BHP-where to next?

[bundy1964]

I kept my CGJ longterm when the broker more or less questioned my sanity in buying them to begin with. Sitting on just over a $10 gain each plus dividends along the way. WES is burning me at the moment having had the price rise $7 since I bailed earlier this year. Can't win them all.

 

[traveller]

Deviating a bit from BHP, but i think the CGJ shareholders have not really got a good deal with the takeover from WES.

They are getting paid majority in form of WES shares which are more or less overpriced (or atleast fully valued, well time will tell, i guess) according to most of the analysts. WES shares have zoomed up from almost $39 to $45 in past 45 days...

WES shares only have to fall back where they were a month ago and CGJ would have more then what they were offered in Oct last year.

thanks-

 

[traveller]

And thats exactly what happened... WES shares are down to 42.80 giving each CGJ shareholder $16.15 effectively and not $17 as initially reported...

 

[Sunfish]

Buying the dips is not as easy as it sounds. There was a small one early in the week. Does one buy then? It was only 80c (if you bought the very bottom), not much in a $35 stock. They may go lower, there may have been good reason for the drop or was it just noise? You only know these things in hind sight.

Well did anyone buy? There's $2/sh already if you picked the bottom.

 

[keithj]

This is from another thread

--A belated congratulations to the All Ordinaries for posting a 25%
gain in the recently-ended fiscal year (28% if you include reinvested
dividends). It was the single-best year for the Aussie index in 20
years - just before the 1987 crash - and came after a 19% gain in the
last fiscal year, a 19.8% gain the year before that, and a 17% gain the
year before that.
.......................
That is more than double in 4yrs.

Interestingly......

It is worth noting that the 110% gain in share prices over the last four years has actually been less than growth in profits of 133% over the same period, in contrast to the 191% rise in the share market over the four years to June 1987 which was only accompanied by a 62% rise in profits.

In 1987 prices rose by over 3 times profits. If we get the same exuberance today as back in 1987, then that adds up to ASX of well over 20000, with BHP at over $100 & RIO at over $300. I haven't seen any significant exuberance so far.

 

[Sunfish]

In 1987 prices rose by over 3 times profits. If we get the same exuberance today as back in 1987, then that adds up to ASX of well over 20000, with BHP at over $100 & RIO at over $300. I haven't seen any significant exuberance so far.

The "old money" brokers sacked their analysts on the mining/resource desks years ago and still don't believe good prices are here to stay. Their projections on prices of Cu, Zn & Ni eg. are still way below actual prices. BHP has a PE of 13.5 and 12 projected next year. That is VERY low for this sort of company. Another has a PE of 7.2 and 8.5 next year.

If the belief that resource prices were going to remain high spread through "old money", both these companies would be re-rated and have an easy 50% in them.

This partly explains the prices lagging profits phenomenon.

 

[willair]

The facts never lie,if you would had bought into BHP,in Jan 2007 you would have to be happy with your investment,and after yesterday..
Australian markets,and O/S overnights upwards trends then
then it's only a matter of time before $50.00 will be broken
IMHO...stay happy willair..$37.540..

 

[Bantam Roosta]

if you would had bought into BHP,in Jan 2007 you would have to be happy with your investment,and after yesterday..[/quote]
I've only invested in funds up until Jan this year, when I bought BHP in Jan and than again APR, $24 and $29, for a 30% return so far. I bought RIO for the first time in APR at $82 for a 22% gain since purchase. They were my best picks by far. The others are doing alright, but I'm pretty happy overall.

BR

 

[willair]

I've only invested in funds up until Jan this year, when I bought BHP in Jan and than again APR, $24 and $29, for a 30% return so far. I bought RIO for the first time in APR at $82 for a 22% gain since purchase. They were my best picks by far. The others are doing alright, but I'm pretty happy overall.

BR

Yes you would have to be happy,and even back in Jan with all the doom and gloom was around it still requires a large degree of faith to walk away from M/Funds and start everything on your own welldone..
From another angle, the property next to one of our rentals went to
Auction yesterday ,just a normal 60 style 3 bedroom house on a small
res A block,the end BIDDER paid 807k,never seen nothing like it 4
people wanted this property and fought a hard battle to buy that
property,makes our rundown fibro renter,which we only paid 79k
for in 1991 on 813 sm look good..

stay happy willair..

 

[yadreamin]

I've only invested in funds up until Jan this year, when I bought BHP in Jan and than again APR, $24 and $29, for a 30% return so far. I bought RIO for the first time in APR at $82 for a 22% gain since purchase. They were my best picks by far. The others are doing alright, but I'm pretty happy overall.

BR

I had every intention of investing 25k into BHP in April BUT was convinced by so many people NOT to do it, l didnt
Even a shares forum had a lot of posts against BHP as an investment at that time.
If it does go to $50 it will make $35 look cheap.
What to ?What to do?
I quess l still have benefited from having BHP in my M/F.
cheers yadreamin

 

[topcropper]

if you want bhp how about buying rio? they will probly take rio out at a premium and offer shares as exchange?

Rio plus Woodside would be almost a BHP. Say 70% Rio, 30% WPL. But I think Rio has no zinc or nickel?

Maybe 60% Rio, 30% Woodside, 5% Zinefex, 5% Minara or Jubillee would give similar exposure as BHP.
Maybe just easier buying BHP?

But then you get all the takeover upside with the others?

See ya's.


I hold BHP, RIO, WPL, ZFX.
Made a heap from Jubillee, but sold, and it's since doubled in 12 months. Stupidly sold Minara for around $2, after holding for 2 years and making a slight loss. It immediately started it's rise and went to $8 once I sold. Missed 50 grand there!!! and instead lost a few.

 

[Jase H]

BHP have been one of my better holding in the last 2 years and I wouldn't dream of selling them at the current price of $37.54.

I bought my first parcel in Oct '05 at $20 and took 1/2 profits at $29.50 in April 06'.

I then brought another parcel (larger parcel due to lower price) in Sep '06 for $25 and still hold both parcels. I plan on holding longer yet to ride the long term trend higher.

I remember in Sep '06 my dad rang me and asked if he should sell his BHP shares as he was worried that they had dropped a lot to around $25. I told him honestly that I had just bought more as they 'were on special' at the current price and that they would likely see $35 within 12 months.

Well I'm hapy to say he took my advice and did not sell (although he didn't buy more either), and i'm also happy that the risk has been to the upside of that $35 prediction and inside 10 months.

I also added to my WPL holding when they went to $36 which has also paid off.

Jase

 

[Jase H]

But I think Rio has no zinc or nickel?

Rio also has no Uranium exposure unlike BHP

Whilst takeover premiums are always nice, they are generally only around 20%-33% over current market price which is insignificant compared to the long term compounding growth BHP will likely see yet. Also, who wants to pay CGT without having even decided to sell a company

Jase

 

[bundy1964]

Rio also has no Uranium exposure unlike BHP

Whilst takeover premiums are always nice, they are generally only around 20%-33% over current market price which is insignificant compared to the long term compounding growth BHP will likely see yet. Also, who wants to pay CGT without having even decided to sell a company

Jase

Check out who is the top shareholder in ERA then say RIO has no exposure to that

 

[topcropper]

Stupidly sold Minara for around $2, after holding for 2 years and making a slight loss. It immediately started it's rise and went to $8 once I sold. Missed 50 grand there!!! and instead lost a few.

What really makes me cranky about selling Minara, is that it was paying 10c a share dividend when I sold it, so that was about 5% dividend. So it wasn't costing me much to hold it.

So now it's paying about 50c a share dividend, which would be about 25% fully franked...

I'm not a good share trader, and have no intention of being one. It's buy and hold for me
Generally when I sell something, the share takes off.

See ya's.

 

[Andrew_A]

What really makes me cranky about selling Minara, is that it was paying 10c a share dividend when I sold it, so that was about 5% dividend. So it wasn't costing me much to hold it.

So now it's paying about 50c a share dividend, which would be about 25% fully franked...

I'm not a good share trader, and have no intention of being one. It's buy and hold for me
Generally when I sell something, the share takes off.

See ya's.

Sitting is really where the money is made.

A well known Aussie trader I follow who has excellent market timing (much better than mine) has been kicking goals these last few years, or so I thought. Then out of interest I compared his results to a 70% leveraged position (similar leverage is used by the trader) in STW over the same time frame (The ASX200 index tracker) and the fund had a better performance which floored me!

With the fund you are always in the market and running a much higher portfolio heat (100% at risk with a 30% correction initially) but it's an idea of how difficult it is for a trader to outperform in a bull market.

The real rewards for the trader in this bull run are potentially in the home run stocks, after reviewing a few of my watch lists from 2005 of ASX floats I noted that an index fund of these floats would be returning sparkling results, only a few had tanked and a few were negative and a handful were 2 or 3000% + returners which gives you the sauce for your steak, so it's a market for the punter perhaps and the holder at the moment. Likely that will have to change at some point.

 

[keithj]

A well known Aussie trader I follow who has excellent market timing (much better than mine) has been kicking goals these last few years, or so I thought. Then out of interest I compared his results to a 70% leveraged position (similar leverage is used by the trader) in STW over the same time frame (The ASX200 index tracker) and the fund had a better performance which floored me!

I think that's a v. important point.

B&H is best strategy in a bull market
Trading is better than B&H in a flat market
IP is best strategy in a down or flat share market

Pick your strategy according to the big picture. Let the rising tide do the work for you.

 

[GreatPig]

B&H is best strategy in a bull market

I think that depends on how good a trader you are. Daryl Guppy in his newsletter portfolio achieved a 106.7% return this last financial year, putting his eleven year average at 84.8% pa. The portfolio occasionally uses derivates, but no margin. STW by comparison increased about 20% over the same period.

IP is best strategy in a down or flat share market

Depends if you're good at shorting or using option spreads.

GP

 

[Sunfish]

The discussion on B&H V Trading frustrates me because neither are ideal. Not even close, I reckon.

Buy and hold, in my mind, does not mean buy a diversified portfolio of shares and then take a few years sabbatical to the Darkest Africa. Some here seem to think that is how to do it. Even if you're not a trader you can't ignore the tides of change. Do the reading, (beats workin' mate) and try to stay ahead of the pack.

What I do know is that when I look at my year in retrospect my trading profits are modest and that most of those are from one or two "longer" holdings anyway. I updated my trading spreadsheet today and it confirmed this with a $25k profit. Better in my pocket than yours, I'll agree, but in a year when super funds returned 15% I'm not crowing.

BHP and ZFX have done better than that and I could have been in Africa. I didn't trade them BTW. just held. The best part of fundamental investment is that the "homework" is reading both domestic and international news which is no task for me.

Fish

 

[Sunfish]

Wow! Up $4 or nearly 15% in under 2 weeks.