‘Group Think’ and busting Australian investing myths

PM Capital

PM Capital

In the recent quarter the market finally caught up with the fact that China is slowing more quickly than the ‘bogus’ official trajectories. Paul Moore, Chief Investment Officer of PM Capital, says the sell off caused by this realization serves as an important reminder of the dangers of investor ‘group think ‘ in an increasingly process driven investment world. “It was not that long ago that China was supposed to grow forever and thus resource stocks were the place to be. With such a high weighting in the local ASX index, BHP was a must own in Australian mandated investment portfolios.” With commodity prices peaking in 2011 and BHP shares 65% off their highs, the reality of declining demand for resources has finally sunk in. Moore says that until resources companies face up to reality and cut paying dividends the sector remains one to avoid. In this video Moore highlights another investing myth that has recently been busted in the Australian market and points to the sector he believes is most vulnerable to a correction. (VIEW LINK)

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