It is interesting to see what happens around the same time each year – that is, around the end of June.

It seems that this is when many share market traders take stock and look to having an end of year sale.

Much like the retailers when everything must go, each year it seems the news is the same.

Over the course of the year in trading, we seem to take small profits and generate larger losses. By way of example, how many of the companies we have collected over the year and whose share price has fallen have we traded out of for a small loss rather than a larger one?

When the share price starts to decline, we either:

  1. Buy more to average down our price. This strategy is OK if you are a long-term investor and are buying into quality companies.
  2. Or we watch the share price wither on the vine in the vain hope that at some stage the price will increase back up to what we originally paid. Then we will invariably sell after having forgone any benefits of being able to use the funds for other more profitable trades or other non-market related purposes. 

It is human nature to look for good news and ignore the bad and hope that hope prevails.

We need more discipline and I, for one, have learnt many lessons over the past few years.

Being an optimist during this period of time has been a costly exercise.

Everywhere I go in business, I always ask them about the numbers coffee shops, food stands and cafes are great places to get the goss on what is happening in the immediate economy.

Any rises or falls in consumer sentiment seem to be felt very quickly in these businesses and, by way of example, I was talking to a fellow who owns a fish distribution delivery business and he told me that over the last few weeks, business has dropped by close to 60 per cent.

He delivers to takeaway food shops, cafes and restaurants and he said that he cannot recall such a rapid drop in orders and sentiment in recent memory. Part of the decline can be sheeted home to the recent drop in temperatures but he is still very worried about the immediate outlook and what the current uncertainty will mean for his business.

This translates to further declines in consumer confidence, which translates to less sales at the registers of the retailers and less profits for companies in the area of discretionary income.

With the potential for an election in August or September, consumer sentiment will be dampened further as people keep their hands in their pockets ahead of this time. However, we can be assured that there will be continued growth in coffee and broadband as these are areas it seems that we can't do without.

Attached is a chart of the share price of Domino Pizzas compared to BHP Ltd over the past twelve months, which shows that we may all need to eat our way to prosperity from here on in.

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