RYM - Ryman Healthcare

[troyvdh]

Okay okay..that comment was perhaps unwise...however.My point remains but perhaps I could have rephrased the comment.
Its just as you get older..the "world" appears to me to be quite focused on money..i.e. possessions purchased to portray wealth ..flash cars,300sqm houses...etc along side huge levels of debt....Old guy ..great stuff you made 15 % in 5 months..cool...

Whats been the return per annum of RYM over the past 5 years ...10 15 20 % ?

Why is Mr W Buffet so successful....Why have most of those of huge wealth have held commercial property long term...Why ..on the NZX ..one of the most successful of property entites over the past approx. 20 years (PFI 9.5 compounding-thanks Roger) is the only entity which retains its original name...go figure.

Why historically has the NZX been considered "the wild west"...why have folk shunned same in preference to buying rentals...Its my belief that has occurred because it still is viewed as a casino...

Old guy...perhaps thats the way I should have said it...cheers troy

[James108]

You're using the wrong denominator. This is a common problem. The opportunity cost of holding is determined by current market value, not purchase price. I am surprised that you'd made this mistake, as your posts are normally pretty good.

I believe it may be a good idea to invest in RYM for dividends. An investor may believe that the dividends received from RYM over the lifetime of the company, discounted appropriately, will be in excess of other investments.

[OldGuy]

With the greatest of respect, I am somewhat shocked at the lack of financial/economic literacy expressed above.

Opportunity cost is defined as the return foregone on an investment with a similar risk profile to the one in question. The amount you invested years ago is totally irrelevant. Seriously.

Consider this example. You wisely invested $10,000 in something 10 years ago when the price was $1. The price is now $10 and it has a dividend yield of 1%. So, your annual dividends are $100,000 * 1% = $1,000.

You suddenly realise that there is a similar investment opportunity with a dividend yield of 2%. Should you switch? Why or why not??

Keen to hear everybody's answers!

[Cricketfan]

On the subject of opprtunity cost, I'm also confused as to why some people use the term 'free' when they refer to shares left in a company after selling their initial investment. Surely the that's profit from your initial investment (which you earned by risking your capital) and keeping the shares incurs an opportunity cost just like anything else?

[Bjauck]

Consider this example. You wisely invested $10,000 in something 10 years ago when the price was $1. The price is now $10 and it has a dividend yield of 1%. So, your annual dividends are $100,000 * 1% = $1,000.

You suddenly realise that there is a similar investment opportunity with a dividend yield of 2%. Should you switch? Why or why not??

Keen to hear everybody's answers!

From the point of view of a long term investor:
1.Will Company B with 2% yield be able to grow their dividend as fast as Co.A with 1%?
2.Has Co B got as good a track record as Co A?
3. What sectors are the Companies in?

[freddagg]

From the point of view of a long term investor:
1.Will Company B with 2% yield be able to grow their dividend as fast as Co.A with 1%?
2.Has Co A got as good a track record as Co A?
3. What sectors are the Companies in?

OldGuy said a similar investment opportunity so on balance you can pick nothing between them.
I would say it makes no difference at all as obviously the better dividend is offset by a balancing factor in the other opportunity

[percy]

On the subject of opprtunity cost, I'm also confused as to why some people use the term 'free' when they refer to shares left in a company after selling their initial investment. Surely the that's profit from your initial investment (which you earned by risking your capital) and keeping the shares incurs an opportunity cost just like anything else?

One of my simple pleasures in life has been building a growing portfolio of "free" shares.Includes AIA,FPH,RYM,SUM.
And now you come along and try to spoil it all by talking such things as opportunity cost etc.
In reality by taking advantage of great opportunities I have made them "free". I have taken my capital at no cost to the next opportunity.
Is nothing sacred.???????!!
Leave my "free" shares alone.!!! ..lol.

ps.I find it difficult trying to work out my yields on "free" shares.
I think 100% is close enough.!!

[Beagle]

No absolutely right and absolutely wrong investment approaches. RYM has been a massive wealth generator for long term investors and is a superbly managed company, no argument with that but sometimes a simply buy and hold strategy does involve opportunity cost and sitting out a period of time holding a growth stock is absolutely a valid investment technique when you honestly believe the SP has appreciated to a point where its significantly overvalued based on fundamentals.

Opportunity cost is the cost of the forgone opportunity that ones bears by having their money invested in something. Simplest way to understand this is that while long term investors have enjoyed fantastic returns over the very long term, in the last two years by holding the shares from when they were $9 and they closed on Friday at $8.60 this hasn't been the case, investors have not only suffered a slight reduction in the capital profits but also to the extent of the sum they had invested in RYM at $9.00, lost the opportunity to invest that profitably elsewhere in the market over those two years when the NZX50 went up 35%.

Two people on here were adamant that RYM had run well ahead of itself two years ago and I doubt any of you need reminding who they are.

Doubling your money on a stock and / or more and then taking profits on half such that remaining shares have no specific cost is a great way for people to ignore opportunity cost.

[winner69]

On the subject of opprtunity cost, I'm also confused as to why some people use the term 'free' when they refer to shares left in a company after selling their initial investment. Surely the that's profit from your initial investment (which you earned by risking your capital) and keeping the shares incurs an opportunity cost just like anything else?

Me too.

On how these people do their sums I think i have been paid more than $15 (yes negative cost) for each of the RYM shares i now hold

And i get a dividend as well but find it hard to work out a yield.

But then I get totally confused quite often

[Beagle]

Yes the whole free shares thing doesn't make sense to me either. Anyone could claim to have free shares in any company that had gone up by a reasonable amount. For example while not investing in RYM for the last two years I invested in another property company a REIT GMT which has shown a total shareholder return of 60% so I could easily sell some of these take my 60% gain, add in previous significant profits I've made on RYM and get a whole bunch of free shares myself. I'd also probably have a great deal of difficulty working out my dividend yield going forward.