tell me where the RBD share price will be in 18 
months time, then I will tell you for certain if RBD is a good investment 
today.

>
>There Is something wrong with a system that allows this to happen 
the
>fundamentals are completely wrong.  
>

Please explain what fundamentals of RBD are completely wrong?    A 
declining share price is not, in itself, a fundamental.

>
>They listed In 1997 at $2.20 I
>

There has been a bonus share issue since which reduces that 
equivalent price to $2.

>
> Add all the dividends to that and you are still running
> at a loss.   
>

Dividends listing since amount to around 40c (net) or 60c (gross).  My 
average entry price is actually $1.42, due to my strategy of buying 
when the share price is 'undervalued'.   So actually I am still in profit, 
based on a share price of $1.10, whichever way you look at it.   
Granted there are many other shares I could have invested in and 
done much better with, but who here is betting the farm on KFC?   
Perhaps Bongo did!   But I have never advocated that.

>
>That Is the fundamentals that count perhaps If you add a
> little Ta to your system It might stop you making a clanger
>as costly as that.       
>

My 'system' also means that I am holding SKC, CEN, LPC and WRI in 
my 'income' portfolio.     I don't invest in just two or three shares like 
Bongo does.    Perhaps you didn't notice that while RBD was going 
backwards, SKC and CEN have been moving forwards.  They have 
more than made up for the recent RBD losses.

>
>Remember this dog sold Its kennel not much left to sell
> when It goes under.       
>

I did some of my own research by dining at KFC tonight.   Even though 
Turkey and Iraq had just been bombed, there was a steady stream of 
customers coming into the KFC 'drive in' lane.    There was a good 
smattering of customers inside licking their fingers.   The staff looked 
well occupied and the place looked clean.  They even managed to 
squeeze around $9 out of me, which was more than I was planning to 
spend.   Afterwards I went over the road to check out the competition 
(Subway).   KFC was definitely the busier of the two.

Now, I know that was a boring set of non-news anecdotal observations.   
But while all the headline news is happening, there is a lot of non-news 
going on too.    People going about their daily lives buying takeaway 
food.   It's not very interesting and you don't get to hear about it in the 
newspapers or on TV, but ultimately that is what is driving KFC.

What was all this about RBD 'going under' again?

>
> I  look at dividends as an added bonus
> never as a must buy because they happen to be high.     
>

I don't buy only because the dividends are high.  They have to be 
sustainable too.    Due to the strong cash flow from RBD, the dividends 
are sustainable.

>
>I learned a lot from you snoopy perhaps 
>you might learn from me and fix up your
>selling strategy It badly needs fixing.  
>            

While my 'income shares' continue to give me good income, I have no 
selling strategy.    Why should I sell when the shares are behaving 
exactly as I want them to do?     Even in this 'bad' year, where I have 
made 'only' 12%  combined income and capital gain (equivalent to 
somewhere around 16% before tax)?   I suppose I could sell my shares 
and in so doing, cut my 'income share income' by two thirds while I 
waited for a better income opportunity to come along ??!!!?!

However,  just to show you I haven't given up completely on charting I 
will now sit on the sidelines and await my next entry point.   'Rationally' 
I should be mortgaging the house to the  hilt and stocking up on those 
RBD 'share packs'.    But Mr Market isn't always rational.   If T/A gives 
me a tool to use when my F/A toolbox is empty, then why not use it?

SNOOPY




SNOOPY


--
Message sent by Snoopy 
on Pegasus Mail version 4.02
----------------------------------
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"A: Four.  Calling a tail a leg doesn't make it a leg."



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