Monthly Archives: July 2016

Managed funds fail the investor

The financial services industry in Australian does not serve investors well. For example, some 70% of managed funds underperform the index over a five-year period and for this underperformance investors are charged high fees. According to the ABS, the managed funds industry in Australia controls nearly $3 trillion of Australian investors funds. If the average fee is 2% then this is an income to fund managers of about $60 billion and that is just from the managed funds industry. If you add on the other non-performers or poor performers in the financial services industry to include brokers and advisors, then the figure is truly enormous.

In the case of financial advisors there have been many instances in recent years where investors have lost significant amounts or in some cases all of their capital. These advisors are not small outfits because all of the major banks have been implicated in this… Continue reading

Caution needed with this “bull” market

The ASX200 index has now convincingly taken out resistance at 5427. From its low in mid-February of this year, there have been a series of higher highs and higher lows (see chart below), so this move no longer has the feel or appearance of a bear market rally and has the potential to continue. It is now becoming difficult to rationalise the market move over the past few weeks with my Elliot wave model of a continuing bear market! There has been some support from the financial sector and the gold sector has been particularly strong with increasing support from resources stocks many of which are showing interesting up-moves from based patterns.

xjo july

Despite these promising developments investors should be concerned about a number of world events which could potentially impact on the Australian market. These include the on-going effects of Brexit on the world economy, the alarming state of Italian… Continue reading

Is this really a bull market?

It is interesting that the Dow Jones Index and other American markets have gone to new highs. The Australian market is also very buoyant although in our case we are still in a confirmed downtrend so it could be argued that we are seeing a bear market rally rather than a new bull market. If the high of 5428 on the ASX200 is taken out, then this gives some support for a strong uptrend.

It remains to be seen whether this move on the Dow Jones Index is really a bull market move or merely a false breakout. The fact that the Dow Jones Transports Index lags considerably behind the Dow Jones Index suggests that it could be a false breakout.

Investors are desperate for yield and this is the main driver for this market since in the light of historically low bank rates there is just nowhere else to… Continue reading

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