Learning about shares: Check which way the wind blows

Olympic champion and investment novice BARBARA KENDALL continues her six-part series on sharemarket investing.


The merits of investing in managed funds versus individual shares.

I love getting letters from Carmel Fisher.

Carmel runs Fisher Funds Management, a fund of New Zealand shares that I've invested some money in. She sends quarterly newsletters to her investors.

The letters give updates on any shares the fund has bought and sold, and news from the companies we've invested in.

Carmel visits each company regularly and reports on what she sees. Sometimes she's really frank, which I always find makes compelling reading.

It's given me a new perspective on business. Sure, there's all the financial information that I confess I struggle to be interested in, but there's a human side as well.

Who's the chief executive? What's their track record? How are they performing? What's the strategy for developing the business? Who's prowling around and poised for a takeover?

I'm big on making decisions based on personality and attitude. This is probably the best reason for me to leave my share investment decisions to Carmel.

Nevertheless, I believe you can tell a lot about a company by its chief executive, just like a headmaster says a lot about the school.

My point is, I've enjoyed my investments in New Zealand companies more than I thought I would when we put money in the Fisher Fund. For a start, I didn't realise I'd be getting quarterly instalments from an ongoing drama called business.

It's changed my experience of reading the newspaper, too. If I know I've got a stake in a company via the Fisher Fund, I actually read any business stories about the firm.

Sometimes I even have an opinion - which is a sure sign that I'm starting to find it all quite interesting.

This isn't my very first experience following shares. Back in the late 1980s when Telecom listed, my Nan bought some shares for all of her grandkids. I remember enjoying checking out how my shares were doing on the share page - especially watching them climb from their listing price of $2 to about $9 when I sold them.

I also remember loving the dividend cheques that came in the mail every now and then. They weren't huge, but for a teenager who spent all her money on expensive stuff like boats, it was cool getting any amount of money through the mail.

My question for Dan Dividend today is:

Where do you get the best information about shares?

Dan Dividend responds:

Good question. Here goes.

Information is the wind in the market's sails.

Information on specific companies, industry sectors or the economy all affect the market price at any time. Daily business news is your market windvane and investors always have an eye on the sharemarket table and the business news.

Look beyond your windvane.

Your windvane by itself often isn't enough. To spot investment wind shifts from a distance - well before they register on the windvane - you need access to a greater body of information. This will give you more time to make investment decisions in advance of market movements.

There are many signs of wind shifts.

Key information that will help you read the market includes:

* Daily company announcements. These are available free on NZX's website, www.nzx.com. All listed companies are required to make announcements of any development that is likely to affect their share price, and they are required to make their announcement via NZX before anyone else, including the media. This ensures all investors have equal access to information.

* Specific company analysis. Foremost among these are broker reports, which are worth obtaining and reading carefully. After all, NZX firms' reputations are on the line every time they make a prediction and these reports are well-researched. Also, broking analysts do something we as individuals are unlikely to do - they regularly visit listed companies for the "good oil" to share with their clients.

* Industry sector announcements. A prediction about global newsprint demand, for example, will affect our listed forestry stocks as well as companies that service the forestry industry.

* National economic announcements. Predictions of currency movements, for example, affect both importing and exporting businesses.

* Global economic reports. Generally, our market follows big international markets. Interestingly, though, in the last three years the local sharemarket, the NZX, has outperformed global benchmarks.

Enlist tacticians to your crew.

If you are helming your own investments, you'll get real pleasure learning to navigate through the sea of information outlined above.

Recent research shows that most small investors get their sharemarket information from the media and their friends.

NZX recommends that you always enlist expert help from a broker. Apart from the information they have, they will help you tailor investment choices to your specific needs and risk profile. A list of NZX firms is available at www.nzx.com.

But always remember - hold a steady course.

There are numerous ways to predict changes in the market but for most investors, the real benefits flow not from regularly changing tack, but from investing in quality stocks over the long-term.

* Email questions to Dan Dividend.