A Hickey in Bernard's Advice

I usually rate Bernard Hickey very highly, he basically tells it like it is and is right more often than wrong.

He knows interest rates, property and all investment categories generally very well.

His latest column on the death of stocks as a long term investment bugs me a little though because I think he has got things horribly wrong.

There has been much talk about the end of equities or the end of buy and hold but my experience in the stockmarket would prove otherwise.

After more than 10 years of market experience(not long at all and still learning) and my stock portfolio which is 7 years at its oldest and 2 years at its youngest and given one of the worst stockmarket routs since the Great Depression my portfolio is still in the green.

Granted things could get worse and they probably will but the thing that Bernard et al are forgetting is that investing in good companies and time will take care of your stock investment for the positive.

Generally, the longer you have held the stocks in your portfolio the better for your wallet.

In my series of Long VS Short columns I have proven after looking at six different stocks in my portfolio that the longer you have held the better you have done.

Bernard either has a different view to me what long term is (10 years plus is my interpretation)or he has neglected to take into account all aspects of long term investing; tax credits, compounding dividends when combined with length of time.

Any asset class (bar residential housing for living in) is better for your pocket in the long-term, especially if you have chosen well and at the right price at the get go.

You simply cannot beat compounding investment over time and while getting out of that investment is usually inevitable the timing of that must be made before you make that investment.

Stick to your initial investment intention(if it is a short term investment, stick to it as well) and only alter it if you know you have made a mistake or see circumstances drastically change.

Bernard Hickey may be right now but I can almost guarantee that years from now he wont.

Be patient!


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Nuplex rights decision a dilemna for shareholders

I have been chatting to a customer about his Nuplex Industries Ltd [NPX.NZ] shares for around a year now.

A year ago he was very positive about the company and its prospects for the long term.

He was also in the money because his shares had risen, up to over 8 bucks.

Oh how times have changed.

Since then then the stock has crashed 90% to finish at 89c today (it hit a low of 51 c on Mar 23) it has announced a big drop in profit and also a rights issue to raise more capital because of high debt levels and therefore a lack of cashflow for the day to day running of the company.

The rights issue key points are:

- Entitlement Ratio: 7 new shares for every 1 existing share
- Issue Price: NZ$0.23 per new share
- Total New Shares: 577,643,738 million new shares to be issued
- Gross Proceeds: NZ$132.8 million to be raised (fully underwritten)

My customer asked my advice on whether he should in effect chase good money after bad by participating in the issue.

I wasn't about to give him advice because everyone has different financial circumstances but I did tell him what I would do given the same situation.

It went sort of as follows.

You would have to consider that given they are in their current situation after the beginning of an economic downturn, then when things get worse will they have the cap out again in another 12 months for more money?

If the answer is no and the company will recover and you may get a recovery in profitability and share price.

Then and only then if I was sure about the long term viability of Nuplex then I would participate in the rights issue.

If not then the only other thing to consider is when to cut and run before the share price is diluted, presumably down to 23c, the rights issue price.

I am not sure if I was helpful at all to my client but I think he is erring on the side of pluncking down some more money.

I hope his hunch is right.


Related Links

NPX- Rights Issue Offer Doc



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c Share Investor 2009

Earth Day 2009: Time to turn it on!

Just like last year, this year's "Earth Day" will prove to be the biggest waste of time since Al Gore's parents decided to have sex.

Demented unwashed dipsticks all around the world will be turning off electrical appliances for an hour.

Imagine streets and homes without lights, what a wonderful opportunity for the less law abiding citizens.

No lights, no heat, no air-con, no commerce, no business...

All for "climate change", a non-existent problem.

As I did last year this is what I propose we do this coming Mirth Day March 28:

My proposal is this. At 8.00pm sharp, when the dolphin loving, Volvo driving, mung bean eating, bearded female, non smoking, non drinking, Leo Dio loving, vegetarian, hairy arm pitted, sandal wearing , finger pointing, lesbian school teachers are sitting in the dark with all their lights out for an hour, playing with the insert appropriate expletive here next to them, I will turn on every light, appliance and electrical device that I can lay my meat eating, chain smoking, 6 litre V8 Holden driving hands on... for two hours.

My first earth day last year was a success and I will update you afterwards to let you know how much power we used.

We managed to use so much energy and waste so many of the earths resources we did enough to cancel out the efforts of a dozen brain-dead morons who switched off(their lights as well).

This year we are hoping to double our efforts.

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Herald On Sunday to publish Andrew William's Expose'

An article will be coming out in the Herald on Sunday about North Shore Mayor Andrew William's recent and historical shenanigans with his constituents and other individuals and groups that have had the unfortunate opportunity to meet with him.

It is being written by Heather McCracken. 

She has asked me a few questions about that email and is currently trying to get hold of the great one on his cycle trip around the South Island (we on the Shore are grateful he has gone) to get his views about why he is so unpopular.

It is to be published either this week or next.

If you have any input you would like to add to the article I am sure Heather would like to hear from you, especially if you are a 'Shore boy(okay or girl) like me.

Email Heather here:  heather.mccracken@heraldonsunday.co.nz

As Heather pointed out to me, it seems strange, given Williams very vocal opposition to the "Super City" plan that he would be absent from his post when the news came out that this plan is going ahead.

Kinda nutty if you ask me.

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