Pete Wargent blogspot

Co-founder & CEO of AllenWargent property buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place), and CEO of WargentAdvisory (providing subscription analysis, reports & services to institutional clients).

5 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.

"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he is one of the finest property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

"Pete is one of Australia's brightest financial minds - a must-follow for articulate, accurate & in-depth analysis." - David Scutt, Business Insider, leading Australian market analyst.

"I've been investing for over 40 years & read nearly every investment book ever written yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.

"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data and charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, and author of the New York Times bestsellers 'End Game' and 'Code Red'.

"The level of detail in Pete's work is superlative across all of Australia's housing markets" - Grant Williams, co-founder RealVision - where world class experts share their thoughts on economics & finance - & author of Things That Make You Go of the world's most popular & widely-read financial publications.

"Wargent is a bald-faced realty foghorn" - David Llewellyn-Smith, MacroBusiness.

Wednesday, 15 October 2014

Wild ride for iron ore

NHS strikes

You may have gathered from yesterday's blog post that I have been spending a bit of time in hospital over the past couple of days (not for myself, I should add) over in Britain.

With characteristic great timing, I managed to coincide my visit with the first National Health Service (NHS) strike since 1982, some 32 years ago!

To put that in perspective 32 years ago my mother was one of the tens of thousands of women who gathered to form human chains at Greenham Common in protest at American nuclear weapons being sited in England. The famous 1984-5 UK miners strike would not even start for another couple of years after that.

In the three decades since then the campaign for nuclear disarmament has been well heard across the world, by the end of 2015 only one of Britain's coal mines will remain with dozens of other pits long since shut down, yet we still can't manage to pay nurses and healthcare workers a decent 1 percent pay rise, which is saddening.

The NHS will form a key election strategy budget pledge in 2015, with the health service creaking under the weight of Britain's ageing population.

Wild climate

We have had some harsh weather in Britain this week, but nothing as compared to the wild "Sydney cyclone" which over the past day or so which has seen heavy snow at Blackheath in the Blue Mountains and a lightning strike for Sydney tower.

Meanwhile, as noted here yesterday, the bounce in the iron ore price did indeed result in Australian iron ore stocks going crazy.

Mount Gibson (MGX) closed for the trade up by a massive 17 percent. while Atlas Iron (AGO) added 15 percent and BC Iron (BCI) 13 percent respectively.

Big gains for sure, but I'd suggest that these jumps are hardly based on dramatically improved fundamentals, rather they represent a short squeeze of epic proportions.

A glance at recent shortsell reports show that the iron ore miners are among the most  heavily shorted stocks on the market.

Fortescue Metals Group's (FMG) stock in particular had several hundred million dollars worth of short positions in place last week and thus it is unsurprising that share prices bounced. However, those gains should be put in the perspective of the last year's brutal price action (click chart):

Experienced and skilful traders will enjoy taking money from the amateurs on these volatile trading days, but most average punters will fail to get ahead with a strategy which is heavily focused on daily price action.

For most it would be far better to recognise that stocks and shares are an income asset which can be used to build long term wealth rather than gambling on the direction of a volatile commodity price which, incidentally, moved down a little by 0.4 percent overnight to $83.82/tonne.

At the small end of resources town the big dollars are usually made by the entrepreneurs and average investors are best advised to play with only a small percentage of their portfolio. 

Mind you, there is one group of folk who are absolutely guaranteed to make a killing from the recent iron ore market speculation - brokers! Just look at those volumes being traded!