A Positive session to finish the year

December 31st, 2008  by Lawrence Grasso

Closing Data

	current	change	%
Dow Jones	8668.39	184.46	2.2%
NASDAQ	1550.7	40.38	2.7%
S P 500	890.64	21.22	2.4%
FTSE 100	4392.68	73.33	1.7%
Nikkei 225	8859.56	112.39	1.3%
SPI Futures	3712	76	2.1%
All Ords	3,591.50	37.3	1.1%
Oil	38.95	-0.94	-2.4%
Gold	870	-5.3	-0.6%
Silver	10.98	0.17	1.6%
Aluminium	1445.5	-14.5	-1.0%
Copper	2812	-31	-1.1%
Lead	945	44.5	4.9%
Nickel	9860	105	1.1%
Tin	10070	70	0.7%
Zinc	1090	-16	-1.4%

A Positive session to finish the year

Wall Street staged a big advance in the next to last session of 2008 on Tuesday after Washington’s latest lifeline to the auto industry bolstered hopes that the government will do whatever is necessary  to cut short the recession. Investors found solace in news that General Motors Corp’s troubled financing arm (GMAC) received $5 billion of financing.

The Australian market is set to open higher today on the back of the positive move on Wall Street.

OZL

OZ Minerals the world’s second-largest zinc mining company, won a two month extension to refinance debt after burning through $1 billion in cash in six months as metal prices plunged.
The company has received approaches seeking a majority stake in the A$2.5 billion Prominent Hill copper and gold mine as it proceeds with assets sales to meet refinancing requirements. It’s also seeking bridging finance to meet cash shortfalls at three of its projects and has agreed to give Societe Generale, one of its lenders, security over its biggest zinc mine.

Closing Word

by Neil Gynther

So there goes 2008, a year that most of us would want to forget. Huge falls in the value of most asset classes have left investors shell-shocked and wondering what is coming next. No one predicted the timing of this downturn and no one ever imagined the depth of the selloff, especially in the share markets around the world.

The Australian Newspaper conducts a survey each year of 10 (so called) experts who name their 10 most favoured stocks and the level of the markets, gold, oil and the currency at the year’s end. The best (or least worst) performance was a decrease in portfolio value of 42.8%. The lowest prediction for the All Ordinaries was 5400 and the highest 7550. The A.O. finished at 3515.

Ironically the representative of the Australian Psychics Association came 3rd with a loss of 44.3% on his portfolio.

But where to from here? There will be more bad news to come especially on the unemployment front. However unemployment is a lagging indicator and stock prices have a lot of bad news built in. Price Earnings Ratios (an indicator of the markets appetite for risk) are at historically low levels and yields at highs. I am referring to our major companies i.e. the top 50. It is not the time to be investing in smaller companies, junior miners, Bio techs or highly geared companies.  All of these will find it very difficult to raise funds over the next 12 months at least. There will be corporate moves (takeovers & mergers) but trying to pick which ones will be involved is very difficult.

Therefore we should be looking for opportunities in the top 50. Our market has seen a small rally in the past week but this has been on very low volume (no institutional activity, only retail).

The second week of January could see the markets pull back as the institutions return to work. Take the opportunity to write positions in the first week. Reporting season in February has been dubbed “Confession Season” as companies take the opportunity to write off everything they possibly can.
This could be a good opportunity to increase your Blue Chip portfolio.

Overall I think 2009 will be a better year after a lacklustre first half and my prediction for the All Ordinaries at the end of 2009 is 4400 points.

From myself, Tony, Cale, Lawrence and Bryden and on behalf of Peter Spann and all the team at Freeman Fox, we wish you a safe New Year and pray for better markets in 2009.

Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.

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