It’s been a pretty rough week on markets, although the local market was starting to look up a little yesterday – a bit like Sydney weather.
It’s hard not to panic when everything is going pear shaped and the memories of the global financial crisis and euro debt crisis are still quite clear in our minds.
Here at the Switzer Super Report we’re still pretty confident that the recent run on stocks was a reaction to some of the big tech stocks falling from their overinflated highs. After all it was the NASDAQ, not the Dow Jones, that suffered the biggest falls.
Last week Charlie was very prescient in his suggestions to rotate into mega caps the day before the biggest falls in the US. And he continues to preach on this theme today.
He suggested taking some profits on stocks like: REA Group (REA); Seek Ltd (SEK); Domino Pizza Enterprises (DMP); CarSales.Com (CRZ); Xero Ltd (XRO); and a bunch of others including the big health companies CSL, Resmed (RMD), Ramsay Healthcare (RHC) and Sirtex Medical (SRX).
The mega-cap companies he suggested rolling those into included the big four banks, Suncorp, Macquarie, AMP, IAG, Telstra and BHP.
And a few weeks ago, James Dunn was already looking at what might be the next REA Group, Carsales.com.au and SEEK, given those companies were so overvalued. He came up with iCar Asia, iProperty Group, Onthehouse Holdings, Disruptive Investment Group and iBuy.
A lot of those companies are not yet making profits. But as James pointed out:
“At one point, the prospects for SEEK, REA Group, Carsales.com, Wotif.com and Webjet would have looked similar. Fortune certainly favoured the brave speculator back then – for that’s what this kind of investing is – and those taking a similar leap of faith in this group could potentially be well-rewarded, too.”
And can we remind you again that the Switzer Super Report speculated that David Jones would probably be more likely to receive a foreign bid before Myers had another go?
James Dunn said a month ago that any “offshore bid that needed clearance from the Foreign Investment Review Board (FIRB) would arguably stand a greater chance of clearance than a domestic department-store merger would of getting past the Australian Competition and Consumer Commission (ACCC).”
David Jones’ share price has been hovering pretty close to the Woolworths South Africa bid price of $4 a share ever since the acquisition was announced.
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