SCT - Scott Tech

I was holding (LT) til Nov last year (I had to sell for personal reasons, ie I was a reluctant seller).
I particularly like the meat industry blue sky.
Not sure about the mining side given current economic conditions.
I am approaching a position when I can consider repurchase, so will have to study that report.

Looking at chart (weak signals because of thin volumes) does show some buy signal last week at 70-71, so well done Snoopy, And struck 20day MA then.
50 day MA is not yet struck, but approaching. OBV is kind of flat...
but TA is all a bit vague at these low volumes. SP rather too sensitive to whims of one individual (buyer or seller)

ToBo

here's the chart I was looking at

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Originally Posted by tobo

I particularly like the meat industry blue sky.
Not sure about the mining side given current economic conditions.

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The main market for the mining technology side of the business is in the gold sector. Apparently that does relatively well in times of recession.

It is hard to judge the progress of the meat industry robots because they are lumped together in the same division as the automated production lines. But I think that realistically it will still be the direction of the automated appliance production line work that will drive the business model of SCT over the next few years.

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Looking at chart (weak signals because of thin volumes) does show some buy signal last week at 70-71, so well done Snoopy, And struck 20day MA then. 50 day MA is not yet struck, but approaching. OBV is kind of flat...
But TA is all a bit vague at these low volumes. SP rather too sensitive to whims of one individual (buyer or seller)

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That last pagagraph is so true Tobo. There is another 'SCT chart thread' where the T/A of SCT is discussed. Personally I don't think TA is useful with a share that trades as thinly as this. My last SCT share purchase at 71c was very painful. It took ten days and that was a relatively small order to fill. If you had been after those same shares at the same time at the same price Tobo, I may not have had my order filled at all. Yes, I was happy with my purchase price that fortnight.

The problem is over the last year I have also bought SCT shares at $1.20, $1.18, 91c and 85c. And due to previous purchases in other years my average SCT purchase price is now $1.38. So I feel a bit like the guy who won the lottery by purchasing all the tickets. If you keep buying sooner or later you will 'look good', provided your memory is selective.

Nevertheless I am not in SCT for the quick buck. I know that SCT is financially a very strong company and will be able to ride out this current business downturn. So for me it is just a matter of waiting, rather like it is for management I would guess. Still, given any sort of upturn I think even $1.38 will prove to be a cheap entry point for me. IOW I am not at all concerned about my SCT position.

I think you need to consider what some of these market indicators actually mean in real life Tobo. For example, the share price crossing above the 20 day moving average simply means that today's share price is higher than the average paid by everyone else over the last three weeks. 20 days doesn't even cover the time between board meetings. With even the shortest of SCT projects taking something like two years between when an order is received, I would argue the 20 day MA is meaningless. In fact I would go so far as to say it is probably a dangerous indicator because the fact that it even exists gives it credibility that it doesn't deserve. My guess is that in the case of SCT the 20 day MA can only give false signals to traders.

Perhaps the 50 day MA is more useful in this case. At least that indicator covers the gap between board meetings. But IMO a 120day MA would be much better. The problem is though such a 120MA signal would probably fire off buy and sell signals at a rate that is too low to profit from. That leads to my overall conclusion. You are probbaly best off not using any MA - or Trend Analysis in its entirety for that matter - at all when evaluating SCT.

SNOOPY

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Originally Posted by Snoopy

With even the shortest of SCT projects taking something like two years between when an order is received, I would argue the 20 day MA is meaningless. My guess is that in the case of SCT the 20 day MA can only give false signals to traders.

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Good guess Snoopy. Anyone using such a super-fast moving average on SCT over the last 12 years would have had 142 trades signalled comprising 30 wins and 112 losses. An initial investment of $10,000, compounded, would be down to just $258!

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Originally Posted by Snoopy

IMO a 120day MA would be much better.

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Right again, Snoopy - a 120 day ma IS much better. Over 12 years it would have triggered 66 trades comprising 6 wins and 60 losses. An initial investment of $10,000, compounded, would be down to $1285. Still lousy performance though eh?

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Originally Posted by Snoopy

The problem is that such a 120MA signal would probably fire off buy and sell signals at a rate that is too low to profit from.

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Not so - in fact the problem is quite the reverse. A 120ma is firing off way too many signals - and what's worse, the vast majority are losing trades.

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Originally Posted by Snoopy

That leads to my overall conclusion. You are probably best off not using any MA - or Trend Analysis in its entirety for that matter - at all when evaluating SCT.

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You are quite wrong there, Snoopy - and you were doing so well up until you said that!

Stand back and take a dispassionate look at SCT. Anyone "investing" $10,000 in SCT 12 years ago would be down to just 40% of their initial capital. In 12 years, SCT has had just 2 "longterm" uptrends. The first lasted 2 years and the second lasted 3 years. Moving average or indeed any trend analysis pays off handsomely with stocks like this, where, while they have gone absolutely nowhere but down in the long term, still have clearly defined longterm uptrends that last for years at a time. Ideally, you therefore want just 2 trades (totaling 5 years) out of the last 12 years. You need to use a very slow moving average and indicators with long time periods. Now, these are trend indicators and you must understand that when trend indicators are applied to stocks that are NOT trending, they generate a string of useless, meaningless and conflicting signals. In 12 years, SCT has had 2 such periods and the trading ranges they encompass are ringed with dotted blue circles. Any signals generated from trend indicators while SCT was in a trading range should be ignored. There are 4 indicators featured on this chart - A long-term moving average, trendlines and 2 oscillators. As you can see, these very different indicators all trigger Buy or Sell signals reasonably close to each other. A $10,000 initial investment would have compounded into $28,000 over 5 years. Knocks the socks off buying and holding doesn't it!

Snoopy, it should be easy for you to see why I think your statement "You are probably best off not using any MA or Trend Analysis when evaluating SCT". is totally, completely and utterly wrong.

http://h1.ripway.com/78963/SCT47.gif

Thanks Phaedrus.
More wisdom. More learning.

(Snoopy, I wasn't actually saying 20day MA meant anything - just tried a few to see how many days MA would show as crossing sp. But I see that I should have interogated to relevance before considering worth a mention.)

So it seems we are not even near a buy signal.

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Originally Posted by Phaedrus

A 120ma is firing off way too many signals - and what's worse, the vast majority are losing trades.

Stand back and take a dispassionate look at SCT. Anyone "investing" $10,000 in SCT 12 years ago would be down to just 40% of their initial capital. In 12 years, SCT has had just 2 "longterm" uptrends. The first lasted 2 years and the second lasted 3 years. Moving average or indeed any trend analysis pays off handsomely with stocks like this, where, while they have gone absolutely nowhere but down in the long term, still have clearly defined longterm uptrends that last for years at a time. Ideally, you therefore want just 2 trades (totaling 5 years) out of the last 12 years. You need to use a very slow moving average and indicators with long time periods. Now, these are trend indicators and you must understand that when trend indicators are applied to stocks that are NOT trending, they generate a string of useless, meaningless and conflicting signals. In 12 years, SCT has had 2 such periods and the trading ranges they encompass are ringed with dotted blue circles. Any signals generated from trend indicators while SCT was in a trading range should be ignored. There are 4 indicators featured on this chart - A long-term moving average, trendlines and 2 oscillators. As you can see, these very different indicators all trigger Buy or Sell signals reasonably close to each other. A $10,000 initial investment would have compounded into $28,000 over 5 years. Knocks the socks off buying and holding doesn't it!

Snoopy, it should be easy for you to see why I think your statement "You are probably best off not using any MA or Trend Analysis when evaluating SCT". is totally, completely and utterly wrong.

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Interesting to see that very long term 365 day Moving Average in your analysis Phaedrus, and watch how closely it mirrors the trend lines. I guess it isn't surprising when SCT prospects can take a year or so before an order is crystallized.

I took the opportunity to look back five years Phaedrus when you yourself were an SCT shareholder and taking advantage of that most recent uptrend.

http://www.sharetrader.co.nz/showthr...orst#post33565

According to the 'SCT Chart' thread you were a shareholder as at 26-11-2004, even as you were making half hearted attempts to reduce your holding, having held since 2001. But you had fully sold out by 6-12-2004. I had a look at the historical data and saw that 55,400 SCT shares were traded over that period. That period covers 7 trading days which gives an average of just under 8,000 shares traded per day. Over that time it looks like the share price varied from $3.20 down to $2.90, or around 10%. Those 8,000 shares average traded per day we have to remember are not just the shares of Phaedrus, but the entire market. Let's say there were half a dozen traders trying to get out at these price levels. That means the average number of shares any one trader can expect to sell would be 1300 per day.

The purpose of the above number rumination is not to try and guess the position of Phaedrus, but to show how difficult it is for *anyone* to extract themselves from a thinly traded share like this. If your trigger exit point is $3.20, the odds are your real exit point will be 5% below that (on average) in this case. For those looking back at the chart and regretting that they 'could have sold' at $3.20, these price charts have even less relevence.
If our theoretical new seller had put a modest parcel of say 3,000 shares up for sale, that would have increased the number of shares on offer by around 40% on any given day. The laws of supply and demand will tell you that if you increase the availability of goods (shares in this case) by 40%, the market price will not stay constant. It will go down.

It is easy to draw a precision pencil thin trend line on a computer screen. Try actually trading using this line though, and you will find in reality you have a 'big thick lumpy line' to work with. That means in general you would have had to buy at a price higher than what the trend line might indicate to you, and -at the other end- sell at a price lower than what the trend line suggested you might get. This remember is talking about sales in quite a bullish market (the end of CY2004). These problems are greatly exasperated and exaggerated in the kind of market we have now.

So perhaps my comment about not using TA was a little broad brush. Perhaps I should have said, don't expect to be able to enter and exit SCT at the prices T/A says you should!
For this reason I have been ignoring TA when buying SCT and simply stocking up at prices I am happy with. Of course this method will only work if you are prepared to ride out the business cycle. But at least you don't have to guess when the upturn will happen. As long as you are 'on board', you will benefit.

SNOOPY

The perfect system of buying and selling shares without making a mistake is beyond everybody. When you realize that you must make allowance to limit your mistakes to small mistakes. Stocks like SCT with limited turnover must either be avoided completely or if you have a rush of blood to the head only a limited quantity. To buy and hold with no sell strategy is a huge mistake. To take a small loss to escape a losing position is only a small mistake. When i look at charts of down trending shares and compare them to what people have said about them using whatever analysis they use then with the benefit of hindesight i know which camp i prefer to follow.
The fundamentalists seem blind to the ever changing market reality, which can turn a good investment into a dog overnight making the sell strategy more important than the buy strategy. SCT in a fire sale would have very little to sell making it a high risk investment dependent on the expertease of their skilled work force.
The buy and hold brigade have suffered huge losses in share price with the added handicap of trying to sell an illiquid stock. The market is always right it dictates the price learn to study the market your stock selections follow that. Macdunk

Snoopy, it took me a full month to get out of SCT. This re-emphasised for me the problems inherent in investing in illiquid stocks. Aren't you just a little bit worried about the difficulties you will face in extricating yourself from SCT when the time comes?

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Originally Posted by Snoopy

Interesting to see that very long term 365 day Moving Average in your analysis Phaedrus, and watch how closely it mirrors the trend lines. I guess it isn't surprising when SCT prospects can take a year or so before an order is crystallized.

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It's not surprising because these are both trend indicators, monitoring the same trend.

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Originally Posted by Snoopy

In general you would have had to buy at a price higher than what the trend line might indicate to you, and - at the other end - sell at a price lower than what the trend line suggested you might get.

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Right. It's called "slippage". It only becomes of any significance with very lightly traded stocks.

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Originally Posted by Snoopy

Perhaps I should have said, don't expect to be able to enter and exit SCT at the prices T/A says you should!

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More precisely, don't expect to be able to buy/sell as many SCT shares as you like at the price that was pertaining when you decided to buy or sell. This of course applies to everybody - not just TA users!

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Originally Posted by Snoopy

I have been ignoring TA when buying SCT and simply stocking up at prices I am happy with. Of course this method will only work if you are prepared to ride out the business cycle. But at least you don't have to guess when the upturn will happen. As long as you are 'on board', you will benefit.

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You might be 'on board' Snoopy, but look at the price you have paid for your ticket!

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Originally Posted by duncan macgregor

The fundamentalists seem blind to the ever changing market reality, which can turn a good investment into a dog overnight making the sell strategy more important than the buy strategy.

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Dead wrong Macdunk. Good investments do not turn into 'dogs' overnight. If that has happened to you that is a reflection on how 'good' those investments of yours really were in the first place. The market is generally right, but not always right.

Look at RBD over the last six weeks. AMP sold their investment in the company at 57c six weeks ago. Yet today those same shares are trading at 88c. In the intervening six weeks there has been no unexpected market news over that time, other than a 0.5c rise in the final dividend from 3.5c to 4.0c. That is surely insufficent to explain a 54% rise in share price. Eliminate all of the possible explanations for the rise in share price and the remaining explanation, however implausible, must be the correct one. That explanation is that 'the market was wrong' - and badly wrong. I would even get more personal about that.

It was AMP that was wrong and badly wrong. I don't imagine that those AMP fund managers boast stupidity as their greatest mental asset. So my guess is that they were forced sellers. AMP managers were needing to cash up an investment to repay a distraught public redeeming money from their poorly performing funds. The fact that these managers offloaded with hindsight, what would have been their best performing share to make these redemption payments is public testament to their skills. In certainly undoes any kudos they earned when they made a lot of money out of the run up in RBD share price a few years ago.

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Stocks like SCT with limited turnover must either be avoided completely or if you have a rush of blood to the head only a limited quantity.

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Only if your main aim in this game is to 'sell out'. If your main aim is to plug into the upcoming dividend stream there is no need to sell out. So liquidity is removed as an issue.

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SCT in a fire sale would have very little to sell making it a high risk investment

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You are right that SCT in liquidation would probably not fetch a great price Macdunk. But risk is not only measured by what would happen if a company got into trouble. You have to consider the *likelihood* of that company getting into trouble in the first place. If you had studied the financial structure of SCT, you would see that this is unlikely to happen. But of course you cannot obtain such information by studying your beloved charts, so you remain ignorant of any company debt issues. IMO, SCT would be one of the ten lowest risk companies listed the NZX.

SNOOPY

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Originally Posted by Phaedrus

Snoopy, it took me a full month to get out of SCT. This re-emphasised for me the problems inherent in investing in illiquid stocks. Aren't you just a little bit worried about the difficulties you will face in extricating yourself from SCT when the time comes?

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I was for a while worried about my exit strategy Phaedrus. For a while I handled that worry by keeping the number of shares I held in SCT deliberately low. But I have reassessed that position, and that reassessment allowed me to double my shareholding. When the SCT share price recovers I will probably sell down my holding but not sell out. IOW I won't have to sell out what I own in a 'big block' quickly. That seems to me to be a practical way out of the liquidity trap, while still capturing most of the upside.

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"slippage" only becomes of any significance with very lightly traded stocks.

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...like SCT!

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You might be 'on board' Snoopy, but look at the price you have paid for your ticket!

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I can't claim that I am happy with my average SCT entry price Phaedrus. But I am future focussed not rear vision mirror focussed. I am fairly sure that I will be able to double my capital in SCT quickly once dividend payments are resumed. My entry price won't look too bad then.

SNOOPY

[QUOTE=Snoopy;

This thread starts with 'out to lunch' suggesting SCT was a 'screaming buy' at somewhere near $3 on 30/04/2004. Yet now the share price has retreated to a '$1.82 buy and $1.85 sell' spread, this same share barely gets a mention on this forum. For those who like the FA statistics $1.82 today represents an historic PE of 15. That is greater than the 12.5 PE when SCT was regarded as a 'screaming buy' at $3 two and a half years ago. Consequently I don't think SCT is a 'screaming buy' at close to $2. I am buying more for portfolio rebalancing purposes. But if you believe that exporting from NZ has any future then I think SCT is worth accumulating at around this $2 level.
Kilpatrick selling out of 170,000 odd shares during 2007 has worked well for me because I have been buying SCT shares in trickles all year - boosting my own holding in this company by something like 80% in the process. My average purchase price of these 'new' shares was $2.07. That doesn't look very clever if you consider the current buy price is $1.82. But that is assuming that I could have bought the number of shares I did buy at 'todays price' of $1.82. And that would not have been possible. It also ignores the dividends that I have accumulated during the year, which makes my 'theoretical loss' (it was a 'theoretical profit' two weeks ago) much less painful. I know that I couldn't have bought my shares at $1.82 because it has taken over a month for me to buy my 'November tranche', a very modest number of shares on market at a price around $2.

So when do I expect my profit margin on my latest SCT acquisition to rise into the black again? I have no idea. But I am prepared to wait. And if the market weakens further I am prepared to buy more shares in the interim. I don't know if buying SCT shares at $2ish today will look clever in two and one half years time or not. But I think it is more likely to look clever than buying SCT at $3 looks now, viewed with two and one half years of hindsight.

SNOOPY

discl: hold SCT[/QUOTE] SNOOPY fundamental analysis is as usefull as tits on a bull as you keep proving. Explain where you got it wrong then tell us why you did not react to reduce your substantial losses sooner. Macdunk

I cant believe this is coming from you Duncan. Buying on a downtrend? All this time you been giving Snoop Dog heaps by ignoring the TA. You also said you were going to stay out of the market as the recession is bringing too much uncertainty. Your breaking your rules by buying illiquid stocks. It just keeps getting worse. This is not your wife positing is it?

Duncan my dear friend. Either your telling porkies or someone has hacked your login ID.

Are you now... forget "TA" it doesnt work for me but "FA" is where its at?

Great to have you back posting but you have blown me away by your about turn.

Nita.. keeping it real as always

NITA, no downturn from me my friend i have been out the market since jan 2008 and expect to remain out for some considerable period. I look at todays market with great concern. My money is in material assets which will hold its value after the next market shock which will be inflation. Hope to be proved wrong this time but 100% correct to the day last time.

macdunk , you run the risk of having your mountain of cash inflated away
What material assets are you going to buy?
I suggest you get yourself some scott tech, telecom and rest brands shares, pronto:D

have an enjoyable easter weeekend

,

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Originally Posted by duncan macgregor

SNOOPY fundamental analysis is as usefull as tits on a bull as you keep proving. Explain where you got it wrong then tell us why you did not react to reduce your substantial losses sooner. Macdunk

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Got it wrong? Did I not write....

"Consequently I don't think SCT is a 'screaming buy' at close to $2."

That statement was correct, with hindsight. After that I wrote:

"If you believe that exporting from NZ has any future then I think SCT is worth accumulating at around this $2 level."

The just released sixth month report for SCT showed they had lost a couple of big orders thanks to whole projects being cancelled as a result of the credit crunch. SCT is basically 100% export orientated as regards profits. So it follows that if all export sales are really struggling, then SCT is not worth $2. Looks like I was right again.

"So when do I expect my profit margin on my latest SCT acquisition to rise into the black again? I have no idea."

Another accurate comment.

"And if the market weakens further I am prepared to buy more shares in the interim."

....which is exactly what I did.

"I don't know if buying SCT shares at $2ish today will look clever in two and one half years time or not. But I think it is more likely to look clever than buying SCT at $3 looks now, viewed with two and one half years of hindsight."

That post was made right near the end of CY2007. What I said means that mid way through 2010 I don't think it is likely the share price will be below $1.32 (a 1/3 decline from $2, just as $2 is a 1/3 decline from $3). Whether I am right or not remains to be seen.

Macdunk, I can't see anything in that post you quoted that I would take back or apologize for. The only problem you can find is that the SCT share price has not gone relentlessly upwards since I made the original post. Since I had no intention of cashing out of this share at this time the declining share price is not a problem. It is in fact an opportunity I have taken advantage of by buying many more shares

SNOOPY

discl: hold SCT