Rudi's View | 4:08 PM
Updates on Model Portfolios, Best Buys, Top Picks, Sector favourites and Conviction Buys.
By Rudi Filapek-Vandyck, Editor
Longview Economics' tactical market signals have been flashing various warning signals, but not a universal 'get-me-outta-here' consensus.
Kudos to those signals as global equities have merely traded sideways amidst heightened volatility, ignoring the many calls for a much deeper "reckoning".
Not that Australian investors would necessarily agree with that statement as the local bourse has excelled in exhibiting the worst of all worlds post-August.
On days when US equities rally the local index might, just might join in with a tepid gain, but when the US sneezes the ASX most definitely suffers from pneumonia.
Exceptions have been the banks (despite everyone calling them ex-growth), commodities and smaller cap speccies. To be fair, there are equally some strong momentum stocks that largely kept going, until they no longer did.
Has anyone else noticed shares in Sigma Healthcare ((SIG)) will simply not fall?
Meanwhile, below the surface (for those whose attention is not fixated on the index), many of local High Quality and Super-Duper growth stocks have been de-rated as if the world just experienced a repeat of the Nasdaq meltdown in 2000-2001.
Unless we are about to experience such a repeat (not my personal base case scenario) or next year's US mid-term elections year includes economic recession, the Fed loses grip of global liquidity or something similarly nasty is about to unfold, I believe this selective post-August slump for many of the best of what the ASX has to offer will eventually create a 'starting point' from which strong investment returns will follow next.
No idea when exactly this will happen, but I have no doubt it will.
Many of the stocks I have in mind form part of my selections on the dedicated All-Weather Stocks section of the website. Paying subscribers can check it out here: https://fnarena.com/index.php/analysis-data/all-weather-stocks/
Those earlier mentioned tactical market signals have kept the official line at Longview Economics that investors better be "cautious" with their equity portfolio strategies and positioning. That view is slowly starting to change, inspired by improving signals.
Hence, Longview's updated view this week is that much of prior complacency and exuberance is now gone with some signals trending back into positive territory.
Longview's communication to investors is it is time to start adding more 'risk' to portfolios, i.e. to take a more positive view (move Overweight US equities).
Assuming Longview's signals are indicating the annual Santa rally for US equities is about to commence soon, Australian investors will be keeping the fingers crossed the local share market will at least keep pace and not continue underperforming.
We cannot blame Michele Bullock for everything, or can we?
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