Not for traders

[Lawso]

The following will be of very little interest to the committed traders on this site and perhaps not even to many others. I worked it out for my own benefit but am posting it in the hope that it may help sharemarket novices, NZX sceptics, property speculators etc to see the benefits of patient investment in a sound and well managed NZ listed company.

I first bought into Cavalier Corp in July 1996 with a modest purchase of 2500 shares @ 243cps (there was a 2:1 split in 2002). I bought more steadily and sold some occasionally. My total outlay incl. brokerage for various purchases up to July this year has been $49,075. On the credit side, I've received $24,120 in tax-paid dividends and $25,789 from a few sales and a buyback in 2001. This puts me in credit to the tune of $924, plus of course the value of the shares.

Recently I bought a further 2000 @ 390cps, taking my holding back to 20,000, worth $80k today (but worth well over $100k a couple of years ago). My net spend over nine years is $6125 or 30.625cps [^] And there should be another $3600-odd in dividends before the end of this year, which will take my average cost per share to about 12.5c. And all this without any capital gains tax. Beats working[8D]

[Halebop]

Nice!

[wns]

Giddy up!! Nice returns.

[KJ]

That's good Lawso-what does it mean as a percentage on a pa basis?

[donner]

If you bought GEN at the same time for diversification as recommended by the experts, I think you would still have to be working a decent job.

And remember, its not cash until you sell. But those dividends sure add up. I suspect you may have overlooked interest and inflation though.

[Lawso]

quote:That's good Lawso-what does it mean as a percentage on a pa basis?

Don't ask me, mate. Woddyer take me for - Einstein? All I know is that I started buying CAV in '96 and the $80k worth I now hold have cost me nothing.

quote:
If you bought GEN at the same time for diversification as recommended by the experts, I think you would still have to be working a decent job.

What a killjoy! A wonder you didn't mention RMG as well[B)] Fact is, I first bought GEN in '99 @ 220, bought more in '00 @ $6 [V], sold some but not enough in '01 for $4 and am sitting on 6000 that have cost me $21k
I've since learnt the stop-loss lesson from Phaedrus.[8D]

[donner]

Yes. I think we can all learn something from him. However, I am sure that with time I will prove him wrong with my averaging down strategy.

[KJ]

Lawso-I already know you are not Einstein-after all you were critical of me (Nervous Nellie)selling out of CAV in Aug 2004 above $5.00.

[Phaedrus]

Lawso,
There is no doubt that you have done well by CAV. The question is whether you could have done better by being more (or less!) active. You mention that you "sold some occasionally". I appreciate that these sales may have been for personal reasons, but the fact remains that you would be better off today if you had not sold any CAV shares while it was in such a good steady uptrend. "Selling occasionally" is what traders do!

You note that your current holding was worth a lot more more in the past than it is now. Indeed you would have done better selling all your CAV a long time ago, and not buying back in.

CAV was in a very steady uptrend for many years. It would have been the star performer for many people. All uptrends come to an end sooner or later though, and CAV was no exception. The uptrend ended, reversed, and CAV is currently in a long-term downtrend. From a technical perspective, the only current holders of this stock would be short/medium term traders. Long-term investors such as you should have been out long ago. I am, I guess, taking issue with your thread title, as much as anything!

If we look at the chart, we can see that there were many good exit signals that would have pulled long-term holders out of this stock before they gave a lot of their gains back to the market.
(1) The OBV trendline was broken and there was a very clear sign that the "smart money" had begun to exit this stock.
(2) Then there was a clear break of a confirmed trendline that had held good for over a year.
(3) Next to go was a break of the "old" trendline that had held good for over 4 years.
(4) A very long-term moving average, such as would be used by very conservative investors was then broken.
(5) Price action then broke below a trailing stop that had held good for over 4 years.
At this point, CAV was in a longterm downtrend. The longterm uptrend had ended. Technically savvy longterm investors would all have been out by now, and today, 1 - 2 years later, would still be out There have been no new long-term Buy signals.

You can't really categorise people as either "traders" or "investors". There are a multitude of approaches that lie between these extremes. The approach I have outlined here is that of a long-term "active investor". Someone who wants to be in long-term uptrends and out of long-term downtrends. In the past, CAV has served you very well indeed. Not so the last 18 months - at a time when the market has boomed. Have you read the book "It's When You Sell that Counts" by Donald Cassidy? I think you would get a lot out of it.

[Winston001]

Thanks Phaedrus. I've been wondering if I should finally buy CAV because I've watched it for years. Time to stand back.

The other stock which I've mused about but never bought is STU. Are you able to post a similar chart on it please?

My investment experience tends to be to watch a good stock with slight disbelief. After all, we've had some dogs on our market over the past 25 years. So when I finally decide after 4 - 5 years that a company really is performing, the price has rocketed and often the downtrend is just around the corner. Knowing when to sell is perhaps more important than buying.