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Wry & Dry - A weekly review of wealth management matters through a cynical eye
Greek ruins May Surge. Facebooks's IPO.
If Treasurer Swan asked his fairy godmother to take his budget off the front pages quick smart, then his wish has been granted. The fiasco that is the Greek government sent a nervous tremor across world stock markets.
Given the 11% increase in the Australian share market already in 2012, the market was, arguably, going to fall anyway, as traders took profits.
“Sell in May, and go away (on vacation: Wimbledon, Lords, Ascot, Henley, etc)” is an old saw that sometimes affects sentiment. But the market has fallen by about 7% since the start of May, a little more than a correction. And sentiment wasn’t helped by the Captain Obvious observation from BHP about falling commodity prices.
Our clients’ Australian share portfolios have held up reasonably well: down, but not by as much as the share market. 10% cash, a focus on dividend paying companies, and the recent sale of BHP have been most helpful.
And clients with income securities in their portfolios will be even less affected.
The only affect the Greek crisis will have on your long-term investments is to make buying more of them immediately attractive. We shall wait. The yield on clients’ share portfolios is now about 7.5%.
We again observe that there is no way that the European Central Bank is going to allow the European financial system to fail.
Inevitably, there’s nothing like a seeming crisis to bring out every would-be-expert. And so with Greece. I’m surprised that Malcolm Fraser hasn’t been asked to comment. But Saturday’s Age is yet to hit the doorstep.
Having said that, see later for my might-be-expert take on Greece.
Elsewhere...
- Japan’s economy grew at an annual rate of 4.1% in the March quarter
- Germany’s economy grew at an annual rate of 2% in the March quarter, keeping the eurozone out of recession
- US industrial production and housing starts were higher than expected
World Stock Markets
World stock market indices are as at previous market close & updated daily.