When the chips are down…

Credit to Motley Fool… Great Read…

I looked at my portfolio today…

I didn’t look for long. To say it was ugly would be an understatement.

All that money, up in smoke, in the twinkling of an eye.

All those hard-fought gains, wiped out in an instant.

Yesterday, the ASX plunged to a one-month low. It has fallen in seven of the last 10 sessions, lead by a rout in bank shares.

Worse, BHP Billiton shares have crashed to 2009 prices, its shares down 5% more today.

Santos is in a trading halt. Gold and gold stocks have been smashed. The ASX is close to dipping back below 5,100.

So much for those predictions of ASX 6,000 by the end of this year!

At the rate we’re going, the ASX will be lucky to hold on to 5,000… a level the market first broke back through almost three years ago.

Hard as it is to admit, I did warn you dark days like these would come…

So what do you do?

Let me guess…

You sit on the sidelines, too scared to make any move.

Too scared to sell in case the market recovers.

Too scared to buy in case the market falls lower.

Yet you know the share market STILL has been the greatest wealth creation vehicle on earth.

And you know interest rates are low, and likely STILL staying low for what could be years to come.

I get it. I especially get it if you are a retiree. You’ve worked hard to build your retirement nest egg. The last thing you want is to see half of it go up in a puff of smoke.

The problem is, leaving your money in the bank, earning just 2% per annum, may confine you to a miserly retirement, watching every cent, too scared to spend up on some of life’s luxuries.

There is another way.

A way that thousands of your fellow investors have already discovered.

A way that not only earns you a thoroughly decent return on your money, but also enables you to beat the taxman, potentially setting you up to receive a tax refund.

In this low interest rate environment, we believe dividend-paying ASX shares — particularly those paying fully franked dividends — are a truly compelling alternative to cash.

Below I’ll show you how you can get started, either by adding some of the ASX’s very best dividend stocks to your portfolio, or just get started earning a decent return on your money.

But first, before you get started, know these two simple yet critically important keys to investing success…

We think the ultimate secret to wealth creation, is having the discipline to…

1) Put money to work in the stock market every single month, no matter what the market is doing, either up or down.

2) Leave your money invested in shares for the long-term, no matter what the market is doing, either up or down.

Investing during a bull market is easy. Your portfolio only goes up. Happy days.

It’s what you do during the inevitable downturns — almost exactly like we’re experiencing today — that ultimately determines whether you’ll be prince or pauper.

If you’re the type of person to freak out at the first sign of share market volatility, you’re probably better off in cash.

I’m in cash.

I’m in shares too.

Cash helps me sleep well at night.
It also gives me options.

The option to buy shares whenever I see opportunity.

The option to pile a heap of money into the market when prices are cheapest.

The option to go on holiday, to repair the car, or to upgrade the TV.

You like a bargain. You like to buy a case of wine when it’s on special. Buy one, get one free. Half price on a block of Cadbury’s chocolate.

You’d think the same thing goes with investing. The cheaper they are, the more shares people will buy.

The strange fact is the exact opposite is true.

When shares are cheap — as many appear to be now, after the market’s recent correction — many investors head for the hills.

Worse, they sell, at the worst possible moment… like now, when the share market is going through one of its inevitable wobbles.

A Few Charts of interest.

Just a bit of an update and some interesting charts to keep the mind juices flowing…

• SPX tried to push through resistance last week, but ended the week a little softer.   Russell and emerging markets have been dragging, although the Nasdaq continued to push higher but now into resistance.  VIX has also come off very hard and short interest has fallen away, thus I believe this could be a medium term top.

• Nasdaq gap has held so far but pushing into resistance.   If there is any weakness this week, look for a gap fill target of ~4905

• The dollar index broke out a potential bull flag last week but has pulled back retesting the break zone.  This break is by no means out of the woods.  It does appear the the Dollar yen will push higher from here and the EURUSD will continue to break down.

• Fuel for the bears – Thursday last week – long term change showing the 2 month rate of change at record lows.

• XJO (ASX200) tested 5400 but sold off sharply, following the weaker metal prices down.  5200 is a support area.

• AUD also came off following the metal prices lower, but is holding above a decent support area just above 70c.

LP

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Feel free to get in touch through the ‘Contact’ page.

LP

ASX200 Key Support!

The weekly chart above has, so far, held the key support trend line base on today’s strong performance in the index.

I think we will see some choppiness in the market coming into October before we look to push higher towards the end of October. If we see these current levels hold as support in the coming weeks, pin your ears back for the run into Christmas.

LP

Risky.

Below is an article I read that puts the age old debate of ‘The Stock Market is so risky’ into perspective. I think most reasonable people get this article, once they’ve had a chance to weigh up the facts. The problem for most is working out just what shares they should buy. This is when you pick up the phone and we have a chat. Read on.

Credit to Motley Fool.

Now, I’m not about to put the boot into property investing — done sensibly, it is without doubt one of the best investments you can make. And I’m not going to preach on about how shares are so much better — each to their own I say.

But the difference in attitudes towards shares and property couldn’t be more stark, and is worth teasing apart. Especially when much of the perception is based on complete misconception.

Take the idea of risk.

Now a loss making mining exploration company with mountains of debt and an ever shrinking balance sheet is risky — super risky — but that says nothing about the long term risk associated with an established, profitable ‘blue-chip’ company.

Sure, all shares have a tendency to be volatile over the short term, but that speaks only to the risk associated with short-term price speculation. I’d wager that buying and selling properties in quick succession was equally risky — perhaps more so given the costs and difficulties of selling houses.

People also like to tell me that shares aren’t ‘real’; they are intangible assets. Bricks and mortar, on the other hand, is a solid asset that you can touch. And as such, its value is more real.

Obviously, these people have never been to a Bunnings warehouse, a Woolworths supermarket or a Commonwealth Bank. They all seem pretty real to me.

For some reason, people also like to tell me that property never loses value. Shares, on the other hand, can ‘crash’ and do so regularly.

I’d suggest these people open up a history book. Property — like all assets — does of course ‘crash’ from time to time. Ask an American or Spaniard if they think property doesn’t crash! Sure, we haven’t seen a significant pullback in price in an Australian capital city for quite some time, but right now there is a property crash underway in many mining communities. A few years back, many Gold Coast properties lost close to half of their value and have still yet to recover.

Here’s the irony.

That mate of mine, who feels I am being risky with my investments, has 2 properties; one is his residence the other an investment. Both are in the same geographic area (and hence face similar risks), and both are highly leveraged — about 90% of their value is in debt.

The investment property actually costs more in interest, fees and maintenance that what it generates in rent. He gets a tax benefit from this ‘negative gearing’, but even with that he is still losing money each year.

Every spare cent he manages to save goes towards servicing his loans. He loses sleep anytime he hears that interest rates might rise — and I don’t blame him.

Seems pretty risky to me!

Of course, if the value of his properties can grow enough over the coming years, it will all be worthwhile — he’ll likely make a great return. That’s what happens when a highly leveraged bet pays off.

But if his properties don’t appreciate in value fast enough, or if he can no longer service his obligations while he waits, he is going to get taken to the cleaners. In a BIG way.

And I’m the one taking a huge risk?

Now, what he is doing doesn’t mean that property investing in general is risky — it’s just the way he is going about it.

And it’s the same with shares. Invest in poor companies, with borrowed money and a short time horizon — well, you deserve what you get.

But if you buy a diversified range of wonderful businesses, with established and growing operations, strong balance sheets and the capacity to deliver regular and attractive tax effective dividends — and with the intention of holding tight for many years — you’ll likely do very well. Sure, you’ll face the inevitable bumps along the way, but I wager you’ll do better than most.

Morgan Stanley says ‘Time to Buy’

If you have ever thought about investing in the markets or when to add to a portfolio, now is the greatest opportunity we will see for years to come. Read on and access the link below to see where I’m coming from…

I thought I would share with you Morgan Stanley’s latest take on international equity markets.

‘Morgan Stanley has issued a “full house” buy alert on international stock markets for the first time since early 2009, effectively calling the bottom of this summer’s equity slump.’

We have been beaten and abused by the markets throughout August and we have really felt the effects. The local market was down 17.8% at one stage from it’s highs made only 3 months prior in April this year. US and European equities are hurting but as the saying goes, ‘Buy when those are fearful’. It takes courage and your remaining capital to take advantage of these excellent opportunities when they arise. We need to take advantage of these opportunities.

Lets not forget, this is not a GFC! We have strengthening economies both in Europe and the US. We have stimulus up to our ears, encouraging investors to seek returns in the equity and housing markets. Holding cash in these environments is criminal. The market is falling on fear and bouncing on optimism of a bottom being formed. The Devaluation of the Chinese Yuan has been the catalyst across global markets for the sell off. There are concerns of the Chinese economy starting to contract but this has been in the news for the past 18 months, so why the fear now?

As I have mentioned in previous notes, I believe we will see local and offshore markets pushing back towards their highs by the end of January as this crash is all forgotten about and everyone takes advantage of the great yields and buying opportunities on display now.

Read Morgan Stanley’s take on it all:

http://www.telegraph.co.uk/finance/11837853/morgan-stanley-capitulation-MSCI-Europe-equities-China-bank-stocks-1998-bonds.html

If you have the capital preserved, now is a better time than ever to begin or add to your portfolio.

Let’s chat.

LP

May Take On It All – August

It’s been a while since I have updated everyone on everything from this side of the desk and we seem to be as settled in the new office as we possibly can be given everything the market has thrown at us this year. Given the amount of time that has passed since I last updated everyone, I thought I would provide my view on the current state of play along with outlining some of the things we have been doing and what is currently in play along with some ideas going forward.

With the issues in Greece dominating the early part of the northern hemisphere summer it now seems to have stopped making the headlines of every media outlet available.  This has seen the Euro trade in a range between 1.0500 to 1.1500 against the USD.  European equity markets took the news badly on any negative news but were also very quick to rebound on any sign of an agreement or turnaround in the market. The sell offs provided good buying opportunities and we did so by purchasing some DAX calls through issued trade alerts. All trades that have been recently executed can be seen in the Performance Report that can be downloaded through the Performance Page.

Post Greece, the market then shifted its focus to China and the Federal Reserve in the US. The swings on a daily basis on the Chinese equity markets were significant to say the least but this was to be expected given the massive run up we had seen – 69.84% gain from the lows made in February this year alone!

In the US all eyes are on the September FOMC meeting in anticipation of a possible rise in interest rates. We have seen the USD strengthen against most currencies, combined with commodity prices, QE in Japan and Europe all pointing to more strength in the USD. The big question remains as to how far can this go? If we look at the Australian dollar, we have weaker commodities, slowing demand in China and the RBA still on an easing bias so holidays in the US don’t look like they are going to get any cheaper any time soon. The AUDUSD in on course to touch 70 cents this year in my opinion. On the holiday front the only positive is the lower crude oil prices which is benefiting the airlines but doesn’t quite seem to have made its way to the petrol pump for our benefit. Fuel Prices are higher now that when oil was trading around $100/barrel! – explain to me how this works?!

Looking forward I still have a preference for US equities over domestic equities but having said that, we have done quite well locally but better offshore. Stocks such as CSL have pushed to new highs, The banks have been steady and the miners have been hammered. I have been issuing investment recommendations on the ASX200 and we have simply been buying dips in the index. To date we are doing well with this strategy as you can see in the Performance Report on the Performance Page. Timing has been everything but my core view remains that we should perform better in the second half of the year as compared to the first half. With regard to the US we have also been on the right side of the currency move so not only has it been a case of calling the direction of the equity markets but the currency gains have also improved the returns.

From here, I continue to favour health care, technology, pharmaceuticals, biotechnology, banks and solid trending stocks which continue to deliver. The most notable example being Walt Disney in the US up until the overnight movements. Stock down circa 10%.

I will look to put a note out, post the close of each month with an update. Please use this as an opportunity to ask any questions you might have.

LP

About time we saw green!

Good Morning,

Finally….

Some love, after seeing the index only trade in the red since the beginning of June we were up 7 points on the ASX at yesterdays close.

Dow Jones up 264 points

Crude Oil up 1.65%

Gold up 0.66%

Iron Ore up past $65.00/tonne

I am certainly feeling happy this morning….

Now…

The big question will be whether the ASX will actually end the day higher …

The answer is yes, it will.

So why the rally? Germany may be satisfied with Greece committing to at least one economic reform sought by creditors to open the door to bailout funds, according to two people familiar with the country’s position. A government spokesman denied that Germany is considering such a deal.

U.S. crude stockpiles capped their longest stretch of weekly declines since August. This is good news for oil……

Yesterday, clients received an email with a DAX (Germany 30 index) recommendation to buy the index through whichever means. If you bought 20 Index CFD’s and put aside 4500 EUR margin, you would currently be up over 5K EUR profit this morning. Should see it trade up to 11,500. Currently 11,259.

To Thirsty Thursday!

LP

Bit of an update – 3rd June

Apple was started in a bedroom in Cupertino, California in 1976. There’s hope for us all yet.

So June hasn’t kicked off like we’ve hoped, with the XJO down ~ 150 points over the past two trading days, but it is early on and we keep fighting.

Last night, the AUD/USD rallied 2.23%….

One of the biggest moves we have seen in the past 12 months, as the RBA kept interest rates on hold and a weakness in the USD lifted sentiment…

That’s a big move…

Is there now a change of trend and have we seen a bottom for the AUD?

It will all depend on the US 10 year bond rates… so keep an eye on these…

US stocks eased on Tuesday (Dow down 22 points), as a jump in bond yields hit utilities and other top dividend payers, but energy gains and optimism Greece is near a deal with creditors limited losses.

New orders for US factory goods unexpectedly fell in April as demand for transportation equipment and other goods weakened – the latest data to suggest the economy might not be bouncing back after a first-quarter slump.

Commodities higher with Crude Oil above $60.00, Gold back to $1,193/oz. and the AUD/USD trading at $0.7780.

After seeing such a selloff in the first two days of June, the local ASX200 index is currently looking to re-test support levels around the 5600 level. Unless we see a break of the low made in May of 5574 I think we should look to push higher in the short term from these levels. Buy with a target of 5800. Please contact me to see how you can take advantage of a possible move higher in the index.

LP

Busy week ahead – Buy USD

May the 4th be with you.

• This week is likely to be one of the busiest trading weeks for 2015 due to the sheer amount on data, company releases and central bank statements, both here and overseas.
• There was solid bounce in US equities on Friday night is likely to flow through to Asia this morning. There was no trade in Europe on Friday for May Day holiday and London is closed tonight for the same holiday.
• After a harsh winter brought U.S. growth almost to a halt in the first three months of 2015, April’s non-farm payrolls report, due on Friday, will signal whether the world’s largest economy is faring any better in the second quarter.
• MONSANTO: has approached SYNGENTA about a takeover, almost a year after a previous attempt fell apart, according to people familiar with the matter.
• TESLA: unveiled a line of home and industrial battery packs late Thursday, “power wall” batteries—ranging from a $3,000 7 kilowatt-hour wall-mounted unit to a $3,500 10 kwh unit—cost far less than the going rate for large-scale batteries and can be easier to install. Tesla aims to begin delivering units by the summer from its car factory in California.

DOW: +1.03%, S&P500: +1.09% and NASDAQ: -+1.29%

• The AUD has moved well away from 80 cents on the back of the article and it’s very likely that the Statement of Monetary Policy on Friday will fill in the details as to why the RBA moved rates and if there could be more cuts to come – another argument over semantics could be had here. The AUD is going to move very quickly this week.

• With the volume of data, the company and Reserve bank announcements, there will be some big moves in the currencies this week. Above is the US Dollar Index chart that tracks the strength of the USD against a basket of other major currencies. The current holding and respecting of the 95.00 level and 100 day moving average may be a sign of the USD re-strengthening after the past three weeks of weakness. Look to take up long USD positions on the back of recent weakness.