eFlash: Anyone for a dip? Price falls can
create buying opportunities
Every day the prices of individual company shares rise and fall and so does the overall market index. Sometimes
the broad market index falls because of a sell-off in a particularly large stock but most market-wide sell-offs are
caused by factors affecting general market confidence, like the recent Greek debt crises and more recently the
slowdown in growth evident in China, which are unrelated to particular companies.
Speculators will attempt to profit from this type of volatility by looking for market peaks and troughs and trying to
trade accordingly. However, long term investors look forward to market-wide falls because good companies are sold
off along with the rest. It gives us a chance to buy into companies we have been wanting to buy but may have been
too expensive. With the reporting season behind us in Australia we were impressed with the results of a number of
companies we have been monitoring for some time now – feedback from many of our research sources confirms
this.
Fortunately for long term investors, sell-offs of 10% or
more occur quite often, about once every couple of years.
If we include this current market sell-off, we have had 39
market dips of 10% or more in Australia in the past 70
years since shares came off war-time price controls at the
end of 1946.
In recent years the overall market has fallen -55% in 20089 (sub-prime), then -22.5% in 2011 (Greece 1), -10.5% in
2012 (Greece 2), and then -10.9% in 2013 (US QE taper
scare). The quantum of this current sell-off will in time be
recorded similarly with the benefit of hindsight – the
opportunities however are becoming evident now and we
will continue to use our experience and research to
identify these and advise you accordingly.
If you would like to discuss the current state of play in
investment markets, please don’t hesitate to call us.
Regards
David
Manager – Investments
Thanks to Ashley Owen from Cuffelinks
T 08 8291 2111
F 08 8291 2101
Level 1, 170 Greenhill Road, Parkside SA 5063
http://www.360Private.com.au
Disclaimer
Unless stated otherwise, this eFlash contains only general advice and does not consider your personal circumstances. Expressed views or
opinions are solely those of the author and may not represent those of 360Private Wealth By Design Pty Limited ABN 44 169 464 135
('360PWBD'). Liability limited by a scheme approved under Professional Standards Legislation other than for the acts or omissions of
financial services licensees.