The small resources share price index is showing how appearances can be deceiving

John Robertson


The small resources share price index is showing how appearances can be deceiving. On Friday, the index closed at precisely the same level as on 9 July 2013 after having fallen by 70% over the prior two and a half years. Among the stocks currently in the index, there was a 301 percentage point spread between the best performing stock and the worst. Sixteen stocks produced returns in excess of 20%. Fourteen stocks had share price declines in excess of 20%. Strong gains offset by large losses have produced the appearance of stability. The action below the surface suggests a welcome break from the macro drivers which had dominated stock performance in this market segment for more than five years. There is a hint of more emphasis on individual stock characteristics as a performance guide. Let's hope people haven't forgotten how to choose.

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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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