blairbart,Thanks for the fantastic feedback!Given that we have...

blairbart,

Thanks for the fantastic feedback!

Given that we have had a relatively lacklustre news period combined with volatile price action, today i was actually thinking about fleshing out my analysis on FML. I'll have a look tomorrow and see if there is any more useful information that i might be able to add.

On a side note, I've been thinking about how much I should be invested overall at the moment and if I should be aggressive with some hedging. This has been prompted by some various calls that the US markets should have a shake-down prior to QE3 in order to make QE3 politically acceptable. I read a report by Socgen that went as far as calling for 400 on the S&P without it. Many people seem to be putting on their bear coats (if they weren't on already!) and while I'm comfortable with my positions, I'd prefer to reduce any extreme volatility where possible.

This has prompted me to go and analyse the companies that incorporate the DOW Jones. I believe that if we see significant price falls overseas, then there would likely be implications for our market and even FML in the shorter term due to sentiment and withdrawal of liquidity. Instead of taking the word of others at face value and because I haven't actually read any reasonable justification for significant market falls, I've gone through my own process to figure out where things stand.

Since I can't fit it here, I've linked a post that I've put up which details the full analysis here http://macrovalueinvestment.blogspot.com/2011/06/will-markets-crash-without-qe3.html

I guess the main reason for me to go through this process is simply that there have been too many conflicting views on how things might play out over the next few months and none of it made much sense to me. My analysis has provided me with clarity and allowed me to have a better view of where some things are headed.

The short answer, for those who aren't interested in having a look, is that the DOW and therefore a fair portion of the US markets is not likely to experience a significant price falls based on underlying business value. Any substantial drop is likely to be due to sentiment only and therefore temporary regardless of whether there is further market intervention via quantitative easing.

I realise this is not directly related to FML. However these sorts of questions that I have been asking myself could have influenced my overall positions, including that of FML, had I reached a different conclusion. Perhaps it might assist someone who is thinking along similar lines.

I plan to complete the same process for the ASX20 to satisfy my curiosity.