Picking great companies for the long run

[SailorRob]

The role of government should be limited to upholding the rights of individuals such as private property, free speech, liberty ect. Taxation should be limited to ensuring these rights are upheld. I'm not the type to call taxation "theft" rather than a necessary evil.

Warren Buffett doesn't believe the rich are taxed enough in the US, despite the top 1% paying 42.3% of income taxes in 2020. I believe that the wealthy in aggregate pay more than their fair share. That isn't to say there aren't cases where rich people are able to work the tax system to their favour, and pay an amount which is unfair to the rest of society. The tax rules should be simplified as much as possible to avoid this happening.

I don't believe I'm absolutist in my views about much, rather I attempt to examine arguments by their merit. I agree it is something to be mindful at all times however, since people are subject to cognitive biases and falling for logical fallacies.

Strongly agree with all that.

To think that most people want the state to educate their children is mind blowing to me. Let alone provide other services.

[mistaTea]

Strongly agree with all that.

To think that most people want the state to educate their children is mind blowing to me. Let alone provide other services.

Aye, as a general principle - when it comes to governments… I think a lot of people agree with the idea of ‘the smaller the better’.

You’ve got two extremes though - what we currently have with government just getting bigger and bigger over the years, constantly finding new ways to take more money from people (raise existing taxes, dreaming up new ones) so that they can become even bigger…

Then the other extreme is where you have this tiny government that literally is there to enforce a few basic laws, but other than that it is everyone for themself. Super low taxes, so if you get out there and work hard you can keep almost all of your money and then it’s up to you to invest that money or p1ss it away at the pub - but, whatever you do, don’t come crying to the government if you fall on hard times because there ain’t no dole, sickness benefit etc buddy.

Personally, I think there is a balance somewhere between those extremes.

I do think government is too big and we should be finding ways to reduce taxes and constrain government. If we let them, they will enter every facet of our lives.

But then I think of things like the health service, and do like the idea that people with grave illnesses like cancer etc can receive treatment regardless of their economic status.

Good thing we do not have to be too ‘ideological’ on these matters.

[Snoopy]

I want to add few more for my criteria.

Socially responsible business
Environmentally friendly business

There areas where I would not invest for moral reasons. I would not join a drug lord cartel as an example. But step down from the criminal level and 'being moral' becomes more nuanced.

I am an investor in Sky City, as an example. Sure I think that problem gambling is an issue and a serious one. But would banning casinos solve the issue? I would suggest not. Before there were any casinos, there were other ways to 'have a flutter'. There was the TAB, and of course going to the horses and the dogs live. I think there is a tendency to look for someone or something 'to blame' for societal problems, when in fact the issues are far more complex.

The 'correct' way to look at a night out at the casino is IMV to regard it as just that 'a night out', set a dollar amount beforehand that you are prepared to spend and if you blow it all, well you have had an - hopefully entertaining - night out. Oh and it helps if you were able to study a little probability theory in school too. I think there is some truth to the theory that gambling at the TAB or casino is an 'extra tax' levied on those in the population that are not good with maths. Finally, if you come out of a casino with a few extra dollars in your pocket, treat that as a 'one off' bonus. Not an expectation of further 'success' to come.

I know that if you are a 'problem gambler' the idea of setting a gambling budget is 'pie in the sky'. But the Sky City business is not built on problem gambling. Problem gamblers go broke. And there is no successful business model in the world that 'succeeds' by sending their customers broke. In fact Sky City has policies in place that aim to avoid this. Workers on the floor are trained to look for people that may be exhibiting problem gambling behaviour. It is even possible for a problem gambler, in a moment of gambling sobriety, to get themselves banned from the gambling premises altogether. Neither of those safeguards are present in the gambling machine dens in pubs and clubs. The fact that Sky City continues to flourish would suggest that most of their profits are not from problem gambling.

Sky City is not only a 'gambling business'. It is also a hotel and hospitality business. I have never gambled at the Sky City Auckland casino myself, although I have walked the floors to have a look. But I have stayed there, and I have eaten there. Both experiences I thought were good value. There is an argument to say that the 'gambling' side of the business, cross subsidizes the sleeping and eating side of the business. For those 'in the know' about this, it makes the casino complex 'the place to go' for the non-gambler. I remember one non-gambler who no longer frequents this forum regaling us on his profitable dining out at a Sky City all you can eat buffet! And good on him for doing that, even if it did me no good as a shareholder. Then some have forgotten Sky City was also the first NZX50 listed company to pay all of their workers 'a living wage'. Surely that is something to be admired?

OTOH I have put my foot in the door of a casino in Macau, which seemed a much more 'serious' gambling establishment and not in a good way. So I am not saying all casinos are good as a rule. But as an investor you can pick and choose, and for me owning shares in Sky City is a good way to have an investment foot in one of our biggest industries, the tourism sector.

In summary, I regard those fund managers who refuse to invest in casinos (and Sky City in particular) for 'moral' reasons as perpetrators of 'selective woke-ism', touting for business on a very shallow investment world view where 'a veneer of moral standing' can be easily marketed. Some don't see Sky City as a moral business. But I would suggest that holding up a business to blame for immoral behaviour from a small minority of our society is not a reason to get rid of the likes of Sky City. And of course not investing in Sky City doesn't close it down. It just means the shares are held by less moral shareholders. And I can't see that as being a good thing.

SNOOPY

[Valuegrowth]

Thank you for the information.

There areas where I would not invest for moral reasons. I would not join a drug lord cartel as an example. But step down from the criminal level and 'being moral' becomes more nuanced.

I am an investor in Sky City, as an example. Sure I think that problem gambling is an issue and a serious one. But would banning casinos solve the issue? I would suggest not. Before there were any casinos, there were other ways to 'have a flutter'. There was the TAB, and of course going to the horses and the dogs live. I think there is a tendency to look for someone or something 'to blame' for societal problems, when in fact the issues are far more complex.

The 'correct' way to look at a night out at the casino is IMV to regard it as just that 'a night out', set a dollar amount beforehand that you are prepared to spend and if you blow it all, well you have had an - hopefully entertaining - night out. Oh and it helps if you were able to study a little probability theory in school too. I think there is some truth to the theory that gambling at the TAB or casino is an 'extra tax' levied on those in the population that are not good with maths. Finally, if you come out of a casino with a few extra dollars in your pocket, treat that as a 'one off' bonus. Not an expectation of further 'success' to come.

I know that if you are a 'problem gambler' the idea of setting a gambling budget is 'pie in the sky'. But the Sky City business is not built on problem gambling. Problem gamblers go broke. And there is no successful business model in the world that 'succeeds' by sending their customers broke. In fact Sky City has policies in place that aim to avoid this. Workers on the floor are trained to look for people that may be exhibiting problem gambling behaviour. It is even possible for a problem gambler, in a moment of gambling sobriety, to get themselves banned from the gambling premises altogether. Neither of those safeguards are present in the gambling machine dens in pubs and clubs. The fact that Sky City continues to flourish would suggest that most of their profits are not from problem gambling.

Sky City is not only a 'gambling business'. It is also a hotel and hospitality business. I have never gambled at the Sky City Auckland casino myself, although I have walked the floors to have a look. But I have stayed there, and I have eaten there. Both experiences I thought were good value. There is an argument to say that the 'gambling' side of the business, cross subsidizes the sleeping and eating side of the business. For those 'in the know' about this, it makes the casino complex 'the place to go' for the non-gambler. I remember one non-gambler who no longer frequents this forum regaling us on his profitable dining out at a Sky City all you can eat buffet! And good on him for doing that, even if it did me no good as a shareholder. Then some have forgotten Sky City was also the first NZX50 listed company to pay all of their workers 'a living wage'. Surely that is something to be admired?

OTOH I have put my foot in the door of a casino in Macau, which seemed a much more 'serious' gambling establishment and not in a good way. So I am not saying all casinos are good as a rule. But as an investor you can pick and choose, and for me owning shares in Sky City is a good way to have an investment foot in one of our biggest industries, the tourism sector.

In summary, I regard those fund managers who refuse to invest in casinos (and Sky City in particular) for 'moral' reasons as perpetrators of 'selective woke-ism', touting for business on a very shallow investment world view where 'a veneer of moral standing' can be easily marketed. Some don't see Sky City as a moral business. But I would suggest that holding up a business to blame for immoral behaviour from a small minority of our society is not a reason to get rid of the likes of Sky City. And of course not investing in Sky City doesn't close it down. It just means the shares are held by less moral shareholders. And I can't see that as being a good thing.

SNOOPY

[Snoopy]

I want to add few more for my criteria.

Socially responsible business
Environmentally friendly business.

For my next rant I will talk about Genesis Energy. A real moral 'bad boy' as they produce maximum carbon dioxide for electric power output by burning coal and turbocharging the evil effects of climate change in the process. That is enough to put Genesis Energy on the sooty black list of many fund managers. Except these fund managers obviously have no idea how the electric power system in New Zealand works.

The NZ electric power generation system runs in 30 minute auction blocks. Power from all the generators is offered up on a sliding price scale with the lowest bids being accepted first and progressively higher bids accepted until demand is fulfilled. Then all the power is paid for at the highest bid offer price that is accepted. Wind energy is generally tendered at the lowest price because it cannot be stored. Then the price increases steadily for other forms of energy until fossil fuel generation kicks in as the final backstop at a high price, boosted by the company having to buy carbon credits for fossil fuel burned as well. This means that fossil fuelled electricity is often only accepted into the market as a 'supply tender of last resort'. Thus fossil fuelled electricity has its biggest place in the market when no form of renewable energy alternative is available. Thus the choice is not between coal and hydro (for example) as an energy source. The choice is between coal fired energy or nothing. And no coal burning means granny drinking cold soup for dinner and going to bed early with a cold water bottle to avoid the worst of the winter chills. These moralising managers who won't invest in Genesis Energy are nothing more than 'granny haters' in my view.

Personally I don't invest in Genesis Energy. But this isn't for moral reasons. The reason is I prefer my gentailer investments to own their generation assets, not exist as 'middle men'. And Genesis is going down a path of buying power from generation stations owned by others - not funding their own power stations. But I digress as that point has nothing to do with morality or environmental sustainability.

SNOOPY

[SailorRob]

Aye, as a general principle - when it comes to governments… I think a lot of people agree with the idea of ‘the smaller the better’.

You’ve got two extremes though - what we currently have with government just getting bigger and bigger over the years, constantly finding new ways to take more money from people (raise existing taxes, dreaming up new ones) so that they can become even bigger…

Then the other extreme is where you have this tiny government that literally is there to enforce a few basic laws, but other than that it is everyone for themself. Super low taxes, so if you get out there and work hard you can keep almost all of your money and then it’s up to you to invest that money or p1ss it away at the pub - but, whatever you do, don’t come crying to the government if you fall on hard times because there ain’t no dole, sickness benefit etc buddy.

Personally, I think there is a balance somewhere between those extremes.

I do think government is too big and we should be finding ways to reduce taxes and constrain government. If we let them, they will enter every facet of our lives.

But then I think of things like the health service, and do like the idea that people with grave illnesses like cancer etc can receive treatment regardless of their economic status.

Good thing we do not have to be too ‘ideological’ on these matters.

Well said yes.

[SailorRob]

There areas where I would not invest for moral reasons. I would not join a drug lord cartel as an example. But step down from the criminal level and 'being moral' becomes more nuanced.

I am an investor in Sky City, as an example. Sure I think that problem gambling is an issue and a serious one. But would banning casinos solve the issue? I would suggest not. Before there were any casinos, there were other ways to 'have a flutter'. There was the TAB, and of course going to the horses and the dogs live. I think there is a tendency to look for someone or something 'to blame' for societal problems, when in fact the issues are far more complex.

The 'correct' way to look at a night out at the casino is IMV to regard it as just that 'a night out', set a dollar amount beforehand that you are prepared to spend and if you blow it all, well you have had an - hopefully entertaining - night out. Oh and it helps if you were able to study a little probability theory in school too. I think there is some truth to the theory that gambling at the TAB or casino is an 'extra tax' levied on those in the population that are not good with maths. Finally, if you come out of a casino with a few extra dollars in your pocket, treat that as a 'one off' bonus. Not an expectation of further 'success' to come.

I know that if you are a 'problem gambler' the idea of setting a gambling budget is 'pie in the sky'. But the Sky City business is not built on problem gambling. Problem gamblers go broke. And there is no successful business model in the world that 'succeeds' by sending their customers broke. In fact Sky City has policies in place that aim to avoid this. Workers on the floor are trained to look for people that may be exhibiting problem gambling behaviour. It is even possible for a problem gambler, in a moment of gambling sobriety, to get themselves banned from the gambling premises altogether. Neither of those safeguards are present in the gambling machine dens in pubs and clubs. The fact that Sky City continues to flourish would suggest that most of their profits are not from problem gambling.

Sky City is not only a 'gambling business'. It is also a hotel and hospitality business. I have never gambled at the Sky City Auckland casino myself, although I have walked the floors to have a look. But I have stayed there, and I have eaten there. Both experiences I thought were good value. There is an argument to say that the 'gambling' side of the business, cross subsidizes the sleeping and eating side of the business. For those 'in the know' about this, it makes the casino complex 'the place to go' for the non-gambler. I remember one non-gambler who no longer frequents this forum regaling us on his profitable dining out at a Sky City all you can eat buffet! And good on him for doing that, even if it did me no good as a shareholder. Then some have forgotten Sky City was also the first NZX50 listed company to pay all of their workers 'a living wage'. Surely that is something to be admired?

OTOH I have put my foot in the door of a casino in Macau, which seemed a much more 'serious' gambling establishment and not in a good way. So I am not saying all casinos are good as a rule. But as an investor you can pick and choose, and for me owning shares in Sky City is a good way to have an investment foot in one of our biggest industries, the tourism sector.

In summary, I regard those fund managers who refuse to invest in casinos (and Sky City in particular) for 'moral' reasons as perpetrators of 'selective woke-ism', touting for business on a very shallow investment world view where 'a veneer of moral standing' can be easily marketed. Some don't see Sky City as a moral business. But I would suggest that holding up a business to blame for immoral behaviour from a small minority of our society is not a reason to get rid of the likes of Sky City. And of course not investing in Sky City doesn't close it down. It just means the shares are held by less moral shareholders. And I can't see that as being a good thing.

SNOOPY

Great post thanks.

[Bjauck]

The role of government should be limited to upholding the rights of individuals such as private property, free speech, liberty ect. Taxation should be limited to ensuring these rights are upheld. I'm not the type to call taxation "theft" rather than a necessary evil.

Warren Buffett doesn't believe the rich are taxed enough in the US, despite the top 1% paying 42.3% of income taxes in 2020. I believe that the wealthy in aggregate pay more than their fair share. That isn't to say there aren't cases where rich people are able to work the tax system to their favour, and pay an amount which is unfair to the rest of society. The tax rules should be simplified as much as possible to avoid this happening.

I don't believe I'm absolutist in my views about much, rather I attempt to examine arguments by their merit. I agree it is something to be mindful at all times however, since people are subject to cognitive biases and falling for logical fallacies.

The Role of government is to confer private property rights too. Without the social legal structure of “the state” there would be no private rights.

You soon understand that the state has full ultimate rights over your “private property” when they can compulsorily take it, subject to whatever conditions the state has enacted.

[Bjauck]

I want to buy at least one great business in each country in the following list using my Kiwi saver fund.

1. NZ
2. Australia
3. Asia which include Singapore,Malaysia or Hongkong
4. USA
5. UK


My criteria

Good Projected profitability(Future earnings)
Instrinsic value
Favorable asset allocation
Capital structue
Long term growth or going concern

What would be your choice? Highly appreciate your analysis.Thank you in advance.

How can you choose individual companies with your KiwiSaver? Which provider are you with?

[Valuegrowth]

Thank you.

Perky[/B];1005076]NZ.
MFT or EBO
Aus: MQG
HK: PRudential or HSBC
US. Berkshire
London. Shell
chose to ignore your esg criteria.

SailorRob[/B];1005082]
1. OCA
2. Don't know
3. C K Hutchinson
4. Berkshire Hathaway
5. Unilever