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Random
13-08-2013, 06:06 AM
Hello people's,

i have a question....actually I have lots but will bore you with only one at this point. I started in shares after the last crash with craigs in their my start package which has been great. Earlier in the year I wanted to jump into xero but was talked out of it and I wanted an index as well although there seem to be only certain ones you're allowed to jump into until I guess you grow your portfolio to thousands of dollars or have some unknown number of shares.

i opened asb so I could buy some things on my own. I think the craigs portfolio should be the buy and hold strategy, the asb will be the medium term strategy like if I wanted to ride companies like xero etc (not that I'm getting in at these levels) then sell so I guess trading at months to years type strategy or buy shares I can't get through craigs.....

Im also thinking about doing some short term trading once I've read every book on the planet and feel comfortable with paper trading but figure I should keep that account separate from the above?? Was thinking about direct broking.

is this a reasonable way to think about separating out accounts? I guess I'd like to keep the strategies separate. I think I read there can be some tax benefits in doing this plus I think it's good to keep things straight in my head.

or is this over the top?

Looking at the fees on my craigs account I get the impression asb is cheaper too. I'll keep craigs though as I like having someone to chat to... Although on a couple of occasions I wish I had stuck to my own rules that I'm developing.

Random
13-08-2013, 06:13 AM
Ok so I have another question,

i read that it's people that push share prices around (as a reaction to company news and various other reasons). Given NZ is such a small country, if a company were listed in NZ and say.... The US... Given we have say 4-5 million people in NZ vs the 260 or more million in the US, would the share price go higher (let's say its doing well) in the US than it would in NZ because they have more buyers? I mean its not like people from the US are going to buy on our NZX from there is it??. I mean I guess it's doable but... Yeah just wondering if the share price has the ability to go higher in countries with more people to push prices around?

CJ
13-08-2013, 07:56 AM
You should be able to buy any NZX share through Craigs - were you trying to buy one of the smart shares (NZX index shares) or one on another exchange?

Craigs will be more expensive as they are a full service broker - that is they do analysis and give advice. Just remember, you dont have to listen to their advice. They would have let you buy XRO if you really wanted too. They aren't always right.

ASB are cheap but you have to do your own research.

Yes it is best to use two different accounts (not necessarily different firms) if you are to have a buy and hold strategy and a trading strategy. By spliting the two into different accounts, it is easy to prove which shares are which.

Re your second post, it depends. In NZ there are only 4m people but only about 100 companies on the NZX. US has 260m people but 1,000's os different companies on many different exchanges. For example, XRO has said it needs at least 100m in revenue to get onto the Nasdaq. It could go onto a different exchange but who looks at the smaller exchanges? Endace listed on the London AIM market, in part because of the reasons you state. In hindsight, at least a few years ago, they wished they had listed on the NZX as they would have been a bigger fish in a smaller pond (plus DIL and XRO had proved the NZ did have a tech appetite).

Random
13-08-2013, 06:28 PM
It was really xero they said were full of hot air and that they would be beat out by someone else..... I should have reminded them that hot air rises!! Being a newbie you tend to take the position they know more.... Well they do, I have no financial background except life experience and accounting in 5th form... Forever ago.

Do you have an opinion on managed funds vs an index or ETF??
The nzx50 looks difficult to pick a new stock to invest in currently. I feel like everything has done its run and there is no way to predict if this is a top of the cycle or midway etc. but I don't like the fact I don't see a whole bunch of new 52 wk highs being made. I feel poised to do something but I cannot decide on the market.....so I thought looking at funds and indices would be better... Why not let someone with more experience place my money? Although they're always trying to beat the index.

I guess the downside of the index is that it includes the crap companies..... And companies like xero and dil previously have had such meteoric rises that I figure they inflate the index in meantime if you adjusted the index without xero and dil where would it sit? Although at the end of the day it probably doesn't matter because up is UP regardless.

If you followed the funds investments well.... Guess the person who got in at the lowest point would do better and I imagine funds have been holding the larger stock a while longer than me picking things now. I guess the question I need to ask myself is... Are the improvements in a managed fund minus the fees better than I would do myself if I bought a similar stock portfolio? Although I think that comes back to who got in at the lowest point?

I could drive myself round in circles thinking about these things:(

my other alternative has been to look at the asx200 since it seems they're not doing so hot. I feel so much more comfortable in a crap market than I do a bull market..... Well the beginning I can handle but anything above midway does my head in.... I really have to start thinking and doing homework as to what's "worth it". I know companies I would buy in a heartbeat in a bear market...well... At the bottom. Just watching some at the moment..... Because I need to do some more research before I jump.

Any pearls of wisdom??

Random
13-08-2013, 06:29 PM
Oops... Forgot to say thanks for the info

Random
13-08-2013, 07:19 PM
Just another wee question. I read the book on high profit IPO strategies by Tom Taulli. It presented many reasons why NOT to invest in IPOs but wait til it goes public and the price to settle months later to account for lock out periods, underwriters holding value up, flipping etc. Do the same principles apply to the NZ exchange???? Or is this book faulty because its American based and I live in N.Z.? It pretty much single handedly has put me off buying into IPOs and instead I prefer to watch first... MRP seems to be a good example of a company whom it has been better to wait to buy than participate in the IPO. Now fingers crossed it actually goes up over time (many moons I think). SLI also seems to have done a run up and then dive.... I'm starting to think there's something in this book!

Although if you're stagging then I guess that would be a reason to get in?

born2invest
14-08-2013, 01:24 PM
Just another wee question. I read the book on high profit IPO strategies by Tom Taulli. It presented many reasons why NOT to invest in IPOs but wait til it goes public and the price to settle months later to account for lock out periods, underwriters holding value up, flipping etc. Do the same principles apply to the NZ exchange???? Or is this book faulty because its American based and I live in N.Z.? It pretty much single handedly has put me off buying into IPOs and instead I prefer to watch first... MRP seems to be a good example of a company whom it has been better to wait to buy than participate in the IPO. Now fingers crossed it actually goes up over time (many moons I think). SLI also seems to have done a run up and then dive.... I'm starting to think there's something in this book!

Although if you're stagging then I guess that would be a reason to get in?

Hi Random,

You have to ask yourself, if you were management of a company which you were a part owner of and you wanted to sell it on the sharemarket, would you sell it off cheap to the public so they can make lots of money? Or would you price it so it is quite expensive for the public investor and you make more money out of the sale?

Also, companies that list as an IPO generally do after they have had a couple of really good growth years, say growing profits at 10%. If management knows that the year after listing as an IPO their growth is going to be flat. Would they sell the year after the 10% growth or the year when they struggle with 0% growth.

I prefer to wait for at least a full financial year after a company lists their IPO before I start to look at buying them.

Hope that helps!

CJ
14-08-2013, 01:49 PM
Index funds (EFT or unlisted)- good when the market is going up, bad when the market is going down. Dont expect to beat the market and after fees, you are guaranteed to do worse than the market. Haveing said that, they have their place. I used them for a while to add diversity as I built up a DIY portfolio.

Managed funds - your relying on the manager. Good manager = great. bad manager = bad. At least with DIY, you only have yourself to blame. If you dont have the time to do DIY, then again, they have their place.

IPO's - you win some, you lose some. I dont expect Fonterra, Synlait, Z Energy (fingers crossed) to ever go below their list price. I expected MRP to be about even but with hindsight, should have waited and got in at 2.20. Likewise XRO traded below its IPO price for a while. WYN and SLI were under their IPO price for a short period, now above but still too early to call. MOA I new well enough to stay away but it held up well for while till they have to disclose their sales failures.

Random
14-08-2013, 02:36 PM
You have to ask yourself, if you were management of a company which you were a part owner of and you wanted to sell it on the sharemarket, would you sell it off cheap to the public so they can make lots of money? Or would you price it so it is quite expensive for the public investor and you make more money out of the sale?

Also, companies that list as an IPO generally do after they have had a couple of really good growth years, say growing profits at 10%. If management knows that the year after listing as an IPO their growth is going to be flat. Would they sell the year after the 10% growth or the year when they struggle with 0% growth.

hi, not sure if the above works out as the blue box cut and paste.

I imagine companies want to make the most money so will sell higher..... Given that after the listing the company still tucks along business as usual apart from the obligations eg reports etc and yes they would sell after the growth year....it's advertising although I'm sure there are a lot
of people besides myself that may not have read the prospectus or annual reports prior to jumping in. It makes you want to cry seeing 152 pages to read....( yes and please don't ccompare that to the crying you do if you lose money).

It basically reiterates my belief on not buying iPO's unless its the next apple etc

CJ
14-08-2013, 02:47 PM
It basically reiterates my belief on not buying iPO's unless its the next apple etcWhen you are trying to get people to hand over $20m or $450m or even over $1B in the case of Meridian, you have to leave something on the table for them. Once on market, when smaller parcels are traded, you cant expect that to happen. Doesn't necessarily happen that way but it should.

Just look at the recent placements (eg. SUM, SKY). The majority shareholder had to sell them at a discount to market in order to get rid of them in one go.

Lizard
15-08-2013, 07:52 AM
Just another wee question. I read the book on high profit IPO strategies by Tom Taulli. It presented many reasons why NOT to invest in IPOs but wait til it goes public and the price to settle months later to account for lock out periods, underwriters holding value up, flipping etc. Do the same principles apply to the NZ exchange???? Or is this book faulty because its American based and I live in N.Z.? It pretty much single handedly has put me off buying into IPOs and instead I prefer to watch first... MRP seems to be a good example of a company whom it has been better to wait to buy than participate in the IPO. Now fingers crossed it actually goes up over time (many moons I think). SLI also seems to have done a run up and then dive.... I'm starting to think there's something in this book!

Although if you're stagging then I guess that would be a reason to get in?

Welcome Random - I'm sure with your level of enthusiasm and interest, you will do well and learn fast. I think there are two places for index funds and managed funds - those who only have a small amount to invest and want a lower risk option than owning just one or two shares and for those with no interest or time in learning to invest directly into shares themselves. Doing so simply because you can't see anything you like yourself and hoping that someone more experienced than you will do better will likely leave you with the same regrets as being talked out of XRO did. I tend to think mid-cap indices should make better investments, as shares both rise out of them when they have performed well and fall back into them when they have a glitch, so you don't tend to get left with only the biggest companies that might tend to be tied to economic growth rates overall. However, I don't use any passive funds, although I do use a few managed funds, both listed and unlisted, for easier diversification into global markets. Listed for ease of access, unlisted only for those rare exceptional boutique fund managers who own and operate their funds with greater freedom and returns.

I have almost never bought IPO's in the past 10 years, as the listing process seems to have developed into a slick formula that rarely achieves a good entry for a small investor. However, that is not to say that it will always be that way. But while there are existing listed companies without the distortionary drivers of an IPO and with a history of performance information, then I would prefer to keep buying on the secondary market.