Like the rest of us, Charlie Aitken is only right some of the time. One of Australia’s most oft-quoted stockbrokers is Southern Cross Equities’ Charlie Aitken. For a while, Aitken was hailed as a sage, almost a celebrity. However, as we learned from Henry Blodget and Mary Meeker, notoriety and accuracy are not necessarily correlated. It is perhaps unfair to single out Aitken – he certainly isn’t alone among brokers in getting things wrong. However, Charlie did make the mistake of filming a YouTube clip for Eureka Report. In his 2007 Preview Aitken claimed that:

Australian companies are in the best financial shape ever and we have seen no PE expansion to reflect the unbelievable balance sheet strength we now have … You must be an optimistic. To do well out of the sharemarket, you must be optimistic.

Even after the sub-prime crisis started, Aitken didn’t lose faith, telling the Eureka Report that

The whole sub-prime issue is over-stated and losses/defaults will be nowhere near where the armageddonists believe.

As Crikey later noted, Aitken also criticized people who had the audacity to be bearish. Meanwhile, Charlie’s favourite stocks haven’t performed too well. Aitken confidently predicted:

Even at $40 BHP remains the cheapest global growth stock in the world, while Commonwealth Bank remains the cheapest risk-adjusted bank in the world. Wesfarmers is the cheapest retailer in the world. Fortescue Metals (just outside the ASX 20) is the cheapest iron ore pure play in the world. You won’t go wrong backing these strong Australian companies.

Since then, BHP is down 10%, CBA is down 27%, Wesfarmers is down 14%, while FMG has performed very well, but has dropped almost 40% from its high. All this probably hasn’t bothered Charlie though. Thanks to the boys at Bell Potter, who lobbed a $150 million takeover for Southern Cross, he will walk away with millions courtesy of his significant shareholding in the broker. — Adam Schwab

Terry McCrann’s backflips good enough for Beijing. Another Terry McCrann double somersault with pike has emerged. Crikey last week reminded everyone that Tezza thought early last year that the subprime crisis wasn’t going to be a problem: it would create a buying opportunity. Now respected Macquarie Bank interest rate strategist Rory Robertson has found a McCrann backflip with inward tuck. This is from Robertson’s latest RBA/Fed watch missive:

Somewhat amusingly, Terry McCrann today took an axe to local economists for being stuck in the mud, struggling to make the jump from forecasting rate cuts early next year to forecasting rate cuts early next month, if not today. That’s a bit rich from a bloke who a fortnight ago was still talking about the next move in rates being up:

The commentariat has convinced itself that rates have finished rising. At least, the official ones from the RBA. The focus is on when they start coming down and how far they drop. … Yesterday’s numbers [CPI at 4.5%, etc] make it brutally clear that a further [RBA rate] rise remains all-too possible. But not, I hasten to add, in two weeks. The massed commentariat are right on that point. There is nothing in the numbers – even though higher than consensus forecast – to force Stevens to move rates higher now. But the commentariat was dead wrong to assume that there is no possibility of rates being hiked again. Full stop. ( ).

That was a fortnight ago. Then last Thursday – out of the blue – came an extraordinary turnaround in analysis: “The market is still thinking rate cuts at the end of the year. In fact the first one in September is now odds-on”.

Oh, dear, that’s two gold medal performances in the diving for Tezza. Why isn’t this man in Beijing and the WaterCube? — Glenn Dyer


Peter Fray

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