Life In Australia

The Aussie stock market reached a new record high last night, and my paltry 3.3 percent capital gain over the last six-and-a-half months is slightly less paltry now, at 4.9 percent - giving an annualised return of around 9 percent. Much more encouraging than the position on Friday afternoon of 6 percent annualised.

I don’t normally rush to check stock prices each day, but given the market had hit a new high, I thought I’d have a quick peek. So all I need over the next few months is another few percent gain and I’ll have comfortably beaten any return I could have got from an interest-bearing security.

As of the close of the ASX on Monday afternoon, prices were:

• Compass Resources CMR at $5.13 per share
• BHP Billiton BHP at $31.18 per share
• Oxiana OXR at $3.30 per share
• Kagara Zinc KZL at $6.18 per share

I thought it was about time I updated my stock market activity. In May last year I wrote about how I had grown $100,000 to $373,800 in a year by investing in mining stocks.

After that I got cold feet and took my cash out of the market, missing out on more tidy profits. I’d been reading Martin Zweig’s Winning on Wall Street and I was concerned about having a lot of cash in the market while interest rates were rising.

On the other hand, watching prices continue to rise was irritating. Furthermore, the Chinese economy, which in large part is responsible for the mining stocks’ boom was continuing to grow at a ferocious rate. I decided to go back into the market, taking heed of Zweig’s advice not to commit all of my funds because of my uncertainty about the effects of interest rates on the stock market. I decided to do as I had done before and invest $100,000 into the same four ASX stocks - I did this on November 2 last year. I bought:

• Compass Resources CMR at $4.52 per share
• BHP Billiton BHP at $27.31 per share
• Oxiana OXR at $3.22 per share
• Kagara Zinc KZL at $6.90 per share

As of the close of the ASX on Friday afternoon, prices were:

• Compass Resources CMR at $5.00 per share
• BHP Billiton BHP at $30.71 per share
• Oxiana OXR at $3.24 per share
• Kagara Zinc KZL at $6.18 per share

Overall that’s a 3.3% gain, or 6% annualized. I’d have been as well keeping the money in the bank. We’ll see how things pan out over the next few months.

Well, yesterday it was doctors and nurses that Queensland wanted - today there’s good news on the construction front.

Leighton / Abigroup have been chosen as the preferred tenderers to build Brisbane’s $1.88 billion motorway upgrade and the new Gateway Bridge.

Construction work should begin by the end of the year. The builders are going to build a new Gateway Bridge 50 metres east of the existing bridge and upgrade 20 kilometres of the Gateway Motorway between Mount Gravatt and Nudgee.

More than 5,000 jobs will be created during the four-and-a-half year construction period. The government is estimating a flow-on into the local economy of $450 million in wages and salaries.

To help meet the cost of the project, tolling on both the new and existing bridges will continue for 30 years after the works are completed.

In 2011, the toll to use the bridge - collected electronically - is expected to be $3.10. rather than the $2.20 if the Federal government had supported the project.

There are always plenty of healthworker wanting to emigrate from the UK.

Recently Queensland has been very active in recruiting healthcare workers - and is still recruiting! According to the government, in the last year, recruitment figures for additional staff (extra staff over and above existing staffing levels) in Queensland have been:

• 397 extra doctors
• 1,812 extra nurses
• 601 extra allied health professionals

In real terms, that translates into 4,949 doctors working in public hospitals today compared to 4,552 in June 2005. 23,723 nurses today compared to 21,911 in June 2005. 6,407 allied health professionals compared to 5,806.

The Government says it will continue to recruit aggressively to ensure hospitals have the clinical staff they need.

I see that 170,000 southeast Queensland pool owners will be required to buy pool covers (average cost $500 each) by July 2007. This will stop milions of litres of water a day being wasted by evaporation. (It should also be a big boost to businesses who supply pool accessories.) People who fill pools from rainwater tanks will be exempt.

To add to this particular financial grief felt by pool owners, they will also be required to do further penance by installing at least two of the following: dual flush toilets, a water-efficient washing machine or water-efficient taps and shower heads.

Come the end of October, using a bucket or a watering can to water gardens in Brisbane will be allowed only on alternate days. (A hosepipe ban came in months ago.)

Businesses and government offices are also going to face mandatory restrictions for the first time.

The top 10 per cent of business water users will have to come up with ways to reduce their usage by 25 per cent or implement best practice management for their industry with fines of up to $15,000 waiting for those who don’t pull their socks up.

I thought I would revist my stock market exploits. In May I wrote about how well I had done by investing in mining / resource stocks in the previous 12 months, growing $100,000 to $373,800. I sold my shares, looking for other opportunities. I wrote that I hoped it wouldn’t prove to be a case of “a fool and his money are soon parted”.

For the many who can’t be bothered reading my previous post, let me remind you that I initially had $100,000 to invest, which I split it into four $25,000 chunks and bought:

• Compass Resources CMR at $0.54 per share
• BHP Billiton BHP at $16.30 per share
• Oxiana OXR at $0.83 per share
• Kagara Zinc KZL at $1.19 per share

I sold all of my shares in May for:

• Compass Resources CMR at $3.60 per share
• BHP Billiton BHP at $28.65 per share
• Oxiana OXR at $2.95 per share
• Kagara Zinc KZL at $3.54 per share

Today these shares closed at:

• Compass Resources CMR at $4.20 per share
• BHP Billiton BHP at $25.05 per share
• Oxiana OXR at $2.69 per share
• Kagara Zinc KZL at $4.92 per share

If I had held my shares for another 3.5 months, my $100,000 would have grown to $417,249. The shares I sold increased in value by 11.6% in 3.5 months. That’s an annualised gain of about 40 percent.

So although this fool and his money have not been parted - I’ve been too cautious to do anything with the money - this fool would have done better if he had not sold his shares at the first hint of trouble.