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Good buy or Bad Buy ? Blue chip stocks Or small ordinaries ?

It will be an interesting battle between buyers and sellers this week. Traders with nerve will be tempted to load up on the high-yield blue chip stocks that funds dumped last week. The funds dump blue chips to raise cash because they can. It’s much easier to sell Citigroup (NYSE:C), GE (NYSE:GE), Macquarie (ASX:MBL), or BHP (ASX:BHP) than to sell exotic financial instruments these days. Hence the selling.

The No Pain, No Gain portfolio spends much of its time hunting in the stock market undercard for its constituents. There is no doubt that little'uns are more exciting and often more rewarding than blue chips which, because of their very size, attract the headlines.

Is it time to be a blue chip buyer or is it better to be in cash? Well that depends on how troubled the market really is by the subprime mess. Here’s the thing, though. The sub-prime meltdown has shown us that the whole class of exotic financial instruments that became so popular in the last ten years is difficult to value and even more difficult to trade.

But a portfolio cannot live by small caps alone. It needs a few heavyweights to provide ballast and a more secure dividend income. Since .


Here’s what is something Interesting you probably don’t know about Australia:

  • Australia is HIGHLY REGULATED. Society borders on being socialist - Medical is practically free. The result is that the government meddles in every aspect of life and one can get tied in knots by rules and laws (much the same as the USA). Figure this one out, it’s a law that you have to Vote in every election!

  • Being a socialist country (well almost) the tax burden is incredibly high. 42% on income over US$44,000 and 47% on income over US$65,000. The first thing I did when I opened a branch in Sydney was convert my degree to become an Australian Chartered Accountant. As with all tax codes one MUST be aware of the finer points. For example, there is NO capital gains tax in Australia on Non-residents that buy or sell less than 10% of a Corporations Capital Stock.

  • Financial services in particular are extremely regulated. Legally speaking one cannot even recommend a stock to a friend without being a registered advisor. The result is that financial services are dominated by the BIG Banks and Institutions (not much different to anywhere else actually).

  • Here’s an interesting point – there is a law that each employer must place the equivalent of 10% of an employees payroll into a superannuation fund (pension). This has generated a massive flow of funds, mostly into the stock market, over the last 10 years. People believe this flow will support the market forever – yeah right, tell me another one!

  • Australia was first out the gate with the Housing Boom. Sydney property prices are still astronomical even though they’ve been off the boil for 2 years. The result is a demographic that looks eerily similar to the US in that people are up to their eyeballs in debt. The difference though is that Australians have a much higher debt to income ratio than the US. A TICKING TIME BOMB IF YOU ASK ME!



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  1. Hi,

    Once again after crash Nifty has started going up. Now we suggest all rises should be used as an opportunity to exit old long positions.
    This bull run will continue for few more days. Overall market is in bearish mood as in medium term its just a small rally due to short covering
    and result season.

    Happy Trading,


  2. Anonymous3:10 AM

    Global economies are feeling pain due to USA recession and now major outcomes are coming to prevent slowdown. Still USA is a hub of financial services and most of the banks in USA are bank corrupt now which is effecting every country.
    Indian stock market is trading at the almost same levels where it was 2 years back. All gains of 2 years are now washed out in few months. Most of the Indian stocks are trading at there 52 weeks low.

    Now investors are thinking that this is the right time to invest there valuable money for value buying still we suggest investors to stay away from market for few more days as still market is in bearish trend and we may witness more downfall before recovery.

    For any doubt please feel free to ask us.




  3. This blog is nice and informative,its our pleasure to post a comment on this blog created by the webmaster

    Now as such we had seen in the month of Feb'09 that volitality was very much there considering the various factors deciding the movement of the Indian Stock Market

    Now in the coming Month of March'09 which is also the year's closing period,also the important Policies would might be declared around the world will be deciding the movement of Indian Stock Market

    Happy Trading a Head

    Queries are welcomed



  4. Dear Visitors,

    This blog is really nice and informative. We are pleased to know this blog is really helping people. It’s our pleasure to post informative content on this useful blog created by webmaster.

    As budget season is approaching so it is wise to think before investing as we can witness very volatile market in coming days. Moreover, we are expecting some stock market correction in post budget session

    We advise every investor to book profit before budget and try to grab value stocks at further decline for short to medium term.

    For any query feel free to contact us.


    +91- 9891655316
    +91- 9899056796
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  5. Hi,

    The market is currently enjoying a good rally which has seen most stocks gain from competitive advantage and it would be advisable for all stock market enthusiasts to seize this opportunity and plan their investments in a safer yet conducive stock market. With NIFTY hovering around 4800-4900 +, it is expected to take hold of this currently rally and be realistically be closest to 5000 more so than before in what should be its new 52 week high.

    Lot many untouched stocks are still there which are ready to blast any moment.


  6. Anonymous2:37 PM

    Интересно написано....но многое остается непонятнымb

  7. Hi,

    Stock market India is volatile and all those who speculate in market are loosing everyday. Please remember stock market is not for speculation purpose. If one feel investing in stock market is gamble then its better to think again.

    One should always note that if they want to invest money they should do proper research be it fundamental research or technical research. Just think how come you can invest
    your money without any convincing reason for the same?

    Indian stock market is one of the most happening and emerging market. Major Indian stock exchanges are BSE and NSE and both are of world class standards.

    So grab good stocks and invest that’s the bottom line.

  8. StocksDuniya, Stocks Duniya,, the indian stock market, the stock market, free stocks tips, freestockstips, intraday free trading tips, live nse sectors, bse sectors, nse tips free

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  10. I really appreciate your post and you explain each and every point very well.Thanks for sharing this information.And I’ll love to read your next post too.

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