If only I'd bought yesterday

"If only I'd bought yesterday."

That must have been the most oft-heard utterance on the floor of the Australian Stock Exchange in Bond St yesterday.

Now that the stock market has recorded its biggest one-day rise in history, albeit after its second biggest fall, investors across the country are kicking themselves.

It seems everyone has a tale of woe about almost buying on Tuesday but not quite having the nerve, the cash or a frantic stockbroker to take your call.

Instead of spending part of "crash day" persuading my mother to send $2000 to my stockbroker to stop him selling plunging debt-funded shares, I'd far rather have ploughed $100,000 into the market.

Blue-chip stocks have delivered 24-hour profits of up to 25.7 per cent in what must go down as one of the greatest short-term buying opportunities in history, assuming you have already taken your profits.

Victorian Premier and astute stockpicker Jeff Kennett certainly got it right when he told regular listeners to his weekly radio broadcast on Tuesday that the correction presented "a wonderful opportunity" and he would "probably buy more" stocks.

Assuming you were smart and took Jeff's expert view of the world, this is what you would have done with that spare $100,000 sitting in your bank account.

While the rest of Sydney went to cry into their Chardonnays over lunch on Tuesday, you would have waited until 1.10pm when the All Ordinaries index was down 267 points at an 18-month low of 2210.

With the benefit of 20-20 hindsight the five blue-chips to tip $20,000 each into would have been Woolworths, ANZ, James Hardie, WMC and Coca-Cola Amatil, in that order.

Woolworths collapsed to a bargain basement $3.60 at the height of the selling on Tuesday, but by yesterday's close was back up at $4.60. On 20,000 you would have made $5136 in 24-hours -25.7 per cent -which is enough to keep you in groceries for a few months.

Can you imagine how I'd have felt if my broker had "margin called" me and sold WMC at Tuesday's low of $4.19 and ANZ at $8. WMC finished at $5.20 yesterday and ANZ $9.96, reflecting recoveries of 24.1 per cent and 24.5 per cent respectively. Thanks for the bailout, mum.

This hypothetical $100,000 investment in these five top-50 stocks would have been worth $124,214 by yesterday's close -a return of 24.2 per cent. On that sort of profit you could have a decent three-year holiday in Thailand at the present exchange rate.

Those sorts of returns are normally reserved for the casino table, and even Melbourne's wobbling Crown recovered 23.7 per cent from Wednesday's low of 80c to finish at 99c yesterday.

Which is not much solace when you paid $1.45 earlier this month before Asian billionaires decided to stay away from Lloyd Williams' Mecca on the Yarra.

Other top stocks such as Macquarie Bank, Boral, Southcorp and Mayne Nickless also delivered profits of more than 15 per cent in a day.

And if you were a little bit bolder and ventured outside the top 50 you could have made even more. Especially if you got into the sophisticated options, futures or warrant trading which the screen jockeys so love.

Having recently outlined 10 reasons why the market would not suffer another 1987-style crash, it came as somewhat of a relief that Wall St bounced back yesterday, bringing the world with it.

And while you cannot be sure the recovery will be sustained, it is unlikely the market will enjoy another 233-point turnaround in 24 hours. That's a whopping 10.5 per cent for those who got their timing right.

Don't expect to ever again see blue-chips like Woolworths, James Hardie and ANZ leap by 25 per cent in 24 hours. That's 1 per cent an hour, which sure beats what you'd get in an ANZ term deposit, even after considering brokerage fees.

Back in the real world, I'll probably have to crank up the credit card to repay mum before she tells dad about her $2000 bailout.

Still, like every other small investor out there, we can all dream about correctly guessing when the market will go up and down.

As for those lucky investors who bought at lunchtime on Tuesday. Congratulations, you picked it. And for those who sold? Get yourself a new broker.

* Regrettably, the author owns Crown shares and after the correction is also losing on Joe Gutnick's Great Central Mines, WMC, Seven, ANZ, Austrim and Brierley Investments, among others.

Copyright © 2024 The Mayne Report. All rights reserved

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