There comes a time when investors just need to let go.
Some things are just not meant to be.
Yet even so, the fascination with and the desire for some investors to buy Telstra [ASX: TLS] shares is unwavering.
Personally we don’t get it. If Telstra was the only share listed on the Australian Stock Exchange, we still wouldn’t touch it. In fact, I think I’d rather buy an over-priced property with a 100% mortgage and negative gearing than buy Telstra shares.
That’s how bad an investment in Telstra is.
Given where the share price is, we’d say that most investors agree:
But amazingly, there’s still a bunch of investors out there who keep lapping it up. They keep believe it can’t possibly get any cheaper.
Remember the scam last year with the sale of Telstra shares by the Future Fund? The fund managers and brokers were falling over themselves to grab a piece of the action.
So excited were they, that as we recall, the Future Fund ended up flogging more shares to meet the demand.
Yet still the share price has done nothing. And odds are it never will do anything.
But that doesn’t stop the brokers from trying to hoodwink their clients into the stock. Look at the chart below that we got from the CMC Markets Stockbroking website:
Of the five analysts surveyed – which granted, isn’t many – all five of them reckon Telstra is a cracking buy right now.
Then there’s the broker consensus on the Investsmart website. Seven buys and three holds. The analysts obviously reckon they’ve picked the bottom of the market for this dog:
But when I look at Telstra I just think, “Why would you bother?”
It’s not as though Telstra is the only share available to buy on the ASX. At the last count there was something like 1,800 listed stocks.
And not only that, it’s got so much going against it only a mentallist would consider the stock a good buy.
Think about it. Do you really want to buy or own a stock that owns and maintains technology that is up to 100 years old? And which faces stiff competition from better companies in the new technology areas.
Do you really want to buy or own a stock that has a quasi-government department in control of a big stake in the company?
Do you really want to own a stock where the government could destroy it at the single stroke of a pen? And where the same government is plotting to establish a taxpayer funded competitor?
We don’t. But plenty do.
But then we always hear this one, “Oh, but it pays a good dividend.”
Really? If you’d bought Telstra shares back in 1997 and held on, you would have picked up $2.98 of dividends.
Right now, Telstra is trading at roughly the same level as the initial float price of $3.30. So, taking the dividends into account you’ve almost doubled your money in thirteen years.
Factor in the real cost of inflation and your investment would be well under water.
And if you were unlucky enough to pay $6, $7 or $9 then you’re seeing on a fat loss right now.
We like dividend paying stocks, but that doesn’t mean you should forgo capital value.
The dividend with Telstra just isn’t good enough to justify holding it. There are plenty of other stocks on the market that will give you a decent dividend yield, plus the potential for some conservative growth as well.
But, I’m sure you know why nearly all the brokers and analysts have a buy recommendation on Telstra. The simple fact is, they’re keen to get their snout in the trough the next time the Future Fund decides it wants to flog some stock.
The millions in fees that UBS earned from the last sale is evidence of that. And as for the fund managers, well, it’s not their money anyway, and they’re always keen to do a favour for their broker mates, and vice versa – “You scratch my back…”
Look, maybe we’re wrong and maybe the Telstra share price could double or triple from here. But so what? Who cares? There are so many other opportunities on the market that staying with Telstra is just a monumental waste of your capital.
Our advice to anyone that’ll listen is to just sell the thing and be done with it.
Buy something else. Heck, I’d rather tell you to buy bank shares than Telstra shares – and that’s saying something!
Cheers.
Kris.
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I have just found the Austraian Bullion Company’s website, but it looks like they do not publish their prices. You have to call them to get their price. The link is below, and they appear to be based in Melbourne. I have bought some of their 10 oz bars a few years back, but through a dealer in Brisbane, so they do appear to supply nationawide, both through direct dealing and through independent dealers.
You should always check out your local dealer, I would suggest, and give them your business, provided that they are prepared to be competitive and match the best price you got from somewhere else. That’s how I tend to think, anyhow.
Dealers are typically open for negotiation, so if you ring around and get a few prices, then you can always ask them to improve them on their offer in light of a competing quote you just got from somewhere else.
http://www.australianbullioncompany.com.au/todays-prices
cb
Bennett: China will boom because it has lots of poor people and it will make Australia the richest country in the world
GB: China will see lower GDP growth soon because of inflation an irresponsible monetary and fiscal policy linked with obscene bank lending
One of us will be correct
lol, GB. Just as you say.
Spot on Tim….its a laugh sometimes how much people take themselves so seriously.
Lets all stick to the topic of the day people…it makes for a much more open and fluid debate.
Incidently cb: Do you do anything other than comment on blogs all day?
I’m sure CB has many things he attends to apart from blogging, but i for one am grateful for the informed opinion he bestows upon us.
Well, Richard – I recommend that you stick to your own good advice.
As for the rest of us, let us stick to ours. Do YOU do anything all day but tell people what they should or shouldn’t do?
You want to make a discussion more fluid? Then why don’t you contribute a thought or two to every topic? No idea?
mt – this is what happens when you try to push anlightened ideas onto people, when those ideas are not supported by economic fundamentals, when supply demand fundamentals are being distorted by legislative fiat. One word sums it up well: malinvestment.
http://blogs.news.com.au/heraldsun/andrewbolt/index.php/heraldsun/comments/death_of_the_wind_farms/
Richard – I forgot to mention that you should not feel obliged to read just anything people post here, but if you cannot help yourself, then your complaints should be directed to the editor. On the other hand, if you after a lesson or two in civility and courtesy, they happen to be very close to my field, so we can talk.
Sandra – thank you for the kind words. I would myself describe what I am doing as ‘sharing’ and sometimes ‘venting,’ but I am also mindful of the fact that some in the crowd would be far more inclined to describe it as ‘hyperventilating,’ or worse. Anyhow, I will get bored with it one day, like Peter Fraser seems to have, and then I will be gone.
In the meantime, those who would rather see me shut up, should continue going for the knee.
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