Wednesday, January 26, 2011

Investing in the Stockmarket: Timing your Purchase

My Mainfreight Ltd [MFT.NZX] shareholding really is a tale of two stories.

I bought my initial shareholding at $7.96 and $8 over 4 years ago and my most recent addition in 2009 for $4.20.

Yesterday the stock closed at $8.15, an all time high.

The two stories are as follows:

1. The initial shareholding has returned $1.02c in net dividends and 33c in tax credits with a rise in share price of 2%. This gives a total return of approx 19% or an annual return of approx 4.75%.

2. The second shareholding has returned 42c in net dividends and 33c in tax credits with a rise in share price of 94%. This gives a total return of approx 107% or an annual return of approx 71 %.

Apart from the quality of the company and the research you must do to find the right performance and management, what I am pointing out here is that the timing of your investment purchase is critical to your returns.

I was happy to buy the company at 8 bucks because I knew long term that I would be a winner and the recent share price rise and performance of the company is vindication of that but clearly buying stocks when the prospects for a good company are at a high is not always the best way of buying.

I have learnt this over the last 2 years of the stockmarket volatility, buying beaten down stocks (see below for links) in companies I already own, and it looks like another opportunity will present itself as global stockmarkets like the NYSE start to reach all-time highs (with the exception of NZX, Japan and a few others) in a global economic background that doesn't fit with stockmarket gains.

I am keeping my options open and being patient, so should you if you want better returns.


What Share Investor Has Been Buying


July 2009
July 2009
July 2009
April 2009


Mainfreight @ Share Investor

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The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) (Collins Business Essentials)The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) (Collins Business Essentials) by Benjamin Graham
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The Essays of Warren Buffett: Lessons for Corporate America, Fourth EditionThe Essays of Warren Buffett: Lessons for Corporate America, Fourth Edition by Warren E. Buffett
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c Share Investor 2011