Resource sector returns have been bouncing between the extremes of the range of feasible outcomes in each of the last 10 calendar years, as illustrated in the...

John Robertson

PortfolioDirect

Resource sector returns have been bouncing between the extremes of the range of feasible outcomes in each of the last 10 calendar years, as illustrated in the chart. Not only are each of the calendar year movements over the past decade abnormally large there is a tendency for them to be correlated across years leading to prolonged periods of unusually strong as well as unusually weak returns. This pattern of returns ultimately detracts from investor support. Greater investor interest may not require prolonged periods of outstanding returns - although that would be accepted gratefully by long suffering sector investors - as much as the more moderate outcomes which have been conspicuously absent. [The chart uses the small resource share price index as the most representative available indicator of sector performance since the index excludes the distorting effect of BHP Billiton while all the constituent stocks are above average in size and readily tradeable.]


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John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...

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