Rudi’s View: Bear&Bull Market To Continue (?) In 2024

rudi-views
Always an independent thinker, Rudi has not shied away from making big out-of-consensus predictions that proved accurate later on. When Rio Tinto shares surged above $120 he wrote investors should sell. In mid-2008 he warned investors not to hold on to equities in oil producers. In August 2008 he predicted the largest sell-off in commodities stocks was about to follow. In 2009 he suggested Australian banks were an excellent buy. Between 2011 and 2015 Rudi consistently maintained investors were better off avoiding exposure to commodities and to commodities stocks. Post GFC, he dedicated his research to finding All-Weather Performers. See also "All-Weather Performers" on this website, as well as the Special Reports section.

Rudi's View | Dec 06 2023

In this week's Weekly Insights:

-All-Weather Model Portfolio
-Bear&Bull Market To Continue (?) In 2024
-Conviction Calls & Best Ideas
-Holidays Are Beckoning


By Rudi Filapek-Vandyck, Editor

All-Weather Model Portfolio

Last week's Weekly Insights included some estimates on the performance of the FNArena/Vested Equities All-Weather Model Portfolio.

Alas, those estimates were incorrect, for which my sincere apologies.

Below are the updated statistics as per WealthO2, the platform on which the All-Weather Portfolio is administered. WealthO2 was recently renamed Dash.

The third column from the top depicts the total return (TR), before fees, after first identifying capital return and income.

Bear&Bull Market To Continue (?) In 2024

Traditionally a lot of time and effort is spent on whether share markets are in a bear or bull phase, and the public debate often relies on flawed and ultra-subjective signals and interpretations, such as the price action itself at face value.

One observation that might be more valuable to investors is that underneath the surface, share markets have polarised, often in extreme fashion, and the pendulum of share price momentum swings between positive and negative cycles from one year into another.

Last year (2022) generating return from Australia was all about oil & gas and metallurgical coal, but owning shares in Woodside Energy ((WDS)), Whitehaven Coal ((WHC)) and Co in 2023 has been quite the opposite experience.

Most shares in lithium producers and developers have given back all the previous gains, and then some.

The rollercoaster ride in technology stocks has not been less volatile; strong rallies throughout 2021, a deep fall into the abyss in 2022, then a remarkable comeback in 2023.

Most major indices, including those in the US, believe it or not, are still below or around the index levels of December 2021 (two years ago).

Instead of debating whether share markets are in a bear or in a bull market, maybe we should accept different parts of markets have experienced opposite conditions post covid. This then raises the obvious question: can we identify segments that might be moving from bear to bull in 2024?



My personal attention goes out to bond proxies and healthcare companies. Both market segments have (largely) failed to fully participate during the positive times post 2020, while still feeling the downward pressure during the not-so-positive times.

Loyal shareholders in Charter Hall ((CHC)), Centuria Capital Group ((CNI)) and Mirvac Group ((MGR)), to name but three examples, but also in CSL ((CSL)), Sonic Healthcare ((SHL)) and Ansell ((ANN)) have had little to smile about for three long years.

The current share market rally into year-end is injecting new life in these share prices. I note the recent H1 release by Fisher & Paykel Healthcare ((FPH)) has been well-received. Sigma Healthcare ((SIG)) is coming back to life as well. Shares in CSL and ResMed ((RMD)) are now up nearly 15% and 15.5% respectively from recent lows.

It goes without saying, if global bond yields continue to fall, and the level by late 2024 should be lower than where yields are today, all else remaining equal (lower growth, lower inflation), the previously negative impact should reverse for those segments that have been held back because of high inflation and rising bond yields.


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