Australian Shares

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Health Stocks Part 1: Bad Medicine

I have a problem; I am always thinking about shares.  To be more precise, I am always thinking about what shares are worth buying and at what price I should buy them.   My problem is actually quite debilitating – I find all manner of social events a complete bore unless we’re talking about Return on

4

Banks backing banks

A stock broker once sagely commented to me that “things are never as bad as they look and never as good as they seem.” Somebody forgot to tell that to the markets, which have a habit of over reacting. But it is a useful starting point. So when I was looking at some broker reports

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Telstra – still a telegraph pole stock

The Future Fund announced recently that is has reduced its holding in Telstra (TLS) to below 5%, and is still selling. Future Fund, I salute you. TLS is still a telegraph pole stock – as in, any sane, rational investor shouldn’t touch it with a ten foot or even a telegraph pole. In this post,

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Retail woes

Picking the direction of retail demand is an issue assuming considerable importance for investors in the stock market.  It is a matter of deciding between two reversions to “normal” behaviour — consumption norms or savings norms. Many brokers are anticipating that consumer demand will be lower, but return to normal, which is why they have

2

Weekly Market Analysis: Risk is up!

The S&P/ASX200 index closed 0.91 per cent higher to 4,742.6 points on Friday, after a strong rebound rally. The index is up 116 points or 2.5% for the week, but still down 1.75% since the start of March and no movement at all for the year. For a primer on how I do my analysis,

0

Rio’s iron cross

Rio Tinto is complaining that governments are seeking rents when the rents should obviously go to Rio Tinto, as my co-blogger Houses and Holes pointed out. More pragmatically, is the stock accurately priced? Brokers are mostly putting buys on it, because that is the obvious thing to do. Yes, its very, very big — big

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How to Sell a Donkey – Ask an “Expert”

The Prince sent me a link this morning to an article in the Oz about the WAN-7 Merger, which I wrote about a couple of weeks ago.  This quote in the article had me painfully coughing up my Weeties through my nose: “An independent expert’s report found Seven Media was worth between $519m and $986m

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Gov’ should fund equity research

My co-blogger, The Prince, has devised a fine scheme to fund innovation that might prove highly effective. Which is why it will never happen, most probbaly. Still, to continue the practice of tilting at windmills, I wish to propose something else that might prove effective (and so also will probably never occur). Public funding of

2

Japan and local stocks

The financial markets are starting to settle after the tsunami in Japan, although matters remain ominous in North Africa. Brokers are starting to return to more conventional analyses of commodity trends, suggesting that stocks will also return to more predictable valuations, experience less volatility. UBS is reasonably bullish on the effects of the earthquake on

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Weekly Market Analysis: March 18

Summary The S&P/ASX200 index eventually closed 0.4 per cent lower to 4,626.8 points today, after a wild rollercoaster ride. The index is down 200 points or 4.14% for the month and 2.4% since the start of the year. In effect, the XJO has gone nowhere since September 2009, rangebound between 4200 and 5000 points. In

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The Banksters: Part 1

Note: This is part 1 of a 2-part series on trading and valuing the big four Australian banks. Part 2 shall be forthcoming soon. Fellow equities blogger Sell on News completed an excellent thematic post on the bubble like growth of the finance industry recently. In the face of a likely change in how capital

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Sell finance

With global markets facing a period of sustained uncertainty, it is worth taking a longer perspective, comparing the current conditions with the so-called “Goldilocks” economy that existed just prior to the GFC. It turned out then to be a case of all the three bears instead of Goldilocks, but at the time things seemed robust

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Stocks for Bears

It’s a scary and volatile world at the moment:  floods, cyclones, earthquakes, tsunamis, US housing crashes, Aussie housing bubbles, the GFC, QEII, PIIGS, Japanese debt, revolution in the Middle East and Charlie Sheen.  As the Chinese curse goes, we are living in interesting times. So what’s a bear to do?  I’ve never been the “head

3

Will this cat bounce?

Today’s strong uptrend in almost all risk markets is not that surprising. In trader’s parlance, this may just be a “dead cat’s bounce“. Sorry for the awful terminology, but there it is. This broad correction offers both risks and opportunities for trader’s and investor’s alike. For the latter, it offers excellent buying opportunities in “Very

3

Buy on news

The fear gripping global markets after the earthquake in Japan is the kind of event that creates investment opportunities. It may be time to buy on news, as it were. The implications are many. Merrill Lynch believes that the Australian market is now cheap (see report).  The market’s forward price earnings ratio is 11.6 times,

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QBE shaken

Given the enormity of what is happening in Japan, it seems a little trivial to be tracking the possible effects on Australian shares. The greatest concern will be the long term impacts on the world’s third largest economy and one of the power houses of the Asian region. Japan is a heavy consumer of Australian

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Banks eating one another

Banking Day has some interesting analysis today of Westpac’s new move to revive the Bank of Melbourne brand: An intensive program of new branch openings in Victoria is the key feature of Westpac’s decision to revive the Bank of Melbourne brand from August this year. The bank will, however, retire the St George brand name

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The Neck is broken? ASX200 drops below 4750

Well that didn’t take long – the ASX200 has corrected again this morning, with an intraday level at 4714 points. Readers may have noticed that I am still wrong about a possible rally! In my last regular weekly analysis I did mention however: But basic charting analysis suggests a more bearish stance: a classic head

0

AMPed, for now

The AMP-AXA deal has been bedded down and a familiar, very Australian, story will unfold. The fast growing Asian business has been sold off – despite some analyses suggesting it would double in value in less than three years – and a domestic oligopoly is concentrating its market share. Once again, Australia makes a hash

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When a Donkey Meets a Thoroughbred

After a quick holiday across the pond in NZ (luckily not near Christchurch), your blogger returned to Australia to the news that West Australia Newspaper Holdings (WAN) is going to buy the Seven Media Group from Seven Group Holdings (SVM). So a WA media monopoly is marrying the TV sideshow of a Caterpillar servicing business. I can’t wait to see their kids.

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In the carbon crosshairs

Amidst the heat and confusion about the carbon price, it does seem increasingly likely that some sort of tax will be applied. What does it mean for stocks? “Don’t know yet,” is the commonest answer, and not unreasonably so. But it is likely to hit the big emitters. The steel companies, BlueScope Steel and OneSteel

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Oiling the portfolio

Having read with fear, bordering on terror, the percipient Houses and Holes’ blog Sell Signal, I am struck by how different broking analysis is from H&H’s dire world of lightning strikes and imminent turmoil. Grains, H&H informs us, may be decoupling. Metals are getting “smashed”. Wheat may be a give away. But none of that

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Weekly Market Analysis: a close below 4800

Weekly Summary Apologies for not posting my regular end-week summary, but this blogger is feeling the combined effects of moving house and re-valuing the avalanche of HY earnings reports. What follows is my analysis from last week but with notes on today’s correction and what it may mean looking ahead for the rest of this

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Buy time, apparently

What is the reporting season saying about the stock market? Little surprise that brokers think that equities are cheap. Might be time to ring, well, a broker. The overall picture is certainly reasonably healthy, although that of course is historical and doesn’t say much about future price movements. According to Goldman Sachs sales were up

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Hundreds of thousands factory

Investors in Macquarie Group might wish to avoid an article in The Economist, entitled “Can investment banks make high enough returns on equity to exist?” They may also consider it appropriate not to look to closely to Macquarie’s fundamentals. The gist of the argument is that investment banks will be “clobbered”  by the new Basel 3 rules. For most types

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The US stock market’s declining importance

There has been an interesting debate going on amongst some of my fellow bloggers in recent days about the meagre future return potential of stocks in developed markets. The return prospects for the US look particularly cloudy. And this is important, because as Sell on News noted today, the US still dominates the global markets

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Are stocks long in the tooth?

The effect of demographics on investment patterns is pretty straightforward – people get more conservative as they get older and they don’t care much when they are young. An article in The Economist, aptly titled “Betting on Ben”, cites research by Barclays Capital about the relationship between population variables and equity markets. The key causal

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Oil profits

The oil price looks headed north, maybe a long way north, which will probably focus investor attention on potential domestic equity market plays in the energy sector. But wading through the broker reports, it is a pretty mixed picture. Morningstar Equities describes Woodside as “Australia’s premier oil and gas play” and has a buy on

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Weekly Market Analysis: blinkers or whips?

Weekly Summary The ASX200 finished the week at 4836 points, down 100 points or 2%. Total move for the month (still have Monday to go) is 1.74%. As I thought would happen in last weekend’s analysis, a small correction occurred, ostensibly because of the Libyan crisis and the Christchurch earthquake, but most likely because of