Week 48 of 2014
As the DOW heads higher into unchartered waters, 2014 looks set to end another good year for the Major Indices. Quite remarkable when you take into consideration the weak economic outlooks. But QE has fuelled an equity rally that just keeps on going. Stimulus may have ended in the US, but Eurozone looks ready to act and japan has already pulled the trigger. China is tentatively heading towards more easing. All of this could extend equities into the blue again in 2015.
As suggested lasted week – OPEC was the key event and boy oh boy did they surprise the market. The majority of analysts had plunged for a small cut – hence when the status quo was called. the market reacted like a school kid who’s just had his/her sweets taken away. We’ve seen these market tantrums all too often these days. Whether it is ahead of the FED Reserve minutes or ahead of Interest rate decisions, the market always seems to spiral into a mini panic. I say ‘mini’, as the last time the DOW wobbled it saw the 17350 level turn into 15850 levels in a matter of days (mid Oct). But as if by magic (or Japanese QE) the market bounced back stronger than ever before. That’s like an extra 10% growth in the DOW ticked off in 2014.
With markets showing more and more volatility and greater swings – questions seriously need answering about Black boxes, High frequency trading, BOTS etc. These are tools of the market that now drive such extreme conditions. It’s putting normal investors off investing as it’s about as far removed from equity fundamentals as you can get and better suited to Casino’s. Times are changing – that’s for sure.
The next few weeks and months leading up to March 2015 should deliver the data or signs that OPEC are looking for. With Iranian Nuclear talks set to move towards a formal agreement stage in Spring – most would be looking for signs of stability in the oil price after that period.
Finally – with many Oil companies are historic lows based on assets, M&A looks a certainty. Talk of BP and Shell hooking up might be premature but the idea of cost savings and a more streamlined business makes pretty good sense in a market where margins are shrinking by the minute.
Stocks that may be attractive to larger fish are players like Afren, GKP, XEL, COP, AMER and PMO. Ophir’s move for Salamander is a guide to appetite which could accelerate over the coming months.
With Autumn statement and Scots vote out of the way – a renewed verve in the North sea should be on its way as players can at last plan with some certainty.
A virtual portfolio has been set up using the 2013 final trading day close figures as a starting point and £1000 has been invested in each stock. This does not include buying fees or stamp duty and is purely intended to be used as a benchmark or summary for each week. Two newspaper top ten picks for 2014 have been included to help monitor/compare against.
Week 48 stock picks performance review:
The Independent looks odds on to secure another win making it 3 on the trot. The Telegraph needs some Santa rally magic to give it a chance of making a come back. Something special from its ten picks is needed and fast. The commodity heavy TSH Hotlist took another beating after OPEC’s decision to play chicken with the international / global markets. Time will tell whether they called it right but for now it’s hurting just about any company that has production or even future planned developments.
Current standings / Week 48 Results
1. The Independent’s Top Ten 2014 +5.25% (Weekly gain of 2.77%)
2. The Telegraph’s Top Ten 2014 -0.56% (Weekly gain of 1.64%)
3. TheShareHub’s 2014 B-List -27.49% (Weekly loss of 1.53%)
4. TheShareHub’s 2014 Hotlist -41.40% (Weekly loss of 1.71%)