Morning Report Monday 2 June 2014
It’s currently all about dividends in Australia, how about the US?
The perception remains that you cannot lose buying Australian equities paying quality high dividends and especially “The Banks” – easy to understand the feeling with CBA trading at all-time highs of $82.20 last week, up a whopping 242% since the GFC lows of 2009. However things do change and most things in markets are cyclical, it was only a few years ago that Telstra (TLS) was the butt of most market jokes and Newcrest was a market darling. Markets look forward and when they get a sniff of inflation and subsequent higher rates the music will stop playing very quickly and in my opinion a correction of around 20% from the yield sector will be sharp. Let’s have a quick look at what happened in the US recently when investors all jumped on the yield bandwagon:
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