Reflecting on the market as we approach Xmas

Reflecting on the market as we approach Xmas

Activity is starting to slow down as we approach Xmas. So far we have not seen any evidence of a pre-Christmas rally. On the contrary, the junior end has fallen further as funds have been drained by another spate of capital raisings as companies try and refresh the kitty while people are still at their desks. Raising money in January is never easy so there is a last minute rush now.

On the big picture the gold price continues to rise and markets are being positively influenced by a backdrop of expectations of interest rate easings. We are still in an extended bull market with the exception being the junior end.

How long will the bears dominate the juniors? this end could be underperforming for another two years under the weight of placements and a lack of FOMO. This would fit in with the larger, 10-12 year cycle that seems relevant. The last time we had a market like this was 2010 to 2013. Resource equities fell on average by 80%, excluding BHP, Iluka, RIO and Santos. We are seeing something similar now. Eventually the market recovers but it takes new blood and new money to turn the market around. This happens gradually and cautiously, not overnight, but where will the new blood come from this time?

With such catastrophic falls in share prices the average portfolio has suffered crippling losses. Not only has the funds available for investing shrunk dramatically but confidence of investors has been shattered. The greatest falls have been in the new age and alternative energy stocks where enthusiasm was once exuberant. The only exception to the despair is the gold sector which continues to benefit from record gold prices.