Australian Investment Blog

Good morning everyone Overview Well, an exciting market in the US overnight! But let’s talk about Telstra. As readers are aware, Market Matters had been planning to buy Telstra around $5 over recent weeks. Interestingly, yesterday’s "Buy Alert" resulted in almost 20x more questions than we have ever previously experienced; we find this very exciting because moving forward Market Matters can help educate subscribers as well as aiding with classic investment decision making. The majority of questions were focussed on “what is” and “why” we were buying in the cum dividend market. Firstly, sorry that the first alert had the incorrect stock code; it should have been TLSCD and this was quickly corrected. So, let’s first readdress “why TLS” and then discuss “why and what” is the cum dividend market. Yesterday, Telstra (TLS) went ex-dividend 15.5c fully franked and the underlying stock closed at $5 down 25c on the day (4.8%). However, as TLS traded ex-dividend 15.5c fully franked the fall was in reality 9.5c or 1.8% on a day when the market gained 0.85%; this ignores franking credits because they have different benefits to different investors. For Market Matters yesterday it was a classic "Plan your trade and then trade your plan!" Remember, the above classic trading mantra is just as important to investors as traders.Investors and traders alike all think far more clearly, logically and analytically prior to committing money to the market. Unplanned market activity can let loose human emotions and their influences on decision making; generally in a poor manner - Fear & Greed. Market Matters is bullish TLS from this $5 level targeting a bounce back over $5.50, we believe the 31c fully franked yield (6.2%) is sustainable and hence very supportive of the stock.