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G'Day all from an Aussie working in Singapore.

I've been sitting here absorbing all the Foolishness that's abound on this board for some months now and thought that it was about time I joined in. Much thanks to everyone who's posts here as you have contributed much to my steep learning curve and have helped me to finally take the plunge into investing, hopefully in a Foolish way.

As a newbie, and talking of plunges, can anyone give me any ideas why AGL has lost a dollar (~13%) over the last few weeks (ie from the day after I buy it!!). To my inexperienced eye they seem to have a solid financial picture and are tying up some good ventures in and around VIC, ACT and SA.

Is it that it is simply unfashionable vs tech stocks? I am in long, as are all my new aquisitions, but surely there must be something I'm missing.

Not the most exciting of questions to start with but one that is puzzling me.
Thanks in advance
Russnkez
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Your question is answered in the affirmative.

>>Is it that it is simply unfashionable vs tech stocks?<<

Overall a similar situation has developed as what existed in 1973, with a large number of investors exiting the blue chip stocks for large capital gains in the reseource sector.

The only difference in the current environment is the concept stocks have altered to the high-tech area.

IMO I feel that this transfer from value to non-value stocks will be shortlived and then the masses will again look to the blue-chip stocks for security.

Mind you it may take 8 months before people wake up as to what are the real 'value' stocks. Remember in these markets patience is a virtue and speculation leads to losses!
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Dear Russnekz (if i spelt that right)

banged it on the head, AGL no internet strategy, thus SELL !!!

Seriously Australia is internet crazy like everyone else me included. I am sure there is profits to be made for value investing- that assumes someone is willing to buy that stock at a higher price later.

However i am fully growth orientated. sorry let me rephrase that hyper-growth orientated. It must return at least 35% growth for me to invest. Of course this is contrary to all norms of investing but so far i am doing well

lance
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I take it Lance that was tongue in cheek?

Your comments however add to the sorry state of affairs that now exist in that we have allowed ourselves to be taken by the same pattern of greed fascination that those that lived before us in 1700, 1830, 1929, 1973,1984 and 1987.

We no longer look to value stocks as we do not know what value is! Instead we look to a concept stock that returns 35% capital growth in a short space of time and we think that this is all above board.

In youth I was once warned that the offer of easy money was illicit or illegal. Since then they have legalised gambling, however that does not mean that you will have gd returns continuously on concept stocks that offer no more than an 'e'xpectation of future results.

How mad have we become when Telstra posts enormous profits yet the investing public sells off these shares and then invests the proceeds into a dot.com fantasy that may have expectations of some future profit. This applies to basically all of the blue chip stocks from NAB, NDY, ANZ, BHP ... all of these stocks do not have the internet concept entangled into their business plans and hence the unfashionable is left for the fashionable - regardless of the ability for any profit or dividend to materialise in the short of long term.

What you see happening on a daily basis is the groundwork being done by the 'dot.com' investing public to transfer capital to valueless stocks. You cannot give a company value that can only make losses! A vacuum cleaner has the same ability yet I feel that this allegory will be lost on the forum.

The subsequent result will be the loss of the capital that is invested by the public through a reality check of a correction or crash of the markets. What a better way to wipe out this purported wealth that has been created and teach all a lesson in value investing!

And if you think that it cannot happen then think again as most crashes occur after good profits are posted!

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dear John

unfortunately i am not kidding.

Can you value a company that makes losses? Of course you can, the Australian Financial Review (a good read) has made losses for 20 years when it was founded. Yet i am sure you agree it was a product that was surely needed by the Financial Community, otherwise Rupert's News Corporation would have came up with that idea.

I think capitalism is fantastic, it allows the destruction of old companies and the formation of new companies. What may have been valuable 30 years ago is not valuable today. Remember the All Ords 25 years ago, companies such as MIM, Hamersley and Posideon were in the top ten stocks reflecting a resource focus.

Today the focus is on banking and media stocks. Who knows where ten years from now what the focus is. I am not saying the market is always correct but there are millions of individual investors who believe that by investng in a sector that grows above the market average they will be well positioned to capture the capital gains.

Now if you were a Graham & Dodd Investor, you would never invest in a technology stock. Yet without investing in technology, you would have missed all the gains of the last decade.

Will the stockmarket crash this year- i can tell you with 95% invested in a tech focus portfolio that the market will not crash. Sure they may be a slowdow but this is no 1987.

Lance
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John & Lance:

Given your discussion, you might find this article about the high aggregate P/E ratio on the NADSDAQ of interest.

http://www.mercurycenter.com/business/top/079556.htm

Christina



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G'day Christina, hope it's getting warmer over there in New York. Hopefully i'll be flying over there soon !!!

Anyway great article on PE's. I actually don't know where you stand Christina, are you a value or a growth investor? i'll love to hear your story.

Anyway for a full disclosure here is my portfolio displayed with a % it holds in my portfolio and a P/E (assuming it actually has earnings). They all American Stocks.

Stock    % of portfolio      P/E Ratio

NTAP:       43.56%            667.71
BRCD:       15.56%           1557.74
EMC:        12.61%            142.39
MSFT:        6.12%             62.89
IBI:         0.0001%           17.58
TERN:        4.77%           Yet to make a profit !
CSCO:        3.11%            190.84
INKT:        3.73%           Yet to make a profit !
EXDS:        1.04%           Yet to make a profit !

Why am i betting on technology?

Unlike other booms such as the Nifty Fifty of the 1974 period, i see most of the companies above revolutionising the way businesses and society can reduce the costs of work.

For instance EMC is a storage filer, thus instead of all those huge paper warehouses, businesses can store it on the these machines. This makes it easier for businesses to recover records instead of going to a warehouse and physically recovering it. 

Lance

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G'day and welcome,
AGL not a bad buy, I would have thought the same myself and am still thinking of buying them. Pity the market doesn't always agree with us.
Some things to remember, you haven't lost any money until you sell at a loss. You still have the same yield that you bought at. The fundamentals are still good.
Looking back at AGL 12 month chart they appear to be in a long downtrend, as the others posted this is because blue chips are largely out of flavour at the moment. This will not last forever but your guess is as good as anyones as to when this will change. If the Nasdaq dives this will change quickly, if it doesn't then who knows what will happen.
I suggest learning technical analysis to time entry and exits better.
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Aarrggghhh... had another bad day yesterday so I thought I would hit the 'concept' stocks on the boards. I thought the 'e'xpectancy but was quite gd actually ......... can't do trades as holiday in Melbourne so I will mull around and review some other valueless companies (lol).
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