Yeah guys,
no problem. I will post up some comments shortly. I am rather busy for the next day or two.
One question first. Are there many stocks traded on the PNG stock exchange? You may have to establish an account and trade on the ASX. That would give you more scope.
:et's start from scratch. There are basically four types of investments:
1. Fixed interest.
2. Property.
3. Shares/stocks
4. Commmodities
Fixed interest--obvious. You put your money in a bank or a financial institution for a fixed term and they pay you interest on that money. The higher the interest the greater the risk. eg. Unsecured notes.
Property. You buy a house or a commercial property, and let it out to tenants. Your income is capital gains and rent. Long term outlook 5 -10 years normally. You can, of course, buy into a listed or unlisted Property Trust.
Shares. You are actually buying a piece of the company. Take Higlands Gold (HIG) for instance. It has 500 million shares worth about 20 cents each. So the company is worth A$1 billion. The question before you buy shares in HIG or any other company is, would I buy that company for, in this case HIG, $1 billion?
Let us look deeper. HIG runs at a loss. It has hedged its forward production at A$399.00 an ounce. It is hedged for an annual production of more than it has ever produced. So that extra gold needed, is bought on the spot market at over $600.00 an ounce. So what is the company worth? The answer is of course (F--- knows). The company could go broke. Or if it comes good, the shares could go to A$2 to A$3. So you see, here is great risk with a possibility of great gains. I have 5,000 shares as a wildly speculative investment.
Lihir Gold is another one that has never made a profit. The other day it bought out its hedging position for A$23 million. It did this by issuing more scrip (shares). So from now on, it should start to make a profit. But, for this financial year, you have a loss of A$23M up front.
Alternatively, you could invest in BHP Westpac or other "Blue Chips" and virtually sit back and forget them. You will get paid a dividend on those shares every six months normally. Any shares that do not pay dividends, are classed as higher risk. So once again you may note, the higher the potential gain the higher the risk. You can hang onto shares for years, or trade them on a regular basis. That tends to depend on the type of company. Blue chips, you will tend to hold for years. Others, you may trade on a yearly or even weekly/daily basis.
Bonds. The government issues Bonds. In effect, you are loaning the government money thet it will repay in 5 - 7 years time, for a set anmount. Obviously if interet rate go down you are well in front. If they go up in that time, you will diminsh your profit.
Establishing a Trading Account. You set up a Bank Account that your Stockbroker can access, to pay for shares you have bought, or deposit funds for shares you have sold. Not absolutely necessary, if you only trade in PNG. But if you wish to trade on the ASX, it would be a necessity.
So that is a start. If you have any specific questions, I will help if I am able.
Dr Who,
what you have suggested sounds OK to me. That seems like a good mix to me.
The correct imvestment mix in your portfolio is as individual as you are. It depends on your age, your risk tolerance. There are a few basic rules though. Main one is; Do not have all your eggs in one basket. You certainly need fixed interest as well as shares. For instance, you may unexpectedly need money in a hurry. In this case, property, whilst being a great long term investment, would be a liability. You cannot sell, say, 1/4 of a house. If you have to sell property quickly, and at the wrong part of the cycle, you can lose a lot of money. In Brissie, no more than five years ago, people were selling houses and Units, for little more than half of what they had paid 5 years previously.
That being said, in the long run I hace made more out of property, than I have made out of any other class of investment. However others will tell you that shares are better. Perhaps I understand the property market, (at least in Brissie) better than the sharemarket. The time frame I work on in property, is 5 - 20 years or more. So that can be, a most of a lifetime investment. Shares I look at, from 1 day to 2 years investment. So I guess that makes me a trader by nature.
Thanks ralph, very clear and understanding. Ok now, i have 2 goals, Long term and short term.
How would I know which share to invest in, like general tips. In PNG the mining and petroleum industry is booming. So is the tourism market with the access to the spinoff from the massive Fijian tourism market.
Unfortunally, there is no listening for a tourism company on POM sox. BTW, ralf, vortexPNG LTD is a company, what are some of your suggesting if we wanted to make share offers?
Re the Pomsox list,
there are onlty three companies I know anything about. They are HIG; LHG; and OSH.
HIG and LHG have never made a profit yet. That being said, I recommended LHG to someone about 2 years ago, when the price was around A$1.00. OSH has been around for a zillion years or so and has never done much. BSP I know nothing about, but I imagine it would be a steady blue-chip growth stock like most banks.
Worse luck, like anything, you have to do years of study. I must have studied the market for ten years, before I actually bought my first share. I know that sounds ultra conservative, but as an engineer, I only operate when I have 120% of the facts. I hate doubt. But that is just my personality, I guess. So, normally, I look at the downside of every stock. Usually, no matter what the upside, if the downside is too great, I don't invest. HIG was an exception, and I may well get burnt on that one.
So that could serve as a warning. If you decide on an investment strategy, don't deviate from it without very good reason. Even if you lose on an investment, do your research on why. Then see if you can learn something from it.
If you decide to invest on the ASXm you can shortcut the learning processm by subscibing to one of the reputable Investment Newsletters. I subscribe to one myself."The Rivkin Report"
Kolwan. You can invest in or sell Treasury Bond at any time in their life cycle, by trading them on the market. To do this successfully, you have to have some view on the movement of interest rates. That is beyond me. Alternatively, you can invest in them as along term fixed interest investment, and keep them until maturity. If you need ready cash in a hurry, you can always sell them "on market".
If Vortex was to go public, it would have to issue a prospectus. Then It would have to get a Broker to underwrite the IPO.(Initial Public Offering) I would not know all the steps, for I have never been involved with a company that has "gone public". Naturally, it would have to list its profits and losses, assets, liabilities, and future growth prospects. Read any company's Annual Report, and you will get some idea.
