Under normal circumstances, I keep my comments on this blog to thoughts about market direction. But ... occasionaly ... well ... less than occasionally ... things get up my nose and I think they deserve a RANT.
RANT ONE, let's take the banks. Specifically Commonwealth Bank. Boy ... haven't they come in for a bashing in the media and from the pollies!!! Anybody would think they make Shylock look like a gentle benevolent uncle.
What does the market think? Look at the chart above. (Last chart.)
During the past year, CBA has had a strong positive correlation to the general market (XAO) ... that is ... until mid-September, when the charts part company. CBA has carked it, while the general market has continued a gentle uptrend.
The market seems to be buying CBA's argument that its costs are increasing over and above the RBA's interest rate rises. No wonder CBA's price has been dropping. So, now, CBA says it must raise its prices to cover its costs.
Personally, I would much prefer the market's opinion (which has the best investment minds behind it) over the opinion of a few media pundits and a few politicians.
CBA's unpopular increase in interest rates seems to be a sensible reaction to the slide in its share price which is, no doubt, based on fundamental factors about its future profitability. Forget the pollies' words and the media's - I'll believe the market's assessment. (The market is always right.)
That's enough for RANT ONE.
Now ... for RANT TWO
Yesterday, Melbourne Cup Day, Westfield announced at 2.53 pm, that they intended to set up a new Westfield Retail Trust comprising Australian and New Zealand assets. Effectively hiving off the underperforming American assets into another separate entity.
What's been happening to Westfield's share price in recent days? Particularly compared to its peers in the Real Estate Sector?
Yesterday, Westfield rose about 2% before the announcement. And that was after considerable upside over the previous four days - over 2% up in that time. All told - a four percent rise for those people who some how were prescient enough to buy into Westfield about a week ago. And even more so for those people who bought in on the day of the announcement.
How did the Australian market as measured by the XAO (All Ordinaries Index) do on Tuesday? It was up just 0.05%.
It looks to me like punters in Westfield were just as lucky as punters on Americain.
Maybe the big rise in Westfield before the announcement was just coincidence? After all, the Efficient Markey Hypothesis says that movements in the stock market are random. So, you might as well just throw darts at a list of stocks. Maybe a lot of darts hit WDC on Tuesday.
Just for reference, I've also put up the chart of GPT and SGP, two of the other major real estate trusts in the 50-Leaders. I guess a lot of darts missed those two stocks.
What do you think?
Cheers
Red
No comments:
Post a Comment