Tuesday, July 27, 2004
Leave tea leaves to the tyros
Tyro. Like all the best words it's short, rarely heard and easily defined:
tyro
Tyro \Ty"ro\, n.; pl. Tyros. [L. tiro a newly levied soldier, a beginner.]
A beginner in learning; one who is in the rudiments of any branch of study; a person imperfectly acquainted with a subject; a novice. [Written also tiro.]
(Webster's)
On July 29th, 2002, almost two years to the day, I made my first serious investment in equities. For £1,999.78 I acquired shares in McCarthy and Stone, the retirement housebuilder at 275p. My wallet was persuaded to party by the company's low valuation against fundamentals and share price momentum. McCarthy was a company enjoying pituitary-case growth in a niche market they conquered. So far, so good. Impressive results nudged the share price higher beyond three pounds. The earnings outlook confirmed the industry's future was a hot topic but the company's markets remained strong:
The home-owning retirement community, which is now more affluent and more numerous, is the market we serve.
The rate of house price increases over the last year has been the subject of much public debate, as is the high levels of household and mortgage debt, but with low interest rates, affordability within the general housing market remains sound.
McCarthy & Stone has started the new financial year in excellent health. We are enjoying much higher levels of enquiries, visitors and net reservations compared to last year and have a record forward sales position. This is extremely encouraging. We have a land bank that will deliver us profitable growth and a balance sheet that can finance it.
Given the present market conditions, the Group can look forward with confidence to delivering increased value for shareholders and sustainable long term growth.
As a tyro, I suffered the delusion I was some prescient pundit that could better predict McCarthy and Stone's fortunes than the company insiders themselves. In my own arrogance I failed to ascribe greater relevance to the company's report of a stronger market, higher levels of net reservations and record forward sales position, arrogantly unable to ignore the public debate on future house prices on which I had formed my own judgement - the industry's earnings were facing a steep decline. I was in no place to claim to know the industry better than McCarthy executives, or the management at any other housebuilder, who were all extremely bullish.
I hastily sold McCarthy and Stone for 313p on November 27th, 2002. McCarthy continued to deliver growth to it's shareholders without me. The business was so desirable it's co-founder, John McCarthy attempted to buy the company back in the summer of 2003 and the share price progressed past five pounds.
Luck was with me during my shareholding, the price not once fell below my exit point, despite my error I'd made a profit. My mistake was convincing myself I was a corporate clairvoyant, that with good use of nose and nous I could foresee the fortune of industries I had no inside experience or knowledge of.
Did I learn from this error? Not before I'd diagnosed it. That came in 2003, after losing all my gains from McCarthy and Stone in AIM Group, incurring my maiden loss in stock market investing.
Don't second guess the market, trust your company's management to inform you. Tea-leaves are for mugs.
The Artful Dodger
tyro
Tyro \Ty"ro\, n.; pl. Tyros. [L. tiro a newly levied soldier, a beginner.]
A beginner in learning; one who is in the rudiments of any branch of study; a person imperfectly acquainted with a subject; a novice. [Written also tiro.]
(Webster's)
On July 29th, 2002, almost two years to the day, I made my first serious investment in equities. For £1,999.78 I acquired shares in McCarthy and Stone, the retirement housebuilder at 275p. My wallet was persuaded to party by the company's low valuation against fundamentals and share price momentum. McCarthy was a company enjoying pituitary-case growth in a niche market they conquered. So far, so good. Impressive results nudged the share price higher beyond three pounds. The earnings outlook confirmed the industry's future was a hot topic but the company's markets remained strong:
The home-owning retirement community, which is now more affluent and more numerous, is the market we serve.
The rate of house price increases over the last year has been the subject of much public debate, as is the high levels of household and mortgage debt, but with low interest rates, affordability within the general housing market remains sound.
McCarthy & Stone has started the new financial year in excellent health. We are enjoying much higher levels of enquiries, visitors and net reservations compared to last year and have a record forward sales position. This is extremely encouraging. We have a land bank that will deliver us profitable growth and a balance sheet that can finance it.
Given the present market conditions, the Group can look forward with confidence to delivering increased value for shareholders and sustainable long term growth.
As a tyro, I suffered the delusion I was some prescient pundit that could better predict McCarthy and Stone's fortunes than the company insiders themselves. In my own arrogance I failed to ascribe greater relevance to the company's report of a stronger market, higher levels of net reservations and record forward sales position, arrogantly unable to ignore the public debate on future house prices on which I had formed my own judgement - the industry's earnings were facing a steep decline. I was in no place to claim to know the industry better than McCarthy executives, or the management at any other housebuilder, who were all extremely bullish.
I hastily sold McCarthy and Stone for 313p on November 27th, 2002. McCarthy continued to deliver growth to it's shareholders without me. The business was so desirable it's co-founder, John McCarthy attempted to buy the company back in the summer of 2003 and the share price progressed past five pounds.
Luck was with me during my shareholding, the price not once fell below my exit point, despite my error I'd made a profit. My mistake was convincing myself I was a corporate clairvoyant, that with good use of nose and nous I could foresee the fortune of industries I had no inside experience or knowledge of.
Did I learn from this error? Not before I'd diagnosed it. That came in 2003, after losing all my gains from McCarthy and Stone in AIM Group, incurring my maiden loss in stock market investing.
Don't second guess the market, trust your company's management to inform you. Tea-leaves are for mugs.
The Artful Dodger
Comments:
Post a Comment
