August Monthly Update

All I can say is what a month! Late July/early August really saw the market fall off a cliff on the back of the US downgrade and concerns over European debt issues. It is not like the event itself was entirely unexpected, more the timing of when. I will admit that since the Global Financial Crisis low I had remained bearish for a very long time. As a result I missed most of the initial run up. At the time I did not think the run would last as long as it did and I was also talking with close friends who were even more bearish than I. Unfortunately I listened to them a little bit more than I should have.

Anyway that is a story for another day. So where was I ……… With the market falling off a cliff a lot of people were saying here we go again. I am glad to say that I was not one of them (at least in the short term). I don’t quite know what it was but I did not see “panic” in the markets. Sure stocks were down but it did not seem like investors were running for the exits and would get out at any price. This stance was confirmed when on August 9 the market opened sharply down and hit a low of 3765. What we then witnesses was a massive turn around, something like a 7% intraday range which saw the market eventually close up at 4034. From that point forward the market has not done too much of note and has largely traded between 4100 and 4300.

The performance of the ASX 200 (XJO) and the Small Ords (XSO) is summarised below. As you would expect the XSO did get hit harder during August as investors moved out of riskier stocks.

Market:	July 29 Close	August 31 Close	Percentage Change:
XJO	4424	4296	-2.89%
XSO	2595	2514	-3.12%

In regard to my portfolio both OBJ and MHM were hit harder than the broader market. This can be expected during times of increased volatility as investors do not want to be holding stocks with limited revenue and or high debt. OBJ closed down 10% for the month, with MHM down 8.91%. MHM could have been down considerably more if it was not for yesterday’s action which saw the stock climb 10%. If we see MHM green again today then I think we can say that the downtrend has been broken.

Code:	Weighting:	July 29 Close	August 31 Close	Percentage Change:	Weighted Change:
OBJ	25.00%	0.02	0.018	-10.00%	-2.50%
MHM	12.50%	1.01	0.92	-8.91%	-1.11%
Cash	62.50%			0%	0.00%
TOTAL				-6.304%	-3.61%

Given the fact that over 62.5% of my portfolio was in cash the weighted change was not too bad with the overall portfolio losing 3.61% (compared to a loss of 2.89% for the XJO). If we remove cash and just examine the stocks held then the portfolio dropped 9.54% during the month of August.

Code:	Weighting:	July 29 Close	August 31 Close	Percentage Change:	Weighted Change:
OBJ	66.00%	0.02	0.018	-10.00%	-6.60%
MHM	33.00%	1.01	0.92	-8.91%	-2.94%
TOTAL					-9.54%

Finally those of you who follow my blog closely would know that I added a new position yesterday, Kentor Gold (ASX: KGL). I have not included it in the above analysis because it has only been held for 1 day of August. For the record I purchased at 0.10 and the stock closed at 0.099.