Australian Investment Blog

Morning Report 17/06/2014

Morning Report Tuesday 17 June 2014

I am finding that domestically, we seem to turn to Iron Ore stocks for some fun and volatility when Gold is quiet and sit on our banks to enjoy excellent fully franked dividend returns. I have produced a number of morning reports over recent months on Iron Ore that have proven accurate, we have retained a zero investment holding to Iron Ore stocks and have traded rallies in Fortescue (FMG) successfully, twice. I am becoming very nervous on Iron Ore stocks as we come to the end of the Financial Year. I believe the risk is totally down for these “price takers” and have shunned bounce opportunities over recent weeks as the sector plunges. I have attached a fun chart illustrating the Fine Wine Index. The Chinese appetite for western luxuries pushed it up strongly in 2010-11, the index has since fallen 40% and it’s only now that the scary news of falling Chinese is hitting the news. If this fall continues, then eventually the Chinese will be forced to stop building the “ghost towns” and the use of Steel / Iron Ore will plunge dragging the price with it.

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