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A Broadband Point of Difference & The Wrinkle's Review

by The Wrinkle | July 30, 2010

I doubt the Wrinkle would be alone in rating lobbyists on a par with some lawyers, who in turn have been compared to catfish (this is the old lawyer joke, what's the difference between lawyers and catfish? None, they are both bottom get the picture). As the headline went in the SMH last weekend, this election is really "The Battle of the Blands". Accordingly the "spin doctors" on each side have gone into overdrive to try and create some interest.

Part of this strategy is having your team dig up whatever you can on the other side that might generate a headline, and Tweet or email away to your heart's content to lobby the media in the hope they might pick it up and run with it. If you cross the odd personal boundary, who cares? Good old fashioned investigative journalism is relegated to the prerogative of some academic audience somewhere. Forget concepts like vision and leadership, this election is all about the potential of the person making the least mistakes to hold on and win. If we get bored to death on the way through, so be it.

This "lockstep" of adhering to the party line regardless of personal belief, to avoid potential errors or point of difference that can be exploited by the other side, seems to have been taken to ridiculous lengths. For example how can Penny Wong, who is openly gay, expect us to seriously believe she doesn't support gay marriage? Maybe she is taking "a lend" of Tony Abbot's flexible policy on the truth.

Frankly the only real point of difference between the two main parties as the Wrinkle sees it is the national broadband network. Being active in the IT space means we are strongly behind this and can see the potential productivity gains for our clients. As for everything else it seems to simply be a tinkering around the edges in a vote grab that totally ignores the old left/right, pro-union/pro-business boundaries between the two parties.

So if the Wrinkle had to pick a party, at this juncture Labour would get my vote purely and solely due to the national broadband roll out. The only other comment I would make in passing is that from an economic sense, government spending whether it's poorly directly or accounted for, will as a general rule still stimulate an economy.

While government spending may not deliver the fairest distribution, and people don't like waste and stupid decisions, overpaid people still spend money like everyone else. The GFC required some "Weapons of Mass Spending" to hold us up in a difficult time, in hindsight as always it could have been done in far better ways, but at least something was done, and was done relatively quickly. Maybe it was only 60% or 80% effective, but we do need to remember that it did have a positive impact and Kevin Rudd did better than most other world leaders in this regard, what price success?

Moving onto stocks I've put together a quick results table of the Wrinkle's stock picks so far. This also details the end of day trading range of the picks since they were published.


Date Code Name Price Then Price Now
% Change
End of Day High End of Day Low
29/04/10 GGP Golden Gate
2.7 -18.2%


25/06/10 CFU Ceramic Fuel Cells 16.5 21.5 30.3% 21.5 15.5
16/07/10 VLA Viralytics 3.8  3.5 -7.9%
3.8 3.5


GGP – This stock has stalled a little as one of its wells requires further work to assess the potential of the untargeted reserves discovered at the bottom of the well. At this lower pricing level I would now rank it a "strong buy" rather than a "buy" and expect to see growth over the coming months.

CFU – This stock continues to move forward (catchy term that) and has recently been taken up as a potential supplier to Harvey Norman's commercial division creating stronger interest. A favourable outcome from the Victorian government's "feed in tariff" review would also help boost this stock. Plus given the number of trials underway in various parts of the world, the potential for ongoing positive news is strong.

VLA – This stock is thinly traded until there is major news when it has the potential to burst strongly on the upside. FDA approvals take time, and this stock could simmer for a while or just as easily go for a run. There are support levels around the 4c mark, and the Wrinkle believes that any purchase below 4c is a reasonable buy in level.

As advised previously, with the possible exception of CFU, these are all high risk, speculative stocks (personal disclosure: The Wrinkle holds 550,000 GGP, 30,000 CFU, and 50,000 VLA).

One small point The Wrinkle hasn't touched on in a trading context so far is the "round number" syndrome. This can be a factor in trading stocks in that orders tend to clump around "round numbers" mainly because that's the way we tend to think. For example, in the commentary about VLA above I've talked about 4c when it would have probably been more accurate to say 3.85c.

Generally people tend to think in these terms when they talk about support levels, trading ranges, etc. The chartists may go down to a more precise level but if you watch the trading screens you'll see the clumping I'm talking about, and this may help to indicate when short bursts in a stock are likely to go either down or up. If you trade the lower priced stocks for example where a .1c or 1c swing is material in a percentage sense then this can be useful. For example, there used to be a large number of day traders who traded in the old Babcock and Brown when it was around the 10c mark. The upside price was in .5c multiples and the downside risk was in .1c multiples and there was reasonable stock liquidity.

The economic outlook Bears in the US still seem to be battling with the quarterly results Bulls at the moment; however as the reporting season draws to a close the Bears may outlast the Bulls. Something to watch out for over the coming month or so.

Have a good week.

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