Podcast Archive

There are a lot of interesting themes running through the overnight session in the US - the rotation out of safe defensive sectors like Utilities and Staples (which fell despite the US market being up 2%) and into recovery sectors (Energy, Smaller companies, Airlines and many others) is underway and we are likely to see something similar in Australia as we continue to anticipate the economic restart. There are traffic Jams in China. The Fed confirmed overnight that they will use all tools to support the markets - the "Fed Put" is in place. Wouldn't have expected anything less. Without making an asset allocation decision our interest in recovery plays has left us pretty much "All in" again. Find out some of the stocks we've bought in today's strategy piece. 

Interesting rotation from Technology to Value in the US, Tech stocks selling off. Come a recovery from the virus is the most money going to be made in Netflix and Amazon, stocks that have been hitting all time highs in the midst of crisis, or in gambling, travel, tourism stocks, stocks that have been clobbered. We are pursuing the same theme, looking to play recovery sectors, buy the victims, rather than the survivors of COVID-19. Meanwhile the banks may have bottomed, the 'economic restart' theme gathers pace, the FOMC and the ECB are going to try and molly-coddle us and the US GDP number is so historic its all but irrelevant, as is the CPI number today. The biggest risk is a 'Second Wave', the markets would tank, but it seems to be low odds. 

We still believe the 'Big low' is in and will be happy to get fully invested again when the moment is right, but we're not convinced that that's today. Very few charts, of markets, sectors, or stocks, are throwing off buy signals. It takes more than one good day (yesterday) to start a trend. So we remain in some cash although we have started to nibble on some recovery plays today (see the newsletter for which stocks). Boris Johnson is telling the world to go slow on the economic restart and we might just take his lead here. So no big rush to get fully invested, but ready to do so at the slightest technical excuse. 

It may not be over in society but the stock market looks six months ahead. The next headlines are going to be about every economy restarting, lockdowns ending, getting back to work and before long sports, bars and restaurants getting back to business. Next you will find yourself at the airport flying to that international holiday resort for that holiday you deserve (with 23m of your closest mates) and those roving retirees are going to be  rushing to book cruises at huge discounts that will not last. they say "Buy the dips". We're in the middle of one. Now all we have to do is time it. In today's strategy piece we look at timing this moment (not yet), and which stocks are the most geared to it. 

Meet Ben O'Leary the Marcus Today Back-Room Boffin and Assistant Portfolio Manager on the SMAs which have outperformed over 20% in the last two months. Find out how he did it, some lessons he's learned, what he thinks about the outlook and three stock tips at the same time. 

We talk about an underlying resilience in the market. Maybe we really are over the worst and maybe we're being a bit too cautious. There is no technical reason to buy anything yet but maybe we're not on the brink of a new economic collapse either. We also talk about the fact that in a couple of months we are all going to be back in the office and stuffed into a crowded cinema watching Top Gun 2 and if we don't recognise that now we'll miss the lows on some of the most damaged stocks and sectors. We also talk about the risk in the Bank sector results season next week being on the upside. 

The volatility is still with us - Wall St down 632 one day, up 457 the next. We talk about one day reversals  - we saw one yesterday - down 121 at one point but we closed unchanged. Lets see if we hold on to this mornings gains this afternoon. We also talk about your mindset and the need for investors to get ahead of the headlines rather than react to them. The money is in guessing where the herd is going to next, not join in on the predictable low-brow reactions to events now in the past. We look at the ASX 200 chart and note the recent strong sell signal and we'll go with that for now. 

40% cash looking good this morning as the market tips over again. 3% falls in the NASDAQ, Germany, Italy and France are not a good sign. Weakness in the US mainstay, the Technology sector, also a worry. We talk about the Collins Class Rule this morning (don't take it too seriously). 10% of the stocks in the All Ordinaries index have triggered RSI sell signals today (yesterday), we list them. The RBA thinks the banks can afford to pay dividends. We are still holding a neutral sector holding going into results in the next two weeks. Now watching to see if this 'minor' top turns into a major top. 

The oil price fall is a red herring - otherwise with volatility on the rise again, a few stocks and markets rolling over the top and the US market back to a fantasy world PE of 21x already there is room for a reality check on this recent ultra fast rally. We have cashed up a bit more.

Still happy holding a bit more cash than we were - waiting to see if this ultra fast recovery rally comes of the top now as we quietly expect - the US market is only 15% off the top and back to the middle of the long term bull market trading range with $23 trillion of S&P 500 stocks back on 21x - not sure that's really reflecting the economic and corporate damage, but who knows with that herd.