Labor Wins Election - ASX Rallies

After a successful election at the weekend for the Labor party, the market responded positively by surging 141 points. A gain of 2.2% in market is a good indicator that the market was expecting a Labor victory. However, the US market on the Friday had gone up by approximately 2%.

Had the Australian market simply responded to the US as it typically does or was the election the over-riding factor? Would the market have gone up if the Liberals under John Howard have won?

IPO's or IP Oh No's

According the Australian Financial Review, 80% of domestic IPOs have gone in the red after their first day of trading. Rams (RHG.AX) is a good example of this with a list price of $2.50 and now it languishes at 28c.

This is in direct contrast to a bullish outlook the previous year when 82% of all IPOs went up. The market has consistently gone up over those two years, so why has their been a marked downturn in new companies going to the ASX?

The answer is twofold....

1) Current mainstream companies are going so well with double-digit increases, that investors and punters alike are staying away from less tried and tested, more speculative stocks and sticking to well-known names. Because of this investors are selling out of their speculative positions.

2) The current batch of IPOs are substandard. As last year's IPOs seemed to go in the right direction, many companies decided to go public when it probably wasn't the best decision. Either their business model is not mature enough or their management isn't up to scratch or a combination of these things.

At the moment, IPOs are the flavour of the month for the companies listing but not the investors investing. Has anyone in the Cafe any stories to share about good or bad IPOs they were involved in

The Advances in Online Trading

As technology advances, it feels like the world is becoming smaller and smaller. Simply go back just 10 years and the idea of trading stocks on the NASDAQ or on the New York Stock Exchange was only for the elite traders with a full service broker.

In fact go back 10 years and no one in Australia had heard of CFDs or most other traded derivatives even though they existed at that time.

Now, Online Trading has broken down all barriers and given Australian traders an all access pass to the world's markets. Whether you are trading Stocks, CFD's, Currency or Futures if there is a market open, you can trade it.

In a way, it is a mirror of consumers going to a supermarket to find everything they need in one location with transparent pricing and choice.

Previously companies that had seen phenomonal growth in the US or UK were difficult for Australian traders to take advantage of. Imagine if you were able to place trades on Microsoft, Dell, Yahoo, Ebay and Amazon at the beginning of the tech boom. Or companies like General Electric that have paid a dividend every year since 1899.

Now companies that we associate with on a daily basis are available for trading - clothes, shoes, food, software, internet, electronics or cars from domestic and international companies. They can now be traded.

Now, you just go on your computer, click on an icon to open your trading platform, and within seconds the world's stock exchanges are ready for trading. You can also trade internationally with your money in an Australian account. Another example of technology making life easier.

Traders now have access to almos the same information in which institutions and brokers have through their platform, decreasing the reliance on full service brokers. If you are an SMC Trader, how have you found that freedom?

Rio Tinto vs Macquarie Bank

In September, there was a race between Rio Tinto (RIO.AX) and Macquarie Bank (MBL.AX) as to which stock would become the first to $100 and stay there. Both were at the mid $90 mark, had shown good fundamentals and were rising on good technical data.

Two months on, Macquarie sits at a touch over $81. It fell as the sub-prime mortgage sector, to which Macquarie Bank was heavily exposed to, was a catalyst to a global credit crunch and the once mighty investment bank sub-sector was starting to show weakness.

Rio Tinto on the other hand has risen and risen. Strong demand globally for resources, increased resource prices and a strong Australian Dollar have contributed to its bullish run. Yesterday, BHP Billiton (BHP.AX) made a firm offer to Rio Tinto to create a resources behemoth. This news sent shares soaring to $131 today and climbing.

In two months, two strong Australian companies were looking to crack $100 per share. Now, because of differing fortunes there is $50 difference in price. How quickly the market changes.

Has there been any investors, that have positively or negatively been affected by either Rio Tinto or Macquarie Bank in recent months?