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Share-market roller coaster

Today was one of the strangest days on the share market I can recall. Values have dropped dramatically over recent days and weeks but by early morning today the market had dropped a further (dramatic) 5.5%. By the time the market closed it had increased 6.7% to be up 1.2% on the day! Your scribe bought in at the depth of the decline  – a looseness in the bowels suggested a certain lack of conviction – or perhaps more accurately his sheer terror. In the end I had snapped a few underpriced bargains and the resulting profits (if realised) would have been enough to afford a crate or three of decent Coonawarra shiraz. Of course tomorrow is another day and, in these times, cash has great appeal but, on the day,  I did well. If the world is not to end tomorrow then Qantas for sale at $1-49 seems irresistible. That’s a little less than a quarter of the value in the proposed management buyout a few years back for a carrier which, despite some current transitional problems, remains the major link between 23 million affluent Australians and the rest-of-the-world.

I am struck by the short-sightedness of Australian investors. They sell out great mining and other firms much too cheaply – think of Norths, Western Mining and MIM. At the same time Aussie investors seem incredibly skittish.  The market is at a point where it seems pretty good value just on the basis of yield alone.

Of course I am not offering financial advice – the late rally may be for suckers alone. If there is a further weakening however I’ll buy more.  The market looks to me like a medium term bear but, at current prices, looks dramatically oversold. My guess is that those selling out at current prices will feel sick about doing so in a year’s time.

Update: The market held up today (Wednesday) with strong gains. Am I confident? Not at all – this market is a very scary place.

2 comments to Share-market roller coaster

  • conrad

    Curiously, if you’re into information flow and people’s perceptions of it, the same didn’t happen in HK or Singapore, even though their markets close later than ours.

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