Every great bubble story comes with its own disastrous crash landing. And when it’s the stock market, it’s so often carnage of the mid-air jumbo jet explosion variety.
Debris and casualties strewn over thousands of hectares, tens of thousands of lives impacted, plans changed forever, general fear and panic.
Don’t think Flying High. This is serious. Ted Striker can’t land this baby safely.
If the mining boom is over – and I’m not saying it is, because, hey, I don’t know – it doesn’t mean that you exit everything associated with digging and drilling.
When it comes to resource company share prices, the sector has fallen 33 per cent in value since early April 2011. The boom in resource company share prices ended ages ago.
It should be time to reconsider your portfolio. No longer is a rising tide going to lift everything. You must more closely monitor any one-trick resource ponies in your portfolio.
Australia’s stock markets are heavily weighted to two sectors – banks and resources. From a diversification perspective, you can’t ignore those two sectors if you’re buying direct stocks.
Big miners like BHP Billiton and Rio Tinto will give you good diversification across the mining sector. They’ve both got a long history of strong management.
As Kerrin has pointed out, volumes are likely to rise, even if prices fall.
Resource stocks are more about growth than income. Gen Xers will have some mining stocks in their super funds. But they should also consider a portion of any direct share portfolio across the sector also, because they have time to ride out the bumps.
Bruce Brammall is the author of Debt Man Walking (www.debtman.com.au) and principal adviser with Castellan Financial Consulting.