Time to buy Straw Hats?

There's an old stock market saying that one should "buy straw hats in Winter" - yet another way of saying it's better to buy low and sell high, than vice versa ;)

With the stock market off last year's highs by more than 15%, some sectors are looking especially "cheap". The banking sector in Australia is one such source of possible bargains. The table below shows that the banks are down by around 30%-40% from the highs last year, and are currently producing dividend yields between 5.2% and 7.3%.

The banking sector comprises 12.5% of the All Ordinaries stock index, but my Australian stock portfolio is relatively underweight banking stocks, at only 6.9% of my portfolio invested in bank stocks. My tax refund arrived by EFT yesterday (less than one week after filing with eTax), so I may use part of this money to increasing my existing bank investments.



Copyright Enough Wealth 2007