Sir Robert Jones in his Autumn of Content

I am a contrarian investor of sorts. I say this because while I am buying stocks right now and looking at buying more, I also bought them while the market was at a higher level.

I have written about a couple over the last week, Michael hill and Doris Mousdale, and there are a couple of other New Zealand notables, Jan Cameron and Bricoe Group's [BGR.NZ], Rod Duke who are contrarians by nature.

Perhaps one of the worlds most famous contrarian investors is the world's richest man, Warren Buffett - he loves the current market turmoil, proclaiming such gems that he feels like a "Kid in a candy store" or a "Teenager in a whorehouse", when it comes to the prices he is paying for beaten down assets.

New Zealand has its own Waren Buffett in Sir Robert Jones.

He is as happy as a tar baby in a sandpit because the property tycoon has been buying property when everyone else is selling - NZ$100 million of deals done so far this year.

Some prescient quotes to a recent audience of property professionals show just how excited Sir Bob is:

"From a self- interest point of view, we look forward to a recession."

"We are not going broke. We buy buildings and those buildings are cheaper."

"Land developers go broke, building developers go broke, and for very good reasons, but they're too dumb to work it out for themselves."

"Why do banks keep financing them? Because the bankers get younger every year."

"I've survived more property cycles than most of you, so where's property going? Nowhere - property doesn't move."

You cannot get a more experienced commercial property man in Australasia than Sir Bob, as he points out he has seen this all before and no doubt capitalised on the troughs.

I recall him selling a large office block during one the boom times only to buy the same block back years latter for a much lower price - from memory it was a building in the 1980's Chase development, the full city block the "Finance Centre" in Auckland.

Sir Bob likens the economic cycles to the four seasons, with Winter the low point and Summer the high. He reckons we are in the Autumn of this cycle.

I think he is right and there is worse to come before it gets better but he certainly is making his autumn/early winter one of content rather than the alternative.

You should too if you have the cash.


Related Links

Listener Sir Bob Interview


Recent Share Investor Reading

• List of Bruce Sheppard's top NZX listed company debt worries
  
• Morgan's book "After the Panic" timely
• Charlies Group: A Triumph of Style over Substance
• MICHAEL HILL - Toughen Up: What I've Learned About the Tough Times
  
• Burger Fuel doesn't rule out capital raising
• Share Investor Portfolio: June 15 2009

Discuss this Topic @ Share Investor Forum


Related Fishpond Reading



NZ $28.64 @ Fishpond.co.nz

c Share Investor 2009

Contrarian Investor: Doris Mousdale

A few months ago I decided to get all Pollyanna-ish, to stop writing about the economy in the doldrums, because it is going to do what it is going to do and instead focus on stocks, business and as some in the financial world say look at things "going forward". The contrarian investor approach if you like.






Doris Mousdale

A positive spin, because I am sick of the mind numbing daily focus, usually inaccurate and at its worst pure guess work, of talking heads telling us how bad it is and how long it is going to last.

With this in mind I am going to do a series on people or businesses that are doing the opposite to everyone else.

Growing instead of retrenching, starting business rather than closing and hiring instead of firing - you get the picture.

I suppose I was inspired by Michael Hill's interview on 60 Minutes this last Monday where he told us that he was more positive and excited about his Michael Hill International [MHI.NZ] Jewelry business than any time in his life.

The man is looking at the global economic downturn as an opportunity to expand, get cheap retail sites and reach 1000 stores by 2020.

With this positive theme in mind lets take a look at the book business and one person in particular that has been in the business for many, many years, Doris Mousdale.

She has had positions with Whitcoulls, Dymocks, Real Groovy. Made redundant from her position with Dymocks in April she has decided to open up her own bookstore, Anthology, in Auckland's Newmarket shopping district.

Now with a very competitive book market in New Zealand and with book chains downsizing, shutting and moving head offices to Australia, Mousdale certainly has taken the bull by the horns and gone in the opposite direction.

She thinks her personal touch as an owner operator and experience in the book industry will mark her out from other book retailers:

"I'm feeling quite confident about it, I think the independent bookstore has a lot to offer the surrounding community. There are still people out there who want the next best read, and they want it recommended to them." See full story.

I think she is right. A point of difference is crucial to survival in business, especially in retail, especially in the cut-throat book biz and most certainly during an economic downturn.

Mousdale has a niche to fill - experience and personal service- because she cannot compete on price and title range with the Borders of this world and her move to position herself where she is , is canny to say the least.

This comes on top of a broad downturn in all retail and a movement away from pricier entertainment and gift giving to more affordable product like a book to read or a movie ticket, instead of that weekend way in Taupo.

If Doris can get through the tough times, her business is going to go from strength to strength and she has certainly chosen a opportune time to make her mark. Contrarian investors have almost always had better returns than those who go with the crowds, as their start up costs are always cheaper -in Mousdale's case with on going business expenses negotiated at a time when relative bargains can be had.

Good luck to her.

Related Links

Doris Reviews Books - Leightonsmith.co.nz

Recent Share Investor Reading

• Burger Fuel Worldwide: Closer look at Company Accounts
• Share Investor's NZX Market Diary: 15 - 22 June 2009
• Analysis - Burger Fuel Worldwide: FY profit to 31/03/09
• Banks not participating in Recession
• Air New Zealand wants another taxpayer bailout
• Michael Hill TV3 60 Minutes Interview

Related Amazon Reading


Contrarians, Cycles and Waves (Secrets of the Great Investors)
Bargain Hunters, Contrarians, Cycles and Waves (Secrets of the Great Investors) by Janet Lowe; Ken Fisher
Buy new: $25.00 / Used from: $9.99
Usually ships in 24 hours

c Share Investor 2009

Banking Madness!

My adventures with Bryce the Banker have kept myself and many others amused and there is yet another tale to be told about the ASB in Albany and its approach to customers now that the economic wolves are seemingly at their customer's doors.

When I visited Bryce the last time I asked him what the chances of me getting a loan to buy an investment property was.

He kind of laughed nervously and mentioned it was harder now than it was a year or so back but thinking to myself, considering I seemed to be the only middle class Kiwi who didn't buy an investment house during the housing boom, I now thought it was a good time to buy one.

Consider this:

1. Housing is approaching realistic asking prices
2. Your expenses are now likely to be recouped by the rent received
3. Interest rates are lower by at least 2% than during the boom

But then also think about this:

Even though my financial position is now stronger than it was a few years back and the investment case to buy a house for rental purposes is much more attractive, the ASB Bank and probably yours too is unwilling to lend as much money for that purpose.

Interesting that in some cases at the height of the housing boom that banks were lending more than 100% mortgages and throwing money at monkeys while now they will barely consider you even though you now back their deposits and lending through your taxes.

A case for some contrary investment thinking, in other words good sound financial practice, is clearly needed within our banks and the staff that they employ.

Treat each customer and lending case on its own individual financial merits and you will please your good customers and keep your CEO from losing sleep at night.

End of lesson.


Recent Share Investor Reading

• Schroder Investment Management takes big Fisher & Paykel Healthcare stake
• Good Morningstar
• Like a Kid in a Candy Store
• Bruce Sheppard: Explanation Received
• Bruce Sheppard: Please Explain

Discuss this topic at Shareinvestorforum.com




c Share Investor 2009

A sensible approach to global market volatility

Sell, sell, sell!!




The NZSX 50 was down 48 points today and is at its
lowest point since November 2006. Other global indexes
have also been markedly negative since Jan 1.



New Zealand and global sharemarket investors seem to be telling their brokers right now.

Global indexes have suffered from a New Year hangover that has seen values drop by an average of around 5% since January 1.

For sure there are underlying issues surrounding sub prime loans affecting credit flow and therefore investment, high inflation and oil prices but hang on a second, is that the end of the world?

Investors have to ask themselves why they bought their stocks in the first place and if the only criteria that has changed are the current macro conditions that currently exist and they will have no direct, disastrous affect on the fortunes of the company you have plunked money into, then following the sheep to your broker's door is only going to make him richer in the long run.

Why don't you follow your own research and perhaps stock up on companies that you already have shareholdings in?

Most serious wealth is created for investors when they buy assets during down periods such as the present one.

The worlds most successful investor, Warren Buffett, uses this very approach to add to his ever increasing large holdings and enter new businesses and it is one backbone to his investing style that has done him well.

The tricky part is of course choosing the right time to buy in a declining market and that is probably the hardest part of "picking a bargain", because the share price could be even cheaper next week, month or even year but if you can get shares in a good company that you already own cheaper than your initial purchase then you are doing well.

If you are feeling nervous at all about current market volatility on the downside and you are so worried that you cant sleep because your portfolio is losing value, then you should either stop checking stock prices every minute or simply get out of the stockmarket, because it isn't for you.

The market is risky and continued stock price increases are not going to be the status quo and if you have a short term view of investing then you are going to be continually disappointed and worried!

I think global markets are set for continued negativity for 2008 and a slow recovery in 2009, until we see the full exposure of the sub prime fallout mid year.

Until then just hang on and maybe even get the checkbook out little bears.



Related reading from Share Investor

Research, research, research
Current Credit Crunch a blessing in disguise
Leaders must come clean to restore trust in credit market
Fear and Greed are lovely things
What is Warren Buffett doing?
Global credit squeeze: There is no free lunch
Panic! Wot Me?
Global Markets dropping and your portfolio
Watch for dead cats bouncing




C Share Investor 2008

Fear and Greed are Lovely things

ARRRRRRRRGGGGHHH!!!!!


The DOW doing its thing today



I don't know about you but I'm buying.

The current sell offs of some of my favourite stocks that I already hold I have added to and picked up some new ones.

I added to my Pumpkin Patch(PPL) Portfolio again yesterday and included additions to my portfolio of Kiwi Income Property(KIP) and Postie Plus Group(PPG)

I'm not going to the New Years day sales but I'm going to participate in this one.

If you are a long term investor you would be almost mad if you didn't...well on second thoughts each to his own but.

It just goes to show that the fear and greed labels apply the most when the markets are most volatile and that those that don't follow the herd are more likely to do better in the market long term.

Who knows if we are going to see a substantial sell off of stocks as the New Zealand economy tanks and the US is having a few flutters over high oil prices, all I know is that I like to buy when stock prices are going down.

C Share Investor 2007