Since the beginning of December, the All Ordinaries gold index has risen 53% and the price of only one of the 23 stocks comprising the index has fallen

John Robertson

PortfolioDirect

Since the beginning of December, the All Ordinaries gold index has risen 53% and the price of only one of the 23 stocks comprising the index has fallen. The median return among the constituent stocks has been 44%. There can be unusually strong equity price leverage around turning points in the trough of a cycle after individual stock prices, in many cases, have fallen so much. However, as the market is still trying to define a bottom, the gains can just as quickly be lost. The longer term chart opposite shows that, despite the most recent price gains, the index still sits within a range of prices which have persisted for nearly two years. Market conditions may support a breakout eventually - and it would be open to investors to position themselves for that to happen - but the most risk conscious approach would be to assume the range is intact for the time being and to reduce individual stock exposures when the index nears the upper end of its trading range.


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...

Expertise

No areas of expertise

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.

trending on livewire
Get the best of Livewire by signing up to our popular daily newsletter