Member Info for ToffAppleton1

Centrica has flirted with its critical support level of 30p a few times and each time it has held (30.17 is the lowest) If it were to break, it would quickly tumble to the low twenties, and the 30p support level would become an insurmountable resistance.

A really bad sign today - ftse up 2.82 percent - Centrica down. What happens next time the ftse has a bad day, with it being so close to the sub 30p precipice?

Thinking of buying into Centrica?
I can tell you now, you’ll be buying into a tragedy.

Think of it like this - With the share at an all time low - is anyone in profit?
On the contrary - Every share in circulation from £4-5 downwards are nursing heartbreaking losses. Buy Centrica and you’ll be buying into a share of the tragedy.

I’m going to be bold here - and repeat a prediction I made when the shareprice was about 54p (it’s in my posting history for all to see)

Centrica @20p

Prediction by

Toff:)

Quinny

What's with the dip today when everything else is up...“

Lack of demand I’d guess..
Even before the virus came along BT was dropping up to 10 consecutive days in a row, no matter what the market did. Check the historical prices out - always a good idea before taking the plunge.

Definitely not one for widows or orphans
Or those wanting to make money;)

Toff

Blue dreamer

I’ve just put you on block with the rest of the sad losers that troll me. So don’t expect any more replies. You have forfeited the privilege of reading my distinguished posts.

Toff

But I’ve go

Blue

“How can we follow the Great Toffs advise when he doesn't know what's going on with the company”

True. But I know what’s going on with the shareprice.

And that’s the only thing that matters!

Toff

Jefferies International today reaffirms its buy investment rating on Centrica PLC (LON:CNA) and cut its price target to 50p (from 100p).”

This broker coverage on Centrica today exemplifies just how inadequate brokers are.
As an ex-trader I learnt that these morons follow the shareprice - not vice-versa.

Think about it - the shareprice is 32p and all of a sudden they halve the target price from £1 to 50p - to make it appear like they’re in touch. Brokers have human faces - they’re people like you and me - and from what I’ve seen of them they’re mostly obtuse bean- counters - dreary analysts- if they had a modicum of talent they wouldn’t be doing that job - they’d be making fortunes trading.

When Debenhams went bankrupt about 12 months ago two brokers rated it as a strong buy.

My advice to traders is - do not whatever you do give brokers any credence - follow their advice at your peril. Listening to them will cost you money.

Toff

Galvy

“Jefferies International today reaffirms its buy investment rating on Centrica PLC (LON:CNA) and cut its price target to 50p (from 100p).”

Exemplifies just how inadequate broker’s ratings are.
As an ex-trader I learnt that these morons follow the shareprice not vice-versa.

Think about it - the shareprice is 32p and all of a sudden they halve the target price from £1 to 50p to make it appear like they’re in touch. Brokers have human faces - they’re people like you and me - and from what I’ve seen of them they’re most bean- counters - analysts- if they had a modicum of talent they wouldn’t be doing that job - they’d be making fortunes trading.

When Debenhams went bankrupt about 12 months ago two brokers rated it as a strong buy.

My advice to traders is - do not whatever you do give these morons any credence - follow their advice at your peril. Listening to them will cost you money.

I find the most common mistake inexperienced traders/investors make when buying stocks is that they assign their own valuations to a share rather than accepting the market’s.

Why is that a mistake?

Because people are herd animals and just like any herd they all move in the same direction - they follow one another.

Understanding this little maxim is key to investing.
The trend is your friend.
If you do the opposite you’ll be swimming against the tide - you’re going to get crushed
If you believe a share is too cheap and the market’s got the valuation wrong - it’s irrelevant- the only truth is the current shareprice. Perceiving a share as undervalued is no reason to buy - the market decides the value not you.

So when choosing a stock - choose one the herd is comfortable with. It can be any stock at any given time. A stock may be out of favor now but that could change when the herd changes direction - until then it’s better not to buy.

So the morale of my post is - follow the herd and you will make money. Go against it and you shall lose.

Toff

I find the most common mistake inexperienced traders/investors make when buying stocks is that they assign their own valuations to a share rather than accepting the market’s.

Why is that a mistake?

Because people are herd animals and just like any herd they all move in the same direction - they follow one another.

Understanding that little maxim is key to investing.
The trend is your friend.
If you do the opposite you’ll be swimming against the tide - you’re going to get crushed

I’m not having a dig at BT shareholders here - because the same happens with a lot of shares. But many on here are convinced that BT is too cheap and the market’s got the valuation wrong - and are in denial of the present shareprice - but that’s irrelevant- the only truth is the current shareprice. Yes I know it’s undervalued - but the same argument was being made when BT was £3. Perceiving a share as undervalued is no reason to buy - the market decides the value not you.

So when choosing a stock - choose one the herd is comfortable with. It can be any stock at any given time. BT may be out of favor now but that could change when the herd changes direction - but until then it’s better not to buy.

So the morale of my post is - follow the herd and you will make money. Go against it and you shall lose.

Another precious trading gem by

Toff

Hmmm

5 recommendations for my SSR post on the Lloyds board, but it’s got the Old drudges on the BT board on their uppers.

LOL

You can’t teach Old dogs new tricks. And if you bought into BT at £4-5 my posts are irrelevant to you anyway

So why not filter me out like I have you..

LOL

Toff - at his imperious best.

To believe markets value shares fairly and equally is a misconception. All stocks are valued differently - forget about them being valued on fundamentals- they rarely are.

People are quite right when they point out iniquities in the way companies are valued. But markets. not just stock markets are socially structured realities. And those socially structured realities are constructed in people’s minds.

And that factor is key to understanding market psychology and investing. What’s the use of buying a cheap share if it’s going to stay cheap or become cheaper. The trick is to learn to pick those which are overvalued, not undervalued, because they’re more likely to go up, simply because they’re in demand. There’re a lot of inexperienced bottom feeders who get drawn into certain stocks because they look cheap - and quite often they are - but it doesn’t mean they’re going to rise anytime soon. As many have discovered to their cost - buying into cheap shares can be ruinous. And not only that it ties your capital up in a losing position, so when you see opportunities you haven’t got the money to exploit them.

Toff

Rooster raised the issue of shares not all being valued equal. He posted an example of AstraZen and BT.

To believe markets value shares fairly and equally is a misconception. All stocks are valued differently - forget about them being valued on fundamentals- they rarely are.

Rooster’s quite right when he points if the iniquity in the way companies are valued. But markets. not just stock markets are socially structured realities. And those socially structured realities are constructed in people’s minds.

And that factor is key to understanding market psychology and investing. What’s the use of buying a cheap share of it’s going to stay cheap or become cheaper. The trick is to learn to pick those which are overvalued not undervalued because they’re more likely to go up. Simply because they’re in demand and more likely to rise. There’re a lot of inexperienced bottom feeders who get drawn into shares because they look cheap - and they quite often are - but it doesn’t mean they’re going to rise anytime soon. As many have discovered to their cost - buying into cheap shares can be disastrous.

This isn’t a flippant comment or personal attack on anyone here, it’s a critical piece of information to anyone interested in making money. Far too valuable to be posted on the BT board alone - so I’m going to post it on other boards where I have more of a receptive audience. and share it with budding traders.

Remember what Gordon Gekko said - information is the most important commodity I know

And Toff Appleton has it in spades.

NDN

“That one comment shows you really know nothing about telecoms networks.“

Well I’ve got something in common with the BT board then haven't I. No one could accuse them of knowing anything about telecoms. They’ve overseen capital destruction on a grand scale or haven’t you noticed the SP has fallen by nearly 80 percent over the last 4 years.

And if you think that’s a well run company - well - I won’t say it - it’d only give you sleepless nights!

LOL

Toff

Math

“Maybe post some figures as to why you think BT would need a rights issue so they can be discussed?”

A 1 for 1 rights issue at 60p would give BT £6 billion.
Cancelation of the dividend would add another £1 billion.

With £7 billion they could address the pension deficit, and more importantly be used to modernize its aging technology and roll out new infrastructure.

It dont make sense - paying out dividends while parts of its critical business are cash starved.

New infrastructure should take priority over all else as that’s what’s going to make BT money in the future.

Otherwise you’re going to be left with an old crumbling network. If you’ve ever been to the third world you’ll know what I mean. Underinvestment and cost cutting invariably leads to degradation.

In fact I’m going to email investor relations @bt and suggest they consider these two options.

Toff

Rooster

“Money is cheap and as it looks it may become even cheaper, with negative and zero interest rate bonds, so why should BT opt for right issue?”

The answer to that - is BT wouldn’t have to pay the money back if they tapped their shareholders up. I think the short term pain of a rights issue would be long term gain. The company’s cash shortfalls in all areas are weighing on the shareprice. The dividend will be the first to go so cash can be allocated to other areas.

Regarding markets - there’s nothing new under the sun. There’s always been fear fueled buying of questionable assets, from the south sea bubble to tulips. The same madness pervades stock markets. How many trendy shares have you seen go from pennies to pounds, only to fall back to pennies.

When cabbies start dishing out share tips you know it’s one of those shares. And one to avoid.

That’s not to say you can’t make money out of them - but if you don’t exit before their inevitable collapse you’re going to be saddled with a hefty irretrievable loss.

Toff

Math

For what it’s worth I think the shareprice is way too cheap right now, but it’s not me that values it - it’s the market. And I like to be on the right side of the market.

Many of the posters on this board weren't buying in at current levels, they bought in at £4-5. They’re most definitely on the wrong side of the market; that’s not where you want to be. The shareprice decline could outlast some of them, as many are old.
They need the shareprice to triple or quadruple just to get even.

But I agree, buying in at these levels bodes better for appreciation over the long term.

Toff

Gert

“the Dunning–Kruger effect is a cognitive bias in which people with low ability at a task overestimate their ability.”

Interesting. Sounds similar to the Voight-Kampff test Deckhard used to do on replicants to establish if they were human.

A test many BT shareholders would fail:)

Toff

Rooster

“What do you see in BT that makes you think they are in "terminal decline"?”

Okay - terminal decline might be a little melodramatic. I was alluding more to the shareprice than the company. But bear in mind the SP is the truest reflection of a company’s value and health.

BT’s financial obligations are huge and well publicized. There comes a time when they’ll need to be addressed and I believe that time is fast approaching. Organic growth is never going to provide the money they need. Dividend cancelation and rights issue are the obvious moves.

Toff

Lamtree

“If there was a rights issue that’ll be bt off my watch list forever “

I’d say they'll be a few companies making cash calls when the dust settles on the coronavirus.
Dividend cancelations are the precursor to rights issues. And what better time to do it when you have the virus as a pretext.

BT needs a radical makeover to stem the terminal decline. The only way to do it is to raise billions off shareholders. Although cash calls are nothing to celebrate, the money will help them lessen the pension deficit and roll out new infrastructure.

Why BT are paying dividends with all their other financial obligations is beyond me. They’re imprudent and unaffordable.

But it’s a near certainty that’s about to change.

Toff

Given the dire straits BT are in financially I can see a cash call happening later in the year.

I’d estimate they’d need to raise £4-5 billion to help plug holes in the pension deficit and provide the cash needed to update the infrastructure and provide 5G. The market has punished BT because they see it as cash strapped. The £2 billion a year profits dwarf their financial obligations

And a cash call of that size wouldn’t be enough to pay down any debt. If they did a 1 for 1 at 55p a share that would raise about £5 billion. And with the cancelation of the dividend they could add another billion to that.

It’s obvious BT can’t continue without accruing a war chest to offset immediate capex costs.

I believe they’ll go cap in hand to investors before the year’s out.

Prediction by

Toff

Lse

‘There have been a lot of dividends over that time though’

Yes I know. The Dax & Dow pay dividends too.

Toff