I started buying shares in 2007, my advisor put $20,000 into AMP, Lloyds Bank, Aviva and NZ Windfarms.
Those all tanked, Aviva and Lloyds were OK but Lloyds had a shotgun marriage to an ugly bride in HBOS that destroyed my investment there too.
They also had a newsletter which reviewed "the intelligent investor" so I read the book as it sounded great and they sounded full of shit.
I think 4 times now because it appeals so much. Everyone needs to read that book.
So thanks to that loss I decided not to trust any advisor and to learn how to invest in this way that seemed to be rational and different to how most people think.
I learned how to not buy bankrupt companies by buying bankrupt ones MQG in the GFC made up losses on BNB which was a real rookie error. I would now say I was speculating.
I speculated and started beating the market on APN, TSE and Billabong (nasty).
Then QBE and in NZ, NZR and MEL. No longer was I buying anything that I was going to lose money on - investing not speculating.
I could read a balance sheet/profit/loss/cashflows and get a grasp for simple businesses. What was I doing with complicated insurance?
The windfarm was down from $1.3 to $0.056 per share, less than the cash and land (with lease obligations but no debt) so I went from 5000 shares to 1,900,000 -70% of my portfolio.
This investment proved dissapointing, I sold for only 9c a year later (much less than I believe it is worth) as I disagreed with the new management after we initiated a board renewal process.
If I look at CDD now, at $7 it was highly speculative. Not only the high price but we can see the bad acquisitions and the hubris building in the annual reports. Revenue kept increasing but profits were flat right?
Should have been a massive warning flag to all of us.
I think Andrew was on top of the world and bulletproof, the board was riding on his coattails. The resulting Crescent induced Seppuku was therefore gratifying they fully deserved it.
At 50c CDD was not at all speculative it was pure investment. It was really obvious if you read all the reports carefully and were watching the sectors it is involved in.
Of course all these raisings made the business safer and cheaper at the same time.
This distinction between investing and speculation, speculation is anethema to me and my ilk. The only way to do well is to invest with minimization of potential loss at the heart of everything you do.
I don't think CDD is risky, or any of my investments for that matter. The market is wrong and I am right on all of them - except SMX I am taking a punt there as it looks cheap but I don't really understand the IT business.
I doubt that it's going extinct like the market believes though - the amount is not such a big deal to me now.
I think my excellent returns will continue as I refine my judgement, but I won't be sharing too many more with the wider world of course
Read the book, speculation (like crime) doesn't pay. Long term and contrarian always looking at how the business is doing now with a fearful eye towards an unknowable future.
The market does from time to time get things very wrong and the independent thinkers are well rewarded.
CDD Price at posting:
$1.02 Sentiment: Hold Disclosure: Held
MQG in the GFC made up losses on BNB which was a real rookie error. I would now say I was speculating.
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