THINKING OUT LOUD

Why is the ASX 200 Index floundering?

Blue Chip shares are not bulletproof

These 6 stocks make up 33% of the “points” weighting in the ASX 200.

Commonwealth Bank, BHP, Westpac, CSL, ANZ Bank and National Australia Bank.

These 6 companies amount to 3% of the number of companies in the ASX 200 yet represent one-third of its value and performance.

At today’s value of 5,467, the ASX 200 touched a 2 year low.

But the ASX 200 Index was also at this price 4 years ago.

Some of the reasons and heaviest influence is that;

ANZ is today at the same price it was in 2015 and 2012 (that’s 6 years ago!);

CBA shares are trading a price equivalent to that of June 2013;

NAB has plummeted beyond its 2 year low and is now at the levels last seen in November 2012;

whilst Westpac is trading at the a price similar to July 2012.

BHP & CSL’s “outperformance” has helped the index’s reading only render it being at 2 years lows.

Phew !

Yet many retail investors find supposed solace in “blue chips”.

I argue that there is no such thing if you pay the wrong price or more importantly, too much for an asset.

You can’t fall back on some 1950’s view that “you can’t go wrong wth blue chip shares”.