Morning Report Wednesday 14 October 2015
Are there any lessons that can currently be learnt from European markets?
Market Matters made an excellent "sell" prediction back in 2014 calling Woolworths (WOW) to fall towards $25 when the stock was trading close to $35 AND, at the time, it was a market favourite. - see chart 1.
This recommendation was based on the collapse of Tesco shares in the UK when it faced margin contraction due to new and aggressive competition from quality companies like Aldi and Cosco. At the same time these companies, while in Australia, were only just commencing to flex their muscles.
A classic example of simple logic and awareness being extremely powerful - Woolworths could have no upside from fresh efficient cut-price competition BUT it could be hurt! Hence, there was no reason to own the stock.
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