Local market ran out of puff and closed at the lows of a negative last day of the quarter. We are heading into the last week of trading before school holidays and institutional investors are likely to lock in their profits before going on holiday with their families. Retail investors will take over but they will be completely exposed to global macro risk in a stretched market without institutional investor backing to fight against potential profit taking risk. The market opened well and then profit taking kicked in. Investors started to lock in profit after the market delivered over 5% total return for the first quarter. Market commentators are going to talk up the fact that April historically is a good month as it runs into bank dividends and retail investors love banks….but let me put these numbers before you and show why fund managers are going to lock in the profit (1) since GFC, six out of the eight years had positive Q1…and only once did Q2 delivered a positive return in those six years…and that performance was less than 1% (2) since GFC, there has only been two times where we had four consecutive positive quarters…and it underperformed the next quarter on both of these times. So what do you think the fund management community, mainly underperforming the market after being short banks and resources, going to do after four consecutive positive quarters as US fiscal and EU worries start to rise? My money will be backing a high risk / low return quarter ahead…time to be smart!!! Telecoms and Utilities were the only positive performers while Property and Energy lead the rest of the sectors into negative territory.


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