Morning Report Tuesday 8 July 2014
Why have I bought stocks when I’m nervous / negative equities here?
Please see our MarketMatters update and recent stock picks video
I have been asked numerous times over recent days why I bought three stocks when I am negative / nervous equities at these levels – Flight Centre (FLT), Ansell (ANN) and Seven West Media (SWM). There are a couple of important points to clarify on this topic.
I remain negative US equities now the Russell 2000 has made fresh 2014 highs, my expectation is a 10% correction – see charts 1 to 3.
If this correction eventuates, how this affects the ASX200 will most likely be determined by the reason behind the fall e.g. I believe rising interest rates will have the greatest effect as the local market is so focused on high yielding stocks.
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