Where did Telecom NZ (TEL) begin trading as a listed entity eighteen years ago? $1.82 is the price I have on the 30th August 1991. Where is the TEL price today? A staggering 26 cents above that price at $2.08! There are for better and easier avenues for making money on the stock market but be aware!
The long and short of it is, why would you hold the stock? Yield, yes but was that why you bought stock initially.
Let’s compare it with the stock market gains that have recently been depleted seriously. Starting at 1449 on that same date in August 1991 the index now stands at 3910 a 37% gain and TEL is breaking even. Am I missing something or has this stock massively underperformed? I think and hope the latter but there still is a huge amount of shareholders and those buy and hopers that eighteen years on are still dreaming the dream but unfortunately not living it!
If you haven’t heard there is a rort going on and few escape the tag and many collude to prove it be it governments, companies, fund managers, even the much conflicted ASX as it supervises the market it is listed on (who agreed to that?), and more recently regulators especially in the US have proved to have been complicit in the recent downfall as the lunches get longer and as to the supervision, well that will take care of itself – as long as we’re all making money!
What is my point? It is a battlefield out there with everyone, not just the next trader, arguing a strong case for a piece of you pretty folding and unless your wary and realistic you’ll be fleeced and I would argue that in the case of TLS and even more so TEL it is the “advisors” who are responsible for promoting a story of untold riches which is eagerly agreed to (by the issuer) under the guise of ignorance, by governments (and if we’re doing it ,it must be right and good) who then end up believing their own self righteous story, and there are the many, many potential issuers wishing to float their stories in return for your folding – again. Gee Babcock and Brown had a party with vehicle after vehicle being listed. Where are they now!! So how do we know which ones are the goodies and which are the bad guys? There all at it but the good news is if you accept that realistic knowledge, get on with it, and take things with a grain of salt, face value, or any other adage you want to roll out you’ll be less disappointed and perhaps even profitable. Beware the dream sellers and only ever believe yourself!
Why do I use charts to make my trading decisions? It provides the most accurate and unadulterated view of where our primary motivator, money, is going and if that includes the insiders so be it, they are part of the game whether we like it or not.
Why don’t I hold longer term? Because things always change (AMP, LLC, BXB, CSL blue chip leaders that have all suffered their own calamities over recent years causing severe shareholder devastation) and invariably, although you can get lucky occasionally, not the way you expected and we only need to take our own Telco, (TLS) as an example of that. By not being ego driven, pig headed, or wedded to only one outcome we can be flexible, move with the trends, let the winners unfold and always chop out the doubtful when objectively predefined limits or stop losses are broken. We have made very little money from TLS (as uptrend traders only) with “made” being the operative word because during its life time TLS has spent most of its time going down despite highly promoted new installments and all those fresh new “reasons” to buy (new CEO’s hah hah!) and have another go and yes even then, despite being well underwater, there were still many hopeful believers. Amazing, fleece ‘em once and they’ll come back again for more! Perhaps a little common sense might have been useful.
The money flow apart from on a couple of occasions like the rally from $3.50 to $5.00 in late 2006 early 2007 has been out of TLS, not in, which is the sign we look for. It is that simple and any other stocks with such money trails are filtered out of contention, so why fight it because we already have enough opponents to deal with in generating consistent trading profits. Part of this unquestioned loyalty I believe comes from the fact that it was government supported. There is a responsibility there I think but by now they have absolved themselves like so many ahead of them!
This is not a “throw it down your throat” argument it is critical, cynical, despairing for some, but ultimately honest and truthful having spent the last 25 years in and around markets of all types. We’d all like to think it is a perfect market and if it was we wouldn’t need ASIC and the like but there are not many of us out there wishing to tell it like it is and I a amazed why are we constantly surprised when disaster happens!
So I despair for TEL share holders and my approach in taking money off the table is not necessarily to invest in their “story” (everyone’s got one) but to follow the money flows as directed by the simple demand supply equation of a stock price, and more importantly, especially in these days of short and random rewards when the market can behave erratically at the mercy of sentiment and how rich and poor you are at the time.
Sorry bottom line is money and charts provide the availability and accessibility for us and depict the necessity of understanding this very astutely. The picture is not always clear and that’s when we remain neutral but when the switch gets flicked on our trade plan (money going in i.e. price and volume rising) there we are ready to go with our entry and subsequent management of the trade from an optimum result point of view and that could be a loss, just as easily as a profit. It just so happens that our approach generates average profits of 35%, average losses of just 10%, and a win loss ratio of 1.5 to 1. This is based on our five (20 stock) portfolios that we have run since 2003 for our portfolio members.
TEL may show some promise above $2.15 if it can get there. We are at a historically low price, accumulation is evident and the build-up reflects a sense of eagerness as ample buying is now absorbing the selling and has so far stopped the rot. Now for the sellers to run out of stock! And even that doesn’t necessarily foretell of a resurrection for TEL but merely the possibility of a price move worthy of a trade. That’s all we look for, all we want, and all we need.
Stockradar’s Trend Intensity rating for TEL is at a promising but unsteady -4. (Scale 10/-10) The trend is currently down / neutral, volume is erring on the bull side, the price is right on the moving average reflecting neutrality and the price momentum (MACD) indicator looks set and prepared to challenge the zero level and if it can surmount that level we may have a goer.
A rally through $2.15 is capable of triggering a worthy reversal and result in a rally possibly up towards $3.20/50, but we’re not getting too excited yet! We may not have made much money on TLS or TEL but more importantly neither have we lost any simply be following those money flows. Sometimes it’s simply about capital protection and survival.
