Ask Colin

My trading plan only allows me to trade in the direction of the sector trend, however the new GICS sectors are so wide the whole approach seems to be much weaker. What do you think?

I think the whole thing stinks. The ASX has given S&P monopoly power over sector indexes and they are exercising monopoly pricing. Private investors simply cannot afford to pay what they are asking for the detailed sectors - only the big institutions. Some comments about what can be done:

1. The Australian Financial Review publishes the most detailed information that is available to private investors, as far as I know.

2. This level of detail has been built into the data base manager in Insight Trader, but it is contrary to the law and vendor contracts with the ASX for vendors to create their own GICS indexes, so, although we can put the stocks in the detailed sectors in some cases, we do not have the detailed indexes.

3. I think it will change in time. However, it is going to take a lot of work and effort. A sign is that one broker has already created a Gold index - one of the glaring anomalies in the GICS sector breakdown.

4. If you want to help change things, write to the ASX and to ASIC and to ACCC and say that it is unfair to private investors and an abuse of monopoly power. Tell everyone you know to complain too.

As to what you do, I don't know. The present situation makes accurate top-down analysis very difficult. I think you may have to change your approach to get around the new situation.

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