John Robertson

The largest gains in resource sector equity prices are currently from stocks classified as Phase I within the PortfolioDirect framework. Segmented model results are shown in the chart below. The large cap companies within Phase III benefit from the flow of institutional funds in response to changes in relative risk. The smallest stocks in Phase I benefit from the bottom of the cycle leverage in response to heightened private investor interest. Among the least responsive stocks recently have been those classified within the PortfolioDirect framework as being in Phase II. These rely mostly on successfully completing project development or finalising funding for their investment attractiveness. Remaining examples of good quality exploration endeavours still trapped within cyclical low price ranges suggest further investment opportunities can be found among Phase I companies. Despite the opportunities, price surges associated with the smallest stocks are not proving sustainable. This suggests that, until there is a stronger infusion of new money further along the cyclical path, a ‘buy and hold’ strategy will be less optimal than a more trading oriented approach. (VIEW LINK)



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