August 2013 Review Comments
Written by Tony Gray   
Wednesday, 14 August 2013 14:16

Portfolio Valuation & Comment

Reporting season is in full swing and so far reports have been ‘ok’.  It seems those announcing downgrades updated the market earlier to re-set expectations.  All the same, companies offering better than average growth potential are trading at higher than average multiples and the very cheap stocks are high risk given we do not yet know how well they will handle the downturn in business (e.g. mining service companies).

Ferne has produced a guide to accessing your portfolio through the website – relevant for those where we record portfolios for preparation of accounts and/or act as the mail-house.  If you do not have a log-in to access your portfolio, then please contact Ferne to arrange.  The E*Trade log-in on the website also permits some access to research and portfolios (restricted to listed securities only) and again a log-in for access may be arranged with Ferne.

In very broad terms, we have reservations about the state of the global financial system, but some hope that the US will continue to grow their way out of a debt and deficit issue.  We also hold concerns about the competitiveness of the Australian economy generally – which as the rest of the world recovers could see underperformance of local shares, property and fixed interest.

We continue to emphasise the diversification and total return benefits of building up international exposure for most portfolios – with the lower yields now not much lower than the very low at-call and deposit rates on offer.
My expectation is that cyclical stocks will outperform to the detriment of the strong performers both internationally and locally.  An example of an opportunity relates to technology stocks – they trade on low earnings multiples and have been left behind in much the same way the big healthcare stocks were a couple of years ago.  After years of consolidation this sector globally could move back into favour.  Australia offers very little in the way of large technology stocks, so this is a prime example of a sector specific international area to add.

If you have any concerns or queries about your portfolio, please contact me to discuss.

Best wishes,

A.W. (Tony) GrayBCom, LLB, Dip FP, GDipAppFin, CFP, FFin
Principal, TG Financial

Please treat the above comments as General Advice or general information, with no action to occur until we have considered with reference to your financial position, needs and goals.



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