I have to write this story every few years. Whenever we have a positive iron ore cycle, investors make the same old mistakes. In particular, they assume that the mining cycle of plumped-up dividends is sustainable:
- SMSFs have gone shorter banks for fear of lower dividends.
- They have rotated to miners for higher dividends.
- The shift is almost one-to-one and has pushed miners to very high levels of SMSF holdings.
The last time I had this fight was with journalistic legend, Trevor Sykes, who was advising all and sundry to buy miners in the “Sykesnado” of 2015, right before dividends got slashed.