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Colin Lea
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The author is Australian with a long term interest and personal stake in financial planning and management. He works within the Financial Services Industry, is a member of the FPA Australia, and is a Certified Gold Seeking Alpha Contributor. Prior professional background of 20 years in military... More
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Carey Group
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  • Australian Resources and Banks – The Long and the Short

    Australian Resources and Banks – The Long and the Short

    I’ve written previously pondering why it is that the Australian markets catch a cold every time Wall St sneezes, even though the issue at the time may largely be unrelated to market conditions in Australia. The financial pressures on the USA government and the conflict around raising the debt ceiling, in conjunction with the financial strain in Europe, have caused significant downturns in global markets including Australia.  But already, we are seeing the market’s rebound, and a return to the sideways trading volatility of the previous 12 – 18 months. And for the savvy retail investor, good opportunistic trading is available on both short and long positions.

    Visit www.asx.com.au and look at the following buying opportunities:

    ·         BHP only 30-40 days ago was trading at $45 per share, dipped as low as $36 per share, and in the last two trading days has regained ground to $39.85 per share. It has seen drops as high as 3 – 4 % in the last two weeks, but also has seen gains of between 1.5 – 3.5 % over consecutive days. Nothing phenomenal has changed with BHP’s operations, so long term offers good returns on short positions, and for the long term investor, it offers excellent entry for buyers wishing to take a long term position for both capital gains and income streams from dividends.

    ·         ANZ likewise saw value dumped in relation to the general market panic selling, yet the last five days of trading has seen upward movement of 12.04% in the share price against one day of –ve 0.85% downwards movement. Easy money for the short position traders, and still good entry position for long term prospects (ANZ trading at $24 - $25 per share in February). It has been trading with more volatility sideways given management has taken a longer term growth position to expand services in Asian markets, which offers more exposure to medium term risk, but longer term will place it at an advantage to other banks.

    ·         FMG retraced approx 15% over the last two weeks, but again the price has regained 11.08% in the last five trading days against one downwards move of –ve 1.53%. Short term it’s still $0.56 - $0.46 per share below its normal trading range of $6.70 - $6.60 per share, and long term is a good resource stock for long term capital growth (unless China suddenly intends to stop buying Australian Iron Ore).

    Away from the hype and hysteria, these are but three good buying opportunities in the resources and financial sectors, but for the prudent and calculating investor, there are many more opportunities on the Australian markets. Australia’s strong economy, strong resources sector, and strong prudential regulation will provide a more stable trading environment (even within current sideways volatility) in the coming weeks and months. Even if we do tend to sniffle each time Wall St sneezes…

     



    Disclosure: I am short BHP.

    Additional disclosure: I may initiate a sell or buy position on BHP in the next three days, depending on what the market does.
    Aug 15 3:17 PM | Link | Comment!
  • Buffet on Treasury
    "That an investor should be prepared to accept just 2.5 per cent for a ten-year exposure to the freshly-downgraded US treasury market is a stark measure of desperation worldwide,’’ Buffett said.

    Read more: http://www.smh.com.au/business/a-bull-story-20110809-1ijsj.html#ixzz1UUSWBq1t
    Aug 08 9:22 PM | Link | Comment!
  • Taxing ourselves into oblivion
    Today, after a short week at home in Australia, I fly back to the USA. Just after I get on the plane, the Prime Minister will announce her carbon pricing plan for Australia, a move that while sound in theory (and 'feel goodness'...), is not practical from a global perspective. And here's why - prior to moving to the USA, I was supportive of some form of policy action based around a more sustainable way of life and reducing the impact on the planet. Since being in the USA however, I have become aware of the fact that the majority of 350 million people there don't believe in global warming, and have no intention of adopting a similar carbon pricing plan (at least not under any government soon). And looking at the statistics, if all of Australia's efforts over the next 15 years can be wiped out by a <1% rise in China or the USA's emissions, then who are we fooling in trying to play the global good cop. Yes we have an abundance of natural resources, but with tax after tax on top of tax, we will become irrelevant and overpriced. We will in essence be a very lucky country that is too expensive to be competitive, or a good place to live. I've seen a small taste of it this week. I look forward (with trepidation) to the announced carbon pricing plan, and the subsequent (hopefully vocal) reaction by the Australian public.
    Jul 09 7:17 PM | Link | 1 Comment
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