Question 1: Is it time to invest in the second tier banks? I was thinking about the Bank of Queensland. What do you think? Len, Terrigal, NSW
Answer: Len, the big four or five banks, which includes Macquarie are core holdings in a solid portfolio. I see the second tier banks as speculative plays, where you get in, make profit, and then pocket that profit and look for other speculative plays. This chart of BOQ shows how unreliable it is over time.
The pattern suggests it could be in the buy zone, but the analysts don’t agree! See below.
I suspect the analysts are too negative and the share price will probably sneak up with the improving stock market that I expect for 2024. However, I suspect there are better plays.
Question 2: Is the worst for lithium stocks behind us? Jake, Albury.
Answer: Jake, over the past five days, Liontown is up 25.37%, while Pilbara Minerals rose 3.77%, so it looks like the LTR rise was more company specific. Motley Fool says: “…judging by the gains being made by Liontown shares today, it seems that some investors may be betting on Hancock Prospecting joining forces with Albemarle Corp to complete a deal for Liontown.” But that’s guesswork.
Meanwhile, Allkem was up 5.69%, while IGO was up 14.65%. My best guess is that these companies will benefit from falling interest rates and a lower US dollar. And I think the passage of time will show that Electric Vehicles and battery usage will rise. I think these companies are good long-term holds. One day when all the stars align, the short sellers will have to buy PLS, which is the most shorted stock on the market right now. The next few years will be different from the past two years with inflation falling, interest rates dropping, global growth will be on the rise and the demands of the climate change lobby becoming more insistent on less fossil fuel dependence. Also, the supply of EVs will increase and the prices of these cars will fall as charging stations become more numerous. Lithium is a speculative play but eventually it will be like iron ore and copper, meaning it will be in many diversified portfolios.
