\tI was at a seminar yesterday hosted by the large US fund manager BlackRock<\/span>. Some key points that I was able to take away include:<\/p>\n \t– On a time frame of at least 18 months, equities are at fair value while bonds and fixed interest are overvalued. \tGiven the last point, investors may be wondering what to do with their banking shares. I’ve covered Westpac ((WBC)) as an example with some options on what can be done to protect the downside.<\/p>\n \n\t \n\t \n\t \tPotential Strategy*<\/strong><\/p>\n \tIf you are looking to lighten off on banks, then the upcoming bounce could be your opportunity. However, if we want to hang on but protect the downside, then the bounce will give investors an opportunity to write a covered call to protect the downside. Alternatively, if you are underweight banks, you can use these levels as a buying opportunity and then write a call options against the shares once they have rallied.<\/p>\n \n\t \tContent included in this article is not by association necessarily the view of FNArena<\/span> (see our disclaimer<\/a>).<\/em> \n\tAfter leaving Macquarie Bank's Securities Group in 2008 after many years of service, Michael has gained a highly regarded reputation in the financial services industry. As a Private Client Adviser with Novus<\/span> Capital, Michael has become a popular live commentator and analyst for Sky News Business Channel’s “Your Money, Your Call” program. He is also the author of the weekly stock market report “The Dynamic Investor”.<\/p>\n \tMichael assists investors to achieve their goals by providing advice ranging from short term trading to longer term portfolio management.<\/p>\n \tMichael deals in all ASX<\/span> listed securities and specialises<\/span> in covered call writing to help long term investors protect their share portfolios and generate additional income.<\/p>\n \tMichael is RG146<\/span> Accredited and holds the following formal qualifications:<\/em><\/p>\n \n\t• Bachelor of Engineering, Hons<\/span>. (University of Sydney) \n\t \n\tDisclaimer<\/em><\/strong><\/p>\n \n\tMichael Gable is an Authorised<\/span> Representative (Rep. No. 376892) of Novus<\/span> Capital Limited AFSL<\/span> 238168 ACN<\/span> 006 711 995. Michael Gable and Novus<\/span> Capital Limited, their associates and respective Directors and staff each declare that they, from time to time, may hold interests in securities and\/or earn brokerage, fees, interest, or other benefits from products and services mentioned in this website. This website may contain unsolicited general information, without regard to any investor's individual objectives, financial situation or needs. It is not specific advice for any particular investor. Before making any decision about the information provided, you must consider the appropriateness of the information in this website or the Product Disclosure Statement (PDS<\/span>) or Financial Services Guide (FSG<\/span>), having regard to your objectives, financial situation and needs and consult your adviser. Any indicative information and assumptions used here are summarised<\/span> and also may change without notice to you, particularly if based on past performance. Michael Gable and Novus<\/span> Capital Limited believes that any information or advice (including any securities recommendation) contained in this website is accurate when issued but does not warrant its accuracy or reliability. Michael Gable and Novus<\/span> Capital Limited are not obliged to update you if the information or its advice changes. Michael Gable and Novus<\/span> Capital Limited and each of their respective officers, agents and employees exclude to the full extent permitted by law, all liability of any kind, in negligence, contract, under fiduciary duties or otherwise, for any loss or damage, whether direct, indirect, consequential or otherwise, whether foreseeable or not, to the extent arising from or in connection with this website.<\/em><\/p>\n
\n\t– If QE were to cease, 10 year bonds should be about 1% higher.
\n\t– Profitability of US corporations is at a 45 year high.
\n\t– Japanese equities, despite the recent rally, are still very attractive and they have a government in place with enough power to get things done.
\n\t– When QE slows down and eventually stops, bond yields will rise and the most vulnerable assets are those which investors have used as a substitute for bonds.<\/p>\n
\n\tWestpac<\/u><\/p>\n![\"\"](\"http:\/\/www.fnarena.com\/ckfinder\/userfiles\/images\/wbc.jpg\")
<\/u><\/p>\n
\n\tThe banks, including WBC, have been sold off very heavily since peaking last month. The major cause is the falling $A where overseas investors are looking to bank profits before they become eroded by the currency translation. With the heavily oversold condition on the daily chart, and the yield support, I would expect the banks to stage a small rally here, retracing approximately 50% of the recent falls. For WBC that takes it up towards $32. From there I would expect it to remain under pressure. It could either then drift back towards $29 or a worst case scenario for me would see the stock down near $26.<\/p>\n
\n\t*This strategy contains unsolicited general information only<\/strong>, without regard to any investor's individual objectives, financial situation or needs. It is not specific advice for any particular investor<\/strong>. Before making any decision about the information provided, you must consider the appropriateness of the information in this document, having regard to your objectives, financial situation and needs and consult your adviser.<\/p>\n
\n\t
\n\tVisit Michael Gable's website at <\/span>www.michaelgable.com.au\/<\/a>.<\/a><\/em><\/p>\n
\n\t• Bachelor of Commerce (University of Sydney)
\n\t• Diploma of Mortgage Lending (Finsia<\/span>)
\n\t• Diploma of Financial Services [Financial Planning] (Finsia<\/span>)
\n\t• Completion of ASX<\/span> Accredited Derivatives Adviser Levels 1 & 2<\/em><\/p>\n<\/em><\/p>\n