to show you that even the best of us can engage in massive cock-ups from time to time...

I think that second glass of Dom Perry at dinner was a bit much, as I have managed to place an order on the Gold market, with my broker about 20 minutes ago and ...ummmmm.....read out the wrong figures ...resulting in a massive kick in the goolies (sp?) to the tune of $4500 ..LOL!!

Opps

ahhhhh...the joys of life

minutes! TWELVE minutes!

That is all it has taken for a 'round turn' on the gold market!

Shorted gold at 1:45pm at $768-00 and closed out my position at 1:57pm (about 2 minutes ago) ...at $766-00 to meet my standard profit margin of $200 per contract!

Gosh...not often it is that quick!

see Smiths City Group are up to 62 cents... 5% since I mentioned it last week.

One company I was waiting for the financials to come out before mentioning, is Cavalier Corporation Ltd. Their code is CAV on the New Zealand Sharemarket.

They are in the Carpet business and most of it is exported.

They tend to be fairly consistent with their turnover and profits and currently the shares are well priced at $3-20.

However, they are paying their dividend today so the market will mark the price down and SOLO-ist Capitalists should not pay more than $3-10.

It should turn out to be one of these solid, unglamourous investments.

early October 2006 I put together a small portfolio of US Shares with the intention of seeing the performance during 1 year.

The anniversary has been reached and here are the results...

Stealthgass Inc. Purchase price $12-10 Current price $17-25

Nam Tai Electronics. Purchase price $12-59 Current price $13-04 (this has not performed so well)

Southern Copper Corp. Purchase price $45-13 Current price $127-80

Ship Finance Ltd. Purchase price $$19-61 Current price $27-27

Total return over the 12 month period: 61%

Needless to say, the Broker who placed these orders for me, who works at a certain Sharebroking firm, and who is regularly interviewed for "Expert Comment" on television and the NZ Herald...was horrified 1 year ago today at "how foolish and reckless" I was being...(and is currently scratching his head wondering how I did it)

Mmm, don't quote me on this, but under the old regime ... no, start again.

The problem is that although this would be an Australian Company, because I am a NZ tax resident (you can be tax resident of more than one country), then the income of this company would still have to be 'attributed' back to me (for all extents and purposes). Indeed, under the old regime, although this company would have been in a 'grey list' country, hence, in the first instance, outside NZ's Controlled Foreign Company (CFC) rules, as it would have been most probably making use of 'specified tax preferences' in other jurisdictions, then it would still have been under the CFC rules, which forced attribution of income, and on a basis that always did tax capital gains on shares, as the attribution calculations (four choices) measured differences in opening and closing values of shares. (Possibly).

The new regime has done away with the concept of the grey list, but by simply bringing all company activity into attributing income by one form or another.

Although I'm not explaining this well, and it is certainly not in my area of expertise (all work touching NZ's international tax regime is referred onto KPMG or Deloittes), however, the salient point in all of this is that as a NZ tax resident (and the only way to break that is to become a tax exile, per my first post), I am subject to return/attribute by worldwide income, and I'm pretty sure - I will check and report back - if I were to set up a Company in Australia, then for NZ tax purposes it would simply be treated as if a NZ company for the purposes of the new overseas investment tax rules.

I'll hone my facts a bit better and get back to this thread in a few weeks, but the point is NZ's international tax regime is a huge, vicious (because of the punitive penalty system for getting it wrong) net, that taxes a NZ tax resident's worldwide income in a most comprehensive way. The only way to avoid it is like Faye, Richwhite (sp?) and Myers, that is, you've got to sell the family home and have no other permanent place of abode, and stay out of NZ for the day counting rules in each twelve month period. (By the way, a series of bank accounts has been held to be a 'permanent place of abode'). Never under estimate the ruthlessness of politicians in going after your money.

... that Australian companies don't pay a capital gains tax on the foreign shares they own.

... and if you own that Australian company, and you take no dividend or drawings, you wouldn't have to pay a tax here?

I can see that when you eventually take some drawings or dividends then you might have to pay tax on that but otherwise I don't see where they would tax you.

What's wrong with my scheme?

I only purchase shares based on 'fundamentals', too, Mark...technical analysis is irrelevant if you are seeking long term investments.

I have only lost money on a single occasion...with a British company called Middlesex Holdings Ltd, just before the turn of the century.

They were engaged in metals trading in Russia and President Yeltsin instituted some policy change or other which caused the share price to collapse, resulting in the loss of my $10,000 investment.

I was quite miffed about this and did the only thing anyone in my position would do...namely, to pop down to the University, locate a Russian translator to assist me in composing an invoice for $10,000 which was promptly sent to the Russian Embassy for 'Investment Services'.

Rather to my surprise...(and presumably due to one too many vodkas by the Accounts Payable person)...within six weeks a cheque arrived in the mail!

Just read your post properly. Australian companies are 'generally' out of the new international tax regime that has been instituted. But setting up an Aussie company for myself to hold other foreign shares doesn't work, as I'm a NZ tax resident so am liable to return my worldwide income regardless (and it would make no difference if I held shares through Family Trust, etc: if I had effective control of that Company - actually, you don't even need to be 'in control' - then all income is taxable in NZ). And this would be without even considering the obligations that company would then have to the Australian Tax Office, and I wouldn't have a clue how that works. The only way round this is to become a tax exile: leave the country for the day counting rules, plus, have no 'permanent place of abode' in NZ, which is not possible.

Many people do not understand just how vicious NZ's international tax regime is. The Socialists, including National, have the game completely sown up. And no, Elijah, the concept of tax havens is illusory, utterly, to NZ resident taxpayers.

Reed: yes, own a few ASX shares as part of my 12% foreign shares (and yes, outside the new regime), but thinking latterly I'm better using managed funds, as my picks tend to be lousy: case in point, BSA (Broadcasting Services Australia) - lost a major Telstra contract two weeks ago, down 34% since Best thing I ever did was put money in Fishers Australian Growth Fund, although I suspect their Centrebet holding is hurting them a bit lately on top of the horse flu, just currently.

Although I'll take my BSA to your Feltex Did you get into them through Forsyth Barr? I had one client whom they were recommending to go in, but luckily, as they were high country farmers, they begged off as it didn't represent diversification from their main business, which was clever, and lucky, for them, as it ended up.

Elijiah: love your posts here, so don't stop, but I'm not easily parted with my money, (correction, my wife is not easily parted with our money, so will always check things out. I buy on a fundamentals basis, as opposed to technical analysis, with concentration on earnings ratios, rather than asset backing, given under International Accounting Standards you can categorise an awful lot under assets that is nebulous as to value when markets turn bad. Concentration on earnings means I'm relegated to established companies, rather than start ups, but experience has taught me to be risk adverse.

Feltex figures were complete nonsense from start to finish ...as 'some of us' were cautioning at the time

With regards to this tax business...here is some inside information for you ...the IRD is overworked and understaffed.

It is true.

I admit it.

Therefore why not buy shares and increase your wealth and simply ignore the law?

Paying the tax is entirely voluntary on your part

Elijah -
Was feltexs NTA figure misleading?

Mark -
As Ausi companies are exempt the tax would it fix your capital gains tax problem if you set up an Australian company to own your shares?

was actually using the figure from their Annual Report...but yes, it also appears on the NZX website.

The Feltex situation was awful and shows a lack of honour on behalf of 'certain parties'.

On the 'honour' front, Smiths City did trade their way out of receivership when they could have gone into liquidation and shrugged their shoulders.

But, Reed, you can take the 83 cent figure as being accurate...with prison sentences for Directors if it is inaccurate.

Is it simply the Net Tangible Assets figure from the NZX SCY data?

It looks obvious but the reason I ask is that I'm pretty sure I used that figure to reassure myself before buying my feltex shares *blush*.

price earnings ratio is 7.7

One main reason Smiths City are trading at a discount is because they were once in receivership, and although traded their way out of it, there is a rule of thumb about the Sharemarket ... "the market is slow to forgive and never forgets"

With regards to International Shares I have made a few helpful suggestions on this forum of companies I have put my own hard earned money into...and will continue to do so, as I want SOLO-ists to become capitalists, dammit!

I only hope readers accept I am trying to be of assistance with various helpful suggestions.

Do you have the price/earnings ratio Elijah (on Smiths)?

I would be worried about the lack of liquidity, and suspect this is partly why they 'are' trading at a discount, also, re that asset backing, how much of that is over intangibles?

(I manage my [well, our] own portfolio, and currently have 88% in cash, effectively, risk free 8.1% just on cash account at RaboPlus, but breaking that to partake this month in the Origin Energy and Rabobank Preference Share issues ... wandering, sorry. I have international shares but not a single NZ share as I just can't get excited with investing in NZ economy under the socialists - imagine an investment in Telecom, you're simply punting on how much regulating of the company there is going to be, or not - not on business basics. There remain much better countries to invest, which is precisely NZ's problem.

But even that 12% of ours in international shares I'm having to look at reorganising given I'm still going to get caught by the fair value dividend rules (ie, capital gains tax) on international shares. Although the new regime could be worked to advantage if I could find enough international companies paying a better than 5% dividend yield: tax on such companies will be lower under the new rules. Searching for an international share fund along these lines. Now rambling. Procastinating, actually.

Need coffee ...)

have known it for ages.

As a public company Smiths City Group Ltd... (and every other public company) ...are required to give these figures, and keep them up to date.

I accept that many New Zealanders have a visceral suspicion of the Sharemarket, due to events 19 years and 11 months ago, so I advocate Smiths City as a "dipping your toe in the water" investment.

The asset backing to value is such it is a bit like a valuer telling you a building is worth, say, $250,000 and being able to purchase it for $185,000.

The asset backing of the shares is 83 cents

How did you find this out?

good New Zealand company to purchase shares in is Smiths City Group Ltd. (Code: SCY)

They are a chain of Department Stores in the South Island and a good investment for those seeking to minimise or eliminate risk.

The shares can be purchased for 59 or 60 cents each and there are a number of benefits in doing so..

1. The asset backing of the shares is 83 cents making it impossible to lose money.

2. The shares tend not to move very much, so you will never get a stomach churning gyrating share price (which really can be stomach churning for novice investors).

3. The dividend is 4 cents fully imputed which is not bad for what is essentially a 'passive investment'.

It is a well managed company and my only criticism would be that Management kept the Mosgiel store open 2 years longer than they should have..(despite a couple of strongly worded letters from a certain shareholder) ... when it was losing enormous amounts of money, but that has been wisely closed now.

is a small (by US standards) company which has been a splendid performer in recent weeks.

The Eastern Company. (Code: EML)

I purchased at $17-35 in early August and it closed today at $21-50 (down from $22 last week).

The company has experienced an increase in sales so far this year although profits have been reduced.
Much of the reduction in profits resulted from 'one off' matters earlier in the year which have been dealt with.

SOLO-ists should be able to snap the shares up at around the $21-50 price, which is looking increasingly like a bargain.

(As an amusing aside ...the company paid its quarterly dividend last week, of 8 cents per share, and I had to laugh when I discovered it was the 268th consecutive quarterly dividend payment!)

few people have discovered that Frontline Ltd shares rose to $50 by the end of the week, and have emailed wondering if I "knew something"

No, the sharp rise in the shareprice was merely coincidental, although I am delighted to hear of one SOLO regular who took my advice and has done very well in a couple of days.

Asian markets are having a stunner today, Elijah, on the back of the American rate cut last night (no matter what we think of that). Hang Seng particularly. Nice to see some green ink.