It’s time to check how Livewire readers called five market events for 2016 that were on the radar when we ran our Outlook questionnaire in December 2015. We asked your view on events ranging from whether BHP would cut its dividend, if Sydney property was to have a down-year, and whether bank stocks would hit new lows. In the first part of this series of three reports, we saw that Livewire readers’ stock picks were up 18% for the year. In the second part of this series, we looked at how readers had a 75% strike rate on calls that included the 2016 small-cap rally. In this final part of the October update on the 2016 Outlook series, we check in to see if Livewire readers continue to beat the market.
A major miner or mining services company will enter insolvency in 2016
With 88% of respondents saying yes, there was solid conviction here. It is understandable, given that back in December 2015, the sector had fallen in a straight line for five years to reach a ten year low. It was a fair assumption that there was going to be some rationalization at the big end. However, the market started to improve in January. This was not soon enough for beleaguered Arrium though, which called it quits in April. We count Arrium on the basis it had iron ore mining operations, and had been in ‘Major’ territory in the recent past.
BHP cuts its dividend in 2016
This question got the most unanimous response with 93% correctly predicting the BHP dividend cut, which was announced in late February.
It is interesting to note that the negative view on resources these last two questions demonstrated contrasts with the high number of respondents that backed mining companies in the stock tip section of the same survey. The best performing large cap from the survey so far is South S32, which saw a large number of votes.
Sydney residential property prices fall 5% in 2016
This prediction is still technically in play, but unless prices crash by 20% in the next two months, the 58% who predicted a down year are on the wrong side of the bet.
Sydney dwelling values have had a strong year...
Source: Core Logic Data, Livewire chart
The major banks will fall below their 2015 lows
Just 37% of subscribers correctly predicted that the 2015 bank sell off would continue into 2016. All four had hit new lows by March.
Would Woolies ditch Masters?
This prediction caught out the 56% majority that thought Woolies would hang onto the ill-fated Masters. By early Feb, Woolies had announced it would exit.
How did readers do?
Out of just over 300 readers who took part in the questionnaire, 22 have scored a clean 5 out of 5, and 96 got 4 from 5, so a pretty solid result, which follows the 18% YTD gain in your stocks picks, and the 75% strike rate on macro calls.
In case you missed it
Anything could change in these last few months of the year, and we will update again in late November, then close the books in December. We will tally results across all parts of the questionnaire once books are closed, to see which readers made the most correct calls across stocks, macro, and market events. It will then be time to ask you your predictions for 2017!