BT - time to buy ?

ISTR that's what they said about Bank shares

tim

News this morning that their Global Services division is in a mess. I thought that was their great hope for progress.

Is it time to buy a particular stock?

Well that requires you to get 1) the right stock 2) the right timing.

Past performance even from "gold" companies may not remain indefinately. I think MSFT went from 0.12$ to 120$ from 1984 to 2000. That is 1000$ into 1,000,000$US. However had you bought in 2000 it has gone from

120$ to about 60$, roughly a -50% over 9yrs in which a plain MM ran rings around it. There are sod all MSFT at the same valuation in the West right now - it was unique re right company at the right time at the right valuation. With big companies the Law Of Big Numbers applies.

The general principal of investing is do not confuse talent with trend, hence the financial industry is fubar.

Thus it is always wise to verify you went through the requisite learning, because mistakes can be costly. For example progressing as an investor through Cash - Bonds - Broad Funds - All Asset Funds - All Asset Sector Funds with weighting according to economic cycle & reweighting according to some model (eg, MPT) - Currency Hedging (ie, some of your assets are in Euro & US$ & Swiss Franc) - Some Individual Stocks added after due diligence (momentum stocks for momentum times, value stocks for value times - eg, sell Nascrap QQQ & buy Brk.B / Gold / Oil after 2000 peak) - Multiple Individual Stocks very carefully selected and monitored - Options to balance risk & opportunity and so on. Something is a cost or a return, a trade is not an investment.

Cutting short the learning curve can move you back down - lose 50% and you need 100% to get back. Investing is business - consider the cost of being wrong as well as right (bull & bear overstay their welcome), ignore the sunk cost of a mistake - correct it before it becomes financially your last one.

To add the bloody obvious, debt is of course the enemy of all returns. The asset of all returns is compound interest, many poo poo cash but at the right rates it compounds well. Consider saving £2k/yr at age 18-23 compared to having to play catchup much later in life.

The mistake with all the debt is that quite frankly the easy-money should have been targetted at business - and consumer loans/mortgages should have been subject to higher rates and stricter controls. We had a vast amount of credit, yet squandered it on land & junk when we COULD have rebuilt the economy. Now the UK is a 1-trick donkey of finance whose debt risks not only sinking future growth, but the people & currency.

Utter utter ********* disgrace of irresponsible lending which has seen an opportunity wasted to simply result in the UK moving backwards in competitive terms and financials to business turn up for "Benefit".

I'll state one final point. Create a life spreadsheet - from whatever age you are now until retirement. Enter replacement car cost - and delaying it for an extra 6 months or buying something reliable rather than a money pit on wheels, enter likely energy costs. Ideally do a bad / good scenario every 5yrs so you end up with a spectrum of them over life. You will THEN understand the real COST and RETURN of money, how seemingly minor choices actually have very big long term implications. Challenge your assumptions - doesn't need the be a peter senge left column systems thinking, just financially plan & litmus test ahead.

Of course financials don't want anyone to do this. They prefer people spending on plastic so most are sheep and can't remember what they spent so overspend. They also prefer people to "refi" 25k over 10yrs into 52k over 25yrs, if people sat down and stuck the numbers in a "life spreadsheet" they might rapidly think twice about such parasites.

Would I buy a particular stock, actually the adage is monitor weakness, buy strength & add to strength. If you are a nimble & disciplined trader you can trade anything - most people are not. Better to spend the same effort on choosing funds (because most people can't get that right, never mind the fund managers).

Nothing wrong with a "prudent barbell strategy" linked to "play money". Quite a few people did that through the 1990s & 2000s with GS MER (particularly if they worked in the financial services). However don't lose track of risk, because otherwise you need a bailout and you are not a bank :-)

A bit lower yet, apparently.

The Telegraph has a crystal ball which reports that BT shares will fall 15% tomorrow morning.

"By Rupert Neate Last Updated: 12:21PM GMT 22 Jan 2009

BT shares tumble on Global Services woe. Shares in BT tumbled 15pc on Friday morning after it again warned on profits at its Global Services division and said it will be forced to write off £340m in costs trying to turn around the troubled IT networks business."

Chris

In message , Chris Blunt writes

I am going to have to start reading the Telegraph, 24 hours ahead of the market is good enough for me. :-)

Does it tell us which way the Euro's going.

I have some money to change

tim

Remember when they were 1061p in Jan 2000? Derek

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As a shareholder (by inheritance only) for over 10 years I really do wonder about BT's long term future. They are straddled with the copper network which costs a fortune to maintain, are struggling to keep their existing telephone subscribers (including me), due to their high rental charges, penalties for no going direct debit and constantly changing their charging structure so that you don't know where you are.

Can anyone tell me what is the next "big thing" that will put BT back on the map... 21C maybe?

0

Regards,

Merger with Channel 4?

Linkup with T-Mobile and 3?

On the other hand, all that Indian outsourcing they've done must be looking dodgy given the 25% drop in the value of the pound. When those deals come up for renewal .... ouch!