I think one interesting point about our economy not recovering/peaking as well as the SP500/DJIA is that the Federal Reserve have been aggressive with quantitative easing and 0% interest rates. Whereas, the RBA, ACCC and APRA all appear to be anti growth. They are afraid of another GFC and how it will affect Australia, in particular, our housing market. However, we don't dabble as much in the derivatives on our MBS. We don't have anywhere near as much risk in that space. The RBA is trying to keep us real steady which really annoys me, we should be dropping rates which will promote businesses to borrow more and greater economic growth. Australia was one of the least impacted countries during the GFC however we are one of the slowest to recover.. what does that tell you? We are not being effective with our monetary policies. Furthermore, APRA is worried about our exposure to foreign investors in our housing market, however the Chinese investors have the lowest default rate and I have never seen the Chinese market/economy go backwards nearly as much as the US. The Chinese Government have a lot of influence in their economy and are extremely savvy with propping up their stock market and maintaining growth.
ASIC banned short selling in Aus for a period of time as it was hurting investors but now its back and worse than before. Most people give you the same rhetoric that short selling facilitates the correction of over-valued stocks. This may be true a certain extent but one can not ignore that they promote fear and scare-mongering to execute their trades. The correction of prices is dramatic and devastating. Myer is a classic example of this, shorters took a position at a high entry point then provide analysts at Credit Suisse, UBS etc with forecasts of the worse case scenario of earnings impact in the future from ‘Amazon entering’ to justify a downwards revision price target of $0.825. This prompted a 9% sell off on the day which continues to be fuelled with fear. This is basically insto’s preying on retail investors. They are like a pack of hyenas. However, this also provides opportunities for those who see value. My qualm is with ASIC who just sit back and let it all happen. I like how the chinese market is smoking shorters at the moment and their government steps in to helps retail investors, point in case Evergarde.
Anyway, Myer is at all-time lows and is showing good revenue with improving margins. The dividend yield is also quite attractive at this level. A takeover may be brewing in the background and could eventuate in the next 12 months. If it dips below $0.80 to say $0.75 then this stock would spring back really strongly from an insto accumulating (like Investors Mutual). This would provide great momentum and then force shorters to exit out as gains to be made from further downside moves is starting to dry up.
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