Morning Report Friday 19 December 2014
Will 2015 be the year for the “3 Ugly Sisters”?
Equity markets are currently unfolding as we have been predicting over recent week, so laying plans for the next few months is important in case we are correct and the Dow has the predicted 2000-2500 point correction. The Christmas rally is finally taking shape with the Dow up 709 points in just 2 days. Tops are always the hardest points of inflexion to identify, but ideally, the US will rally another 2-3% before I start aggressively selling. In a perfect word, I will be sitting on around 50% cash prior to a decent correction in the US. If that unfolds it is likely to drag the ASX200 back towards, or under, the 5000 area. Investors must have a plan around both what stocks to buy, and at what price, to avoid being caught up in “Fear & Greed” destructive emotions. Enormous amounts of wealth have been lost by generations of investors trying to buy “underperforming stocks cheaply”, but occasionally with some good timing and vital money management, these trades can yield spectacular results, but we should always remember poor stocks generally remain, or stay poor, for a long time. The 3 major Australian stocks that have been disappointing for years and costing investors millions continue to disappoint but they are slowly catching my attention:
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