Looking back at my notes, my worst purchase of Contact Energy shares was made in November 2008 when I picked up a parcel for $6.63. That doesn't look very clever now. But the share price had within a short time of that been as high as $9. So it was easy to convince myself that $6.63 was a bargain. And so it might have been. Except that post GFC a lot of the 'growth premium' was let out of the energy market. Contact as a 'steady state' earner had a very different outlook to Contact as a 'growth company'. The truth is I took my eye off the ball and assumed energy growth was going to follow the historical trend, and it didn't. So I have no-one to blame but myself for this little episode.
By contrast my best purchase was when I bought a parcel for $2.80 in December 2000. What a millennium present that little purchase turned out to be! Contact had floated at $3.10 just over a year earlier. My memory isn't good enough to remember exactly why the price declined. But I do remember thinking about those shares I bought at float time, and reasoning that if I could pick up some more Contact shares at a 10% discount that sounded like a good thing. And so it was!
What we have here are two examples of 'catching a falling knife'. In the first case I got bloodied. In the second case I got a firm grip on the handle. Which proves nothing really. The big bandage I keep in the bottom of the doghouse meant the bloodied paw was a repairable effect.
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