Tregedy in Japan takes it's toll on the markets

Following a third explosion and the release of Nuclear pollution headed towards Tokyo, world share markets have retreated significantly.  Japan is Australia's second largest trading partner (second to China) and one the worlds largest economies.  The earthquake, tsunami and now Nuclear rector explosions have compounded Japan's already struggling economic woes.  This heavily outweighed by the human tragedy in any case.

The  Bank of Japan pumped $250billion into the economy to provide liqudity for the banks but with a further explosion in Fukushima's nuclear reactor, the threat remains for Tokyo and the entire Japanese economy.  This has caused a swift retreat on global share markets.

As you can probably saw, the Australian Share market fell significantly over the past few weeks in reaction to the Japanese earthquake, tsunami and nuclear explosion.  Despite the human tragedy of these events, we feel the ramifications for global sharemarkets will be minimal and short term and any volatility will be treated as an opportunity to purchase good shares at a good price.  We always maintain a clear focus on the company and share market fundamentals and will not be swayed by media sensationalism.

What's Henderson Maxwell doing about?

Last month we felt the market was hitting a top and we sold down a few stocks including Westpac, Computershare and other ETFs including the Asia 50 to increase cash.  We now feel support lines exist 4600 on the share market and the liklihood of the market dropping below those values is unlikely and will represent excellent buying if it does occur.  After all, many Australian companies will continue to operate unhindered by the Japanese tragedies.

Our intention is to buy when fear is high and sell when markets are most bouyant.  We will never sell total portfolios or cash out when markets have already fallen- this a proven strategy to lose money quickly and forever.  We endeavour to stick to the fundamentals of our investment philosphy that have allowed our clients to benefit from market volatility.  Our philosphy will not be hampered by emotion especially when the economic and specific company fundamentals remain attractive.

We therefore see a retreat as an opportunity to buy and assuming the doom in japan does not spread further or develop into a fullscale nuclear melt-down, the general prospects for the gloabl economy is postive and this is simply an acute, short term event affecting share prices and markets.

The facts on Nuclear energy

The fact is, nuclear energy remains a popular and growing source of power for the global economy and Australia produces around 20% of the world's Uranium with Canada as the largest supplier for the past 10 years.  We may debate the safety and disposal aspects of nuclear power and as the second cousin of one of Australia's most outspoken activists of nuclear disarmament, Dr Helen Caldicott, I have been seen at some anti-nuclear protests in the past. So I know all about it. 

 Australia however holds the largest known recoverable resources of Uranium holding around three times that of Canada and Uzbekistan.  With 422 Nuclear reactors world wide needing our resources and another 500 odd in planning stages, the writing is on the wall.  But this disaster may sway pundits towards LNG and other more natural and environemntally friendly resources and power sources to which we are well positioned in the share market.  We remain convinced that this disaster is a diret result of the location of the nuclear reactors and a direct result of the earthquake.  Other global reactors remain safe and out of harm's way.

 Ignore financial pornography

Boom and doom sells newspapers but it won’t help you sleep at night.  Media outlets need to create a sensation every day to ensure we keep reading the papers and watching the news so they can sell advertising space.  Everyone has an opinion and as a media commentator myself, I can assure you that the most extreme views is what the journo’s are interested in.  Don't get caught up in the hype and we will stick to our philosophy.