Oceania can't afford much more than $6/hour for pool boys to keep their numerous pools clean
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fresh lows today :scared:
following the sector down on so many macro factor headwinds against this sector at the moment
my modelling suggests re-sales might be a issue sometime next yr for the sector
Ukraine (dirty Russia) and Liz Truss aren't going way. So things will get cheaper. My mum says to wait a bit longer and see what happens to the prices. I have six pools clean this school holidays so lots of cash to spend :)
OCA hit 83 cents on the first day of trading.
I think resales are already an issue, judging by the unprecedented number of brochures and advertisements in my letterbox/the NZ Herald and local community paper, and the regular open days around and about. People are reluctant to sell their existing home under current market conditions, so I suspect numbers entering villages via resales have slowed and given the volume of new builds in the sector.
On the other hand, we are reaching peak demographic momentum. I am an early post-war baby boomer (born 1947) so 75, and I have started looking at the opportunities in Auckland and in several of the provinces too. Not at all ready to act, but it's good to know how it is. My generation is increasingly reaching a critical age, and we were granted a good life and mostly became homeowners, which seems to be the necessary prerequisite to consider this retirement option.
issued at 80c ipo ?
anyway on your long term compounding i believe oca was a good investment untill last yr. that is last yr your returns per yr were roughly 13% per year ( includes capital gain + div ) so yes it was a good investment.
however now with the price at 88c that return is roughly 4% per yr which is not that good
so i guess if price stays where it is for a number of yrs it be very bad long term investment or if it falls more :scared: however if it went back to 1.50 quickly say it again could turn into a good investment.
point being nobody know's how good an investment will turn out until time comes to sell
If you are talking about if you had purchased on IPO yes. But for a buyer here the question is moving forward.
Exactly the opposite to what you wrote which I marked red is in fact true - as I described in August (below in blue), the longer the price stays low will make for the better long term investment provided the business does ok. Even if it takes until 2040 to reach $2 it will destroy just about every pro investor in the world.
After joking with a mate that at this rate OCA would take until 2040 to reach $2, I decided to take a look at what this scenario could look like as an investment.
I was stunned to find that it would be a very decent investment and in all likelihood beat the returns you would get from putting your money with 95% of professional investors over the same 18 year time period. If the shares go to $2 now it will destroy your returns.
From here to $2 in 18 years, the share price would produce a compounded 4.1% return. If dividends kept in lockstep (so the yield remained the same and the dividend also grew at 4.1%) and you paid 25% tax on the dividend and then reinvested into the company at the prevailing share price you would compound your investment at 7.92%.
Now if the share price stayed at 97c for the first 10 years and then grew steadily to $2 by the 18th year, you'd compound at 8.75%, but if the share price stayed at 97c for 17 years before jumping to $2, then you'd compound at a phenomenal 9.5%. This would turn a million into 5.5 million. At the original 7.92% it would be 4.41 million.
Obviously the share price staying static while dividends grow is unlikely, but this shows the effect of having a share price go nowhere. The longer it stays lower the better and you can of course commit external capital.
Given the choice 999 of 1000 investors would want and pray for only $3.46 million and reject the $5.5 million, throwing away 2 million dollars as they prey for the share price to go up NOW which would mean only getting a compound 6.92% return.
Ah, I remember back in the good old days, probably half a lifetime ago, it was worth $1.60. Bring back the good old days I say.
Mum says STFU and wants it to be 76 cents again so I can buy more.