Monthly Archives: January 2015

The ASX200

The United States equity market is in a confirmed bull phase as shown in the weekly chart of S&P500 below. By comparison the Australian markets has performed poorly and has been moving sideways for the past 18 months. What of the future? SP500

Weak commodity markets and a weakening Australian and world economy does not bode well for the Australian equities market. The daily chart of the ASX200 (below), shows a market which has fallen from its high at A in late August and made two lower tops at B and C. Technically this has the hallmarks of a market on the verge of a significant reversal. In October and December market corrections brought the index back to around 5140 which is around the general support and resistance level over the past 2 years.   This provided some hope that this market could rally but to do so convincingly… Continue reading

Will market volatility precede a market crash?

We are now in a period of very high volatility on the markets. There has been a series of volatile moves on the market already this year.   Two weeks ago we had the Swiss franc crisis, last week it was the ECB quantitative easing release and now the result of the Greek election will undoubtedly have an impact.   What is next?   The markets are now very volatile and are moving on short term news releases seemingly without much attention to the underlying economic growth which is after all the basis of value in stocks anyway.

The question is whether this volatility, based on market news and instability is the lead up to a market crash. Certainly Harry Dent in his latest video titled the DOW is going to crash believes that a market crash is inevitable. The strength of Dent’s work in my view… Continue reading

The failure of managed funds

Managed funds have a captive client base with Australian investors who are uncertain how to invest themselves or simply want diversification. But just how useful and competent are the fund managers?

I have used managed funds as part of our super fund investment strategy for more than 30 years. This has covered some 22 different funds and included the big managed funds as well as some of the smaller boutique funds. Over this period every one of these funds, without fail, underperformed the index. In many cases these funds actually lost asset value over several years.

In recent years I have continued to use what I consider to be the better managed funds as part of our super fund simply to get diversification.   Also an important motive was to provide a safe long term diversified investment portfolio for my wife if I predeceased her.

But I am now… Continue reading

The Australian market (ASX200) in 2015

Where is the Australian market headed? There is no doubt that the trend in the United States markets is up, led by an improving economy. But The American market is one of the few positives on the world scene, with deteriorating economic conditions in the European Union and uncertainties in developing economies and in Asia created by a very strong United States dollar and the unknown effects of a collapsing oil price. In this environment where will the Australian equities market go in 2015?

With some very positive days before Christmas an ASX200 recovery looked very likely, particularly coming off the double bottom at A and B shown in the chart below. But at first sight the chart of the ASX200 below is not positive with progressively lower highs at E, D and C showing a declining market momentum.

Technical analysis provides some indication of probable movements in this index… Continue reading

Threats and unknowns in 2015

The potential threats to world equity markets in 2014 remain with us as we enter 2015. These events which pose a real threat to a continuing bull market are:

  • The threat of deflation and instability in the European Union
  • The high level of sovereign and also corporate debt
  • Conflicts in the Ukraine and the Middle East
  • Economic stability in China
  • The unknown outcome of the Japanese economic experiment
  • Instability caused by a strong USD.

There has been a continued rise in the USD and a falling gold price, a trend which is likely to continue. There has also been a dramatic fall in the price of oil and prices of commodities continued to fall.

In 2014 the Australian market moved sideways so it was not a good year for investors who relied on index funds but investors who pick stocks on their merit had a very good year. One suspects… Continue reading

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