Morning Report Wednesday 17 September 2014
The Australian market has corrected over 4%, what stocks do we like?
As anticipated, the Australian market has been slammed over 4% over recent weeks (chart 1) as the “yield play / carry trade” has been sold aggressively e.g. CBA -6.8% and ANZ -8.4%. Personally, I believe this correction may be deeper than I first anticipated, as the US market has not really begun a correction yet – see chart 2. However, for investors looking to put money to work in the market compared to negative real returns from the deposits, I would be comfortable committing 20% of equity around 5,375, adding 20% every 100 points we fall. As I have mentioned a number of times over recent months, a plan is vital when volatility comes to town and this is clearly where we are today.
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