Saturday, November 15, 2008

Pick the biggest losers when buying stocks

On the subject of buying listed shares on the NZX stockmarket I am making a list of the shares I am going to buy.

It looks like the stockmarket is going to go South before it goes North again because there is more bad news to come in relation to the New Zealand economy-we simply haven't been fully hit by economic events overseas yet.

So stocks are going to get lower.

I am lousing at timing the market and have bought earlier on this year and lost some share price value and ironically making a 40% gain on a purchase of Fisher & Paykel Healthcare [FPH.NZ] which is doing very well because of increasing sales and a lower kiwi dollar.

I am looking at the following:

Pumpkin Patch [PPL.NZ]
Hallenstein Glassons [HLG.NZ]
Telecom NZ [TEL.NZ]
Mainfreight [
Fletcher Building [FBU.NZ]
Michael Hill International [MHI.NZ]
Ryman Healthcare [RYM.NZ]

I own every one of the above except Telecom.

All of the above have dropped in share price by more than 50% off their respective highs, with the exception of Pumpkin Patch and Telecom which have dropped by more than 80%, and Mainfreight by about 40%.

I am very tempted to buy now and at these prices the stocks represent good value for money in a long term portfolio but as I have already pointed out I think these stocks have more room to move-down.

The retailers will still be under considerable pressure, even though they are already among the biggest losers in the downturn this year, but the ones I have listed are good quality and will eventually bounce back to life, sales and share price wise.

I will wait until next year and see how bad the February reporting season is before plunging back in.

Meanwhile I am hoarding cash over summer to make my move in 2009.

Related Share Investor Reading

Why did you buy that stock? [Fisher & Paykel Healthcare]
Share Investor's 2008 stock picks
Drinking and Trading

From Amazon

The Economist

The Economist

c Share Investor 2008


  1. Hi Darren

    If you're so lousy at timing the market, why not slowly drip feed some money into those stocks - especially if you think they are under valued.


  2. Hey Nigel,

    so many people do that but I am only talking sums of NZ$10,000 or less.

    Do you approach investing this way and if so how?

    Cheers, Darren


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