Rudi’s View: Telstra, BHP And Netwealth

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 | Jul 19 2018

In this week's Weekly Insights (this is Part Two):

-Is 'Value' Investing Now Dead?
-Conviction Calls
-All-Weather Stocks: Bell Potter
-Next Week
-Rudi Talks
-Rudi On TV
-Rudi On Tour

[Non-highlighted parts appeared in Part One on Wednesday]

Conviction Calls

By Rudi Filapek-Vandyck, Editor FNArena

When you look at the Australian share market, ignoring day-to-day noise and volatility, what do you see?

Stockbroker Morgans sees a complacent investor community ignoring the fact headwinds are building and the outlook is becoming less predictable, if not tougher. Investors can still look forward to making a reasonable return from their portfolio, the stockbroker believes, but maybe not if they continue crowding in the same segments of the share market.

Morgans likes Telstra ((TLS)) and local banks the most. Calendar year 2018 is seen as the window into a new normal wherein interest rates are on the rise, central bank stimulus is being wound back, and exceptionally calm markets are in for a lot more volatility. Whatever might transpire, 2018 is not a year for complacent investing, say the stockbroker's strategists firmly.

For investors looking to re-shuffle portfolios, a few ideas have been put forward. Morgans' favourite among the Big Four banks is Westpac ((WBC)). Among diversified financials, Suncorp ((SUN)) and Link Administration ((LNK)) are offered as best ideas.

Among consumer discretionary stocks, the preference goes to defensive business models of Bapcor ((BAP)) and Apollo Tourism & Leisure ((ATL)), plus Lovisa ((LOV)) and Baby Bunting ((BBY)). Elsewhere Orora ((ORA)) and Reliance Worldwide ((RWC)) remain in favour, as do Telstra and Superloop ((SLC)) in the telecommunication sector.

Equally important: the stockbroker has been advising its clientele to trim positions in stocks that have run hard in FY18.


Morgans' views about prospects for Australian equities would have resonated with market strategists at Morgan Stanley in the US. They have been warming up their clientele for portfolio rotation into defensive stocks and sectors. Last week, Morgan Stanley's view to sell US technology market darlings made headlines around the world, but among investors it was met with a big yawn, report the strategists.

One week later and they reiterate their more defensive view, "with increasing conviction".

The Q2 reporting season will be a bright one, say the strategists, but the market will be forced to focus on the sustainability of growth, and here headwinds are building.

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