- Rotation to large caps ‘uncomfortable’ but creating opportunities
- Avoiding the next Vocation: Five “watch outs” for selecting stocks
- Stocks to watch in an uncertain market: CSL
- Two big takeouts for investors from 2016
- Five reasons why absolute return investing is less volatile than index investing
- Six keys to finding value in the market
- Brexit: Implications for investors
- Difficult start to 2016 for share market – opportunities exist for high conviction stock pickers
- Prime Value’s views on current market volatility
- Short-term cycles to continue into 2015
- Some stocks cope with volatility better than others
- Reporting Season Underlines Need For Strong Fundamentals
- In the world of finance, the most dangerous thing is the thing that never moves
- 2014 shaping as a stockpickers market
- Dark Clouds On The Horizon – Risk Or Opportunity?
- Three Chances at Getting it Right
- Keeping on top of the RORO markets
- Notes from China
- Spring Cleaning The Investment Pantry
- Does Corporate Memory Have A Role In Stockpicking?
- How Do You Harvest Your Returns?
- Why Avoiding the Herd is More Important than Ever
- Safe Bets In Turbulent Times
- History: First Multinational Renaissance Business
- How Bees Invest
Short-term cycles to continue into 2015
ST Wong, February 2015
Uncertainty caused by short-term trends will make 2015 a challenging market for equities investors, but there are opportunities for good returns provided managers stay disciplined.
Again, it is shaping up as a stock picker’s market. But the rapidly changing market landscape is a challenge for everyone. The trends are so short, even the macro trends are changing quickly.
Under current conditions, trying to pick out a single trend is less straightforward.
For example, it would be easy for us to dismiss the resources sector. And we have seen many investors avoiding resources. But, paradoxically, one of the best-performing large cap stocks in recent times has been BHP.
Staying true to your investment principles, and not being distracted by market noise, is paramount.
The market environment is currently a product of conflicting signals and divergent global markets. It’s quite clear we are at a fork in the road with Europe and Japan struggling on the one hand, and the USA showing strong upside on the other.
This has influenced some wild swings in currency and other markets, impacting the ASX.
Aside from adhering to our investment principles for picking stocks, we may consider the bigger, underlying structural changes playing out in the economy. Larger structural trends provide some direction in confusing times. For example, demographics is a structural influence which takes a long time to change.
Another example: the rise of emerging economies such as China into developed economies, which has taken place over a long period of time and is still playing out.
In the Australian equities market, investors should be looking for sectors which may benefit from the nation’s transition away from a resource economy. There are bound to be several sectors which emerge as economic drivers, on the stock market at least. For example: services and tourism show some potential.
We need to also factor in sectors and companies which may be affected by the federal government’s attempts to balance its budget and a slipping terms of trade.
The only way to navigate such uncertainty is to be stay grounded – we all want to enjoy picking the big winners, but in a market such as this avoiding the big mistakes will be more important to performance.