Technicals | Mar 24 2020
By Michael Gable
My advice this week is to stop reading the news for a bit, stay off Facebook, try to avoid a lot of media. It's depressing. If you are depressed, emotional, overwhelmed, then you will not make the best choices. Think back to the GFC. We are lucky in that we all experienced a major event like this. It means we can hopefully remember what we did wrong, what worked, and we can learn from it. Most of us did not live through the Second World War, or the Great Depression. They don't seem as real and it is harder to learn from those experiences.
But we have the GFC to know that as bad as it was, out of it emerged plenty of winners. There are always winners in every tragedy, so from an investor's point of view, we need to be taking advantage of those winners when the time is right. Being overwhelmed by the media will not put you in the right frame of mind to do that. I am sure that many professionals who have been around for too long will be half considering an early retirement now because of all this drama. They won't have the stamina to rebuild. At least in our office over here we are still fairly young and fit and we have plenty of energy do the homework and make the most of what this market will throw at us, so bring it on I say.
What we are seeing is unprecedented and we may well never see an opportunity like this again. However, it won't be easy. In the next few months, we are going to see:
– Massive unemployment
– Huge debt levels
– Money printing
– Companies going under
– Zero interest rates
– A move away from reliance on China
– Further hostilities between the US and China
– A housing slowdown
– Big companies consolidating their power
The list goes on. If the previous bull market was the most hated of all time, it shows that there is always something to worry about. We can use our depressing list to get depressed, or we can use it to understand the new world that we live in. This means that we can make the best investment decisions possible. We can be a victim of this new world, or we can be a winner.
In this week's report, we have one of a few stocks which are at levels that may offer a good margin of safety around here: Macquarie Group ((MQG)).
A monthly chart of MQG doesn't appear very nice at first glance, but when you measure the rally from GFC lows to its recent peak, and draw in the 50% and 61.8% Fib retracements, we can see that MQG is now in a very important zone. With share market momentum not looking as savage in the last few days, this may well be the level that MQG gives us its first bounce. If this starts to happen from around here, then we could see a relief rally up towards $100 before the selling kicks in again.
Fairmont Equities is a share advisory firm assisting Private Clients with the professional management of their share portfolio. We are based in the Sydney CBD but provide services to private clients across Australia. We believe that the concepts of fundamental analysis and technical analysis of stocks are not mutually exclusive. Regardless of whether you are a trader or long term investor, combining both methods is crucial to success. As a result, the unique analysis of Fairmont Equities is featured regularly in the media such as Sky News Business, CNBC, The Australian Financial Review, and the ASX newsletter. Contact us for a free trial of our research and information on our portfolio management services.
Michael is RG146 Accredited and holds the following formal qualifications:
• Bachelor of Engineering, Hons. (University of Sydney)
• Bachelor of Commerce (University of Sydney)
• Diploma of Mortgage Lending (Finsia)
• Diploma of Financial Services [Financial Planning] (Finsia)
• Completion of ASX Accredited Derivatives Adviser Levels 1 & 2
Fairmont Equities Australia (ACN 615 592 802) is a holder of an Australian Financial Services License (No. 494022). The information contained in this report is general information only and is copy write to Fairmont Equities. Fairmont Equities reserves all intellectual property rights. This report should not be interpreted as one that provides personal financial or investment advice. Any examples presented are for illustration purposes only. Past performance is not a reliable indicator of future performance. No person, persons or organisation should invest monies or take action on the reliance of the material contained in this report, but instead should satisfy themselves independently (whether by expert advice or others) of the appropriateness of any such action. Fairmont Equities, it directors and/or officers accept no responsibility for the accuracy, completeness or timeliness of the information contained in the report.
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