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Andrew Baxter
Trader and Leading Educator, Coach and Mentor for Financial Markets Trading
Trader and Leading Educator, Coach and Mentor for Financial Markets Trading

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Learn how to trade by visiting our site

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Where are you making your money right now?

Is the Australian Retail Sector a good investment?

With the demise of High Street names such as Dick Smith, Daryll Lea etc there has been much negative sentiment in the market questioning if the Australian Retail sector is a good investment.

Last week, I was invited to attend an event hosted by Myer, their Spring Fashion launch, and things are looking very upbeat for this High Street stalwart. Just quietly, Jennifer Hawkins was also looking absolutely stunning, too!!

Where are the opportunities in the Australian Retail Sector?

The two main players, Myer and David Jones have been through some very challenging times. Online carved a huge chunk out of their High Street businesses. Some have been looking for bargains, while others have looked for service with companies such as Net-A-Porter providing exceptional service in the online space (I am speaking first hand, as my wife seems to get deliveries most days!)

But is there light at the end of the tunnel?

I believe that there may well be. One very supportive tailwind is the move in the Aussie/US Dollar, which has really removed any incentive to want to shop in the US. Back at 1.05, happy days, today, a 75.4 – no chance!! This more than most things, is a welcome reprieve, if not a stay of execution for some.

Taking a look at Myer, the move up from a low, 12 months ago of 83cents to a recent high of $1.44 is testimony toward a sector that for the past few years has had few friends. Does that make it or the Australian Retail Sector a good investment, maybe. That said, all investors should be aware that a more significant slowdown in the economy will result in retail being hit hard, and most likely first.

So yes, there is opportunity for a good investment in the Australian Retail sector, but one that needs to be carefully managed from a risk management perspective based on the above. If you need some help to get started or master this kind of thing, then let us help you with this through one of our professional courses. Click Here to access

Don't forget this sector!

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How to avoid the trap that crushes most stock investors when they trade options. Do you want to play Chess or Checkers with your financial future? #optionstrading #australianinvestmenteducation #createmoreincome

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So BHP posted an $8.3bn loss last night and that will hurt a lot of investors - not because the stock will fall - it didn't, but in terms of their strategy for generating income from the stock. ‪#‎BHP‬ ‪#‎ASX‬ ‪#‎ProfitableTrading‬

Last night, executives had the enviable task of announcing BHP results for the full year – a whopping $8.3bn loss. Not a small amount and the ramifications on this are just the beginning of an investor nightmare when it comes to BHP results.

The loss is one thing, and rest assured as I type, the stock is, yep, you guessed it, up almost 2.2%. However, the longer term impact and positioning of the stock is now under even greater scrutiny, than simply BHP results of minus $8.3bn for the year!

Over recent years, BHP Management introduced a progressive dividend model, quite at odds with what would typically be expected of a mining company. Traditionally, earnings have been poured into asset development and future growth, rather than a reward to shareholders in the form of an enhanced dividend.

Back in 2015 for example, the dividend yield on the stock was more than 7%, higher than 10% if you took into account the franking credit – great for retirees looking for yield when cash rates are so low. The Company’s progressive dividend plan was then touted as a “ticking time bomb” by many market participants.

The allure of course, of higher yields attracted many investors who were desperate for a higher return than the paper thin cash returns currently available in the market. Add in a franking credit and you suddenly have the perfect vehicle for Superannuation investors too.

However, this type of shift proved to be just a fad – one that came and went in double quick time. February of 2016 saw the company cut its dividend in the face of weaker earnings, and last night’s $8.3bn loss announcement saw a dividend of just 14USc/share, down from 62 US cents last year.

Where does this leave the Stock?

Well, BHP results were what they were, and not unexpected given the weaker commodity prices endured by the company. If what it costs to produce goes up, and what you receive for selling goes down, and you are the World’s biggest company at doing this, then no surprise that the losses are in the billions. But today’s market reaction underlines this was largely expected.

The longer term issue is for investors who have picked up the stock for income or yield purposes is very different. Those investors will not be getting what they want and it is time to move on.

One way of course, for getting a higher yield out of the stock would be to use the covered call strategy to generate an additional income flow from the underlying asset and with only 14 US cents per share in dividend vs 68cents currently, for the September out of the money call, the difference in return is colossal and have very little to do with BHP results! This is why it pays to know what strategies are available to you and how to use them!

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BHP Posted an $8.3bn loss last night and cut its dividend, but investors can still generate great income from this opportunity.

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The RBA's decision to cut rates has really hurt many investors. Check out how you can be avoiding this pain through an alternative income strategy.

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Learn how to use covered calls by following my blog at

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Apple iPhone sales hit 1 billion units. but is investing in Apple shares right now more risky? ‪#‎apple‬ ‪#‎iphone‬ ‪#‎tradingapple‬
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