FBU Chart.

[Phaedrus]

This is a new FBU chart thread, just in case the other one never makes it across from the old forum. Here is the first post, update to follow.

http://www.snitzforum.sharetrader.co.nz/images/icon_posticon.gifPosted - 05/12/2003 : 10:00:15 AM http://www.snitzforum.sharetrader.co.nz/images/icon_profile.gif (http://www.snitzforum.sharetrader.co.nz/pop_profile.asp?mode=display&id=5075) Fletcher Building has been in an uptrend for years, has good fundamentals and a good yield, all of which makes it an excellent "buy and hold" candidate. In addition, its secondary trends are very tradeable. Technical analysis provides an excellent means of timing your entry into stocks such as this.
The chart below shows the longterm uptrend, with secondary "medium term" trendline-break trading signals marked with red and green arrows.
At the top of the chart are plots of 2 oscillators - the Relative Strength Index, using the MetaStock default period of 14 days, and the Williams'%R oscillator, using a period of 90 days instead of the default value of 14 days. This "detunes" the oscillator, makes it less sensitive and markedly reduces the number of Buy/Sell signals generated. Note how every one of the Buy signals generated by either of these oscillators marked an excellent entry point into this stock, as did the medium-term trendline break buy signals.
Notice how the most profitable buying opportunities occur when the signals from 2 or more of these 3 systems coincide.

http://home.ripway.com/2003-11/39768/FBU001.gif

[scamper]

well done, yet again. currently up 1.1%.
and judging by the 'read' for your post, it is the market talking, not readers of the guru on this forum.
scamper's home again, and freezing...

[Phaedrus]

This is simply an update of the first chart. The primary purpose here was to identify good entry points for those wanting to buy or add to their holdings. See how indicators that worked well for that purpose many years ago are still working well. Note that while FBU has now reached "OverSold" levels, there are no Buy signals yet. These are triggered when the oscillator(s) rise above the threshold, from below.
Charts like this help to put the current weakness into perspective. Bloodbath? Meltdown? Carnage? Blood on the floor? Nah - it's business as usual. Get a grip!
http://h1.ripway.com/Phaedrus/FBU817a.gif

[Phaedrus]

This chart shows a wide assortment of long-term trend indicators. You can see from these that technically, FBU is still in a longterm uptrend, and is currently no weaker than it has been half a dozen or more times over the years. You can see, too, that long-term holders of this stock have at times had to withstand drops of up to 25%, if they wished to continue holding. If this is more volatility than you are ready, willing or able to withstand, you have two alternatives. One is to get out of the sharemarket altogether. The other is to trade the stock. This would, of course, require a different set of indicators and a different mindset. The bottom line here being that if you are unable to beat "buying and holding" FBU, then you are wasting your time.
People often claim that TA is only useful for trading and is quite unsuitable for the longer term. This chart gives the lie to that. TA got you into this stock over 6 years ago in early 2001 - and has kept you in ever since. It will continue to keep you in, so long as the uptrend continues.
http://h1.ripway.com/78963/FBU817.gif

[nissan]

Thanks Phaedrus for putting those charts on sharetrader also for your thoughts on the questions I asked you in my e-mail to you. I have decided to hold in the meantime It is a great company - that has not changed . It is just the world around it that has. With super funds looking for a place to invest in it must be high on the list for them. I am not buying - but waiting and watching with a bit of spare cash .Any ideas where to put it?

[Phaedrus]

In your pocket!

[Viking]

:D I like that, Phaedurs~ what better place to put your cash~

Though with little extra cash for saving~ I will be placing on this one~ perhaps in your next update, Master Phaedrus~ :)

Though CEO J. Ling did gave clear statement about next year's profitability expect to be much lower than this year. But I do think with their expansion plan in place, this is bit like putting money in a mortgage to grow your net worth. Besides, FBU has always been quite conservative in their forecast, guess mr. Ling has inherit that from Mr. Walters~ :P

Be intrict to see how next week would be for FBU. Though I am also watching closely Re ASX.UGL I put these two in same categlory in my portfolio~ I do think UGL, like FBU, has the ability to ride out this stormy days~ but that is just my thought.

[Placebo]

fivestar; the answer is "maybe, but not much". Over the past few years there have been a number of FBU revenues, and many of them are long-termers with plenty of horizon time to see any weakness. For example, look around the skylines of any NZ city, plenty of construction going on. If Fletcher Construction isn't throwing the thing up itself, then its products are being well used in it.

Then there is infrastructure building -- roads and the like; prisons, you name it. Every time you see a building project announced, FBU's price should tick up that wee bit more.

So even if the housing market "collapses", things aren't altogether grim. Also, FBU's fortunes aren't necessarily driven by house prices; they are driven by building and renovating activity. Experience has shown that even when there is a retraction in building consents, renovation activity continues apace.

That's the NZ scene. Bear in mind FBU is now making 40% of its revenues offshore (mainly Australia) and is diversified into laminates, steel, concrete, building products.

This diversified approach has been the foundation of its resurgence. Perhaps they have been reading Mary Holm? ;)

[Placebo]

5Star, yes it is much much more than a building company. They have been very clever. So if Johnny Renovator goes down to his local Placemakers and buys a house lot of Pink Batts; FBU wins on both counts. And if Johnny Renovator then asks Forman Insulation to instal them for him, Fletchers win again. :)

Fingers in every pie...

From memory figures from the last couple of Annual Reports indicated a full order book for the construction division and a sense that demand for their services were stretching their capacity. Any pullback will reduce that demand but it will have to be a fairly major retracement to reduce the Construction division's activity.

It was encouraging to see at the last results reporting that they are expecting the purchase of Formica to produce positive revenues in the next FY. There were worries that the size of the purchase and its sliding market position that it would be a stretch for FBU, so to hear them bullish about it was encouraging. IMO the directors and executives of FBU have credibility... but then I would say that, wouldn't i ;)

[Viking]

Indeed, FBU is diversified enough not to be affected by one sector of the market along (e.g. Residential). Remember few years ago when the outlook for NZ residential market was very groomy. FBU counter the trend went upwards, because of the contracts they won in public sector and industrial sectors which sees them have work till 2008. I remember Ralph Walters did came out and made comment about that~ perhaps could find it on one of those Annual Report somewhere.

I think those were it $3 days~ or was it the $7 days~~ hahaha now its around the $12 day already see how things evolved.

[nissan]

I heard on tv this morning FBU are going to sell some of there properties. Can anyone tell me more. Thanks in advance

[Placebo]

Speculation and market rumours. Do you really believe media reports? FBU are more likely to be buying properties than selling them...

This is the sort of news that is really worth taking note of http://www.stuff.co.nz/4216951a13.html

[macduffy]

I heard on tv this morning FBU are going to sell some of there properties. Can anyone tell me more. Thanks in advance

Any property sales/purchases by FBU are unlikely to be material to their earnings/prospects.

[Placebo]

Sydney Morning Herald report that FBU may sell and lease back some properties.

Speculation.

[Viking]

In that case, I called it smart management~
Whether or not FBU also anticipating property value to be lower in the coming years?

[Oiler]

Sydney Morning Herald report that FBU may sell and lease back some properties.

Speculation.

It may well be speculation in that I believe they recently bought back there HO land and buildings on Great South Road Penrose from Goodman Properties for $29m????

[Snapper]

The share price seems to be tanking ATM with some sustained selling going on. All the news from the company appears to have positive recently so what's this all about. I've got no intention of selling, I'm just worried that the market seems to know something I don't!

Any ideas out there?

[AMR]

There was some bad news released by citicorp on Sunday - Markets in Asia are tanking as we speak. I bought FBU today at 1169 but was out within minutes.

A question for those in the know - How exposed is Formica to the US residential slowdown? My knowledge of laminates is very limited, all I know is that the laminates produced in NZ are mainly for residential structural use as glulam.

[Phaedrus]

Tanking :- "to suffer rapid decline, failure, or collapse"
Charts like this help to put the current weakness into perspective. Bloodbath? Meltdown? Carnage? Blood on the floor? Tanking?
Nah - it's business as usual.

The chart below shows a wide assortment of long-term trend indicators. You can see from these that technically, FBU is still in a longterm uptrend, and is currently no weaker than it has been half a dozen or more times over the years. FBU has now fallen about 13% since its May peak. Long-term holders of this stock have at times had to withstand drops of double that magnitude if they wished to continue holding. If this is more volatility than you are ready, willing or able to withstand, you have two alternatives. One is to get out of the sharemarket altogether. The other is to trade the stock. This would, of course, require a different set of indicators and a different mindset. The bottom line being that you are wasting your time trading FBU unless you are able to beat "buying and holding" returns.
People often claim that TA is only useful for trading and is quite unsuitable for the longer term. This chart gives the lie to that. TA got you into this stock over 6 years ago in early 2001 - and has kept you in ever since. It will continue to keep you in, so long as the uptrend continues.
The time WILL come when FBU breaks its long uptrend and gives Sell signals. Not today though!

http://h1.ripway.com/Phaedrus/FBU115.gif

[Snapper]

Thanks Phaedrus, interesting what a difference a long-term perspective makes. Where would your indicators have to move to break the long-term trend?

[Phaedrus]

To break the longterm uptrend, FBU would need to close below the $11.15 low of 17/8/07.

Sell signals would also be generated by price action dropping below the trendline, moving average or either of the trailing stops.

The indicators shown at the top of the chart will give Sell signals when they break below their green "signal" lines, apart from the DMI where you are looking for the green line (+DI) to cross below the red line (-DI).

A fall in the On Balance Volume would be bearish, especially if it was a steep drop (ie the price fell on very heavy volume).

[AMR]

Huge, huge volume today, almost $60m. Does anyone know what's up?

[Viking]

Get them while its cheap~ :D
Get in quick! hahaha~ but seriously, this is a good company to hold~
and me holding too~ :)

[Phaedrus]

For those wanting to buy into FBU, the use of a 90 day Williams's %R oscillator has invariably flagged excellent entry points into this stock. This indicator has only given a dozen or so signals over the last 7 years, but every one of them has been very timely.

The latest FBU price of $11.35 has pushed the W%R above its Oversold signal line, giving another Buy signal.

The short-term downtrend reversed right on the trendline and the moving average as it has done many times in the past.

http://h1.ripway.com/Phaedrus/FBU1114.gif

[Viking]

Thank you Phaedrus, this is indeed fascinating stock~ almost feels like this is the stock can be use for the text book.

[scamper]

Goodness Gracious! what a huge difference a long-term chart makes!
I've never realised the degree of clarity that it makes.
Looking at the last 6-months and its indicators, i would not buy now: 30-and 60-day MAs and parabolic sar dropping, macd and rsi well in negative, mfi and roc trending down, obv dropping etc etc.

so, my lesson for today gratefully received thank you Phaedrus, is that these negatives are a periodic recurrence all within the long-term uptrend.
Is this a stock where you would be comfortable 'picking the bottom' for buys?

I notice that where there have been other double bottoms, the interval between them is much quieter (not a large recovery between them). is this difference significant?
cheers, scamper.

[Phaedrus]

Scamper, it is possible to get some idea as to the reliability of signals from any given indicator by looking at how accurate they have been in the past. You mention the MACD. Over the 7 years of this uptrend, this indicator has signalled 71 trades. Of these, only 22 were profitable and at times there were as many as 9 consecutive losses.

Over the same period, a 30 day EMA signalled 81 trades with only 24 being profitable. There were up to 10 consecutive losses.

A 60 day EMA signalled 53 trades with just 14 being profitable and up to 6 consecutive losses.

On the basis of these figures, none of the above are worth using on FBU, in my opinion.

You ask "Is this a stock where you would be comfortable 'picking the bottom' for buys?" Do you mean would I be happy to act on these W%R buy signals? Yes. In fact, this oscillator forms part of the "medium-term" trading systems that I run on FBU. I have not added to my "long-term" holding since 2001, but had I wanted to, I would have used a combination of trendlines, W%R and RSI to time such entries.

Re your double bottom question, Scamper, I think all you are looking at there is differing volatility. I would be loathe to ascribe any meaning to it.
http://www.sharetrader.co.nz/images/statusicon/user_offline.gif http://www.sharetrader.co.nz/images/buttons/reputation.gif (http://www.sharetrader.co.nz/reputation.php?p=172873) http://www.sharetrader.co.nz/images/buttons/report.gif (http://www.sharetrader.co.nz/report.php?p=172873)

[winner69]

Pessimists at Macquarie downgrade Fletchers ..... seems to be based on a not so cheery AGM

We'll have to see what happens but i feel Phaedrus's chart will still look the same in a few years time

http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10476153

[beacon]

I second that winner

[Deev8]

Pessimists at Macquarie downgrade Fletchers ..... seems to be based on a not so cheery AGMAs far as I can recall Fletcher Building haven't presented a cheery outlook at an AGM over the past five years. Underpromising and overdelivering is simply a part of the Fletchers culture.

[Viking]

I second that Deev8~ :D

[Snapper]

Like most other stocks FBU was down initially in trading yesterday and then finished the day up 40c or 3.4%. I've been noticing that there have been fairly good volumes through on up days and smallish volumes on down days. To any techies out there, does this imply a rising OBV and can this be seen as a strong buy indication?

TIA

[Phaedrus]

Hi Snapper. Go back and read the commentary that began this thread. It was posted 4 years ago and essentially nothing has changed. Here is an update featuring the same 2 oscillators. Buy signals are marked by green arrows and are triggered when the oscillator rises above the "Oversold" level from below. You can see that buy signals were triggered about 2 weeks ago. That was the time to buy FBU, rather than now.

I have added an OBV plot for you, though it is of limited usefulness in this situation.

http://h1.ripway.com/Phaedrus/FBU1128.gif

[Viking]

I have always place FBU in the "defensive" side of my portfolio~ its now almost seemed to me as a higher interest term-deposit.

I bought little earlier when it bounced from the trendline at $11.60 (I really should have acted at $11.40~$11.50 but never mind).

From Phaedrus' chart its easy to see, this is a stock for the textbook. Really perform like what Techies describe them would :) Thank you, Phaedrus, AGAIN!! :D

[Glendoonie]

You can see that buy signals were triggered about 2 weeks ago. That was the time to buy FBU, rather than now.
Hi Phaedrus, why not now? I bought FBU recently at 1150 and sold out at 1175 a sort time later so I’m feeling a little foolish …

[Phaedrus]

Why not buy FBU now? Because there are no buy signals!

The chart below features indicators such as would be used by those wanting to trade FBU, or for longterm holders looking for a logical entry point to buy or add to their holdings. It shows the latest price ($12.20) but of course the Close may be different.

You can see that all 6 of the indicators shown here triggered buy signals over 2 weeks ago on 14/11/07. Buy now and you will pay more, expose yourself to a higher level of risk and run a lower chance of success.

Glendoonie, why did you sell at $11.75? You can see from the chart that at that time FBU was in a clear uptrend and had not even reached "overbought" levels - let alone triggered any sell signals. A week after you sold, FBU is still in an uptrend and has still not reached overbought levels. None of the indicators plotted here have even come close to triggering a Sell. Technically, the time to sell FBU was 6 weeks ago.

This is just the sort of comment that rattles the chains of the "hindsight brigade", but the fact remains that the signals were all there for anyone that bothered to look. I have been using these indicators with these parameters since about 2000! Take a look at the FBU chart I posted here in 2003. Recognise the RSI(14), the W%R(90), the secondary trendlines?

http://h1.ripway.com/Phaedrus/FBU1129.gif

This will be the last chart I post for a while because I'm going on holiday. In any case, I need a break from ST. I'm happy to post charts here and help people like Glendoonie etc but I'm heartily sick and tired of having to waste so much time defending my posts, refuting the same baseless allegations over and over again.

Take care! P.

[winner69]

Phaedrus - have a great holiday mate

And on your return you can tell us 'in hindsight' where you went

[foodee]

Phaedrus
Have a good holiday.
I have just got back from a few weeks fishing - great no computer and no stress with the market as I am still almost fully cashed up - snappers were really snapping!

cheers

[Jay]

Have a good break Phaedrus
Always appreciate your charts and wisdom.

I don't know why some can't seem to understand that you are not trying to predict the future. I thought the basis of T/A was all about looking at what has happend and saying well there is a high chance this or this will happen again.

[AMR]

Have a good holiday, thanks for all your help!

[COLIN]

Yes Phaedrus, enjoy the break - and maybe you will run into a Socrates while you are away, for some intelligent conversation!
But do come back asap to this forum - we can't exist without you.

[limegreen]

It seems some testament to Phaedrus's investment nous that he seems to often be off for an extended holiday. That seems to me to be an excellent criteria for a strategy.
Have a good one!

[Snapper]

Have a great holiday, Phaedrus, and thanks for responding so quickly to all my cries for help. Your charts do not go unappreciated.

Cheers

[chippy52]

Hope your break goes well.
I too appreciate your chart posts & explanations. What a difference one or two months of tuition makes.
Many thanks

[Hoop]

Looking at Phaedrus's last FBU chart, it looks to me that todays (intra) shareprice has plunged thru his nice 5+years green uptrendline thingy.
I know he is on holiday but I hope he is still monitoring.
HOOP

[AMR]

I am in the process of constructing "industry charts" where prices of each company in a sector are compared. Does anyone know whether any such charts are available for the construction/materials sector in Aus/NZ?

[AMR]

A downward breakout of a rectangular top. Happened on Friday too which makes it a bit more significant.
http://img504.imageshack.us/img504/4443/fbubreakoutkd1.png

[Phaedrus]

FBU is currently right at the level of the two trailing stops I have been posting here over the years. Regardless of whether these get broken or not, this provides a good opportunity to assess the value of such trailing stops in comparison with other technical indicators. I have always viewed trailing stops as a device used by people that don't really have a system. Certainly they are much better than nothing, but almost invariably their performance lags well behind that of more dynamic indicators. This is clearly evident here with FBU. You can see that all the featured long-term indicators signalled an exit late last year at prices ranging from $11.55 to $11.10. The 2 trailing stops would have continued to keep you in while the price retreated further to less than $10.00. FBU would have to fall below $9.95 before they were triggered. To my mind, this is an unacceptably large amount to give back to the market.

People often claim that TA is only useful for trading and is quite unsuitable for the longer term. This chart gives the lie to that. TA got me into this stock in early 2001, and kept me in so long as the uptrend continued - for nearly 7 years.

http://h1.ripway.com/Phaedrus/FBU123.gif

[Halebop]

People often claim that TA is only useful for trading and is quite unsuitable for the longer term. This chart gives the lie to that. TA got me into this stock in early 2001, and kept me in so long as the uptrend continued - for nearly 7 years.

Can we please refrain from inserting empirical evidence into the TA debate? :p

You've unquestionably been very lucky with your hocus pokus voodoo graph logic but where's the 12% gross yield huh? Huh?

[Disclaimer: Those involved with this debate will appreciate that I'm JOKING, those who don't can bite me and hold onto their downtrending, high yielding "bargains"]

[Halebop]

so just to keep the trend in place for 7 years in hindsight, you adjust the trailing stop loss to 25%!!! All other times you have done much lower amounts...eg 10%

and you wouldn't have been out of the stock April 2005ish on a drop from $8 to $6

....so what protected the trader who doesn't want to "give so much back" from the 25% drop then?

this is one of the most distorted trading examples to suit a point I have seen.

The secret is to look at the beginning of the chart and to understand the purpose and makeup of a mechanical trailing Stop Loss. Back in 2001 the daily volatility of FBU expressed as a percentage (based on Standard Deviation in cents divided by the share price in cents) was around 1.8%. A 25% stop loss would would represent a multiple of almost 14 volatilities or 14 times the normal movement of the share price. This is typically considered at the higher risk end of the stop loss spectrum but equally this benchmark is used by day traders who make (and lose) money from short term movements. Phaedrus generally has a longer term time frame and likes to bank a few dividends along the way so he can buy those little things in life like underwear and groceries. So 14 times would represent a more moderate level of risk, particularly as FBU operates in the materials & construction sectors which tend to be a little more volatile in any case. On the question of not being kicked out on the $8 to $6 movement versus accepting a 25% loss as fait du compli - can I suggest that you select one as intolerable rather than both because they are at opposite ends of the tolerance for this stop loss technique? You live with not being kicked out by a certain level of movement but you also must then live with that loss if the price keeps falling and you stop out.

I've never held FBU and so have missed out on a nice steady performer and growing dividends. Phaedrus has posted charts on the topic for years with a consistent message - it is in uptrend - buy / hold. According to his tolerance, that uptrend has ended and he has communicated a sell message. I don't get anything self serving or revisionist out of that. It merely reinforces the consistency and rationality of his strikingly simple approach.

[duncan macgregor]

"

well short term or long term, I guess again its always easy after the fact to decide on your "timeline"
its so simple apparently, I have decided I must but stupid not to get the ease of it or the fact that the richest investor in the world today is a fundamental investor based on value, no TA in sight:D. Sector you are twisting and playing loose with reality.
To be a TA trader is a completely different kettle of fish to a person that buys in, and controls a companies direction. You and i play the game according to our position, we have with no control or insight to every day company decisions.
The FA investor is inclined to be a buy and hold type, which covers most investors who go up and down with the market collecting dividends along the way.
Some of the more enlightened investors prefer to have their money sitting in the bank rather than be invested in a falling market.
PHAEDRUS is in that position, along with me and i dare say most TA investors which simply means the risk of losing is higher, than the risk of winning. This withdrawall of funds only drops the market to an oversold position where the enlightened ride the next wave up. Its the market itself that gives out buy and sell signals with trending sectors, supply and demand etc etc, which constantly change.
We all read the same chart and come to different conclusions. When a person gives out their methods of investing as PHAEDRUS does its up to the individual to see ways to improve the methods over a large range of companies. I stopped being an FA investor simply because of one of the more better known FA investors mistakes in holding on to dog companies and averaging down. He taught me more by doing the wrong thing with FA investing than PHAEDRUS did with TA investing. There is no requirement to stay in the market for the sake of staying in it, that is a stupid thing to do, we are all here to make money.
Have a look at your selections in the share picking contest then tell me a 5% pc initial trailing stop loss would not have saved you a lot of money if you invested in them before you rubbish TA. Macdunk.

[Placebo]

"For those wanting to buy into FBU, the use of a 90 day Williams's %R oscillator has invariably flagged excellent entry points into this stock. This indicator has only given a dozen or so signals over the last 7 years, but every one of them has been very timely.

The latest FBU price of $11.35 has pushed the W%R above its Oversold signal line, giving another Buy signal.

The short-term downtrend reversed right on the trendline and the moving average as it has done many times in the past."


well short term or long term, I guess again its always easy after the fact to decide on your "timeline"

here a buy signal 14/11/07


its so simple apparently, I have decided I must but stupid not to get the ease of it or the fact that the richest investor in the world today is a fundamental investor based on value, no TA in sight:D.

SS: Here is a useful quote for you from the book "7 habits of highly effective people" -- "seek first to understand, then to be understood"

I think the problem is with your understanding, not Phaedrus' system. You need to do a bit of homework old son. Just because you don't get it, don't make it wrong. Have to admit I struggled with all the TA techno-babble for a while but once you get your head round it, it is all fairly straightforward...

[winner69]

Sector .... I am slightly confused as to what you really mean by FA and how it works for you .... because you seem all over the place with your thinking

I assume you agree that FA involves analyzing company accounts, its management, competitive advantages, its competitors and markets and general things like how the economy will affect it.

In it's pure form FA analyses historical and present data, but with the goal to make financial projections .... presumably in your case to provide a value for what the company is worth.... and as such evaluating whether to buy shares in it

Take this hypothetical scenarion .......

A solid blue chip company with many years of solid performance behind ... rarely disappoints the market with its results ..... prospects don't look to bad even as the economy slows down a bit ............ currently earns 100 cents per share (nice round number to work on) ...... your FA says that this years earnings will remain at 100 cps (the market is down a bit but it will grow market share so really doing OK) ..... it regularly pays out 45% of eps as divies .... so expect 45 cents dividend this year

How do you put all this FA stuff to work then sector .......... really interested to know

[Halebop]

And t here you have it SectorSurfa, the difficulties with attacking Pheadrus on tthis site, first you have to wade through an a mazing amount of goobledegook to understand what the systerm is all about, then you have to become an enthusiast for using it. Then you have to detect some of Pheadrus's sillier prattle and the flawws in his alledged systerm............ then when you stand up and make your point, the PheadrusBots come piling in on you like a bunch of demented weasels, afraid that you might find that the emperor reallly is stark naked.
And on top of that MacDunk pours a stream of the finest qualilty Bulll....! Still if anyone has the iron will and obsession to take them all on its you!

There you have it Tom. "Attacking Phaedrus" is perhaps what you intended to say but Freudian slip or not, there was precious little contesting the statistical methods in your post or SectorSurfa's. This "Phaedrus Bot" would not always buy what Phaedrus buys but understands the "goobledegook" of the statistics - they can be applied to FA too for those who spend more than 60 seconds predertimining why it can't be useful.

[limegreen]

While I might count myself as a Phaedrus-bot (I'm far too lazy for FA), Halebop and Winner69 I think distinguish themselves as being astute, and quite keyed up on FA (to put it mildly).


the richest investor in the world today is a fundamental investor based on value, no TA in sight

This is plain daft. When you are investing that much, you can't follow price trends, because you are setting them.

[Deev8]

I stopped being an FA investor simply because of one of the more better known FA investors mistakes in holding on to dog companies and averaging down. Out of interest who was the "better known FA investor" - Benjamin Graham, Walter Schloss, Bill Ruane, Charlie Munger, David Dreman, or someone else?

[Halebop]

Put words in your own mouth not mine!

Which words in particular? :confused:

[Halebop]

While I might count myself as a Phaedrus-bot (I'm far too lazy for FA), Halebop and Winner69 I think distinguish themselves as being astute, and quite keyed up on FA (to put it mildly).

This is plain daft. When you are investing that much, you can't follow price trends, because you are setting them.

Limey if you were 18, leggy and blonde I'd marry you! :cool:

[Halebop]

Out of interest who was the "better known FA investor" - Benjamin Graham, Walter Schloss, Bill Ruane, Charlie Munger, David Dreman, or someone else?

I think the better known part was the mistake, not the investor :)

[limegreen]

Now, why is it that you lot always have to hunt in packs?

That or lone wolves simply round on the weakest arguments in the herd...

[limegreen]

Oh I'm sorry, are weak arguments supposed to be exalted? I thought the purpose of discussuion was to expose bad arguments. Not to pile on the arguer and try to smother him.

You're extremely quick to stake out the moral high ground for someone who entered the discussion with hurling a lot of insults and not much in the way of arguments.

In fact, if I may be so bold, you are the pack.

[Phaedrus]

SectorSurfa.
As a newbie, you may be unaware of the existence of the old ShareTrader Snitz forum. I was posting FBU charts there from 2003 to 2007 and if you go back and look, you will find 46 pages (!) of charts and discussion which illustrate the principles of trendfollowing as applied to FBU on a day-to-day basis. Follow this lot right through and you will get an overview of trend-following techniques that you may find helpful.


so just to keep the trend in place for 7 years in hindsight, you adjust the trailing stop loss to 25%!!!
It takes a while for a trend to settle down. Initially, FBU had a maximum volatility of around 16%, but the volatility was increasing and kept rising until it reached 25%. I used this figure as an FBU trailing stop for about 3 years before it was (belatedly) hit. Your claim of "hindsight" is therefore without foundation. In any event, I have devoted many posts to the question of trailing stops and have always said that while they are better than nothing, they severely underperform more dynamic trend indicators. I don't use trailing stops and only include them in my ST charts because I know that some people here do use them.


All other times you have done much lower amounts...eg 10%
All other times?!!!! Perhaps you mean all other stocks! You must surely have noticed that different stocks exhibit different levels of volatility! It is obvious that they therefore require different trailing stop parameters. Yes?


....and you wouldn't have been out of the stock April 2005ish on a drop from $8 to $6
Longterm holders of FBU would not have been out at this time because the uptrend was still intact. Price action was above the trendline and above longterm indicators such as slow oscillators, moving averages etc. As I have said before "Long-term holders of this stock have at times had to withstand drops of up to 25%, if they wished to continue holding. If this is more volatility than you are ready, willing or able to withstand, you have two alternatives. One is to get out of the sharemarket altogether. The other is to trade the stock."


....so what protected the trader who doesn't want to "give so much back" from the 25% drop then?
Their trading system. The use of more active indicators and trendlines optimised for the secondary trends that comprise the main longterm trend. FBU is a reasonably volatile stock with clearly defined secondary trends. This is what makes it a good stock to trade.

The primary emphasis of my ST charts is on the longterm trend. This is because most people here are not all that interested in trading. Nevertheless, I have posted many charts showing indicators suitable for trading FBU's secondary trends.


....well short term or long term, I guess again its always easy after the fact.....
SectorSurfa, you seem confused and suspicious over the Williams'%R oscillator "Buy" signals that have been generated. This indicator, along with a suggested 90 day period, was posted here many years ago. From that point on, buy signals were completely "automatic", with no further input or interpretation required. They were there for anyone that bothered to look. Your claim that they were only visible after the event or were only easy to see "after the fact" is arrant nonsense. Garbage. Anyone, anywhere can run a 90 day W'%R on FBU and see for themselves just how good these buy signals have been. Year in, year out.


I have decided I must be stupid not to get the ease of it
You're not stupid, SS. Just young, brash, inexperienced and not widely read.

I hadn't realised that you were a Buffett disciple, SS. Would his system have got you into NZ's best stocks? (FBU for example)

Amongst other things, Buffett looks for companies whose earnings are in an uptrend. The shareprice of such companies is often in an uptrend too. That's what I look for. We are both trendfollowers to some extent.

When it is all boiled down, what did my "FBU Chart" thread accomplish?
(1) It identified a good stock to hold. "Fletcher Building has been in an uptrend for years, has good fundamentals and a good yield, all of which makes it an excellent "buy and hold" candidate."
(2) It suggested means of monitoring the long-term uptrend, using methods that anyone could follow for themselves. These methods eventually identified early weakness in the longterm uptrend and signalled a very timely exit. (FBU has fallen substantially since then.)
(3) It identified FBU as a good trading stock "In addition, its secondary trends are very tradeable" and suggested suitable indicators for this purpose.
(4) It suggested methods of identifying good entry points into this stock and posted frequent charts featuring these signals. "Technical analysis provides an excellent means of timing your entry into stocks such as this."

I would hope that many people might have found this thread interesting and perhaps even useful. For myself, FBU has been a spectacular performer, both as a longterm hold and as a trading stock. You can't ask for more than that.

[limegreen]

it was my point all along that its the weight of argument that are supposed to matter not the weight of opponents.

Can you point out where that was subtly hidden among the ad-hominem attacks?


And t here you have it SectorSurfa, the difficulties with attacking Pheadrus on tthis site, first you have to wade through an a mazing amount of goobledegook to understand what the systerm is all about, then you have to become an enthusiast for using it. Then you have to detect some of Pheadrus's sillier prattle and the flawws in his alledged systerm............ then when you stand up and make your point, the PheadrusBots come piling in on you like a bunch of demented weasels, afraid that you might find that the emperor reallly is stark naked.
And on top of that MacDunk pours a stream of the finest qualilty Bulll....! Still if anyone has the iron will and obsession to take them all on its you!

[Halebop]

Thanks for the debate. Unfortunately my knowledge of investing is no richer but at least I feel enriched by the layers of irony (http://en.wikipedia.org/wiki/Ad_hominem).

[JMKC]

SectorSurfa.
I hadn't realised that you were a Buffett disciple, SS. Would his system have got you into NZ's best stocks? (FBU for example)

Amongst other things, Buffett looks for companies whose earnings are in an uptrend. The shareprice of such companies is often in an uptrend too. That's what I look for. We are both trendfollowers to some extent.



Phaedrus, I quite enjoyed reading what you had to say up until this paragraph. I am not a major Buffett disciple, but my best guess is that given at around the $3.50 mark back in 2003 it certainly would have come up on a value screen. That is why you saw 4-5 offfshore deep value funds investing in the stock back then.

Your second comment about him looking for companies in an uptrend is factually incorrect. He is not a trend follower at all. In fact value investing methods often totally contradict both technical and momentum investing.

However in fairness, everything else you say makes pretty good sense. It is also fair to say very few people (not just on this site) have any real understanding of volatility.

[duncan macgregor]

Now, why is it that you lot always have to hunt in packs? I am not a pack person myself. Packs or gangs are for the insecure, the type of person who needs back up to boost their inferiority. My mate SECTOR SURFER might talk a lot of crap, but is definately not a pack person. PHAEDRUS, my sparring partner SNOOPY, and my good self, all jump up say our bit, take the flack, and come back for the second round.
SECTOR SURFER is learning the game, what quicker way to do that than question his teachers. The people that get all childish name calling only do it because of their own inferiority. PHAEDRUS said he sold out then went on holiday which is very strange because i did very similar. SECTOR SURFER rubbished me for doing that because he thinks i dont know how to operate in a bear market.
TA investing requires you to get out of falling markets, and into rising markets, buying more of the same on the way up. Its that simple regardless of how you operate your TA system. When the market as a whole is dropping any self respecting TA investor sells up, and goes fishing, leaving the brain dead holding the baby. I only see one buy signal on the NZX which i posted on the NZO thread, so let no one accuse me of coming out after the event. Macdunk

[Halebop]

Your second comment about him looking for companies in an uptrend is factually incorrect. He is not a trend follower at all. In fact value investing methods often totally contradict both technical and momentum investing.

Phaedrus said Buffett looks for companies whose earnings are in uptrend. Buffett looks for companies with a long history of outsized return on equity, high return on assets and the ability to reinvest those profits for more of the same. All of which points to earnings being in an uptrend, often over decades. This is not very different from various forms of technical momentum investing and like a TA, Buffett doesn't spend a lot of time working out the "why" of it, just the demonstration of it. His letters often explain he purchased this or that company on the basis of a few pages of historical data, personally liking the managers and a handshake.

[Phaedrus]

Wikipedia, Buffett's Investment Approach,
(From the book "Buffetology" by Mary Buffett)

Questions to determine what business to buy :-

Question 2 :- Are the owner earnings on an upward trend?

[Phaedrus]

I still cannot get my head around all the TAs saying "remember your tight stops" and yet we now have the "flexibility" to "extend" them to 25% for the sake of showing a candidate for long term investing TA style.
As far as I can make out, SS, your claim here is that any longterm trend-follower would have been flicked out of FBU back in 2005 by the 16% trailing stop in use back then. Let's examine that premise.

Here is an FBU chart showing as much as we knew in 2005, along with the indicators then in use. The big retracement under discussion is in the magenta circle. Leaving the trailing stop issue aside for the moment, let's look at the established longterm uptrend. We had a well confirmed trendline in place and the highlighted 2005 retracement didn't even get anywhere near it. Price action remained well above any established longterm moving average. Excellent confirmation of the uptrend was provided by the ever rising On Balance Volume indicator which also remained well above its longterm trendline. This was an uptrend in excellent health - and it was accelerating! No longterm trendfollower would dream of selling out of such a stock. Now look at the 16% trailing stop I had been plotting for FBU. Price action broke below this at around $6.40. No longterm holder would have chosen to ignore all of those strongly positive trend indicators and sold-out on the basis of a trailing stop. The broken trailing stop simply showed that FBU's volatility was increasing and that a 16% trailing stop was now too tight for this stock. The decision then was to either raise the value of the trailing stop to reflect this new reality - or to dump it altogether.


main point, a drop from $8 to $6 is ok for TAs to stay in long term? .....I JUST DONT GET IT.
Sure it was OK. Longterm trend indicators were nowhere near being triggered. The uptrend was not only intact - it was accelerating! See above.

There have been other occasions during this long uptrend when a single indicator has been triggered. To act on an isolated signal in the absence of any confirmation is not good practice. What you are looking for is some degree of consensus.

http://h1.ripway.com/Phaedrus/FBU2005.gif

This is very old ground we are covering here, SS. Here is a quote from an August 2005 FBU post of mine :- "Technically, nothing much has changed since I posted the chart that began this thread in 2003. The long-term uptrend has steepened a little, necessitating an updated trendline. Same with the OBV. Business as usual. Time to cash up and take profits? Nah.
It seems to me that a lot of you are talking about stops because you do not have any system. McDunk's suggestion of using a tight stop would have had you flicked out of FBU years ago. Here we have a stock that is an excellent long-term hold - to be sold when the long-term uptrend ends. It is also an excellent trading stock - to be sold when the medium-term uptrend ends. The chart shows the last few medium-term trendlines, along with their associated buy/sell signals. Sort yourselves out - select and use a system appropriate to the timeframe you prefer to trade."

[duncan macgregor]

PHAEDRUS, Macdunk sets a tight stop loss on an initial buy then lowers it when in profit depending on the trend. He then buys all the way up. I would have been out several times then back in on the buy signal, which may or may not have been the best way to go.
I only go up to a 15% trailing stop on long term trending companies and buy back when it gets above the 30 day moving average. Never had FBU but thats how i would have operated if i had. If you feel inclined compare that to a buy and hold on a share that trended up like this see if i would be in front or not. Thats the best part of TA you can back test to improve your system for going forward. Remember a 20% pa time line starting at stop loss level on the way up. Macdunk

[winner69]

That FBU chart makes a really good story .... over many years eh Phaedrus

Ironically most of the time that that trend has been in place FBU probably would have been a fundamentalists dream as well .... even today FBU is a solid buy based solely on fundamentals ..... even today a value investor would see value in FBU going forward.

What all this shows is that FA and TA can go hand in hand.

What Sector probably doesn't appreciate is that Phaedrus (on his own admission) looks at the fundamnetals of a company before he buys ..... he than uses TA to time buying and selling decisions --- essentially to optimise profits but above else to protect his valuable hard earned capital .... right Phaedrus?

ORI.ASX is one share I have ...... have had since $4 in 2001 and now over $30 ..... same sort of time frame and trend that FBU has shown in this thread.

There has been times when the ORI shareprice has dipped below the 200EMA line and the ATR I use ..... maybe should have sold (did once but didn't stay out for 2 long) based on this a few times but I believed the 'fundamentals' are so strong that I didn't.

ORI shareprice hasn't really gone anywhere since May last year when an offer was made for the company ..... shareprice pretty close to the 200EMA line but I still hold as I believe that $40 or $50 is where it well be in a year or 2. (maybe Phaedrus could post a long term ORI chart on the ORI thread .... I don't have his software and useless at putting images in ST)

back to FBU ........ no doubt we will have this discussion again in a year or 2 when FBU is $15 and another sector comes along and says why didn't people sell out at $10

[Deev8]

Ironically most of the time that that trend has been in place FBU probably would have been a fundamentalists dream as well .... even today FBU is a solid buy based solely on fundamentals ..... even today a value investor would see value in FBU going forward.I have to agree. I bought into Fletcher building, based purely on fundamentals in early 2002. Although I reduced my holding in 2005 when the price started to run a little ahead of their fundamentals, I'm still holding some shares today.

[peat]

abn amro say this today



Fletcher Building - 1H08 result preview - FBU is due to release its interim
result on Wednesday, 13 February 2008. Our 1H08 NPAT forecast (pre
abnormals) is NZ$219m, with EBIT of NZ$385m, some 13% higher than the
pcp. We would not be surprised if the result is better than our forecast. BUY

[Major von Tempsky]

in which he said, inter alia, that Buffett's approach is not really different from "technical" analysis.
What brand of marijuana are u on Halebop...

Buffett has a number of quotes saying TA is rubbish and he doesn't use it.
Warren is the King of the value investors and an intelligent and selective contrarian.

TAers simply follow the crowd but with a built in lag.
TAer's become expert with practice at then explaining what happened with the benefit of hindsight and why they got it wrong. Although by selecting the "right" period they can usually assert that they actually got it right.

[redzone]

I am a buyer of fbu today...cullens new project announcement today will be big news for fbu....turning point for long term hold

[AMR]

The floor at $10 broke a couple of days ago. Best just to wait.

[Halebop]

in which he said, inter alia, that Buffett's approach is not really different from "technical" analysis.
What brand of marijuana are u on Halebop...

Buffett has a number of quotes saying TA is rubbish and he doesn't use it.
Warren is the King of the value investors and an intelligent and selective contrarian.

TAers simply follow the crowd but with a built in lag.
TAer's become expert with practice at then explaining what happened with the benefit of hindsight and why they got it wrong. Although by selecting the "right" period they can usually assert that they actually got it right.

Thanks for the balanced and insightful drugs slur MVT.

Buffett certainly does not use TA. Even if he wanted to he couldn't use it successfully given the volumes of cash he moves would be the trend. However, what someone does, what they say they do and what you perceive them to do are not the same.

Buffett buys companies (or shares of companies) with a trendable history of high and stable Owner Return on Equity, high and stable Owner Return on Assets and a long term ability to reinvest for more of the same (plus a bunch of largely binary qualitative tests). That this is trendable is him taking the same probability enhancement that TAs take when going long or short on a confirmed share price trend. He may not plot the earnings trend on a graph, but this doesn't make the process materially different. He's looking for statistically valid confirmation of a trend. This doesn't ensure certainty (He too has had a few "oopsies" over the years), it just enhances the probability of a positive outcome.

[duncan macgregor]

BUFFET, wont find one buy in the NZX end of story. BUFFET made a clanger with Coka cola look up the chart end of another story. BUFFET is a great business man in a completly different buying and selling position to any of us, end of story. He cant buy and sell like we do, and we cant have all the facts, and inside information like he can. If he copies any of us, or we copy him then it really would be the end of the story. Incidently FBU are in a downtrend at the moment, the market will tell you when its a buy. Macdunk

[Phaedrus]

As you can see from the multiple trendlines, FBU is in an accelerating downtrend. The On Balance Volume downtrend has accelerated too.

Those wanting to buy back into this excellent stock might like to wait for a break above the price trendline, an OBV trendline break, or a break of the 9.5% trailing short stop as plotted below.

A break of a trailing short stop is primarily meant as a signal to cover a short trade, but of course it functions just as well as a buy indicator for going long.

http://h1.ripway.com/Phaedrus/FBU27st.gif

[duncan macgregor]

As you can see from the multiple trendlines, FBU is in an accelerating downtrend. The On Balance Volume downtrend has accelerated too.

Those wanting to buy back into this excellent stock might like to wait for a break above the price trendline, an OBV trendline break, or a break of the 9.5% trailing short stop as plotted below.

A break of a trailing short stop is primarily meant as a signal to cover a short trade, but of course it functions just as well as a buy indicator for going long.

http://h1.ripway.com/Phaedrus/FBU27st.gif PHAEDRUS I never was a shareholder, but if i had been i would have been kicked out probabely with a 15% stop loss which is my maximum for long trending up shares when well in profit. My question to you as a shareholder past or present is, what did you do in the end?.
Did you go by your long term treadline, or did you use a stop loss. Now that the market has turned on this share, timelines, treadlines, stop losses,etc have all been activated for this share that you were or are holding. I would be interested in what you did at the end [if anything], not to critisize but to compare. The people that critisize your long term treadline as being opportunist in hindesight must wonder if you stuck to your guns or not, by selling out on market perception. Macdunk

[winner69]

Amazing that when the 'fundamentals' remain so strong that FBU can today be 30% off its recent high

Put it down to market sentiment, foreigners pulling their money out of NZ, impending recession or collapse of the building markets in OZ or NZ or whatever this is some drop.

A value investor might say now is the time to buy -- jeez its PE is down to about 10 and all that sort of stuff.

However history shows that this is about an average long term PE for FBU - over all that long term price rise it's average PE has never really gone above 12 - and has ranged from 9-12 in that time - so a fundamental investor looking at value should be turned off.

So FBU shareprice over the next few years will probably mirror eps growth and forcasts say this is pretty subdued - even the touted 13% increase in H1 doesn't feed through to a 13% increase in eps and wouldn't excite many analysts to incraese their full year forecasts to more than last years performance.

Probably many do see some weaker conditions for FBU to operate in over the next year or so - even thought the govt is doing it best to give them zillions of dollars of work. It is that sentiment along with the likliehood on increased interest rates that will hold back the FBU share price I fear.

Keep an eye on Phaedrus's charts - they will show you when the time to buy is

[Phaedrus]

"What did you do in the end?"
I am happy to reassure you Dunc that I kept to my well documented system, selling down my FBU holding as each longterm indicator was hit, at prices ranging from $11.55 to $11.10. My "medium-term" trading positions had all been closed out earlier.

"Did you use a stop loss?"
You mean trailing stop? - No, I prefer to use trend indicators. All my trend indicators had triggered and I was completely out of FBU way before the charted trailing stop was hit.

"I would have been kicked out probabely with a 15% stop loss which is my maximum for long trending up shares when well in profit."
Right. You would have been flicked out way back in 2005 at $6.40. FBU went on to more than double after that. I would claim that this is evidence that your 15% trailing stop was way too tight. Go back and look and you will see that all the trend indicators were nowhere near being triggered at that time - you would have sold out of an intact, ongoing uptrend. In my experience, trailing stops pretty much invariably underperform trend based indicators. They are not really meant to act as a standalone selling strategy.

"I never was a shareholder..."
Why not? What stopped you getting into FBU over the years Dunc? In my opinion it ticked all the boxes - technical and fundamental.

[duncan macgregor]

PHAEDRUS, I never bought FBU even although i am a builder which might have something to do with it. We wont go into that here its not the place. I would think a fair bit of downside still to come, the markets setting itself up for some rude shocks. When i get stopped out thats not the end of it, i come back on buy signals, usually much lower than my exit price [AGM ] perfect example. Its the people with no exit system that are the losers, good companies like this can downtrend for long periods of time. Macdunk

[Snoopy]

PHAEDRUS, I never bought FBU even although i am a builder which might have something to do with it. We wont go into that here its not the place.


If this is not the place for a builder to comment on FBU I don't know what is! I would say your opinions on this subject are highly relevant Dunc and I would like to hear them.

I have never held FBU myself for a couple of reasons. The first was that I held a decent sized position on Rinker (Oz market) and didn't want to become overexposed to the building sector. With Rinker having been taken over last year that 'excuse' is now gone.

The second reason is that I tend to look for companies outside of the top ten for new investments. That is based on different paper studies that show over the medium term small companies tend to outperform bigger ones. I say 'paper studies' because other subsequent studies have shown that this 'small company premium' is illusory because actually trading shares in these companies can move the share price higher on the buy side and lower on the sell side than the market ending quotes show is achievable. That of course is largely a problem of institutional investors. IMO small investors can still exploit that 'smaller company premium', particularly if you use contrarian investment strategies like I do.

The other reason I steer away from larger companies is that they are generally more difficult to analyze from a fundamental perspective. I admit I haven't ever got aroung to studying Fletcher Building, although it is now on my hit list of things to do!

SNOOPY

discl: no shares held

[AMR]

The other reason I steer away from larger companies is that they are generally more difficult to analyze from a fundamental perspective.

Why is that? I always thought it would be easier due to more broker coverage, news, research, etc.

[duncan macgregor]

SNOOPY, I used to buy material in places [example] BUILDING DEPO at real cheap prices until they were taken over and destroyed into being expensive placemakers. It seemed they closed down the opposition by buying them out. I wouldnt deal with them, so why should i buy shares in a company that closes down my cheaper buying opportunities. It might be good business on their part, but they wont do it with my money. Nothing more sinister than that . Macdunk

[Wiremu]

Examples of the most common paranoid symptoms are:

delusions of persecution, reference, special mission, or jealousy;

a minor degree of incongruity is common, as are mood disturbances such as irritability, sudden anger, fearfulness, and suspicion.

[Placebo]

So Dunk you let an emotional response to the company get in the way of taking in part of one of the market success stories of the past 5-6 years.

Now that's smart investing.

That's like saying you'll never invest in someone like Telecom cos they once didn't reconnect your granny's phone 25 years ago...

[duncan macgregor]

So Dunk you let an emotional response to the company get in the way of taking in part of one of the market success stories of the past 5-6 years.

Now that's smart investing.

That's like saying you'll never invest in someone like Telecom cos they once didn't reconnect your granny's phone 25 years ago... Having been in business for a great number of years i steer clear of anyone or anythink that i dont approve off. Fbu have never wronged me i just fight my own personal little battle of what rubs me up the wrong way in a business environment. Probably cost me a lot being like that but sorry thats what i am like. I refuse to be cheated twice by anyone companies or individuals thats my way. Macdunk

[Snoopy]

Why is that? I always thought it would be easier due to more broker coverage, news, research, etc.

I like to do my own fundamental research rather than just blithely accept what the brokers say AMD. As long as a company publishes good accounts, and with the adoption of international standard rules NZ company accounts are getting better, I don't find the *mechanics* of fundamental analysis difficult.

But once a company attains a certain size they tend to hive off into an overseas expansion, tackle a new market sector and/or do all kinds of things that muddy the original reason for that company being in business. I like to take a business to bits, at least in accounting terms, to see how well the original arm of the business is doing verses all the new ventures. As soon as you get more than one business division, you then have to look at where the unallocated costs go. You also get more operational unknowns like, are the existing management up to the new challenge? I hope you can see how things are starting to get messy.

Naturally I will read the broker research as well. But investment is not a popularity contest, at least not in the long term - even if in the short term it looks like it is. Ideally I would prefer my investments to have no broker coverage. There is much more chance of turning over an unheralded investment gem in that situation.

SNOOPY

[COLIN]

SNOOPY, I used to buy material in places [example] BUILDING DEPO at real cheap prices until they were taken over and destroyed into being expensive placemakers. It seemed they closed down the opposition by buying them out. I wouldnt deal with them, so why should i buy shares in a company that closes down my cheaper buying opportunities. It might be good business on their part, but they wont do it with my money. Nothing more sinister than that . Macdunk
Duncan, I haven't been contributing for a while but I always read your posts as they often contain thought-provoking material. However, I must admit I am finding it a little difficult to come to terms with this new "ethical" Dunc. You have stated clearly on a number of occasions that, when considering investment options, you couldn't care less what a particular company does, e.g. whether it trades with Myanmar or whether it is unkind to little old ladies, etc., and your only interest is whether an investment in their shares will make money for you or not. It is more than a trifle disconcerting to now find that you appear to have a social conscience! Who is your new guru?!

[Kropotkin]

Duncan, I haven't been contributing for a while but You have stated clearly on a number of occasions that, when considering investment options, you couldn't care less what a particular company does, e.g. whether it trades with Myanmar or whether it is unkind to little old ladies, etc., and your only interest is whether an investment in their shares will make money for you or not.

I was thinking that last week as well!

I suspect though that Dunc (like myself), draws the line at selling little old ladies to Myanmar :p

[duncan macgregor]

I was thinking that last week as well!

I suspect though that Dunc (like myself), draws the line at selling little old ladies to Myanmar :pI have made and lost enough money in my business life to understand that you still can do it with your principals intact. Someone cheats me once never gets another chance. Someone tells me what a bitch his mother is its goodbye. I am not religeous biggeted or against opposition view points but i do business only with people i trust. STUPID EH?. Macdunk

[Steve]

Could we be seeing the price dropping to the support around the 830's?

[boxing_beaver]

1H results out, currently reading

[Snow Leopard]

Key Points

- Group net earnings up 22 percent to $235 million
- Operating earnings up 16 percent to $394 million
- Cashflow from operations up from $227 million to $245 million
- Earnings per share up from 41 cents to 47 cents
- Interim dividend of 24 cents per share with full New Zealand tax credits -
the 12th consecutive dividend increase
- Acquisition opportunities being evaluated

[Deev8]

- Earnings per share up from 41 cents to 47 cents
- Interim dividend of 24 cents per share with full New Zealand tax credits -
the 12th consecutive dividend increaseIt certainly looked like a decent financial performance. Given Ling's cautious approach, his comment that "we remain comfortable with our earnings prospects for this financial year" was positive too.

Priced at 9 times last year's earnings and with a historic gross dividend yield of 7.3% the shares are starting to look relatively cheap.

[whatsup]

I agree but the market is looking 3 years out , overseas fund managers and slowly selling Kiwi shares .

[Hoop]

From a quick glance at the figures released it seems on the surface as a good result the only black cloud is the quote"..Total shareholder return was negative 4 percent for the half-year, influenced heavily by the uncertainty in equity markets internationally.
The market has reacted to the news with a 5c drop cementing in the continuing downturn. FBU has now had $4.20 knocked off it's share price from it's high of $13 .30 last year.

This is another indication that there is a bear market out there and illogic/ maniac rules.

FBU was my major stock in my portfolio...but sold out at $11.70 at end of November when the markets created bear signals. This is one stock I will return to, once the bears retreat back to their caves.

I am mostly a chicken (cashed up) investor at the moment with bear investor motives (in and out quick, but FBU does not fit that strategy yet). When the tide turns (market upturn) and I become a bull investor(little cash all equities) again and if all things being equal FBU will probably be once again my major stock.....

A mighty fine company but at the moment I am happy to watch from the sidelines.

[Steve]

Down 3% following the announcement. I would expect more weakness in the shareprice over the next few weeks...

[winner69]

It certainly looked like a decent financial performance. Given Ling's cautious approach, his comment that "we remain comfortable with our earnings prospects for this financial year" was positive too.

Priced at 9 times last year's earnings and with a historic gross dividend yield of 7.3% the shares are starting to look relatively cheap.

Remember last years earnings inckuded a $80M one tax gain so EPS was really only 83 cents which means at 887 FBU is on nearly 11 times last years earnings.

Everybody comfortable with the forecast of eps about 95 cents this year so is getting on the cheap side at the current price

FBU has always been a 'cheap' share --- its annual average PE over the last 5 years has ranged from 8.1 to 10.4 so even at todays price is only behaving with in normal past ranges

Bear markets (and at present the market is behaving like one) don't reflect price movements - rather changes in valuation ratios like PEs -- it is the market 'sentiment' (ie what people are prepared to pay for earnings) that is driving down shareprices and not the earnings growth side of the equation.

That is why that rather impressive chart that FBU shows of TSR over time is looking rather sad - earnings per share still growing strongly and the shareprice falling.

Must be hard to take for many to see the current shareprice 34% down from where it was a few months ago when essentially nothing dreastic has happened to FBU ..... but thats what happens in bear markets

[QOH]

I thought it was a excellent result. Was disappointed to see the share price keep falling. Like you say, I guess we really are into a bear market. It doesn't bode well for the rest of the NZ sharemarket, when you see FBU getting hammered like this.

[macduffy]

Yes, a bear market with the added weight of overseas investors quitting the NZ market for the " safety " of home.
There'll be some good buying in FBU when this market turns.

;)

Disc: Hold FBU

[Deev8]

Must be hard to take for many to see the current shareprice 34% down from where it was a few months ago when essentially nothing dreastic has happened to FBU .....It's certainly a situation that would have produced a wry smile from Ralph Waters in the past, and Ling seems to be cast in the same mould.

[Hoop]

FBU having a good day due to maximum positive media coverage.
AMP released its full years results profit up 10% goodish result but same story as FBU yesterday the bear has giving it a damn good hiding (down 8.4%). As Winner says this bear market is not earnings growth driven it something else, as well as lack of available money and investor sentiment forcing revaluations.
If AMP walloping seems unjustified then RAK got what it deserved today.

FBU tomorrow??? after the warm fuzzies from the media dissipate??

[AMR]

Wow FBU up 5% at one point. I wonder what effect the delisting of Blue Chip will have on property here and by extension FBU.

[Steve]

Wow FBU up 5% at one point. I wonder what effect the delisting of Blue Chip will have on property here and by extension FBU.

At a guess, I would say not much effect at all...

[Viking]

Could the TA masters (especially Master Phaedrus, if you are there) let me know~
If to the FBU has broken the trend line~

as I see it broke the 30days average and just just touching the 60days average~
can we somehow interpret this as the stock is starting to reverse the downward trend?
Or do we confirm with greater volume and confirm it till the 90days average is broken?

Thank You all in advance!!!

[Phaedrus]

Viking, here is an update of the FBU chart shown on page 7. You can see that none of the 3 featured indicators have triggered Buy signals as yet.
http://h1.ripway.com/Phaedrus/FBUst219.gif

[chippy52]

Could the TA masters (especially Master Phaedrus, if you are there) let me know~
If to the FBU has broken the trend line~

as I see it broke the 30days average and just just touching the 60days average~
can we somehow interpret this as the stock is starting to reverse the downward trend?
Or do we confirm with greater volume and confirm it till the 90days average is broken?

Thank You all in advance!!!

Not sure what charts you use but I think you will find the 30 day Av will be broken about the $10 mark.

[Viking]

Thank you guys~
Now that's much clearer to me~

Chippy, thanks~ oh~ don't worry about my chart~ since I just use the ASB on the net, so the uncertainty is certainly higher that the professional looking chart like Master Phaedrus is using.
I am no TA at all~ but am eager to learn more about it~

[Steve]

The 961c close today has crept above Big P's trendline - could this be an early indication that a buy signal is on the way?

[winner69]

Non-residential building consents issued in January 2008 were valued at $316 million, up $70 million from January 2007.


pretty healthy jump around 30%

The trend series data from same source says down 3.4% from December

Trend has been down since July 07 (10%)

Maybe that and the residential consent data is what people focused on

[tobo]

Business-wise, NZ is still going gangerbusters with full employment locally. And commercial building has longer lead-times. It's the residential/DIY side that is weighing so heavily on FBU.

How much will residential real estate plateau (or fall)? Fall will quickly make cost of building seem to outweigh cost to buy existing (unless land drops in price in accordance with falling values...but they are still not making new land)

In what form will commercial/infrastructure work be affected by global malaise?
High interest (oh, got that already), reduced debt availability, inflation

ToBo

[boxing_beaver]

massive buy-up at the end of the day - on the back of that presentation?

seems unlikely considering most if not all of that info was already available.....? :S

closed just on the 30-day SMA (i think!) on huge volume, does that tell us anything technical gurus? :D

[AMR]

Possible reverse head-and-shoulders. Can anyone confirm/deny?

[Phaedrus]

30 day SMA crossover? Reverse Head and Shoulders?
FBU's downtrend is littered with examples of these.

Indicators with a bit of form are more reliable - ones that have not been triggered prematurely on the way down.

Don't you like the 3 indicators featured in the above post and on page 7 of this thread? All have now triggered BUY signals. The trendline was confirmed and broken well over a week ago.......

[boxing_beaver]

30 day SMA crossover? Reverse Head and Shoulders?
FBU's downtrend is littered with examples of these.

Indicators with a bit of form are more reliable - ones that have not been triggered prematurely on the way down.

Don't you like the 3 indicators featured in the above post and on page 7 of this thread? All have now triggered BUY signals. The trendline was confirmed and broken well over a week ago.......

Ah after going back through your posts I understand what you have just said :)

FBU is a great stock, so its awesome to see if moving upward a bit now!

[AMR]

Mr Phadreus, could you throw up some medium term indicators as well?

[Phaedrus]

I would claim that the indicators shown at the top of this page are medium-term. I think I know what you mean though in that the trendlines look at the downtrend as 3 separate "legs" and the OBV sees it as 2 distinct trends. What you are wanting is some more conservative, less active indicators that look at the downtrend in its entirety - right?

At the top of the chart below 3 such indicators are plotted. Each has been tailored to the downtrend by selecting parameters such that previous reaction highs have just failed to trigger Buy signals. While all 3 indicators are rising, none has triggered a Buy as yet.

Conservatism has its price!

http://h1.ripway.com/Phaedrus/FBU36.gif

[Glendoonie]

...What you are wanting is some more conservative, less active indicators that look at the downtrend in its entirety - right?...While all 3 indicators are rising, none has triggered a Buy as yet.
Conservatism has its price!


Thanks for that P :) I was starting to get jittery. Is it a case of hang fire there's more (FBU sp fluctuation) to come? Well, I think so.

[boxing_beaver]

yeh... this TA stuff is very interesting, no buy signals triggered and what does the SP do? down down down....

will be watching with interest next week!

[JMKC]

agreed. Stock will break through $9 before it sees $10 again.

[Glendoonie]

when I look at a FBU chart on Direct Broking, it looks like a continuation of the downtrend since mid Oct last year.

stock to avoid

Look and learn, hunny bunny, look and learn. :) Mr P tells it as he sees it. And the info is there for ALL to see. A stock to avoid? Look and learn ;)

[boxing_beaver]

agreed. Stock will break through $9 before it sees $10 again.

what are you basing this on? im not arguing with you, just wanting to learn :D


see the guy at the top of this page

yep, hes looking at the FBU "buy signal"

:D


what am i looking at? im confused! :D
I deal with certain departments at FBU through work so have a special interest in this stock

disc: do not hold

[AMR]

jobs report out tonight in the US. If it shows them in recession, things will get ugly. Part of TA assumes that some 'smart money' knows the information before the general market, but those job reports are pretty securely held.


Quote:
Originally Posted by JMKC http://www.sharetrader.co.nz/images/buttons/viewpost.gif (http://www.sharetrader.co.nz/showthread.php?p=188765#post188765)
agreed. Stock will break through $9 before it sees $10 again.

what are you basing this on? im not arguing with you, just wanting to learn :D

The trendline break on Mr P's chart? Although that trendline was only a tentative trendline.

[Hoop]

It looks like FBU little rally is over for the time being. Typical of a bullish rally (just ended) with in an overall bear market situation.

Bear Markets are very risky times for buyers.

Phaedrus pointed this out in his posting #224 (http://www.sharetrader.co.nz/showthread.php?t=5228&page=15)under the Market Perspective thread. His 18 Feb NZSX50 Chart showed red alert. Under his discipline he says no buys, exit market. Hope all you people heeded his advice.

Since then the NZSX has done nothing to improve on that situation.

DOW has broken its primary support (12000) this morning closing at 11893 so it is another downturn in progress.

Other markets have also broken key indicators as well so it is a start of another global downturn folks.

No doubt this will flow into the NZX on Monday. I expect FBU will be testing its $8.90 low next week.

[Glendoonie]

I expect FBU will be testing its $8.90 low next week.

And the rest Hoopster (you don't mind if I call you Hoopsteer, do you? A term of endeament I assure you :) ) FBU were trading at $8.50 last time I looked. Up 20. Ha ha, I'm not fooled. Flash in the pan; definitely not trending up yet. It won't happen overnight, bu it will happen. Can anyone estimate as to when?

Och ayethe noo and all that.

Glendoonie.

[duncan macgregor]

And the rest Hoopster (you don't mind if I call you Hoopsteer, do you? A term of endeament I assure you :) ) FBU were trading at $8.50 last time I looked. Up 20. Ha ha, I'm not fooled. Flash in the pan; definitely not trending up yet. It won't happen overnight, bu it will happen. Can anyone estimate as to when?

Och ayethe noo and all that.

Glendoonie. We all make the mistake of buying in to soon sometimes trying to time the bottom of good downtrending stocks. If you are a short term TA type investor a good starting buy signal is when it rises above the thirty day mpving average on the way up. If you are more of a long term investor wait until it crosses the 90 day moving average. It definately has a ways to go yet my old mate stick it in the bank and go fishing. Macdunk

[Glendoonie]

We all make the mistake of buying in to soon sometimes trying to time the bottom of good downtrending stocks.

Oh yeah, I hear you. I made the foolish mistake of buying a whole lot of FBU at 820 yesterday. Only to panic like a panicy thing when they went up again later in the day. It canna last, I thought. Sold out at 827. Net gain after brokerage? Too embarasing to mention in this forum. Lesson learned? Nah, probably not. Oh maybe one lesson learned as if I didn't know it already;I'm a crap share trader. :(

G

[AMR]

Not a bad entry actually, there is a lot of resistance around these price levels if you look back a few years. I think Ling has been buying too.

Although I should add tht according to the 6 pm news it was a window dressing day.

[Steve]

Although I should add tht according to the 6 pm news it was a window dressing day.

Wait until Monday for the serious window dressing then?!

[Glendoonie]

Not a bad entry actually, there is a lot of resistance around these price levels if you look back a few years. I think Ling has been buying too.

Although I should add tht according to the 6 pm news it was a window dressing day.
You talkin' t' me, AMR? Please forgive me if I'm wrong. You ask, "Why the whaka are you not in NZO? ". If you were addressing me I would divulge that I am in NZO and glad of it, but what do I do with those pesky options purchased between 10 and 20 cents. Oops, wrong thread. Adieu. G

[AMR]

Hahaha, that's my new signature. Pop over to the thread "Maori need a sense of humour" on the off topic chat if you want to find what it's about.

[AMR]

As mentioned earlier, FBU is now testing a congestion zone from a few years back.

http://img338.imageshack.us/img338/8819/fbulongtermsj4.png

[Hoop]

From AMR chart..a quick glance...next TA target price is approximately 770 -780 area.... *890 - (1010-890) = 770 :(

*....890 (900) old TA target price point 1100 - (1300-1100) = 900

[Hoop]

From AMR chart..a quick glance...next TA target price is approximately 770 -780 area.... *890 - (1010-890) = 770 :(

*....890 (900) old TA target price point 1100 - (1300-1100) = 900

Nothing in life is a sure bet ....but if the new TP of 770 initially holds (respected) a bullish bounce may result. A bounce of 10% resulted from the last respected TP of 890.
If the present share price does not fall but rises above 890 all bets (TP of 770) are off, but beware of bull traps.

[Glendoonie]

From AMR chart..a quick glance...next TA target price is approximately 770 -780 area.... *890 - (1010-890) = 770 :(

*....890 (900) old TA target price point 1100 - (1300-1100) = 900
Given Hoop's caveat, "Nothing in life is a sure bet ...." what do you think, Phaedrus? It's been a wee while since you added you wordsof wisdom to this thread; I'm getting withdrawal symptoms.
G

[Phaedrus]

Glendoonie - here, just for you, is an update of the chart on page 10. There is not much change, with FBU still tracking down, overall.

You can see that I have raised the Trailing Short Stop trigger level from 9.5% to 14% to take in the spike of early March. This brings its sensitivity more into line with the other "medium-term" indicators featured here.

Conservative investors wanting to avoid shorter term trades of little or no profit such as that of Feb/March would be waiting for some signal from these 6 "medium-term" indicators before entering. Such conservatism does have its price, as I have said before. Current price action is well below these indicators and it would require a price rise of maybe 80 cents before some were triggered - although the gap is narrowing.

These indicators gave excellent exit signals and will probably give good entry signals - but make no mistake about it, such signals will be late. More active, shorter term indicators will get you back in earlier, but at higher risk of making a "false start".

The most encouraging feature of this chart is that the OBV has stopped falling.

http://h1.ripway.com/Phaedrus/FBU41.gif

[Placebo]

Crikey. It's enough to make you sorry for Jonathan Ling...

[Glendoonie]

Glendoonie - here, just for you, is an update of the chart on page 10. There is not much change, with FBU still tracking down, overall.

You can see that I have raised the Trailing Short Stop trigger level from 9.5% to 14% to take in the spike of early March. This brings its sensitivity more into line with the other "medium-term" indicators featured here.

Conservative investors wanting to avoid shorter term trades of little or no profit such as that of Feb/March would be waiting for some signal from these 6 "medium-term" indicators before entering. Such conservatism does have its price, as I have said before. Current price action is well below these indicators and it would require a price rise of maybe 80 cents before some were triggered - although the gap is narrowing.

These indicators gave excellent exit signals and will probably give good entry signals - but make no mistake about it, such signals will be late. More active, shorter term indicators will get you back in earlier, but at higher risk of making a "false start".

The most encouraging feature of this chart is that the OBV has stopped falling.
Thank you Mr P. I had a feeling it wasn't time to get in seriously yet, and your chart and your interpretation of said chart have vindicated my intuition (which is aeuphamism for blind luck and stupidity) Thank you. Patience is still required I think. G

[AMR]

Did the support at 820 break this afternoon? Makes me feel nervous and wondering if the next wave of selling is about to begin.

[duncan macgregor]

Did the support at 820 break this afternoon? Makes me feel nervous and wondering if the next wave of selling is about to begin. Sure did AMR, and sure to continue down in this climate. Company fundamentals are as useless as tits on a bull at the moment, stick to your charts. The dow is down again, so look out tomorrow.
FBU might break down to $8-00 as its next sticky point. Bad news breaking out in the financial world all over the place, it will get a lot worse before it gets better. Macdunk

[Glendoonie]

On 10-04-08, Macdunk said, "FBU might break down to $8-00 as its next sticky point. Bad news breaking out in the financial world all over the place, it will get a lot worse before it gets better.". But it hasn't broken 800, and closed yesterday at 877.

Phaedrus, would you be so kind as to give your opinion on the latest FBU upward trend from 10-04-08 to date. Is it sustainable? Have the crucial TA indicators been triggered?

One of your charts is worth a thousand words ;)

In anticipation,
Glendoonie

[JMKC]

Stock is trading at above its historical EV/EBITDA range vs the NZ market, it's more expensive on a P/E and an EV/EBITDA basis than its Aussie peers (eg BLD), the residential property downturn hasn't even started to have a real impact on these guys, and the global market still hates building companies.

I agree with MacDunk... will go further and say that the stock will hit $7.50 before $9.50.

[AMR]

The stock did a nice bounce off 800, lowest it got was 801 intraday. We had a few very wide-ranging days indicating indecision. OBV is in a decelerating downtrend so the selling pressure is slowing for now...

My feel is that this is a great stock once breaks the last peak but I'm not holding my breath. I put a friend onto this at $10 "because a round figure would provide resistance"...:o:o

Also, would anyone be able to explain the last spike in the OBV? Smart money entering or leaving? Or simply banks suffling stock between themselves?

[Glendoonie]

..., would anyone be able to explain the last spike in the OBV? Smart money entering or leaving? Or simply banks suffling stock between themselves?
Dang good question, dude. Somebody pleeeeeease explain.

[Phaedrus]

"Would anyone be able to explain the last spike in the OBV? (marked by green oval) Smart money entering or leaving?"
This is big money (assumed to be smart money) entering, and as such is considered to be Bullish.

While FBU is still in a 6 month downtrend, in my opinion there is room here for a little cautious optimism.

This opinion is based on the fact that technically, FBU is looking stronger now than it has for many months.
(1) The Momentum (26) indicator has triggered a Buy signal (green arrow)
(2) The OBV has stopped falling and is rising.
(3) Smart money is entering (green oval)
(4) OBV trendline break (green arrow)
(5) Price trendline break (green dot)

I doubt that many people would have bought on the price trendline break - I certainly didn't. The trendline itself was unconfirmed, and there were no other buy signals to back it up at that time. Points 2, 3 and 4 were enough confirmation for me and I bought last Monday at around $8.41. Because FBU is still in a 6 month downtrend, this would not be a suitable entry point for longterm "buy and hold" investors. At times like this, such an entry needs to be tightly monitored.

FBU is only 12 cents away from breaking above the 50 day simple moving average as plotted below.....

http://h1.ripway.com/Phaedrus/FBU426.gif

[AMR]

Here's my dilemma : These transactions were done amongst the same broker and did not affect the market depth. If the broker had done the same trade on a down day, then it would have been considered smart money leaving right? Thus OBV has its strengths but one of its weaknesses are that it can be manipulated correct?

[Footsie]

phaedrus

how do you calculate OBV?

[Phaedrus]

Footsie,
On Balance Volume relates volume to price change. It is calculated by adding the day's volume to a cumulative total when the security's price closes up, and subtracting the day's volume when the security's price closes down.
If today's close > yesterday's close then
OBV = yesterday's OBV + today's volume
If today's close < yesterday's close then
OBV = yesterday's OBV - today's volume
If today's close = yesterday's close then
OBV = yesterday's OBV

MoSteph,
You say "I suppose a volume weighted OBV might be more helpful..."
Not in my experience. Read up about the Accumulation/Distribution indicator - I think you will find that is pretty much what you are wanting. At a practical level, I find that A/D and OBV plots are so similar that it generally makes little difference which you use. Certainly the A/D indicator addresses some of your concerns but I have been using OBV for decades and continue to find it very useful indeed. OBV is a crude indicator, but in my opinion it works a lot better than it "ought".

If you and AMR "have trouble with" or "have a dilemma with" OBV the solution is simple - don't use it. I am not trying to portray it as infallible and have no desire to "convert" either of you to its use. One question though - if you dump OBV, what volume indicator would you use? (If any)

Here is a composite chart showing multiple examples of abrupt OBV changes being found at significant turning points. This should give you some idea why On Balance Volume is one of my favourite indicators.

http://h1.ripway.com/Phaedrus/OBVx12.gif

[AMR]

Thank you for answering all my questions in a single post there. I suppose it is like all other chart patterns and indicators out there- 60-80&#37; reliable.

[winner69]

Thats an amazing AIR chart ..... esp when the time frame is just over a year ,,, and the QAN sellout seems to be the trigger ..... they were canny with their timing weren't they

[Phaedrus]

What impresses me most, W69, is the accuracy of the timing here. Generally speaking, these OBV "steps" did not occur at some time around about the turning point - quite often they appear right at the turning point. MoSteph questions talk of "smart money" and claims I am confusing cause and effect, but in actual practice I make no attempt to rationalise or explain this phenomenon. I really don't care too much about the details of what actually creates these "steps" and am unconcerned as to whether they are cause, effect or correlation. To me, the possibility of "confirmation bias" is merely academic. At a practical level, I find them to be very useful and profitable indicators of likely future trend direction. This is similar to the way in which I don't waste time speculating as to the reasons for a downtrend. I don't want to hold downtrending stocks regardless of what the putative "cause" of the downtrend may be.

You might be interested to know that, in association with signals from other indicators, I acted on 7 of the 12 OBV "steps" shown here. The other 5 involve stocks that were of no interest to me at that time.

Here are two simple OBV rules for dummies :-

OBV rising (abruptly or not) = GOOD
OBV falling (abruptly or not) = BAD

[winner69]

What impresses me most, W69, is the accuracy of the timing here. Generally speaking, these OBV "steps" did not occur at some time around about the turning point - quite often they appear right at the turning point. MoSteph questions talk of "smart money" and claims I am confusing cause and effect, but in actual practice I make no attempt to rationalise or explain this phenomenon.

Whether one can rationalise or explain what happened to the AIR share price when QAN dumped their 44m shares on instos is probably too hard. It may have been coincidence as QAN sold for strategic reasons but heck they timed it well .... maybe their knowledge of the industry said it was good time to get out .... even thought heir own companies share price was bound to fall as well.

AIR made a big deal that this put another 44m shares into the market place and would improve liquidity ... and presumeably the share price ... that hasn't come to fruition

Whatever QAN getting well in excess of $100m for their stake and if the same instos who bought them still hold not won't be to impressed to see than worth not much more than $50m.

hats off to QAN .... and as the chart shows what a time to realise real profits in AIR (the only time this century there has been real gains to realise).

taking into account the 5 for 1 consolidation in 2004 the current share price must be about an all time low .... (so by inference cheap as)

Watch those OBV lines I say .... even inane things like QAN selling some AIR shares seem to matter

[Glendoonie]

FBU is only 12 cents away from breaking above the 50 day simple moving average as plotted below.....

So it's all on then? :)
Shall I dust off the chequebook?

[Placebo]

MoSteph I think the point Phaedrus is making is (to badly misquote Dr Johnson), you don't need to know how a telly works in order to use one. (Actually, as Dr Johnson wouldn't have known what a telly was, his quote was "I am not a carpenter, but I know a well-made table when I see one.")

The question for me is: How does the `smart money' know when to get in and how do i become one of them? ;)

[Phaedrus]

MoSteph,
It is a shame that you have felt the need to stoop to dishonesty in an attempt to show some inconsistency on my part. You deliberately deleted my qualifying clause that preceded the excerpt you cite in your reply.
This statement in fact began " in actual practice......"

I have no doubt that you understand full well what I was saying, but just in case you have managed to miss the point entirely, here is some further explanation. This phrase means that in point of fact, in everyday practice, when actually using OBV "steps" as entry/exit indications, there is no inherent need to rationalise or explain them. In other words, it is quite possible to utilise an OBV "step" as a very useful leading indicator without trying to ascertain the details of what actually caused the "step", and in everyday useage, I generally don't bother. Here on ST, however, you will have no trouble whatsoever finding many examples of me theorising as to why and how some TA indicators work.

"I would've thought a more appropriate title, given your indifference to explaining this phenomenon, would have been NPX Price Goes Up After Having Gone Down".
MoSteph, the phenomenon under discussion here is OBV Steps. Suffice to say that the NPX post you refer to does not feature any OBV steps. Your mention of NPX here is totally irrelevant. I don't want to start a separate NPX discussion on this thread though, and will post an updated NPX chart in case you want to discuss that stock further.

"Look, don't get me wrong. I think the OBV might be helpful....."
You think it might be helpful, MoSteph? - I know it is helpful! I've been using it profitably for decades! I strongly recommend that you look into it.

"......despite being hard to verify"
I had no trouble finding plenty of examples - the majority of which had already been mentioned here on ST.

"My point was simply that it can also be deceptive...."
You find me an example (or 12!) of OBV giving a deceptive signal and we will discuss it.
MoSteph, you are on a hiding to nothing here. Lets say you do manage to find an example of an OBV step giving a deceptive "bad" signal. That signal will be in isolation, unconfirmed by the market and unconfirmed by other technical indicators. Only a fool would act on it. We are dealing with human beings here - we are all imperfect. Big money is not invariably smart money. Wealthy people and institutions DO make mistakes sometimes! Generally though, "big money" does have better access to more information than mug-punters like us.

"..... in most of those cases (provided as examples) there're obvious fundamental reasons that would explain it (the OBV step) more convincingly"
Really?
W69, one of the most experienced and competent fundamental analysts here on ST considers that "Whether one can rationalise or explain what happened to the AIR share price when QAN dumped their 44m shares on instos is probably too hard."

His concluding advice?

Watch those OBV lines.

[Phaedrus]

MoSteph, you were attempting to point out an inconsistency ("Um... what's this then?") between what I said on two separate posts. Had you not deleted the "In actual practice" qualifier, it would have been obvious that there was, in fact, no inconsistency at all!

"You're right there's a difference between "steps" and OBV simply moving. One is a bigger version of the other! "
WRONG. They are different animals. The OBV "simply moving" reflects the usual everyday market activity on normal everyday volumes. No exceptional big transactions are involved. An OBV "step" appears when there is grossly atypical volume (well above the usual range) caused by a single large transaction.

"Why should it matter why (I think you mean "whether") an institution sells over weeks or a day?"
It doesn't matter all that much, really. Anyone selling a squillion shares will depress the market (and the OBV) however they do it. Institutions spreading their selling activity over weeks would help to disguise their divestment, I suppose. Their selling on a single day makes an obvious OBV "step". You can see though (I hope!) that either way, the OBV ends up at the same level. Either way, the OBV is Bearish. Capiche?

"And when is a "step" big enough to be a step?"
If it looks like a step, its a step! Don't get too hung up on arbitrary definitions here MoSteph. Steps are a mere technicality, an interesting and useful phenomenon giving some insight into the market and drawing attention to activity by major players. Don't lose sight of the bottom line here :- OBV rising (abruptly or not) = GOOD.
OBV falling (abruptly or not) = BAD. Couldn't be simpler could it!

"I can't understand why anyone would believe anything as vigilantly as you make out you do........" But, but, I don't "believe" it at all, MoSteph, let alone "vigilantly"!!!!! I do know from many years experience that this stuff works most of the time, but if an isolated OBV signal is unconfirmed by other means, I am ready, willing and able to ignore it. No belief there!

" .... when it's not explained."
Silly me! I thought I had explained it reasonably well! MoSteph, if you really do want to know more about volume indicators such as OBV, I suggest you do a bit of serious reading. I can't be writing a textbook here just for you!

You identify ABA, HLG and MFT as providing examples of "deceptive" OBV signals, on the grounds that "All of these have large "steps" with little or contrary direction afterwards".
You are getting very confused here, MoSteph. Since OBV is a "leading" indicator, what is "expected" is NOT a contrary direction at all, but a continuation in the direction of the step. You've got it all ar$e about face!

Let's pretend that you did manage to find some "deceptive" OBV steps - ones that were not confirmed by concurrent price action. Can you not see that this very absence of confirmation would lead to that particular "step" being ignored? That any lack of direction like this would mean no other TA signals would be triggered? That the total lack of confirmation would identify that particular "step" as a bum steer?

"I always want to be convinced, "academic" or not."
You and me both, MoSteph, but the ugly truth here is that I don't give a damn if you are convinced or not. It is readily apparent though that you don't use volume indicators at all and have no experience of their use. If you really do want to learn about such things, you will have to make some sort of effort. Ultimately, you have to convince yourself - I can't do it for you.

[whirly]

Look out I still got my training wheels on!

Phaedrus - I use google finance and yahoo mostly for my charts. Neither seem to offer OBV. Where should go to try it out?

[Lizard]

My choice for ease of use on NZ stocks would be FT.com - link here (http://markets.ft.com/tearsheets/performance.asp?s=FBU%3ANZE). Click on "interactive charting" at bottom left to get a choice of indicators - apart from being able to get OBV and charting NZ stocks, it also has the advantage of being able to edit the period on indicators. You can also save a few of your favourite charts to monitor.

Disadvantage is that it doesn't seem to update data until the following day for NZ stocks - although sometimes Yahoo seems to be even more erratic on this.

(I should probably acknowledge MoSteph here for putting me onto this one some months ago!);)

[Footsie]

thanks LIZ.... i've been looking for a charting site like that for a while

[whirly]

Thanks Lizard - off to check it out now.

Thats what I wanted - now just to learn what all the indicators actually mean.

I have other questions but will post them under investment strategies not here.

[foodee]

Thanks Lizard, will check
Have been using Big Charts but they have become erractic.

[Hoop]

Thxs Liz

Added it to my TA collection.:)

I also have one (digitallook.com) (http://www.digitallook.com/) which I use often, has a zillion indicators (incl OBV of course ;)), and many exchanges to choose from, NZX ASX etc. Stocks seems to be updated by the time I get home at night. You need to sign up ...but thats no biggee as it is free.

[Phaedrus]

Whether “in actual practice” is used or not, your inconsistency remains unless you say “Nuplex Insider Trading” was you theorising. But it wasn’t.

Huh? Of course "Nuplex Insider Trading" was me theorising! How on earth could it possibly be anything else? I have no knowledge whatsoever of the motives or identity of those that were buying!

MoSteph, you haven't given me any examples of "deceptive" OBV signals - you just mentioned a few stocks. Without specific dates, how can I possibly investigate your claims? I can't be hunting through decades of data looking for something that may or may not be the example you are referring to!

Years ago, MoSteph, I was going down the "pure" FA route that you are on. I was a "buy and hold" type of guy. I made good profits - but then, through inaction, I all too often gave the lion's share of my gains back to the market. I finally realised that the major flaw in my system was that it paid insufficient attention (like, none!) to market sentiment. It was only when I began supplementing my Fundamental Analysis with some basic TA that I began to make enough money to quit working.

The idea is, of course, to create your own individual system, tailored to your aims, personality, skills and circumstances. One size does NOT fit all. I would claim, though, that your entire approach is far too theoretical. To my mind it is foolish of you to write off a useful indicator like OBV when you have never actually investigated its use. (Let alone used it!)

At this stage of your life you should be trying everything - with an open mind!

[AMR]

(Mosteph, did you get my PM about Richina?)

Anyway back onto FBU today. It bounced off the 900 resistance, but if it breaks through tomorrow it will complete an ugly double bottom formation.

If we're still on the topic, does anyone know how effective OBV is on stock indices like the e-mini SP500 contract?

[COLIN]

My choice for ease of use on NZ stocks would be FT.com - link here (http://markets.ft.com/tearsheets/performance.asp?s=FBU%3ANZE). Click on "interactive charting" at bottom left to get a choice of indicators - apart from being able to get OBV and charting NZ stocks, it also has the advantage of being able to edit the period on indicators. You can also save a few of your favourite charts to monitor.

Disadvantage is that it doesn't seem to update data until the following day for NZ stocks - although sometimes Yahoo seems to be even more erratic on this.

(I should probably acknowledge MoSteph here for putting me onto this one some months ago!);)


My grateful thanks, also, for alerting us to this site. Looks like being mighty useful.

[Phaedrus]

http://h1.ripway.com/Phaedrus/XL.gif

(A) This OBV upward step ("Buy signal") is clearly an aberration. It came at the end of a long uptrend and was quickly followed by a slew of technical Sell signals. The buy signal for this stock came with ABA Step 1 back in 2006. ABA Holders would be looking for Sell signals, not Buy signals so we can safely assume that this anomalous signal would have been ignored.

(B) This OBV downward step ("Sell" signal) came after MFT had been in an accelerating downtrend for a year. Those following MFT using the OBV indicator would not have been holding MFT at this time, so the chances of their following this signal and selling is ZERO!

[Placebo]

Interesting discussion re fortunes of FBU and it seems someone somewhere has confidence in its immediate prospects. But I think it's high risk for the moment for the following reasons:

1: Money is expensive and this will put the brakes on developments
2: A lot of the finance companies who have gone under were putting their money into bricks and mortar projects. This funding stream is now weaker.
3: General lack of confidence in the property market
4: Looking around the Wellington skyline there are a number of projects underway and this will give the impression all is well. But I would doubt the same number of projects in place in a year's time. Generally speaking large-scale building projects are 18-24 months long, so it will take a while for this to feed through but I expect the pipeline to dry up.

The above may be ameliorated to some degree by FBU's diversification into Australia and other markets, but sub-prime is also hitting the US property market hard so that may also have a flow-on to FBU prospects.

On the upside: AHI is looking at opening a new factory in Hungary! From Stuff today:

Today there is just one item on the agenda for the MPs - Speaker Margaret Wilson, National's Brian Connell and Katherine Rich, Labour's Marian Hobbs and NZ First deputy leader Peter Brown.

They will travel from Budapest to Varpalota, where a ground-breaking ceremony for a new AHI Roofing plant will be held. AHI Roofing is a subsidiary of New Zealand company Fletcher Building.

[Jay]

Thanks Phaedrus for you time and effort in educationg a lot of us. Pleae keep it coming, we really appreciate the efforts you put in.
While we may not all agree with you partly or entirely, I find it very hepful.

[macduffy]

The company website has an interesting presentation to the ABN-AMRO NZ Day in Sydney on 8 March.
Not a lot there that we didn't already know but its a reminder that FBU are confident of the future with steady or modestly rising work volumes forecast across most units for the next 3-4 years. Also makes the point that Infrastructure ( including construction ), while one of their major business units, has reduced its share of company revenues from 32% to 26% in the latest year, while Laminates and Panels has grown from 19% to 30%.

[winner69]

Pretty sad looking building consents data out today .... in both residential and non-residential sector. Residential consents down 30&#37; on April last year for instance.

Prob put a bit of pressure on the FBU shareprice

[COLIN]

Fancy that, smart as they were, we're back to the price they bought at... :p


Sorry, I don't follow. Who are the "they"?

[AMR]

The smart money behind the OBV jump. Anyway, either today or tomorrow seems to be a good entry point.

[AMR]

The smart money behind the OBV jump. Anyway, either today or tomorrow seems to be a good entry point.

Well that was noob. Stopped out at 810. Support at 820 is now resistance. My fault for going against the prevailing trend! I should have grabbed that 40cps profit when it was there.

[Placebo]

(1) 4-price Doji. (High, low, open and close all the same) This candle is very rare in heavily traded stocks such as FBU. They indicate total market indecision, and are often found at turning points.
(2) Doji Evening Star formation completed - again, these are often found at significant turning points.
(3) Big black candle, with the price falling on increasing volume (Bearish)
(4) Trendline break, with another black candle and volume up yet again.


Phaedrus are you sure you didn't copy this as the dialogue from an episode of `Monkey'? http://www.youtube.com/watch?v=T__JxrI3mfc&feature=related

[Phaedrus]

There appears to be something wrong with my data of around that date, MoSteph.
I have deleted my post until I work out what has gone wrong.

[AMR]

Well, that's the problem I've always found with buying on turn arounds. One justifies the decline by saying "it's just confirming" then kapppooowww you're at a loss. At least you're out at 8.10 and not close.

I probably deserved it! My system produced no buy signals, I just thought that it would be a good entry since I was buying right above a support. To answer Mr P, no I did not track my entry with trendlines, moving averages, or any short term trend following indicators. In hindsight, I was picking bottom:o.

Next entry signal is a close above resistance 890, completing a rectangular bottom formation.

[Steve]

It was quite a reasonable jump today off recent weakness. Is it just a bounce or the end of the downtrend?

[Glendoonie]

Good question Steve. Phaedrus, perhaps you might tell us if any of the indicators are signalling a flash in the pan, or is it buy time?G

[Phaedrus]

I can't post my own charts until I have sorted out my database problem Gendoonie, but here is a DB "Superchart" showing a nice confirmed trendline. A break of this would constitute an entry signal for most trend-followers.
http://h1.ripway.com/Phaedrus/FBU519.gif[/CODE]

[Glendoonie]

[quote=Phaedrus;200867]I can't post my own charts until I have sorted out my database problem Gendoonie, but here is a DB "Superchart" showing a nice confirmed trendline. A break of this would constitute an entry signal for most trend-followers.
/quote]

Nice trendline; too bad about the gradient. Thank you once again Mr P. Better oot than in at present, IMUO. (U = uninformed)

I wish you a speedy recovery from your database/charting issues.

G

[winner69]

Was that a veiled profit downgrade this morning? or just setting the market up for likely tough times over the next year or so.

So laminex not quite working out yet ...... a negative

Aust operations might still be operating OK but won't be booming

NZ infrastructure related things (concrete etc) prob doing OK .... a positive

But their construction realted things must be struggling ... reports of them stopping building house in Auckland .... appears as if sales are declining at Placemakers ........ not selling as much gib board as this time last year .... some real negatives here

So maybe not a profit downgrade but enough signs that we won't be seeing exciting results from FBU for the next year or so ........ and we know what that means to the FBU shareprice

[winner69]

Fletcher Building tips profit fall


http://www.stuff.co.nz/4554431a13.html

They mention profit fall .....

[Halebop]

Fletcher Building tips profit fall


http://www.stuff.co.nz/4554431a13.html

They mention profit fall .....

Will it be the old story of "First of 3"?

[Steve]

The shareprice held at $8 for now...

[Dr_Who]

The global property market are expected to have a long dragged out hard times. Maybe a number of years of downturn. More pain to come, so why would you want to be in FBU?

[macduffy]

hmmm, maybe because FBU are not global?

Im not that on to it, but they seem rather limited to OZ/NZ rev wise


It's true that the bulk of revenues and earnings have historically come out of Aust/NZ but the purchase of Formica last year has significantly increased FBU's exposure to USA/Europe/Asia/Sth America.
I think we need to wait for the June 08 numbers to see the extent of this.

[Dr_Who]

hmmm, maybe because FBU are not global?

Im not that on to it, but they seem rather limited to OZ/NZ rev wise

LOL.. mate, with high interest rate, high energy and commodities both in NZ and AU the construction sector will feel the pain.

I nearly shorted FBU when it was at $11, but I told myself that I wont trade this year.

Here's a quote from an article in the Australian...

“A 66 percent drop in first-quarter profits from Home Depot is weighing heavily on traders ... with the company citing a depressed housing market and rising gasoline prices for the decline,” said Andrea Kramer at Schaeffer's Investment Research.

[AMR]

I shorted at $10.80 but I couldn't see it going below $10 so I covered. The bad thing is, I chose FBU for my NZX picks. As meatloaf once said, two outta three ain't bad!

Quite glad I was running a stop loss earlier despite being bundled out. It's made a new low today, next support in the 770s.

[Huang Chung]

FBU down to nearly $6 on the ASX, as a result of all the obvious reasons of interest rates, housing slump etc.

In view of the stock market being forward looking, I'm wondering if this is about as bad as it might get price wise? I'm not a chartist, but can see that the chart looks awful....was more interested in comments on the fundamentals.

Considering this is a NZ company, I was wondering if anyone might be able to comment on how FBU is perceived in its home country....is it seen as a quality blue chip with a record of solid management, or something else.

Your comments would be greatly appreciated.

[Lizard]

One way of looking at it - by price/sales ratio:

Nov 1998 low - FBU P/S ratio = 0.38
1999 rebound - FBU P/S ratio = 0.33
Mar 2003 (approx start of bull market) - FBU P/S = 0.42
Jun 2007 - NZX peak - FBU P/S = 1.06

Current P/S ratio 0.64.

(All data taken from old Market Analysis publications)

[Huang Chung]

One way of looking at it - by price/sales ratio:

Nov 1998 low - FBU P/S ratio = 0.38
1999 rebound - FBU P/S ratio = 0.33
Mar 2003 (approx start of bull market) - FBU P/S = 0.42
Jun 2007 - NZX peak - FBU P/S = 1.06

Current P/S ratio 0.64.

(All data taken from old Market Analysis publications)

Thanks for that Lizard....but the looks of things, they could drop to around $3 - $4 Oz if they were to repeat the ratios set in the late 90s.

Are they a highly regarded company in NZ?

[Lizard]

Annualising to fully year sales could rev up "current" P/S to 0.55 with a surge in the denominator due to inclusion of a full year from Formica.

Any extrapolation from historic results may also overlook changes in debt, diversity of operations (which should work to reduce variability) and relevant exchange rates.

[macduffy]

FBU down to nearly $6 on the ASX, as a result of all the obvious reasons of interest rates, housing slump etc.

In view of the stock market being forward looking, I'm wondering if this is about as bad as it might get price wise? I'm not a chartist, but can see that the chart looks awful....was more interested in comments on the fundamentals.

Considering this is a NZ company, I was wondering if anyone might be able to comment on how FBU is perceived in its home country....is it seen as a quality blue chip with a record of solid management, or something else.

Your comments would be greatly appreciated.


Yes, FBU is seen as one of NZ's better performing companies but of course it is languishing at present under the downturn in housing as well as the general economic slowdown in NZ.
Management is highly regarded, particularly so under former CEO Ralph Waters ( but Jonathon Ling is also well thought of.)
Recent acquisition of Laminex and Formica has diversified the company, both product and market - wise but of course has opened it up to wider geographic risk, particularly in the USA.
I have often felt that FBU would fare better without " Building" in its name, as this tends to be associated too heavily with residential building fortunes. Building products and infrastructural projects are more important to FBU and should insulate it against too much downside from a residential building slowdown.
I hold FBU and will likely buy more, but not at present given the weakness in the SP.
Incidentally, ABN Amro Craigs recently rated FBU their third most favoured NZ stock, After Auckland Airport and Contact Energy.

:)

[Sideshow Bob]

Incidentally, ABN Amro Craigs recently rated FBU their third most favoured NZ stock, After Auckland Airport and Contact Energy.

:)

Well there's a kiss of death if ever I heard it!

Incidentially, I recently asked them for their research on NZO - but they didn't cover them.

[Huang Chung]

Thanks for the input everyone....I might hold off a bit and see where it goes. Certainly doesn't appear to be the need to rush in.

[Dr_Who]

I am also keeping an eye on FBU. It was one of the best performing top 40 stocks in NZ. Good management team. The CEO is Aussie Chinese.

I still have concerns for the property and construction market. Dont really see any recovery till late 2009/2010, so have plenty of time to wait. The property cycle takes 8-10 years to complete.

In the meantime, just sit tight and relax.

[Placebo]

Oh dear. Building consents down, forecast of more to come. More figures to confirm slowdown in housing market... no respite in sight.

FBU being hammered today.

[winner69]

Oh dear. Building consents down, forecast of more to come. More figures to confirm slowdown in housing market... no respite in sight.

FBU being hammered today.

New Residential consents expected to fall by up to 20% over the next year in NZ so the contraction has really only just started. Commercial and infrastructure should keep them reasonably busy in those parts of the division

From what i know about the demand for some building related products at the moment it wouldn't suprise me if they reported Placemakers sales to be down more than 10% at the moment and they wouldn't be losing share either. That is a faitr dent in their operations but also in the upstream manufacturing plants like gib for instance.

Exposed to US and Europe housing markets and the headlines in those countries would send a shiver down your spine if you want a buoyant market to improve profitability

Aussie building market seems to hang in there and talk of govt assistance to make houses affordable is always positive.

Are FBU sector and geographically diversified enough to withstand a prolonged downturn in global nuilding markets ........ only time will tell

In 4 to 5 years time no doubt FBU will be doing very well and the shareprice will rcover and go to new hreights ...... even $20 or more so a good buy now but even better if it falls to $6 something .... maybe $5 something .... so why rush in now

[AMR]

Ouch...breaks through the $7 round figure intraday so far...

I have a feeling that the person who I put onto FBU at $10 hates me right now:(

[Huang Chung]

Since I asked you guys this time last week, the FBU price on the ASX is off about 10%.

Again, thanks for the input. I'd like to buy this stock at some point, but I think the views being expressed here about now not being the right time, are correct.

Watching and waiting......

[winner69]

Since I asked you guys this time last week, the FBU price on the ASX is off about 10%.

Again, thanks for the input. I'd like to buy this stock at some point, but I think the views being expressed here about now not being the right time, are correct.

Watching and waiting......

Be patient HC ... the bad (less buoyant) times are only just starting for the likes of FBU and perfrosmce will be affected both here in NZ and Australia bit global impacts will also have a bearing.

Did you note the other day that Ling declined to comment on how the company would perform against analyst expectations .... ominious I'd say

[Hoop]

Lessons learnt over the decades..forgotten during Bull market excesses ..then remembered or learnt again usually the painful way.

Re: Falling PE ratios during bear-market phases verses naturally (inherently) low PE ratio stocks.

Before the end of the Bull market last year...hands up those long -term investors who decided to ride out a bear-market using FBU as an anchor stock in their portfolio.

It had all the right ingredients...

+ A share-market darling status for years
+ Lower PE Ratio than market average (about 11-12)
+ Expanding company...experiencing moderate growth (makes PE even more attractively low)
+ Overseas exposure limiting the effect of the NZ$ and NZ economy and opening FBU to global opportunities
+ Its construction commitments fully booked for years ahead
+ Great Management
+ Second biggest listed company in NZ
+ Great dividend yield (4&#37; imputed) in relation to its fundamentals, payout only 50% of earnings.

The above ingredients + it's natural low PE... it would be the ideal stock to hold during a downturn with the promise of limited downside...right???.........Wrong!!!

Throughout history it has been noted that the bear can be indiscriminate on what stock it picks on to maul... and with the E part of the PE equation presently under threat in counter-forcing the fall in PE...FBU, (as Winner has pointed out) the bears attention in mauling this stock may not abate for a while yet.

Deduction on what has happened this year, I assume that it would be wrong to enter this share now on the notion that is "perceived" to be a cheap share (PE ratio wise ..now at *6.58).

* PE figure from Direct broking website


A great textbook example of a bear market phase in action and the bears relationship with a low PE ratio stock.............fascinating stuff.....

[winner69]

Good post there Hoop

FBU annual average PE since 2002 has been 11.7 (2002) / 8.1 / 8.2 / 8.7 / 10.1 and 10.4 in 2007. Interesting eh but then many would say FBU deserves to be rerated ... like it is has always traded on lower valuations of the likes of Rinker. From the above numbers one could say it did get rerated (by 25%) .... but those that rerated it are nowing feeling a bit let down

I reckon normalised earnings this year (at best?) will be about 80 cps so on this basis on a PE of just over 8 --- about the long term average. Earnings (normalised) this year about the same as last year and i do think that FBU will have a couple of years of lower profits.

Great company in its sector but at the end of the day is just a boring old industrial that will never command high PEs that are sustainable - market sentiment and all that sort of stuff always win out over what should have happened or what should be ..... but in saying that if you buy FBU shares at the right time in the cycle you can do very well and no doubt that time will again come .... but I don't think today is that time.

[Dr_Who]

PE ratios means nothing when there is a downturn in the economy and company profits gets downgraded year after year. As long as the oil prices stay high stay out of the stock market, with the exception of oil and gas stocks.

[Placebo]

Yeah Hoop interesting analysis. I am not sure that FBU would fit my criteria of a `safe haven' in difficult times. By and large that would be a solid utility such as CEN or TPW or even AIA (dare I say TEL). Most of these are good quality companies with solid earnings, good management (?) and solid records over the past 5-8 years. I chose NZR largely because of its ongoing high divvy yield and I have to say am not disappointed.

FBU as W69 points out is more of a niche industrial with diversified interests within the building and construction sector. It is exposed to macro and micro economic factors and both national and international headwinds.

Having said that the factors that are currently making it weak are those that had previously made it strong.

I feel this will turn again.. the question is when will the bottom be struck?

[Footsie]

i thought about shorting this stock as soon as the previous CEO resigned
then again earlier this year....

but never had enough conviction to do so

i'd say its years away from re-rating

trend is down..... aviod.....wait till the bottom is confirmed b4 u buy

[Drone]

Yeah trend is down, prob is mostly o'seas types looking to exit on falling kiwi and troubles at home. Will be hard to pick the bottom though folks, while FBU has been a strongly trending stock within that trand it tends to move in sharp spikes, can go $50c-$1 in a few days. So I'm buying at current levels, fair value is surely more like $8-$9 (at least). I could well take a hit I know but gut feel is that people will wake up in the next couple of weeks , take a look at the numbers and realise that this is dirt cheap.

BUY.

Disc: long FBU (just now)

[Kryptor]

From: http://tvnz.co.nz/view/page/425823/1148334:

"Fletcher Building may have to plough another $1 billion into laminates company Formica to get it back on track.

The New Zealand company has spent $960 million to buy the US-based corporation.

A former Chief Executive of Formica New Zealand, Graham MacKenzie, hopes Fletcher is in for the long haul. He says substantial investment is needed in the company's factories in the United States in particular, where market share needs to be increased.

MacKenzie says Formica has had a rocky past, with three owners in 15 years and he hopes Fletchers can stabilise the company."

[Shooter]

This is old news (24 May 2007).

[AMR]

Yeah trend is down, prob is mostly o'seas types looking to exit on falling kiwi and troubles at home. Will be hard to pick the bottom though folks, while FBU has been a strongly trending stock within that trand it tends to move in sharp spikes, can go $50c-$1 in a few days. So I'm buying at current levels, fair value is surely more like $8-$9 (at least). I could well take a hit I know but gut feel is that people will wake up in the next couple of weeks , take a look at the numbers and realise that this is dirt cheap.

BUY.

Disc: long FBU (just now)

I thought so back at $8.20 too and went long then...

[Drone]

I thought so back at $8.20 too and went long then...

So true mate, I feel your pain. Run with a fairly tight stop i would advise, (Maybe ave daily move x2 as a starter)

[Placebo]

This is old news (24 May 2007).

I seem to remember some media cover on the condition of Formica and risks to FBU when the purchase was made... So defintely not new.

[winner69]

Story in NBR today says 'what did Fletcher Building say to a room full of analysts and fund managers (in China) last week to make the share price slump to a three year low?"

All about Formica apparently .... suggesting they may ahve bought a dog and that their assumptions were a bit awry

And the carnage continues today

[POSSUM THE CAT]

Winner at what price would you suggest it is a buy for a long term hold $5.00 or lower?

[Footsie]

Why do you want to buy a stock with shocking industry fundamentals, and in a steep downtrend?

Why not look for a growth company and a booming industry

you'll probably need to go offshore for that

[POSSUM THE CAT]

Footsie I bought last time people thought it was a dog and did very nicely out of it. I would like other peoples ideas about where they think it will bottom

[AMR]

Use some TA to determine when the bottom is reached. Just don't do what myself and Drone did and try to pick it.

[winner69]

Possum - like AMR I am waiting until the charts say an uptrend has started.

I feel that could be some time away yet. FBU still priced on this years earnings forecast and we should not overlook that these earnings are still pretty close to record highs which makes me believe that earnings will be lower next year

The interesting comment in that NBR article was along the lines that the analysts that weren't in China on this jaunt are the ones wondering what was said. If indeed what was said is the reason for the pretty signiciant sell off from overseas buyers (according to the paper) then it can't have been very good news at all.

So do some know more than others? Does this mean that the others will react will when they know what the some know?

Who knows but if FBU have got their assumptions around Formica wrong then it will be a drag on FBU earnings at a time when even they are coming under pressure.

As some have pointed Formica has been a dog for a while and has had a few kennels over the last few years and been kicked out of each.

[winner69]

The laminex plant in Western Australia listed as one affected by the current gas shortage because of that recent explosion --- maybe that us another reason why shareprice going down?

[POSSUM THE CAT]

AMR Just trying to pick it like you said just interested in what others thought the bottom would be. If everybody followed the charts shares would either be in a permanent uptrend or downtrend. Some thing else has to change trend. Some of the selling could be for Australian tax loss purposes as well.

[Hoop]

So true mate, I feel your pain. Run with a fairly tight stop i would advise, (Maybe ave daily move x2 as a starter)

Drone...I'm curious (probably "nosey" is a better word), your post said you went long on the 18th ...did you buy in around 680-685?
With your quote post above I assume you have acted on your tight stop and exited FBU a day later or at worst today...did you?

[AMR]

Based on support and resistance, there should be strong support at $4.00 to $4.35. Of course, if you ask a fibonacci TA, they'll give an entirely different answer ;)

[Hoop]

Possum ..yeah I didn't think of that ..end of Ozzie tax year effect.....I was too occuppied in thinking it was overseas investor flight out of NZ back to their home..usually happens in a global equity price decline being experienced at the moment and bad news displayed on our doorstep no thanks to Dr Cullen..I'm sure that was what happened to TEL today down 3&#37;, on a $109m volume.

[Dr_Who]

Tax lost selling or not, you guys will have to be pretty brave to pick up stocks in a recessionary and deflationary environment.

[winner69]

Based on support and resistance, there should be strong support at $4.00 to $4.35. Of course, if you ask a fibonacci TA, they'll give an entirely different answer ;)

Taking that 400 support in early 2004 as the start of the meteoric rise to a high of 1310 in May 2007 the fibs all the way down are 962, 855 (50&#37;), 748 and 615.

Using 200 as the base as seen in Phaedrus's next chart as the start of the uptrend then the fibs are 886, 775 (50%), 624 and 462 ... combining both and if you believe in fibs then 620 is a critical point.

The sharepriice hung around the 855 mark for a few months but once that was broken it almost been freefall ... and the way it went past 748 suggests that 615 wouldn't hold as support so all the back to 400 is a possibility AMR

Definitely something with a 5 in front sometime but I share the Dr's sentiment at the mo in that it would be 'brave to pick up stocks in a recessionary and deflationary environment. '

Wait and see time I think

[Phaedrus]

So much for buy and hold

http://h1.ripway.com/Phaedrus/FBU620.gif

[winner69]

Pheadrus - a 50&#37; drop from its highs doesn't look that painful on a log scale chart does it mate

[tim23]

AMR -why don't you and see your Tarot card reader? They could probably pick share prices as well?

[tim23]

AMR -why don't you and see your Tarot card reader? They could probably pick share prices as well?

"AMR why don't you .... go etc"

[AMR]

AMR -why don't you and see your Tarot card reader? They could probably pick share prices as well?

"AMR why don't you .... go etc"

Nah I listen to tea ladies. They provide accurate analysis of the financial markets through tea leaf reading:p:p

[Huang Chung]

Since I asked you guys this time last week, the FBU price on the ASX is off about 10%.

Again, thanks for the input. I'd like to buy this stock at some point, but I think the views being expressed here about now not being the right time, are correct.

Watching and waiting......

.....and watched it fall another 10% this week.

If this keeps up, the share price will be zero in about a month!

Had a quick chat about it with my broker. He said that building stocks are typically the last to recover from downturns like this one, so definitely no hurry to get set.

[shasta]

.....and watched it fall another 10% this week.

If this keeps up, the share price will be zero in about a month!

Had a quick chat about it with my broker. He said that building stocks are typically the last to recover from downturns like this one, so definitely no hurry to get set.

HC

Don't be in any hurry to catch a falling knife will you...

Only one outcome when that happens :(

[Huang Chung]

Hi Shasta

Probably going to lose a couple of fingers come Monday in any case.....picked up a few NAB, Aspen and Neptune Marine on Friday.

Just a flesh wound!

Cheers HC (The Black Knight)

[redzone]

take a look at DUE.ax....this goes ex a 13.5 cent divi on Tuesday...buy the warrents at about 90cents...you will get three payments in the next 12mths plus a few days...total of approx 40cents plus for 90 cent warrent....and of course ay increase in share price....but of course there could also be a downside to the shareprice.Energy company

[Steve]

Where did the FBU shareprice settle for its lows during the last economic downturn? Could be looking sub $5?!

[Hawke]

I recall FBU at $1.80 in the lows about 98-00.

Hawke.

[winner69]

FBU really only came into existense in its current form in 2001 when turnover was only $2.3 billion and it made $34m .....today turnover is over $6 billion and profits over $400m


The last real downturn in the building industry was 2000/2001 and th FBU shareprice was just over $2

Lizard did a good analysis a while ago on the FBU shareprice based on price sales ratio ... cant remember what it showed but there is a lot more shares on issue now than back then.

Now FBU is much bigger and more diversified you would have to think that $2 is a bit low to go but it wouldn't surprise me to see a 4 in front of the FBU shareprice sometime.

[Footsie]

There it is.... thanks phaedrus

Sayonara to FBU for the next wee while

[ratkin]

I bought at around 2.10 not that many years ago. Im not suggesting it will go back there but it is a cyclical stock.

[winner69]

so Boral to take them over ... and up goes the price ... and Ling can't say anything or make comment about the report ... just as well we have analysts eh

[Dr_Who]

There's been lots of rumours going around about T/O potentials from PPL to FPA to FBU.

All I can say is FBU is holding onto alot of residential development they cant sell.

[Hoop]

FBU had been for many years the anchor stock in my Long term portfolio up until I cash up late last year.
No doubt I will revisit this stock at some stage as it is perceived as being undervalued by $3 to $5 / share
At the moment there are some desparate people doing there damdest to turn this bear market around.
Rumours may spike the price for a short term and bring in the "trigger happy buy now cheap share" investors.

I'm more cautious and risk adverse. This overall market sucks at the moment and is causing asset damage... awaiting TA buy signals.

for example Medium term trendline break is still a $1 away at around $7.30

[Deev8]

FBU annual results out today.


Net earnings after tax for the year to 30 June 2008 were $467 million, up 17% from the previous year excluding unusuals.
Basic earnings per share were 93.2 cents up 11% from 84.0 cents, excluding unusuals in the previous year.
Reported net earnings declined 4% from $484 million to $467 million, the 2007 result included a $80 million one-off taxation benefit.
Operating earnings (earnings before interest and tax) increased 9% to $768 million, from $703 million in the 2007 year.
Interest cover was 7.1 times.
A final dividend of 24.5 cents per share, up from 23c last year, will be paid on 16 October 2008.

The full results announcement is available here: Fletcher Building Annual Results Announcement 2008 - pdf (http://www.fletcherbuilding.com/Corporate/downloads/FB%20Annual%20Results%20Announcement%202008.pdf)

Looking ahead the company say:

The company faces a mix of market conditions that make the outlook for the current year difficult to predict.

In New Zealand, the outlook is for divergent conditions between the housing market and the infrastructure and commercial construction markets. Residential activity is expected to slow further throughout the year ... However, larger scale commercial building and infrastructure markets should remain at similar levels to those in 2008.

In Australia, the national housing market is at a cyclical low, with New South Wales in a slump, offset in part by strength in Queensland and Western Australia. A gradual recovery is expected in New South Wales during late 2009. Growth in non-residential building is expected to slow. Engineering construction activity is expected to continue to grow strongly in line with growth in infrastructure.

In the US, it is not expected that there will be any improvement in general economic conditions during the first half of the current year, and any gains in the second half are likely to be marginal.

Uncertainty about near-term trading conditions also exists in the company’s European markets. The outlook is somewhat stronger in the company’s Asian markets, with good growth prospects available for the Formica plants in China, Taiwan and Thailand.

Given the degree of uncertainty in many of our markets, and as it is early in the financial year, it is not considered appropriate to provide any quantitative earnings guidance on our 2009 results at this stage.

[AMR]

Is today the day for a breakout? It'll either fall hard tomorrow or head straight up...wathcing with interest.

[_Michael]

Don't think there will be much happening tomorrow.

[Financially dependant]

Is today the day for a breakout? It'll either fall hard tomorrow or head straight up...wathcing with interest.

I would have said there is a breakout now??

Time to buy in AMR?

[Phaedrus]

I would have said there is a breakout....
So would I!

Here is an updated FBU chart, FD. You can see that the indicators featured here have all trigger Buy signals :-
(1) Break of a confirmed trendline.
(2) Break above 60 day Simple Moving Average.
(3) Slow Stochastic Oscillator "Buy" signal.
(4) Break above 14% Trailing Short Stop.
(5) Close above $6.91 = new Uptrend.

(All of these indicators were triggered by Friday's $6.99 Close.)

http://h1.ripway.com/Phaedrus/FBU818.gif