Wednesday, April 02, 2008

Fund Switch Completed in Australia

I just switched the another 35% of my super fund from the CFS Conservative Fund to the CFS Geared Share Fund. I am maintaining 15% in the CFS Conservative Fund to retain exposure to bonds. The model forecasts that the Australian stock market is going into a significant rally. For example, yesterday the index rose on falling stochastics in the overbought (above 80 zone):



This is typical very bullish behavior. The forward forecast of the model shows that more of this will continue to happen. I doubt that the next dip in the market will be below today's close and, therefore, despite the market rallying significantly today I bought. I also have orders in at CommSec to switch $A25k from CFS Conservative Fund to CFS Future Leaders and CFS Developing Companies funds (small cap funds). Small caps are likely a buying opportunity here in the Australian market. They've been hit badly, possibly even worse than in the US market due to margin calls resulting in the liquidation of small cap portfolios and large holdings.

The US market is not looking as bullish (but still bullish longer term). So I'll hold off completing the switch from bonds to stocks there until the next dip which might be below Tuesday's close.

European and American markets went just crazy on Tuesday on news of Lehman Brothers and UBS managing to raise more capital. Clearly investors think that the credit crisis has been neutralized - no significant bank will go under because they will either be saved by a central bank or private investors. UBS wrote down $19 billion of bad debts - but the past doesn't count in stock valuation, only the future. I stupidly went short and then pulled my stop and got blown up. Total lack of discipline. Hubris after a good month. Still I am only down about $500 on the day in trading when all is said and done and gaining massively for the moment on the investment side.

3 comments:

debaron said...

Hie.

I would like to email you personally regarding a finance/business portal i'm starting. It's going to be a site that will group all aussie finance bloggers together and massively increase their exposure regardless of their current site traffic. Definitely not a sales/MLM pitch. Would love to hear from you. Let me know what's the best way to contact you. Promise this is worth your while!

mOOm said...

E-mail me at moominoid@yahoo.com

debaron said...

hey. thanks for the email. i've sent you an email couple days ago. Just making sure you got it.