why wouldn't i touch them at present, page-9

kosmo - this upset her

Subject re: the analyser
Posted 03/11/04 11:17 - 67 reads
Posted by TheAnalyser
Post #407129 - in reply to msg. #406764 - splitview

Sandy - don't know why I reply to you but we all have our weaknesses, so here goes...

Unlike you I don't talk a stock up when I own it and then bag it when I sell out too soon. Never owned NEO so I fall into a different category to you. When I post on a stock as being worth consideration in my opinion it is normally because I see it being a good medium to long term hold based on financials, trend and outlook. NDO is the only exception to this as my history of posts shows - it currently lacks financial strength.

Some of those ramping NEO once owned NDO but they sold out too soon by their own admission - due to poor trading techniques (if you decide to ignore financials then at least have a technical trading plan to collect the big wins - tech and fundamantals together are best in my opinion though).

There are posts going back a few months ago on NDO where posters infer that they are in it for the long haul and comments such as 'I'm set' - they know who they are.

So what happened? Well they sold to take a profit and can always buy back in later.
That is interesting - when we exit a trade too soon are we able to emotionally have control over ourselves to re-enter at a higher price when we knew we traded poorly before? Or - do we never re-enter as it is emotionally hard to do? Did those that sold TOL (Toll holdings) at about 80 cents in December 1998 for a near 100% profit re-enter at $2.00 - very few I would suggest - now it is over $12. Was there a sell signal at 80 cents? - nop, was there one at $2.00? - nop, how about $3, $4, $5, $6, $7 - nop! First sell signal was at $8.03 leading in about September 2002 when a lot of ASX200 stocks also turned down with the SARS and pending war on terrorism concerns. The August 2003 report was a ripper at around a price of $7 - did those that sold at 80 cents buy back in? - very unlikely. Notice those enthusiastic on SEN or CUE at much lower levels don’t post on them anymore now that they are a lot higher – sold too soon and didn’t buy back in?

My point? Can always buy back in later is easier to do when a trading plan gives an exit signal and then a re-entry signal - that is good trading. However, when there is no plan other than grabbing a quick $1000 in a short span of time and the stock keeps going up - most will wait for a pullback and if it doesn't come then guess what? - they don't re-enter and miss out on more gains.

So what is my point? Well those that said 'I'm set' on NDO and then sold are again saying 'I'm set' on NEO. When I read their comments on NEO/NEOO I know they probably won't be around in the rough chance it does run up – they will likely be gone at 3.5 cents. Yet they will defend it while they hold a position in the hope of a fast buck.

If you want to see what the NEOO options are really worth then go here

http://www.blobek.com/black-scholes.html

with a strike price of 5 cents a share price of 3 cents, volatility of 30%, days to expiration of approx 450 days and annual interest rate of 7% I get a number of 0.0006 cents - now wait a minute - that is not six tenths of 1 cent - that is six tenths of ONE TENTH OF ONE CENT - ie nearly worthless - can't place a buy order that low!!!

Now here is something worth considering - FCO relisted last week after buying a company that is profitable and has a future. They are forecasting a profit of $3 million and paying dividends fully franked of 5%.
There are options FCOO with expiry of 2008 (November from memory) with a strike of 30 cents. The share price is about 25 cents now and there is 4 years to go in a company forecasting profits and fully franked dividends!!!!

Plug this one into the calculator at the above link and you will see the options with stock at current price of 25 cents and about 1400 days to expiration means they are valued at 6.65 cents. Then plug in 'what if' scenarios - ie stock price goes to 30 cents, 40 cents etc… and see what you get. Do some research and read their last annual report. They are clever too - convinced half the option holders to accept a buy back at 4.5 cents. When Bell Potter clients that just got a placement of FCO at 21 cents have taken their stag profits it will be interesting to see what happens if the profit forecasts prove correct.

Sure they are out of the money at present as are NEOO - but what looks like the better go?