Damn you BHP Billiton, but not you Ashton Agar

Happy Friday.

As well as the end of the working week, today we have much cause for celebration…

  • new record for the S&P 500.
  • Helicopter Ben Bernanke promising to print money, and keep interest rates at 0%, “for the forseeable future.”
  • Ashton Agar‘s heroics.
  • The S&P/ASX 200’s surge back through 5,000, and the return of the bull market.
  • Interest rates headed down again, perhaps as early as next month.
  • QBE Insurance’s 50%+ gain in 2013.
  • The one stock in my portfolio that’s jumped 38% in just the past fortnight.

I must admit to being a little bleary eyed this morning after staying up late to watch the nation’s latest hero — Aussie number 11 batsman, 19 year old Ashton Agar — dispatch the dastardly English bowling attack to all parts of the Trent Bridge cricket ground.

It was magnificent, gripping, unexpected drama, Agar and Phillip Hughes grabbing hope from a seemingly totally forlorn and depressingly familiar Ashes batting collapse.

The return of the stock market bull

The cricket fun didn’t quite carry on into the last session at Trent Bridge, but it was somewhat conveniently replaced by some good old fashioned stock market fun.

Overnight in the U.S., the S&P 500 closed at a new record high after Helicopter Ben Bernanke said that “highly accommodative monetary policy for the foreseeable future” was needed.

So much for tapering the Federal Reserve’s bond purchases, and for higher U.S. interest rates. Heck, even gold celebrated, jumping 2.6% for a fourth day of gains.

The S&P/ASX 200 jumped aboard the action, surging back through 5,000. It’s a wonderful sight for the bulls amongst us…

ASX July 12 2013

Source: The Age

It’s a case of back to the future, back to the good old days of May, when the ASX was riding high and investors were taking to yield stocks like Ashton Agar was taking to the English bowling attack.

A timely reminder… 2013 has been a very good year

For all the recent stock market volatility, and much investor angst, it’s worth reminding our Foolish readers the S&P/ASX 200 is UP a more than respectable 7.4% so far in 2013, and that these popular stocks have had a tremendous year to date…

Flight Centre (ASX: FLT) — Up 65%

JB Hi-Fi (ASX: JBH) — Up 64%

Platinum Asset Management (ASX: PTM) — Up 56%

QBE Insurance (ASX: QBE) — Up 52%

A 50%+ gain for a ASX 20 stock in 6 months is very rare, but I suspect shareholders aren’t complaining.

I confess — I totally missed the QBE boat

At this point, I must make a confession.

I’m less enthusiastic about QBE, and don’t have the insurance giant in my portfolio.

For me, I’m unable to overlook QBE’s series of recent stumbles as one-off events, thinking there may be some more serious underlying problems that will surface in the months and years ahead.

Steve Markel, of U.S. insurance giant Markel Corporation (NYSE: MKL), winces a bit every time the phone rings, saying “there’s no such thing as a good incoming call in the insurance business.”

I wince every time QBE makes an ASX announcement, fearful it’s another one of those phone calls.

Time will tell.

BHP sails away into the sunset… but I’m still a winner

You don’t lose money by not buying a stock. You don’t have to swing at every pitch. The market is saying I’m wrong about QBE. That’s fine. Each to their own. There are plenty more fish in the ocean, and more than one way to skin a cat.

Another cat I’m not yet skinning is BHP Billiton (ASX: BHP). Earlier this week I was hopeful the Big Australian would crash back below $30, enabling me to top up my existing holding at what I think is an attractive price.

Alas, Ben Bernanke has put paid to my best laid plans, and today BHP trades at $33.50. On the bright side, it means my family’s existing long-term BHP holding is powering ahead.

Heads I win, tails I don’t lose — happy Friday indeed.

The interest rate shock that could kill your term deposits, but see the stock market surge higher

That said, you’ve probably seen the story on the front page of The Australian Financial Review with the shock news that interest rates could be headed lower as soon as next month.


AFR Interest rate cut



It’s enough to have you crying into your term deposit

There is hope, of course, and a precedent.

The main reason why the U.S. stock market is trading at an all time high is because in that country, the one-year yield on a Certificate of Deposit (CD) can be as low as 0.15% — and that’s a special rate. The standard CD rate for one year at Wells Fargo is 0.05%.

Warren Buffett recently said…

I feel sorry for people that have clung to fixed-dollar investments.

With interest rates like those above, no wonder Buffett feels sorry for them.

And no wonder the US stock market is trading at an all-time high. If you want to make a return on your money, you have virtually NO OPTION but to invest in stocks.

For all the comfort and safety of term deposits, they are likely to be terrible investments in the years ahead.

Up 38% in a fortnight — my one stock for “the next great resources boom”

It was precisely 2 weeks ago to the day when I unveiled Buru Energy (ASX: BRU) as my latest high-risk energy stock.

Just to be clear, Buru isn’t a stock we’d recommend in our ‘best of the best’ Motley Fool Share Advisor subscription-only service, but I enjoy a little risk and couldn’t resist adding them to my diversified SMSF.

Well, knock me over with Peter Siddle bouncer, but the stock has soared a whopping 38% in the last two weeks, giving my SMSF a nice pick-up, along with my ego.

I’m not getting too carried away…

On the latter point, I’ve been in this investing game far too long to get carried away with share price movements over a period as ridiculously short as 2 weeks.

Still, I am feeling pretty pleased with myself… a feeling I hope will be replicated cheering on the Aussie cricketers again tonight.

Sleep, like term deposits, is over-rated.

The Australian Financial Review says “good quality Australian shares that have a long history of paying dividends are a real alternative to a term deposit.” Get 3 Stocks for the Great Dividend Boom in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading

Of the companies mentioned above, Bruce Jackson has an interest in BHP and Buru Energy.

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