Just to continue the thread reagrding share picks. Thanks for the replies.
The original post was made around 5 months ago. Hit splitview to read.
Since then we have seen the AUD fall by around 12%. Oil is up around the same. Metal prices are down in USD terms but about the same.
The point regarding the small resource companies seems to have come true. Since then the small resource index is down by 3% whilst the overall market is up by 5%.
The large resource companies have remained around flat. The ASX 50 top companies mirrors the overall trend and is up around 5%. The difference is made up by not sureprisingly the oilers. Index is up around the 10% mark. Heavyweights are the ones driving this oil index up and the small minows in a lot of cases have fallen despite the rise in oil.
Where to from here ??? Standing back and having a realistic look at things. Oil is up 10% in USD, Ozzie is down 12%, AUD/MEtal prices are around the same. Our economy is slowing with weak GDP numbers and chances of a rate rise seem remote at this stage, Rises in US rates after their strong payroll numbers seems assured. Question is not if ? but more by how much ??
On this basis
Maybe oilers come off slightly with OPEC turning up the taps but this would seem to be a good level to buy. Can't see it staying too low for too long. Problems in Saudi/Iraq continue. Demand increases as developed countries production is set to fall over coming years and supplies must come from the middle east.
Our currency should remain under a bit of pressure as the US raises rates. However I feel longer term the US numbers are becoming more and more shocking. Trade deficut is set to get worse there and goverment debt defies belief. Risk at some stage in the distant future of a substantial re rating of the USD along the lines of the world bank stuff they shoved down others throats a few years ago. Short term 6700/7200 AUD. More vunerable to the downside.
Our stocks ... all time highs. Not too hard a call from here. With an election coming later this year and chances of maybe a new goverment there is more risk on one side. With a slowing economy same risk has to be for lower profits. Again with the offshore factor, rising US rates and same political situation again risk is more to the downside. Short term I expect our markets to continue on their merry way and hit new highs. Even when the US eventually raises rates I expect the US market to rally. They all know it is coming and feel it has been holding it back. So short term rally over the next 2/3 months but come September/October I expect their to be a big shakeout and change of sentiment.
Now for the small mining and other tiny companies from here. More of the same. Flat at best in a rally but they really need some form of correction in a big way. Despite them not doing so well for the last few months the ASX small resource index stands at 1790.4 as of Friday thats up a stunning 43% in 12 months. One would be brave and I think foolish to be holding these type of stocks at present. To a lesser extent the small industials stand up 16.6% from where they were 12 months ago. Looking at the bigger ASX 50 stocks they were up 12% from levels 12 months ago.
What I find more frightening about the tiny mining stocks is that less than 10% are either producers or even look as though they will produce. Even some that have had drilling programs and spent a lot of money over the 12 months and come up dry are still sitting in some cases 50% up and sometimes over 100% up when in reality their prospects obviously much worse and their cash position is bad.
