The market closed down at 4737 this week, giving us a drop of 3.7% across the week.
The banking sector is now down 11% from its highs and is expect to continue to fall.
We resisted buying the banks over the past 4-5 months due to the high pricing but I expect that in the coming months we may have a chance to pick some.
The news flow is not getting any better with GDP figures out this week indicating a slow down. The US continues to look at slowing its monetary policy.
Also noted was that 941 businesses were put into administration, marking the highest monthly tally since the records were first made public in 1999.
Almost 3,450 companies have gone into administration so far this year, compared with 3524 during the same period in 2012. However, the number is higher than the opening four months of 2008 to 2011, which included the global financial crisis. We are starting to hear the word recession once again.
Things are going to heat up as we move into the election mode and the US ease monetary policy, now is the time to look for the good long term opportunities as the panic selling starts to take shape.
Keep in mind that interest rates are expected to fall further.
I am keen to increase exposure to the resources, and if the banks get cheap enough, add some more to the portfolio.
For more information please contact us on 07 4771 4577.