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Our top three Melbourne Cup tips

Markets paused Monday for a pre Melbourne Cup breather, the S&P/ASX 200 falling 20 points, or 0.4%, to 5,391.It seems like any pre-Christmas assault on 5,500 might have to wait for another day.

What also seems clear is you won’t be able to rely on bank stocks alone to get us there.

Westpac (ASX: WBC) today announced an 8% increase in its cash earnings to $7.1 billion. It also hiked its fully franked dividend by 5%, adding in a 10c per share special dividend for good measure.

The market yawned, Westpac shares falling 1.2% to $34.16.

If ever there was confirmation the big gains for bank shares are in the past, this was it. The miners, particularly BHP Billiton (ASX: BHP) and Rio Tinto (ASX: RIO), are going to have to do the heavy lifting from here — just as well the “mining boom has decades to run.”

Post-election blues

The miners won’t be getting much help from Coca-Cola Amatil (ASX: CCA) — its shares fell 4.7% today after the company said fourth quarter trading to date “is not seeing the expected post-election uplift in consumer spending.”

What do they expect?

We’re still trying to work out the final senate result from the election, for crying out loud. Clive Palmer is already throwing his political weight around, Labor doesn’t know whether it’s Arthur or Martha on the carbon tax, and the Coalition has just raised the debt ceiling to $500 billion.

Politicians, hey? Who’d ever have them running the country?

Tomorrow , the Reserve Bank of Australia meets to decide the fate of interest rates. More importantly, there’s a big horse race being run at Flemington. More on that below…

The Sydney Morning Herald reports financial markets are pricing in a 4% chance of an interest rate cut tomorrow. With house prices and retail sales on the up, unemployment remaining relatively subdued, and the U.S. Federal Reserve expected to start tapering in the first quarter of 2014, interest rates will almost certainly remain on hold.

What’s not a done deal however is picking the winner of tomorrow’s Melbourne Cup.

In Foolish tradition, as we’ve done for the past two years, we asked our punting mate Lewis for his top three tips for the big race.

In 2012, Lewis tipped the winner, Dunaden, to Motley Fool Take Stock readers!

In the euphoria we did entertain launching a new Motley Fool service, to be called Fool Form, until cooler heads prevailed and we stuck to picking stock market winners.

Just as well, as last year, although Lewis’ tip, Mount Athos, finished an unlucky and very respectable 5th, we blew our cash.

Winning is a bonus

We’re investors, not gamblers. But tomorrow is different. The bets I place on the Melbourne Cup will be with money I can afford to lose, and in fact, I fully expect to lose the lot. Winning is a bonus.

The same can’t be said of stock market investing, where with skill and patience, the odds of sharemarket success are firmly in your favour. I’m not talking about placing a bet on some highly speculative penny share mining stock — I’m talking about investing in some of the best companies on the ASX, like many of the ASX stocks we name as buys to Motley Fool Share Advisor subscribers.

Three Melbourne Cup Tips

But tomorrow’s about the Cup, and it would be un-Australian not to have a flutter. I’ll be putting my punting money on the three bolded nags below, hoping to snag a winner. Over to Lewis…

“Australia’s (and perhaps the World’s) greatest horse race is once again upon us, and the Victorian Racing Club has delivered a final field chock full of quality, depth, and intrigue.

The fascination with the Melbourne Cup seemingly knows no end, with local owners in particular content to over-spend in the hope of satiating a Cup dream.  In this year’s event, 19 of the 24 runners had their origins overseas, 10 of which, are now trained locally.

Lloyd Williams, successful last year with the imported Green Moon (who fronts up again), saddles up no less than 6 runners this year — employing somewhat of a scattergun approach, though despite this, he has no apparent standout.

Gai Waterhouse will start Cup favourite Fiorente as well as young import Tres Blue.  Fiorente ran a slashing 2nd to Green Moon last year, and comes into the race off an outstanding, albeit taxing, Cox Plate effort.

Brown Panther, a product of former England soccer international Michael Owen’s passion for horse racing, also adds spice to the race, augmented in no short way by the excited owner’s enthusiastic recent Tweets.

The last three winners of the Melbourne Cup have all been lightly weighted progressive imports, and I see no reason for deviating from this profile in compiling my shortlist for this year.

Mount Athos ($11 on Betfair) was undoubtedly the run of the race last year, covering ground and still running 5th, in a race that suited those on pace and near the fence.  His trainer Luca Cumani, is back, having twice been runner-up, and but for a bad gate, Mount Athos would be challenging for favouritism.

To that end, Craig Williams, arguably Australia’s best jockey (particularly in staying races), has been tasked with navigation and will no doubt have formulated a plan to overcome his tricky draw.  His last start close 2nd in the March Stakes suggests he is going as well as ever.

Voleuse De Coeurs ($18), a recent addition to adopted Kiwi Mike Moroney’s yard, is another who fits the profile of a likely Cup winner.  This lightly raced Irish mare is unbeaten at the Cup distance of 3200m and comes here fresh from a 6 length romp in the Irish St. Leger, a race the first overseas Cup winner Vintage Crop was also successful in. She has the tactical speed to overcome her wide gate, the only knock on her, would be a firming track.

Finally, the best roughie in the race for mine is the Lloyd William’s owned Masked Marvel ($40).  This former English St. Leger winner fits our profile, has shown enough this time in, and is drawn to get the run of the race. His Cox Plate failure is excusable given he settled near last in a leader dominated race, over an unsuitable distance.

Happy Punting,
Lewis

Normal investing service will be resumed on Wednesday.

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Of the companies mentioned above, Bruce Jackson has an interest in Westpac and BHP Billiton.

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