Report Date: 2 November 2015


Where are we in the Cycle?
 Looking back on October, four out of the five PortfolioDirect cyclical guideposts remained on “red”. Only the stance of monetary policy remained supportive but central bank fund flows drive asset prices not the real economy on which the mining industry depends.   More...

Market Directions
Sharp share market reversals typified October. The mining/materials sectors were one of the biggest winners but the momentum was drifting badly by the end of the month with declining stocks beating advancers on the Australian market by four to one in the last week.   More...

Portfolio Performance and Positioning
Portfolio model returns beat the benchmark in October for the sixth consecutive month and for the nineteenth month out of the 22 months since the beginning of 2014. There were no recommended portfolio composition changes in the past week. The biggest gains in October came from Phase I stocks benefiting from the bottom of the cycle leverage.   More...

Stock Reviews and Rating Analysis 
A PortfolioDirect rating update for Excelsior Gold (EXG:AU) was completed recently.  There was a time when the quality of a mining project was judged by how much capital its development required.  Not now.  Excelsior Gold has escaped the capital market burden confronting many other gold producers by striking a deal with the owners of the Paddington mill to process its mine output on a ‘pay as you go’ basis. Cutting back on capital spending commitments slows development and reduces near term profitability but also raises the likelihood of development actually occurring. Companies display a longer duration growth trajectory as they deploy operational cash flows to support ongoing production expansions. The resulting positive value momentum should support future market value appreciation.     
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DAILY BRIEFING: The PortfolioDirect market diary offers brief thoughts on current issues affecting sector investment strategies.

Although the statements of fact in this communication have been added from and are based upon sources E.I.M. Capital Managers Pty Ltd, the publisher, believes to be reliable, their accuracy is not guaranteed and any such information may be incomplete or condensed. 

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