"Happy new year, all you happy punters, and isn't the outlook awful?" Some three weeks after the Punter's gloomy prognosis he has some egg on his face.
The market as a whole, as measured by the all ordinaries index, which just before Christmas was down nearly 15 per cent from the August peak, has risen to the point where it is now down only about 9 per cent.
The Punter's own portfolio at the time of writing was up 1.5 per cent. That sort of egg is quite tasty. However, the Punter still thinks the market is taking a long hard look at prices, with investors looking for real value.
You only have to look at the hammering shares in the Costa Group (ASX code CGC) suffered last week, when it warned hopes for double-digit growth in the current financial year was unlikely.
Costa shares have done extremely well over the past couple of years, climbing steadily from $3.40 to $9 in 18-months. Even though they had fallen, they were still selling for about 20 times earnings, and yielding less than the interest on a bank deposit.
That kind of rating assumes continued strong growth, so the disappointing news was bound to dent the shares. In the event they collapsed, from $7.38 on Wednesday last week to a low of $4.40 the next day. The company says it is a cyclical problem, not a structural one, but plenty of investors are clearly not inclined to wait for the cycle to turn.
Costa shares may rebound, but the Punter doesn't think they are particularly cheap even at the current price.
Clean TeQ holdings (CLQ) has been on his watchlist for some time and edging higher, so he decided to wait no longer and bought 6000 for $2420. Unlike Costa, this water treatment specialist does not make a profit, but its blue sky is the Sunrise Project in NSW, one of the largest cobalt and scandium deposits ever discovered.
- The Punter has no financial qualifications and no links to the financial services industry. He owns shares in a number of companies featured in this column.