Anti Trust
12.35 pm I spent two years going to high school in the USA and learnt that anti trust legislation was taken very seriously. I wondered how the tech behemoths had escaped unscathed for so long and started doing some research last year. Apparently Milton Friedman and the Chicago school changed the thinking so that dominant companies could be left alone if the consumer was gaining a benefit from it. Hence Amazon relentlessly driving prices down could be seen as in the public interest. I find that a thin argument because retail infrastructure - e.g. a huge network of local independent bookshops or a range of mid sized retailers, physical and online - helps to underpin communities and may have a higher public utility despite the potential for higher prices. Equally, a company that drives others out of business through running at a loss for year after year thanks to an ability to raise public capital unavailable to its competitors is doing something akin to dumping or loss leading. I've been expecting the tide to turn for a couple of years now and because it's Trump doing it, with all the fear and loathing that surrounds him, the market is wetting itself.
Once competition is driven out of business, you can jack up prices. Regulators globally have been asleep at the wheel. For example, in Australia, as soon as Expedia bought local player Wotif, they raised the fees charged to hotels who use their website from 11 to 15%. It's very difficult to fill rooms without using these ubiquitous aggregators and they are clearly abusing market dominance.
I've been investing internationally in my super fund for years but increasingly making sure to avoid those funds that are limit long FAANG in the expectation that they could be broken up. They've been great performers and you need them in a portfolio, it's the weighting that concerned me.
Locally, we've shrugged off a lead from the US that was net down a percent of so over the two trading days with a large rise followed by a bigger fall. I think most of the pullback is over internationally and it may be complete here with today's early low at 5725.
The big story of the day is Santos with a highly conditional takeover bid having been lodged at 650. The stock is up 18% to 598 as there's no guarantee of a transaction but the stock could well be in play. I'm disappointed I wasn't in it as it was one of the 3 or 4 stocks I thought were looking ok in a weak market.
Otherwise my large caps are all up including a short in TWE for a fairly flat outcome while the small caps are doing better with Appen and Synlait recovering after I bought into the pullback in strongly trending stocks. I think I went one swing too early but I'm hopeful of reasonable recoveries.
3.03 pm The index is holding the minor gains with a rise of 3 points. I covered the short in TWE at 1702 versus my 1686 entry. It was a hedging position and the stock is in a longer term uptrend despite the minor correction it is in. I felt it wasn't so good technically. My long position in Galaxy is not strong technically either and it hasn't been the smartest trade but if today's low of 288 holds and it swings back up, then that will be a triple bottom at 288, 287 and 288 respectively. It could be enough for it to swing back to the top of the current range in the event of a retracement in the market.
In the small cap sector, I'm interested in Select Harvest, an almond grower. Like most agricultural plays, SHV is quite cyclical and was as high as 1300 a few years back. It bottomed out last October and has been building nicely. I think a breakout through the recent 570 high will signal the start of an acceleration. There's a minor daily buy signal and I may buy a little today with the plan of buying most in the event of a breakout.
4.17 I should have waited till the close for TWE, it finished at 1690. Otherwise the index eased to a finish of 5752, a drop of 7. The ASX 200 chart has made a doji bar at the end of a textbook 5 wave swing so we could be due a rally. The nuts and bolts of it are never certain and its possible there'll be a rally and another minor swing lower but time and price are running out for the sell off.
I bought some Blackham, an emerging gold producer, at 9.6 versus a close of 9.9 so I suppose it compensated for TWE somewhat. It's broken above a high consolidation around 8 to 9.5 and might push on to the 12-14 range this week.
Once competition is driven out of business, you can jack up prices. Regulators globally have been asleep at the wheel. For example, in Australia, as soon as Expedia bought local player Wotif, they raised the fees charged to hotels who use their website from 11 to 15%. It's very difficult to fill rooms without using these ubiquitous aggregators and they are clearly abusing market dominance.
I've been investing internationally in my super fund for years but increasingly making sure to avoid those funds that are limit long FAANG in the expectation that they could be broken up. They've been great performers and you need them in a portfolio, it's the weighting that concerned me.
Locally, we've shrugged off a lead from the US that was net down a percent of so over the two trading days with a large rise followed by a bigger fall. I think most of the pullback is over internationally and it may be complete here with today's early low at 5725.
The big story of the day is Santos with a highly conditional takeover bid having been lodged at 650. The stock is up 18% to 598 as there's no guarantee of a transaction but the stock could well be in play. I'm disappointed I wasn't in it as it was one of the 3 or 4 stocks I thought were looking ok in a weak market.
Otherwise my large caps are all up including a short in TWE for a fairly flat outcome while the small caps are doing better with Appen and Synlait recovering after I bought into the pullback in strongly trending stocks. I think I went one swing too early but I'm hopeful of reasonable recoveries.
3.03 pm The index is holding the minor gains with a rise of 3 points. I covered the short in TWE at 1702 versus my 1686 entry. It was a hedging position and the stock is in a longer term uptrend despite the minor correction it is in. I felt it wasn't so good technically. My long position in Galaxy is not strong technically either and it hasn't been the smartest trade but if today's low of 288 holds and it swings back up, then that will be a triple bottom at 288, 287 and 288 respectively. It could be enough for it to swing back to the top of the current range in the event of a retracement in the market.
4.17 I should have waited till the close for TWE, it finished at 1690. Otherwise the index eased to a finish of 5752, a drop of 7. The ASX 200 chart has made a doji bar at the end of a textbook 5 wave swing so we could be due a rally. The nuts and bolts of it are never certain and its possible there'll be a rally and another minor swing lower but time and price are running out for the sell off.
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