Rudi's View | Sep 19 2024
By Rudi Filapek-Vandyck, Editor
Many years of experience with investing and analysing the share market teaches us one very important insight: whether the outlook involves a 'bear' or 'bull' market very much depends on specific definitions that may or may not be the all-important for one's strategy and portfolio positioning.
Either way, Morgan Stanley's wealth management division has been so kind in offering us their key themes for the 'next' bull market:
-Electrification and Real Infrastructure: grid build out, EV charging networks, data center cooling
-Digitisation of services business: including hardware and software/service providers behind enterprise automation implementation of: AI, natural language processing, machine learning, optical scanning and facial recognition. Sectors that stand to benefit most include financials, health care, government, education, consumer services/call center heavy
-De-globalisation: infrastructure and supply chain reconfiguration. Sectors: industrials, construction, materials, mining
-De-carbonisation: energy both green and carbon, EV, batteries, minerals, mining, internet of things, smart highways
-Defense/Cybersecurity, space, satellite surveillance
-Biotech/Genomics
-Demographics/Residential housing
-Managing longevity/Debts and deficits
If anyone thinks Morgan Stanley might not have the most optimistic forecasts in mind for equities they'd be correct. In Australia, the house view is that share prices and underlying corporate earnings have disconnected, as also illustrated by expensively priced bank shares that simply won't go down.
Over in the US, the house view is the bull case scenario has pretty much been priced-in for equities, suggesting investors should be looking at reducing their exposure to this year's winners and turn more defensive.
Head of Nuveen Equities and Fixed Income, Chief Investment Officer, Saira Malik also believes decelerating economic momentum is likely to turn financial markets a lot more volatile and a lot tougher to navigate. Her solution is to turn to trustworthy, reliable dividend payers.
History suggests, according to Nuveen research, dividend growers are an effective diversifier from large cap growth stocks when times get tougher. The research suggests companies operating a robust business model offering an attractive yield and growing their dividends tend to be less volatile, which makes them a sound choice for a core portfolio allocation, Malik suggests.
Over at DNR Capital, the stockpickers' intention is to stick with high-quality companies that might still be undervalued. Two such companies have been identified:
-James Hardie ((JHX))
-Treasury Wine Estates ((TWE)
Macquarie's Model Portfolio recently added James Hardie shares.
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