Tag Archives: All-Weather Stock

August Reporting Season: Early Progress Report

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 | Aug 15 2019

Dear time-poor reader: early update on corporate results, plus a longer-term assessment of CSL.

In this week's Weekly Insights:

-Financial Joke
-August Reporting Season: Early Progress Report
-CSL Challenge: The Key Ingredient

-Rudi Talks
-Rudi On Tour

By Rudi Filapek-Vandyck, Editor FNArena

Financial Joke

Question: what is a stock that has fallen by -90%?

Answer: that's a stock that falls by -80%, and then the share price halves.

August Reporting Season: Early Progress Report

August is local reporting season for Australian listed companies, but the pace of corporate results releases is so much skewed to the second half of the month that as half-way approaches on the calendar, it remains way too early to draw any definitive conclusions or make far-reaching assessments.

As at Monday, 12th August 2019, the FNArena Corporate Results Monitor still only contains 30 corporate updates. Considering that by month's end the total will have exceeded 300 updates, we have an urge to feel sorry for ourselves. After all, those 300 corporate releases will have to be covered, followed up, updated and summarised. And the slower the season ramps up... you get the idea.

A few early assessments won't go astray (we hope). Corporate Australia clearly is doing it tough. Corporate updates thus far either reveal declining profits, or negative sales growth, or downward pressure on margins, or all three combined.

Subsequent share price responses are often left to management's guidance for the year ahead, potentially supported or negated by hedge funds and other traders taking position prior to the results release.

As such we witnessed Suncorp ((SUN)) releasing a weak result, but with the share price moving higher, and on Friday REA Group ((REA)) missed market expectations, but its share price since put in a notable rally higher. In contrast, CommBank ((CBA)) shares were initially punished upon the release of a weak financial report card, but buyers have since shown themselves.

No such buyers' interest has revealed itself for Insurance Australia Group ((IAG)), whose shares are down quite heavily in a short time, including following the release of disappointing FY19 numbers, and the same observation can be made for Cimic Group ((CIM)), Janus Henderson ((JHG)) and GUD Holdings ((GUD)), whose share prices are all trading significantly below levels prior to the respective results releases.



In the lead-up to August, I predicted investors were most likely to witness a multi-layered experience. The first two weeks are already showing plenty of evidence for this thesis.

We also had a number of major beats, with subsequently solid share price rallies for James Hardie ((JHX)), Pinnacle Investment Management ((PNI)), and Navigator Global Investments ((NGI)). Both ResMed ((RMD)) and REA Group once again proved quality High PE stocks are not necessarily toast, as they have done for many years now.

Continuing on my forecast of a multi-layered August reporting season, Macquarie analysts note companies with direct exposure/leverage to the local housing market have all revealed "headwinds" and tough operational challenges, with each of James Hardie, REA Group, Transurban ((TCL)), CommBank, Mirvac ((MGR)) and Nick Scali ((NCK)) talking the same talk.

But not all housing related business models are similarly vulnerable or operationally exposed with James Hardie and REA Group arguably in a better position than CommBank and Nick Scali.

Macquarie, by the way, continues to recommend investors should buy the dip in selected housing-related businesses, including REA Group, Nine Entertainment ((NEC)), Stockland ((SGP)), James Hardie, CSR ((CSR)), National Australia Bank ((NAB)) and Westpac ((WBC)).

Macquarie's reasoning is that housing will stabilise and subsequently improve on the back of continued RBA rate cuts.

In continuation of recent years, reporting season these days is heavily coloured with capital management (special dividends and share buy backs), as well as with capital raisings. A-REITs in particular are once again using the opportunity to raise fresh capital, but Nufarm ((NUF)), Transurban and AMP ((AMP)) equally have announced fresh raisings.

In terms of general trends, FY19 average EPS growth might not come out too far off the zero mark, predominantly because of another booming performance from resources, in particular iron ore producers and gold miners.

Banks are expected to extend their negative growth period and international industrials are projected to perform significantly better than domestic industrials.

FNArena continues to provide daily updates on Australian corporate updates: https://www.fnarena.com/index.php/reporting_season/

The early data are far from encouraging with decisively more "misses" than "beats" (40% versus 30%) but, as every optimist will tell us, it remains early days.

See also:

"August Preview: Lower Rates & Lower Growth"

https://www.fnarena.com/index.php/2019/08/08/august-preview-lower-rates-lower-growth/

"Corporate Earnings Still Matter In 2019"

https://www.fnarena.com/index.php/2019/07/25/corporate-earnings-still-matter-in-2019/


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Rudi’s View: CSL, Ramelius And Sonic Healthcare

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 | Aug 09 2019

Dear time-poor reader: Part Two offers Conviction Calls, and an update on the CSL Challenge.

In this week's Weekly Insights (published in two parts):

-August Preview: Lower Rates & Lower Growth
-CSL Challenge: A (Not So) Brief Update
-Conviction Calls
-Rudi Talks
-Rudi On Tour

CSL Challenge: A (Not So) Brief Update

By Rudi Filapek-Vandyck, Editor FNArena

Something has gone amiss with my messaging to investors, maybe?

At the recent National Conference organised by the Australian Investors Association (AIA), I showed a price chart during my presentation of a sustainable and structural growth story and asked: anyone a guess which stock this is? The answer came straight from the room: CSL! (In multiple voices).

Yet, it couldn't be CSL as the top of the chart didn't reach beyond $100 and everybody who has been paying attention should know by now CSL ((CSL)) shares surged a second time through $100 in late December 2016 and subsequently never looked back. The share price recently reached a new all-time high of $232.03, more on that further below.

Just as a side-remark: today, I tried to look up recent share price levels for CSL and both Yahoo Finance and the ASX website are ostentatiously displaying incorrect data. What is happening here? FNArena provides access to correct share price data, of course, but for more detail we can all still visit Google Finance.

Upon arrival in Australia, back in late August 2000, I never imagined myself becoming the go-to expert for CSL background and insights nineteen years on. My research into investing in the local share market has led to the concept and identification of All-Weather Performers, and CSL is only one of them.

From memory, my presentations in recent years have specifically highlighted DuluxGroup, Carsales, Bapcor, TechnologyOne and NextDC, alongside others, and occasionally the price chart shown was picturing CSL. The biggest compliment I have received is from investors thanking me for directing their attention, and courage to buy, towards stocks they otherwise would never have considered.

The right answer at the conference was REA Group; yet another one of my all-time favourites, and for good reason. REA Group shares recently surged above $100, equally an all-time high. This means that those who bought at or pre-IPO at $1 a share, and stayed on board since, have enjoyed a 100-bagger, including funds manager Hyperion.

CSL shares, corrected for shares split, IPO-ed at $0.77. Plus there was another shares split pre-GFC. CSL shares have thus performed even better than REA Group's 100-bagger since listing. Needless to say, it is difficult to find a single shareholder today who is unhappy with how management, the company and the share price have performed over the past 2.5 decades (CSL started life in 1991, and listed in 1994).

On  my observation -at the conference and elsewhere- investors do not necessarily grasp the importance of what I just pointed out. The fact that CSL shares, 25 years after listing, have surged to a new all-time high means that everybody who bought the shares, at any given point in time, has made a profit.

Everybody. No matter when the shares were bought.

Think about this for a while and one instantly starts to realise how truly amazing the CSL experience has been for shareholders who stayed the course. REA Group's performance has been equally impressive, but it has only been listed since December 2008. Still very impressive though.

A few stats to highlight the strength and importance of these performances:

-Resources stocks in Australia are still some -33% below their peak in May 2008
-Bank shares are still some -28% below their peak in May 2015

Consider, for example, that BHP Group shares peaked at $50 in late 2007 and again at $49 the following year. CommBank shares reached $96 in 2015.

Hint: local indices recently finally managed to surpass the all-time record (ex-divs) set in late 2007 and while resources and banks were instrumental in getting there over the past seven months, we would still not be nowhere near current level if it wasn't for the steady and continuous, uninterrupted contributions from All-Weather, sustainable, structural growth companies such as CSL, REA Group, and numerous others I have been highlighting through my research in years past.

Yet, when one looks back from the chair I am sitting on, it is difficult to not also remember the abuse, the disbelief, the rejections that have occurred throughout the period. It was only a few months ago I had to stand my ground amidst a wave of criticism and personal attacks. Surely I had lost my sanity? Didn't I know that no single stock trading on a PE multiple above 15x had ever proved to be a genuine, profitable long term investment? CSL is going to crash, and take me and my reputation down with it!


As you all would have guessed, those same voices have gone missing by now. Understanding CSL is effectively understanding how little investors know and understand about the share market. Which is why I launched the CSL Challenge earlier this year (see further below).

To my surprise, a recent analysis by the Australian Financial Review (The stocks doing the heavy lifting, 3-4 August 2019) once again put CSL at the top of the performance table for having contributed the most index points in 2019. My own analysis conducted earlier had the iron ore miners on top, but those share prices deflated quickly while CSL's surged onwards and upwards. Just goes to show how much of these performance tables are determined by timing and time-period.

Time to apologise. Earlier this year I asked long term shareholders to send in their personal experiences to share with other investors but I haven't yet found the time to fully execute that plan. It will happen though. I am aiming for September, after the August reporting season.

CSL is scheduled to release FY19 financials on August 14 and analysts are expecting yet another strong performance, also carried by quite the savage flu season in 2019.  No doubt, this was one of the reasons as to why the share price recently surged to a new all-time high.

To fully understand why CSL shares are where they are, and how much of a stand-out the company's performance has been, consider that a recent analysis by UBS puts the average EPS growth for Australian companies since 2007 at 0.1% per annum. This is not a typo. The Australian share market has effectively lived through an earnings recession over the past twelve years. Judging by forecasts for the upcoming August reporting season, this is not about to change.

One disconcerting observation, however, is that the share price has retreated quite quickly throughout the market turmoil that pulled the local share market in a fierce downdraft this week. It used to be the case that CSL shares held up reasonably well when others were staring into the abyss. Maybe too many momentum and trend followers are on board these days? Maybe this is the price we all have to pay for CSL being such a stand-out?

Maybe, just maybe, in an era of passive investing, this is the toll to pay when CSL is now one of the Top Four in Australia?

Some analysts have been suggesting CSL might disappoint this season as the strong performance over FY19 might be followed up by a more moderate guidance for FY20. I have no extra insights into whether this might happen or not, but history tells me, as with the experiences of REA Group shares I highlighted at the recent conference, that if for some reason CSL's share price comes under pressure upon the release of FY19 financials, this would only be a genuine concern under extremely rare circumstances.

This is what JP Morgan published on Thursday morning: "With a tight market for immunoglobulins, continued solid growth in specialty sales and an expected recovery in albumin and coagulant revenues we are confident CSL will deliver a decent sales result. This should ensure a profit number at or above the top end of the FY19 guidance range as gross margins lift. However, we expect FY20 guidance to come in below our forecasts as management maintains its conservative approach."

It is far more likely that share price weakness in CSL is simply an opportunity to buy (more) shares. See also ResMed shares in late January and where they are trading at today.

In case you read this and you still haven't joined the CSL Challenge, do know you can join at any time, from any place of your own choosing.

Here's more info about it: https://www.fnarena.com/index.php/2019/01/14/rudis-view-join-the-csl-challenge/

Also, paid subscribers have access to my eBooks and other writings about CSL and All-Weather Performers, see the dedicated section on the FNArena website. The slides of my presentations are available through the Special Reports section. The slides I used at the recent AIA National Conference are now included.

P.S. And don't you worry, this success story is nowhere near its end.


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Rudi’s View: All-Weather Portfolio, Charts & Conviction Calls

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 | Jul 19 2019

-In Search Of 'Value', Avoiding 'Cheap Junk'
-All-Weather Portfolio Update
-Unveiling The US Corporate 'Secret' - Three Charts
-Conviction Calls

-Rudi Talks
-Rudi On Tour
-Rudi Talks


All-Weather Portfolio Update

By Rudi Filapek-Vandyck, Editor FNArena

It only took one highly unusual race at the Winter Olympics of 2002 for Australian Steven Bradbury to become a colloquial reference in modern day language.

Just type in Steven in Google search and it is the second suggestion that pops up. No additional info required.

Bradbury has become synonymous for the unexpected victor, the result that nobody expected, the win that is achieved through external and uncontrollable circumstances; when Dame Fortuna smiles upon you and luck is blatantly on your side.

Having read about how the final cricket world cup contest was decided between England and New Zealand, or the Wimbledon tennis final between Novak Djokovic and Roger Federer, I think maybe it's time we also developed a quick reference for playing the game of your life, and still ending up losing by the narrowest of margin at the final finish line.

The thought came to my mind even before both sporting finals had come to their conclusion, when I was doing the sums and calculations for the All-Weather Model Portfolio at the close of mid-2019. In isolation, the Portfolio experienced its best performance over a six months period since its launch in late 2014.

But, really, a return in excess of 13% (before fees) looks rather pale when the ASX200 Accumulation index achieves nearly 20% over the same period. Enter the New Zealand cricket team, and Roger Federer who's understandably taking a full month's rest from tennis.

Below is an overview of how the Portfolio has performed over the past twelve months. Last week, I shared some of my analysis as to why the index outperformed the Portfolio with stocks like Amcor, CSL, REA Group and TechnologyOne, but also Reliance Worldwide, Link Administration, Bapcor and Orora.



See also "Do I Have A Few Surprises For (Most Of) You" https://www.fnarena.com/index.php/2019/07/04/do-i-have-a-few-surprises-for-most-of-you/

And also: https://www.fnarena.com/index.php/2019/07/17/smsfundamentals-10-reasons-why-many-fund-managers-are-now-blank-spaces/

The news about active managers versus passive investment returns has taken another negative bend, according to data supplied by Chant West.

As reported in the Australian Financial Review on Thursday, the two best performing growth funds in Australia, QSuper Balanced and UniSuper Balanced, have achieved returns of 9.9% for the financial year ending on June 30th (FY19).

S&P/ASX 300 Index returned 11.4% over the period while the S&P/ASX 200 Index returned 11.5%. In line with my own observations, the ASX50 performed best, while small cap indices barely managed to return a positive result.

Equally typical for this year's market dynamics, data released by Mercer revealed the Martin Currie Australia Real Income Fund was the best performing over the year with a total return of 18.8% before fees. According to Mercer, the median manager among 134 strategies measured in the Australian shares category delivered a 9% return before fees.

At the bottom of Mercer's total return rankings we find Forager Australian Value with a loss of -18.8%. Next sits Bennelong Concentrated's -6.4% loss. Remarkable, because at the end of the prior financial year Bennelong had ranked the second-best Australian strategy with a 33% gain.

Not all funds are ranked and monitored by Can West or Mercer. The worst result spotted by FNArena is -20.6%.


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Rudi’s View: Afterpay Touch, Nearmap, And a2 Milk

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 | Jul 12 2019

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

-This Too Shall Pass
-The Other Story About Small Caps
-Afraid About Growth: Nearmap
-Who Invests In Negative Yielding Bonds?
-Conviction Calls
-Rudi In The Australian
-Rudi On Tour
-Rudi
Talks

The Other Story About Small Caps

By Rudi Filapek-Vandyck, Editor FNArena

This truly deserves a dedicated story, based upon more detailed in-depth research, but for now I have to restrict myself to merely pointing out one of my pet observations from the past 17 years: small cap investments can generate large, above average returns, but on average, small caps do not outperform in Australia, despite the fact this is convincingly the case in overseas markets like the USA.

On my non-researched hunches, factors in play locally are smaller average company size (what is mid-cap in Australia is merely small cap in the USA), more mining companies and explorers, different dynamics as Australia is a much smaller economy, and, equally important, a much smaller share market with limited liquidity, in particular during times of economic stress. I have a suspicion the big overweight in local indices towards large banks and resources also plays a role.

Whatever the case, investors shouldn't automatically assume there are no outsized gains to be achieved from large cap names in Australia, with the smaller end of the share market the automatic magnet for investors looking for large upside on offer. The statistics, however, tell a different story.

Below is a recent chart I picked up from Colonial First State. I'd wager the big gap in performance between the Top100 in Australia and the tiddly piddly small cap stocks grouped together in the Small Ordinaries has as much to do with CSL, Brambles, REA Group, the banks, iron ore and Telstra as it has to do with the unusually strong performance for Goodman Group and Transurban and the likes, plus the fact that the investment sweet spot in Australia is situated in between positions 51 and 100 of the ASX200.

For those not familiar with the composition and rankings of the ASX200, the aforementioned sweet spot includes names such as Xero, Fisher & Paykel Healthcare, Magellan Financial, WiseTech Global, ResMed, Afterpay Touch, IDP Education, and many other fast growing upcomers. These have been the little engine that could for the Australian share market for a long time now.

In the USA, each of these names would be part of the small caps index. In Australia, all are part of the ASX100, which is outside the typical hunting ground for small cap funds managers.



The second chart, from Ord Minnett, provides more detail into how small caps in Australia performed throughout fiscal 2019.


Afraid About Growth: Nearmap

Australian investors are not used to dealing with structural growth companies. Hence why the likes of CSL and REA Group do not feature prominently in most investment portfolios (while they most definitely should).


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Do I Have A Few Surprises For (Most Of) You!

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 | Jul 04 2019

In this week's Weekly Insights (published in two parts):

-Do I Have A Few Surprises For (Most Of) You!
-M&A Is Back; Who's The Next Target?
-Conviction Calls
-Three Charts To Mark Mid-2019
-Caveat Emptor: Retail Landlords
-Rudi On Tour
-Rudi Talks


Do I Have A Few Surprises For (Most Of) You!

By Rudi Filapek-Vandyck, Editor FNArena

The first six months of calendar 2019 have again superbly proved as to why this equities bull market has been dubbed "the most hated in history".

At face value, equity markets have rallied by up to 20% suggesting making money from asset price inflation via the share market has seldom been easier for investors, but a closer look reveals nothing could be further from the truth.

Imagine an investment portfolio consisting of Adelaide Brighton, Bank of Queensland, Challenger, Caltex Australia, Domino's Pizza, Flight Centre, Link Administration, Pendal Group (the old BT Investments), South32 and the old Westfield, now Unibail-Rodamco-Westfield.

An equal weighted portfolio of these ten household names in Australia generated a negative return of nearly -10% between January 1 and June 28. That's ex-dividends, but the average yield from the portfolio cannot fully compensate for the erosion in capital values. Besides, the ASX200 Accumulation index is up nearly 20% over the same period.

And that's assuming investors venturing into some of the riskier stocks on the ASX haven't been caught out by disasters experienced by Syrah Resources (down -39%) or Wagners (-42%) or Bionomics (-72%), and numerous others.

Many a self-managing investor has portfolio exposure to the big four banks, large resources and energy producers, as well as Telstra, Woolworths, and Wesfarmers-Coles. They don't necessarily need to compare their performance with a benchmark, so they most likely are feeling happy with the Big Bounce post the Grand Sell-Off during the closing months of 2018. In particular if they also managed to pick up some additional gains from smaller cap highflyers such as Afterpay Touch, Austal and Credit Corp.

For professional fund managers, however, the scenarios for share markets in 2018 and the first half of 2019 have made beating the index an extremely tough challenge; indications are most have continued to underperform. This, mind you, at a time when ETF providers offer ever cheaper alternatives and most retail investors would feel emboldened about their own talent and capabilities too.

It should thus be no surprise that, with the notable exception of Magellan Financial ((MFG)), most listed asset managers have been relegated to the basket of consistent underperformers on the ASX, with shares in Janus Henderson ((JHG)), Platinum Asset Management  ((PTM)), Elanor Investors Group ((ENN)), K2 Asset Management ((KAM)), Pinnacle Investment Management ((PNI)), and others overwhelmingly in the doghouse at a time when most investors feel like celebrating.

Internationally, the first signals are becoming apparent the industry of actively managed investment funds is ripe for consolidation, or otherwise a shake-out. Locally, all major banks with exception of Westpac ((WBC)) have unveiled plans to divest their wealth management operations, while Magellan Financial acquiring Airlie Funds Management and Ellerston Capital acquiring Morphic Asset Management are but two early indications the industry locally is equally facing major transformation in the years ahead.

****



But why exactly is it that most active managers cannot beat their benchmark?

One narrative that has been going around recently is that investor exuberance is largely to blame. With stocks like Afterpay Touch ((APT)), Appen ((APX)) and other smaller cap technology stocks up 100% and more in the space of only a few months, the narrative goes that institutional investors cannot own these stocks as they are trading on valuations that can never be justified, and with these kinds of share price gains, it makes beating the index a near impossible task.

Sounds plausible, yes? Except that it doesn't stand up to the test of deeper analysis.


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In Quality We Trust

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 | May 30 2019

In this week's Weekly Insights (published in two parts):

-Conviction Calls, Part I
-In Quality We Trust
-Conviction Calls, Part II
-Rudi On Tour

[Non-highlighted parts will appear in Part Two on Friday]

By Rudi Filapek-Vandyck, Editor FNArena

In Quality We Trust

About one year ago today there was virtually no one in the Australian share market who was interested in buying shares in TechnologyOne ((TNE)).

There was the occasional analyst who dared to point out the shares looked too cheap in light of the company's admirable track record, and ongoing buoyant growth prospects, but few only were paying attention.

One of the few was I because the FNArena/Vested Equities All-Weather Model Portfolio (see further below) owns shares in the company and I personally regard TechnologyOne the highest quality software company listed on the ASX, and one of the true all-weather performers locally.

But, as said, nobody wanted a bar of it. Upon persistent failure to move away from the $5 mark, the share price spent some time near $4.50 before turning back to around $5, where it still resided when I presented at the national conference of the Australian Investors Association (AIA) in early August.

There I was asked about my stock tip for the year ahead and I nominated TechnologyOne. More than ten years of growth in earnings per share averaging circa 15% per annum, and the decade ahead will most likely see more of the same, I explained at the conference. What exactly is there not to like??
It's not a question many are asking about this same stock today. In between last year's AIA conference and the company's interim earnings report earlier this month the share price had rallied to near $9.50, or more than double the $4.50 it was languishing at a little over a year ago.

Yes, I am hopeful this stock might catapult me to last year's best stock picker at the upcoming AIA conference in late July, even though the share price has rapidly given back a chunk of that massive rally since the interim report was released. Truth is I never thought TechnologyOne shares would double from last year's too cheap sub-$5 price level, but I knew it would only be a matter of time before momentum would revisit this champion software company.

This is what I have learned from observing the Australian share market over nearly two decades: a great and high quality, reliable performer such as is TechnologyOne can fall temporarily out of favour, for all kinds of reasons, but it never lasts long. This is one key difference with shares in companies of a lesser quality and with a far less admirable track record; they can remain out of favour for far longer than you and I can keep our faith in a favourable ending.

Most investors get interested in a stock after it has fallen by what appears a ridiculous percentage, and then risk getting caught into temporary rallies, followed up by ongoing bad news and further share price weakness. EclipX Group ((ECX)) is one such fine example. iSentia ((ISD)) is another one.

Sure, Myer ((MYR)) shares doubled between early March and mid-April, so congratulations to everybody who was on board (conveniently forgetting all the money that was lost trying to pick the bottom in the Myer share price during the eight years prior).


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article 3 months old

Everybody Is Waiting…

In this week's Weekly Insights:

-Everybody Is Waiting...
-No Weekly Insights Next Week
-CSL Challenge: Market Share & Margins

-Conviction Calls
-More Pain For Active Funds Managers
-Rudi On TV
-Rudi On Tour
-Rudi Talks

By Rudi Filapek-Vandyck, Editor FNArena

Everybody Is Waiting...

The concerns of the less-than-bullish investors and investment experts have been perfectly captured in the graphic below: global equities have de-coupled from underlying corporate earnings forecasts and the gap between rising share prices and tentatively recovering profit growth prospects has become quite large in 2019.

Australian investors have been equally enjoying the power of central bank support. Every time the RBA sends a signal it might be ready to lower the cash rate, Australian equities find more buyers lining up from the sidelines. As witnessed, again, on Tuesday when the minutes of the most recent RBA board gathering further fueled market speculation about an imminent rate cut.

Beyond the RBA again coming to the international central bank stimulus party, global equities remain supported by a general expectation that economic data in key regions, including Europe, China and the US, should soon start generating better looking trends of improvement. Further out, corporate profits in the US are still expected to bottom this quarter and next, and rise again in Q4.

Meanwhile, of course, many an institutional portfolio is holding an above average level of cash. So what happens when everyone is ready to jump in on the next sell down?

Yes, indeed, the market refuses to give in, instead making all the cash holders on the sidelines look foolish, and let them wait for longer than they thought feasible.

No Weekly Insights Next Week

Next week starts with an Easter holiday on the Monday (and, coincidentally, my birthday) so there will be no Weekly Insights. Next Edition is therefore scheduled for the final day of April, just before I leave for my next presentation in Melbourne.

CSL Challenge: Market Share & Margins

After having advocated for years that every investor with a long term outlook should have CSL shares in the portfolio, I launched the CSL Challenge at the beginning of calendar 2019. For more information: see the link at the bottom of this story.

ECP Asset Management, a long term shareholder in Australia's highest quality outperformer CSL ((CSL)), recently updated its thoughts and views on one of its substantial shareholdings as follows: "In CSL, we see a company that is organically growing the supply of plasma ahead of the industry, while in a supply constrained market.

"The company's sustainable competitive advantage is driven by its extensive suite of products that allows it to generate higher revenue per litre than its competitors, and is also the lowest cost producer, a powerful combination."

However, while such is an unquestionable positive assessment, it is also a longer term view and the share market doesn't do long term well, in particular not when something somewhere raises questions in the short term.



In the short term, market talk is all about "margin pressure" which first arose in late 2018, depressing the share price then, and it's now prominently present in the latest research reports, and subsequently (somewhat) depressing the share price this month. So how a serious issue is this "margin pressure" and should we, long term shareholders in the company, be worried?

Hardly.

For starters, CSL remains the international benchmark for an industry that continues to experience stronger demand than supply can satisfy. Not only does the company remain better placed than each of its competitors, it also remains the only supplier that is seriously investing in expanding its collection facilities, thus effectively increasing market share, further enhancing its international number one market positioning.

But we seem to have entered a phase whereby the investments in new collection centres are likely to have a slight negative impact on margins initially. On top of this comes the argument that as the US economy strengthens, collection centres such as CSL's need to offer higher rewards to continue attracting sufficient numbers of donors, which also exerts downward pressure on the average margin.

Healthcare analysts in Australia are now increasingly adjusting their numbers downwards, while readily acknowledging this is far from a fait accompli. For a complex business such as is CSL's, many other factors play a role, including new products and geographies, the mix in between various products (with general acknowledgment the high margin products are doing just fine) and management's drive to find cost efficiencies.

Most importantly, I think, is that CSL's specialised products, such as Hizentra for the treatment of Chronic Inflammatory Demyelinating Polyneuropathy (CIDP), are as yet unknown throughout most of the global health sector. So one big unknown remains how much more leverage/demand can be created by getting more people familiarised with this product and its advantages for treatment of CIDP.

The bottom line: even with downgrades in forecasts coming through, growth expectations -in constant currency terms (CSL reports in USD)- for earnings per share (EPS) for the foreseeable future (three years ahead and more) remain between high single digit and low double digit percentages in each year. Really, the differences between the various forecasts are not more than 2%-3% between low markers and the more bullish analysts; or between those who have downgraded as yet and those who have not.

Which makes this whole issue more like an exercise in hair splitting, really, even though short term traders and those who wish the CSL share to crash might still jump on board the bandwagon and try to create something important out of it. Apart from short term pressure on the share price, I very much doubt whether it'll turn out more than a tiny blip in an ongoing robust, long term uptrend for the shares.

While I am at it, I thought I'll provide some background behind short term issues and question marks for other high quality healthcare stocks on the ASX:

-ResMed ((RMD)): while question marks remains about management's newly chosen strategy to expand into SaaS and out-of-hospital care through acquisitions, there remain plenty of analysts who remain convinced the best strategy will prove to grant management the benefit of the doubt. Stockbroker Morgans, for instance, has kept the stock stoically as one of its Conviction Buys. ResMed is scheduled to release Q3 results on May 3, Australian time.

-Cochlear ((COH)): long running concerns about a constantly elevated valuation have been replaced with concerns about the company's competitive edge now competing companies seem to have momentum on their side. It is now up to management at Cochlear to formulate an effective response. And what-do-you-know, this morning the company announced in a release to the ASX "the launch of the Nucleus Profile Plus Series cochlear implant,designed for routine 1.5 and 3 Tesla magnetic resonance imaging scans without the need to remove the internal magnet".

One thing you can always count on with quality companies such as these, they seldom let their clients and shareholders down for long. It'll still be a few quarters before this new product gathers all the required licenses and approvals, and market traction, but the response is in the pipeline.

-Ramsay Health Care ((RHC)): only Blind Freddy has missed the share price recovery and subsequent stabilisation for private hospitals operator Ramsay Health Care, despite the threat of a Labor government post May keeping a tight lid on health insurance cost inflation, which also makes life more difficult for private hospitals in Australia. But signs of increasing improvement in operational dynamics in Europe is feeding into growing optimism that better times lay ahead after a few truly challenging years for the former market darling. To put things in perspective: we are still talking 2%-3% potential to the upside, but sometimes little things can have large impacts, and Ramsay Health Care's prospects could be on the rise again, which is supporting the share price.

A few weeks ago I invited readers of Weekly Insights to share their experiences as a CSL shareholder and we received truly amazing, wonderful, touching and surprising responses. I'll put them together in a follow-up story in the not too distant future. Plus an update shall follow about who will be the lucky receiver of a nice bottle of wine via Australia Post.

The FNArena/Vested Equities All-Weather Model Portfolio holds shares in all four companies mentioned.

To find out more about the CSL Challenge: https://www.fnarena.com/index.php/2019/01/14/rudis-view-join-the-csl-challenge/

Conviction Calls

Model portfolio managers at stockbroker Morgans
have elected to reduce exposure to Wesfarmers ((WES)) while increasing exposure to Woolworths ((WOW)). At the same time, portfolio weighting for Cleanaway Waste Management ((CWY)) has been slightly reduced as well.

The portfolio managers communicated their moves as maintaining discipline at times when the overall share market is potentially stretched.

Following the same mantra, the broker's Growth Model Portfolio has trimmed exposures to BHP Group ((BHP)) and to Rio Tinto ((RIO)) while selling out of Computershare ((CPU)). This portfolio holds "higher than usual cash, ready to deploy into upcoming opportunities".

Elsewhere, the Cross Asset Income Model Portfolio has further trimmed ownership of Transurban ((TCL)) shares.

More Pain For Active Funds Managers

Anecdotal observations suggest 2019 is not the ideal hunting ground for active funds managers looking to beat their benchmarks without counting on pure plain luck or taking on excessive risk.

A recent update on domestic funds managers data by JP Morgan (data available up until the February reporting season) suggests few institutions are believers in sustainable upside for Australian banks, still, but they also started reducing overweight positions in resources, while average cash positions remain on the rise.

More interesting, perhaps, is JP Morgan's analysis into how domestic funds managers tend to perform in each of the corporate results reporting seasons of August and February. Analysing data for the past five years, JP Morgan analysts conclude more managers are able to outperform each year in August, but not so in February.

This, of course, raises a few questions such as: what is so different about February that makes outperformance too much of an ask for most?

JP Morgan's analysis suggests the Value style of investing performs better in August, not so in February. But then the Growth segment of the share market displays a similar pattern, albeit with smaller losses in February. Small cap managers in particular would find Februaries hard to outperform in, concludes the analysis, with higher volatility in stocks ex-50 and ex-100 likely to blame.

For those interested in the statistical numbers: only 44% of funds managers on average manages to outperform benchmarks in February while in August that percentage rises to 60%. Within this context, February 2019 actually proved an above average positive month for the sector with just over 50% beating their benchmark. Among active managers researched by JP Morgan, 45% outperformed in February.

Rudi On TV
My weekly appearance on Your Money is now on Mondays, midday-2pm.

Rudi On Tour In 2019

-ASA Melbourne, May 1
-ASA Toowoomba, Qld, May 20
-U3A Investor Group Toowoomba, Qld, May 22
-AIA Adelaide, SA, June 11
-AIA National Conference, Gold Coast, Qld, 28-31 July
-AIA and ASA, Perth, WA, October 1

Rudi Talks

Last week's audio interview about what's happening in the Australian share market:

https://www.youtube.com/watch?v=FpCnk1RSnCY

(This story was written on Tuesday 16th April 2019. It was published on the day in the form of an email to paying subscribers, and will be again on Thursday as a story on the website).

(Do note that, in line with all my analyses, appearances and presentations, all of the above names and calculations are provided for educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions. All views are mine and not by association FNArena's - see disclaimer on the website.

In addition, since FNArena runs a Model Portfolio based upon my research on All-Weather Performers it is more than likely that stocks mentioned are included in this Model Portfolio. For all questions about this: info@fnarena.com or via the direct messaging system on the website).

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BONUS PUBLICATIONS FOR FNARENA SUBSCRIBERS

Paid subscribers to FNArena (6 and 12 mnths) receive several bonus publications, at no extra cost, including:

- The AUD and the Australian Share Market (which stocks benefit from a weaker AUD, and which ones don't?)
- Make Risk Your Friend. Finding All-Weather Performers, January 2013 (The rationale behind investing in stocks that perform irrespective of the overall investment climate)
- Make Risk Your Friend. Finding All-Weather Performers, December 2014 (The follow-up that accounts for an ever changing world and updated stock selection)
- Change. Investing in a Low Growth World. eBook that sells through Amazon and other channels. Tackles the main issues impacting on investment strategies today and the world of tomorrow.
- Who's Afraid Of The Big Bad Bear? eBook and Book (print) available through Amazon and other channels. Your chance to relive 2016, and become a wiser investor along the way.

Subscriptions cost $420 (incl GST) for twelve months or $235 for six and can be purchased here (depending on your status, a subscription to FNArena might be tax deductible): https://www.fnarena.com/index2.cfm?type=dsp_signup

(Do note that, in line with all my analyses, appearances and presentations, all of the above names and calculations are provided for educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions.) 

article 3 months old

Rudi’s View: Join The CSL Challenge

Included In Today's Story:

-Join The CSL Challenge
-Bell Potter's Top Picks For 2019
-Best Wishes From FNArena


Rudi's View: Join The CSL Challenge

By Rudi Filapek-Vandyck, Editor FNArena

For many years I have held a positive view on CSL ((CSL)) shares listed on the Australian Stock Exchange, and I have written and talked about this stock ad infinitum.

And with good reason, one might conclude, as the shares have clocked up more than 400% in returns for shareholders since 2011. Its steady climb in the rankings of local stocks, ranked by market capitalisation, has now made CSL Australia's fourth largest company, only preceded by CommBank, BHP and Westpac.

When I arrived in Australia, eighteen years ago, CSL was but a mid-cap stock. This truly has been, and still is, an incredible success story.

Yet, according to feedback and day-to-day observations, and to my genuine frustration, Australian investors seldom own shares in the company. They remain deterred by other expert voices who tell them you simply cannot buy these shares, they are too "expensive".

Others are wrongfully of the idea that successful investing starts with buying stocks that trade on low Price-Earnings (PE) ratios. So they lose their shirt through owning stocks including Retail Food Group, Vocus, iSentia, AMP, or even IOOF. Then there are those who don't understand the intrinsic weakness that comes with chasing high yielding industrials, which has seen Telstra shares lose more than -50% in just a few quick years.

Plenty of reasons as to why investment portfolios in Australia do not have any exposure to what is undeniably one pivotal success story from corporate Australia over the past three decades, if not ever.



My heart bleeds when questions I receive are whether I think this or that beaten down small-cap industrial stock is finally worth buying, or are Australian banks finally turning the corner? Australian investors, including their advisors and many a market commentator, are way too narrowly focused on finding "value".

Whereas the cold hard truth is CSL shares, carried by exceptional quality and supportive market dynamics, have been one of the best investments any investor could have made since listing in the 1990s. And they most likely still are. This is why Australian investors need to wake up and smell the blood plasma and influenza vaccines, so to speak.

In ten years time, CSL might be this country's most valuable ASX-listed entity, further crowning an already impressive track record. How on earth will Australian investors justify not having been part of its story, instead losing focus, sleep, money, direction and potential return via owning stocks of lesser quality, generating lower returns?

It is my conviction you don't need to. Allow me to provide you with the most valuable investment experience you can possibly expose yourself to in the years ahead.

Add CSL to your portfolio. Maybe include ResMed ((RMD)) and Cochlear ((COH)) as well.

It doesn't matter how many shares you buy. Buy as many as you can be comfortable with. If you are extremely cautious, buy one share of each. It might look like it isn't worth it, given the transaction costs involved, but you can consider those as an investment in your personal education.

And while this is about achieving a return on your investment (of which I am very confident), this is equally as much about education: allow yourself to be surprised by how much benefit your investment portfolio can retrieve from exposure to high quality stocks, with long-term robust growth outlooks.

Once you own a piece of the action, you will feel "connected" to these high quality success stories. You'll pay more attention to what goes around in each particular segment of the global corporate world, you'll read analysts' reports in a different manner, you might even download their annual reports and show up at AGMs.

Most importantly, however, you will learn first hand that, beyond the immediate horizon, "quality" is far more important than cheap "value". The difference may not necessarily reveal itself next week, next month, or even by mid-year. But you can be as confident as I am that your journey will conclude with a positive experience.

So when should you join the "CSL Challenge"?

Pick your moment. My own strategy for buying these High Quality stocks is to wait until the share price weakens. You just have to accept you probably won't be able to jump in at the lowest price point possible, but it's probably not good timing to buy at the summit of a strong short term bounce.

But you will become part of something new, something exciting, and something very beneficial to your own insights and understanding about investing in the share market. I from my end hereby solemnly promise I shall regularly update on share price movement and prospects for all three companies. Once you have joined the CSL Challenge, and you are as yet not on the FNArena mailing list, you can send me an email and I shall keep you posted too (info@fnarena.com).

In case this might have escaped your attention: CSL shares produced a 30% positive return over 2018, despite also falling victim to the bear market sell-off from September onwards. Over the past six weeks, the shares already recovered by circa 10%, significantly outperforming local indices and most stocks listed on the ASX.

CSL shares have now returned to where they were trading in October last year.

But all this short termism is really but noise in the greater scheme of things. We are here to learn what investing and sustainable returns from quality growth stories really looks like, through first-hand involvement.

Who's ready to join the "CSL Challenge"?

I cannot provide any guarantees, but am pretty confident you will not regret this. C'mon, what are you waiting for?

P.S. I couldn't help but noticing CSL shares are weaker today...

P.P.S: Do send me an email once you have joined the CSL Challenge as you will want to remain connected to your High Quality inclusions: info@fnarena.com

Bell Potter's Top Picks For 2019

Stockbroker Bell Potter recently revealed its Favoured Top Picks for calendar year 2019. Keen observers of my own research into All-Weather Performers will notice there are a few names represented in both selections. For All-Weather Performers, including updated share price performances, paying subscribers can access the dedicated section on the website.

Bell Potter's selection of favourites consists of: ALS Ltd ((ALQ)), Caltex Australia ((CTX)), Challenger ((CGF)), CSL, Goodman Group ((GMG)), Macquarie Group ((MQG)), Netwealth Group ((NWL)), Oil Search ((OSH)), Sonic Healthcare ((SHL)), and  Woolworths ((WOW)).

Best Wishes From FNArena

FNArena is gradually ramping up its service this month, with broker views and forecasts up to date via The Australian Broker Call, daily emails and news stories resuming this week, and with Greg Peel re-joining us from next Monday onwards.

As I am presenting at the Australian Investors Association's (AIA) one-day seminar in Melbourne on January 29th, Weekly Insights shall resume from the first week in February onwards. Our Australian Corporate Results Monitor is ready to start adding the first results scheduled for the final week of January.

The team here at FNArena wishes you all a prosperous year ahead.

(Do note that, in line with all my analyses, appearances and presentations, all of the above names and calculations are provided for educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions.)  

P.S. I - All paying members at FNArena are being reminded they can set an email alert for my Rudi's View stories. Go to My Alerts (top bar of the website) and tick the box in front of 'Rudi's View'. You will receive an email alert every time a new Rudi's View story has been published on the website. 

P.S. II - If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" - Warning this story contains unashamedly positive feedback on the service provided.

FNArena is proud about its track record and past achievements: Ten Years On

article 3 months old

Rudi’s View: All-Weather Portfolio Considerations

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

-Late Shock: 2018 Is The Annus Horribilis
-Outlook 2019: The 'Bear' That Keeps On Rolling?
-The Curse Of The Magazine Front Cover
-All-Weather Portfolio Observations And Considerations
-Gartman's Rules Of Trading
-Final Weekly Insights For 2018
-Rudi On TV
-Rudi On Tour


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

The Curse Of The Magazine Front Cover

By Rudi Filapek-Vandyck, Editor

One of the old beliefs on Wall Street is that pivotal points of reversal in market trends are usually preceded by front covers of popular magazines. The most famous example of this adage remains the "death of equities" declaration by Business Week in August 1978, roughly three years before one of the strongest bull markets announced itself.

This time around, Wall Street eyes are looking back at the cover of The Economist which in early November last year declared A Bull Market In Everything!

To be fair to the team at The Economist, that declaration went in hand with asking the question: when will it all end?



All-Weather Portfolio Observations And Considerations

Over the past four years equity markets have experienced three serious pullbacks. First there was the gradual deflation that started in late May 2015. It was preceded by nearly six months of piling into everything -anything- that paid out dividends and represented "yield". The downturn that subsequently unfolded simply kept on going until a capitulation bottom was reached in February the following year.

Next came the Big Portfolio Switch late in the third quarter of 2016. Most Australian investors won't have too much recollection about this particular drawdown because banks and resources became the new momentum trade and most portfolios would have been overweight these two sectors.

Next we had a bit of a wobble in February-March this year, but as things turned out, that really was just a blip ahead of what would descend upon us in October-November. With only five weeks left until 2019 arrives, the Australian share market is in negative territory year-to-date, and (potentially) about to accumulate double digit percentage losses over three consecutive down-months.

Ignoring the pain, the angst and the portfolio losses for a moment, the key lesson to learn from all three experiences is that every time, really, is quite different. And what makes each period of rough share market weather unique in its own right are the following three factors:

-the reason(s) for the shift to a downward trend
-whatever happened prior
-portfolio positioning of large institutional investors

Given we are living through a period in which most investors, consciously or otherwise, are trend followers, one might be inclined to think factors two and three are tightly intertwined, which is often the case. But back in 2015 there was no sudden switch in portfolio allocations which meant the pullback was gradual, drawn out and relentless nevertheless, but many an investor had been positioning anti-consensus and was simply feeling a lot of pain on the way down.

By late 2016, however, just about everybody had become overweight cycle-agnostic stocks and expensive defensives. Equally important, there was a genuine general belief that newly elected President Trump was about to ignite the late cycle reflation trade. And thus the switch was violent and relatively quick, but equally relentless.

By now we are late in 2018. September (-1.78%) was mildly challenging, while October (-6.1%) took no prisoners and November (-2.14%, thus far) failed to deliver the widely anticipated relief rally. Three negative months in a row. Most assets down year to date, including most equities in Australia. Time to sit up and take note, if one hasn't already.

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Observation number one, and this one cannot be highlighted soon enough: holding cash has really made a key difference throughout the extreme day-to-day volatility over the past nine weeks. This was not as much the case back in 2015 and 2016. Gold has, sort of, stood its ground throughout the turmoil, but that's the best it could do and it equally showed some wobbles at various times. The same can be said about government bonds, but inside the share market there have been very few places to hide and not feel the pain of broad selling pressure.

Traditional safe havens such as Woolworths ((WOW)), Transurban ((TCL)) and Sydney Airport ((SYD)) initially were sold down as well, if they hadn't fallen quite noticeably throughout September already, but they regained their status in November as amidst the global share market turmoil bond yields started dropping. (When institutional investors shift funds into bonds prices rise, which lowers the yield, with positive read-through for bond proxies in the share market).

Only few stocks have managed to keep the sellers at bay from the get-go, posting gains along the way, when others kept falling. Stocks like Goodman Group ((GMG)) and Charter Hall ((CHC)) certainly picked their opportunity to shine when all got pulled into darkness, but equally so stocks including Alliance Aviation Services ((AQZ)) and TechnologyOne ((TNE)).

Not all of these performances would have been predicted beforehand. In fact, on my daily observations most movements in share prices have been irrational, illogical and inexplicable, other than that selling begets more selling and investors simply were looking to pull cash out of the falling market.

Hence there have been quite a number of utter surprises, both positive and negative. Which just goes to show, when panic buttons are being pressed and withdrawing liquidity becomes the dominant force du jour, one simply cannot be too confident about what likely comes next and what won't happen.

Part of the reason as to why this withdrawal has been so chaotic, and so broad-based, even when only a selection of stocks had been carrying the index to a new cycle high in Australia, is because of the multitude in factors that impacted, all pretty much around the same time. This is not simply about the Federal Reserve tightening rates and US bond yields rising. This is equally about global economies losing momentum while there seems no relief in tensions between Trump and Beijing. This is also about market consensus probably being too optimistic on corporate profit margins, and about growth stocks becoming a well-overcrowded trade, while the valuation gap between high growth and low growth stocks -"Growth" versus "Value"- had once again stretched to extreme.

In Australia, worries about Emerging Markets falling and overcooked US share market sentiment mixed with a deflating housing market, and ever more bearish forecasts, and growing signals the consumer is starting to hoard instead of continuing to spend. More revelations about the banks at the Royal Commission and a seemingly dead men walking federal government in Canberra, while many an investor worries about Labor's intention to fix the budget through reining in negative gearing and franking credit cash repayments, further add to the quagmire.

This is equally about the sum total of extreme liquidity injections by the world's major central banks coming to an end, with every investor worth his salt knowing full well this never before seen injection has pushed up asset prices around the world over the years past. But now global liquidity is pulling back, what will be the exact effect on global assets? Then there is that growing sense this could be the final phase of this cycle.

Combine all of it together and it is not difficult to see why investors are uncertain and worried, and why many an expert preaches caution and restraint. Actually, if one is brutally honest about it all, the first question to ask is why did it take this long for the US share market to finally take notice?

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We can ask the question, but the answer doesn't really matter. Markets finally woke up to the serious challenges that lay ahead, and they responded with a vengeance. Now the world and its outlook have materially changed. For investors it's best to take notice, and respond responsibly.

The FNArena/Vested Equities All-Weather Model Portfolio had been outperforming the broader index, while at the same time throughout the second and third quarter the percentage of cash held in the portfolio increased steadily. At first it seemed this caution had been applied too early, but by the time October arrived it became instantly clear the level of cash was nowhere near high enough. So we increased it.

I advised FNArena subscribers they should do the same. The logical way to achieve this is by getting rid of failures and disappointments. Most investors "take profits", which means they sell off winners and keep the losers. I, however, am convinced the best way forward is by owning higher quality, solid, reliable and sustainably growing companies. In my experience, these are most likely among the outperformers in the local share market.

The Portfolio only had a few genuine disappointers, so a general review and re-allocation had to take place. It is here where past experience mixes with share market "science" and personal assessments. Overlooking the portfolio as a whole, the highest priority is not whether one is attached to a certain stock or not, and certainly not what price had been paid for it. The highest priority is freeing up cash.

The aim is to reduce risk. So you sell/reduce exposure to leveraged balance sheets with lots of debt (if you happen to own such stocks), in particular small cap stocks and cyclicals. Large cap stocks might fall less than smaller cap stocks. In the latter case: watch out for the drying up of liquidity or the departure of one large shareholder.

Companies that do not make profits (as yet) are most vulnerable, in particular if they are small. Don't stick with companies going through a bad news cycle (the last thing you want is them issuing yet more bad news). The most important thing is to go through the portfolio on a case by case basis, every time trying to assess what type of risk are we taking on in this particular case. Part of my consideration was to trust in the quality of out-of-season financial results reporters in that they were most likely to announce good news. Indeed, good news is what most have reported, but in many cases this did not stop the selling, or sometimes only briefly.

One notable exception has been Appen ((APX)) which is acting like a stock reborn after management upgraded guidance for the year in mid-November. Another portfolio member that has put in a remarkable performance, helped by yet again a high quality growth performance, is the aforementioned TechnologyOne. Note that out of caution, the portfolio exposure to both had been reduced, as part of the overall de-risking. Decisions do not have to be 100% in or out. It is easier to buy more shares at a lower level than it is to add from scratch again (it's how the human brain is wired).

A number of other stocks saw their initial rallies upon good news being used as an easy source for more profit taking, including REA Group ((REA)) and ResMed ((RMD)). Others held up well initially, but then succumbed to that same principle of becoming logical targets for profit taking. Here I would certainly include Bapcor ((BAP)), DuluxGroup ((DLX)), Xero ((XRO)), and Orora ((ORA)).

Certainly, a large contingent of stocks has fallen significantly more than I thought they would, and way more than seems justified even if profit forecasts for the year ahead must come down. In cases like Macquarie Group ((MQG)) and Link Administration ((LNK)) the world out there is simply showing its ignorance and lack of specific knowledge because both companies are not nearly as much aligned with the general status in the share market, but during times of panic and turmoil there is no opportunity to set up a debate with the sellers.

And other investors tend to think if the share price drops it must be for good reason, of course. One of the most difficult decisions to make during the past two months is to sit quiet and not re-allocate cash back into the share market. We are far from convinced that the end of turmoil is near.  This can potentially get a lot nastier, still. Most importantly, there will be rallies here and there (there always are), but it seems highly unlikely this new phase for global risk assets will be over soon.

The down trend between May 2015 and February 2016 ultimately lasted nine months with a sharp sell-off in the final two months. The portfolio switch post Trump election lasted five months before selling down stocks like CSL ((CSL)), Aristocrat Leisure ((ALL)) and NextDC ((NXT)) reversed into new uptrends.

Having said so, we did buy in a few extra shares near what might have been the market bottom (for now) recently, and among the opportunities we jumped upon were Macquarie, Link Administration, Bapcor, Carsales and Orora. Prior to last week, circa 30% of the All-Weather Portfolio had no exposure to the share market. On my assessment, this has been one decisive factor in keeping overall losses contained, and smaller than the broader market.

That percentage has now declined to circa 25%, which means 75% is invested in the local share market in a basket of 20+ stocks that have no resemblance to any of the market indices. While we have taken the view the changing outlook should not be underestimated, we are also of the view this does not by default mean we are staring at a repeat experience of 2008-2009 or 2000-2002. It doesn't even have to be a repeat of 2011-2012 or of 2015-2016.

But neither of such scenarios should categorically be excluded at this stage and we remain prepared to further reduce risk if circumstances so require. In the meantime, we agree with other voices elsewhere two months of (near) persistent weakness for the local share market has made a large number of stocks look very attractive. Instead of looking through a list of stocks that have fallen the most, as is the inclination for many, I'd strongly suggest investors continue de-risking their portfolio.

In terms of fresh opportunities to take advantage of, why would any investor with a longer term horizon now ignore the fact that high quality, less risky, solid and reliable performers in large numbers have sold off -15%, and more? This is where the real opportunity lies in today's share market.

Paying subscribers have access to my research into All-Weather Performers, including a dedicated section on the FNArena website. I strongly suggest this becomes your new Ground Zero for the future.

****

In terms of All-Weather Portfolio performance, October saw a loss of -4.71% compared with the -6.05% that befell the ASX200 Accumulation index. Thus far in November, with three more trading sessions left, the loss is -1.86% for a combined -6.57% for the past eight weeks. The ASX200 Accumulation index has thus far added -2.14% for a combined -8.19%.

Calendar year to date the index is down -2.65% and for the running financial year it is down -6.65%. The All-Weather Portfolio has remained in positive performance territory throughout calendar 2018, albeit with a non-spectacular +1.17% year-to-date (still marking a noticeably better performance); for the financial year to date the performance number is -5.32%.

Late addition: As we are about to publish on the final trading day of November, it appears the All-Weather Portfolio might just escape a negative performance for the month, unlike the broader index.


Gartman's Rules Of Trading

He may not be perfect in all his views and calls, but Dennis Gartman still carries more day-to-day hands on financial markets experience than most of us have aged since birth. Below are his Rules of Trading, as updated and released at the end of last week.

THE RULES OF TRADING - 2018:

1. NEVER, EVER, EVER ADD TO A LOSING POSITION: EVER!:
Adding to losing positions will eventually lead to ruin. All great market humiliations are precipitated by someone doing so such as the Nobel Laureates of Long-Term Capital Management, Nick Leeson, Jon Corzine and now optionsellers.com.

2. TRADE LIKE A “MERCENARY:”
As traders/investors we are to fight on the winning side of any trade. We are pragmatists first, foremost and always with no long-term “allegiance” to either side.

3. MENTAL CAPITAL TRUMPS REAL CAPITAL:
Capital comes in two types: mental and real. Holding losing positions diminishes one’s finite and measurable real capital AND one’s infinite and immeasurable mental capital always and everywhere.

4. WE ARE NOT IN THE BUSINESS OF BUYING LOW AND SELLING HIGH:
We are in the business of buying high and selling higher, or of selling low and buying lower. Strength usually begets strength; weakness, usually, begets more weakness.

5. IN BULL MARKETS ONE MUST TRY ONLY TO BE LONG OR NEUTRAL:
The obvious corollary is that in bear markets one must try only to be short or neutral. There are few exceptions.

6. “MARKETS CAN REMAIN ILLOGICAL FAR LONGER THAN YOU OR I CAN REMAIN SOLVENT:”
Lord Keynes said this decades ago and he was… and still is… right, for illogic does often reign, despite what the academics would have us believe about efficient markets!

7. BUY THAT WHICH SHOWS THE GREATEST STRENGTH; SELL THAT WHICH SHOWS THE GREATEST WEAKNESS:
Metaphorically, the wettest paper sack breaks most easily and the strongest winds carry ships the farthest and the fastest.

8. THINK LIKE A FUNDAMENTALIST; TRADE LIKE A TECHNICIAN:
Be bullish when the technicals and the fundamentals run in tandem. Be bearish when they do not.

9. TRADING RUNS IN CYCLES:
In the “Good Times” even one’s errors are profitable; in the inevitable “Bad Times” even the most well researched trade shall go awry. This is the nature of trading; accept it. Move on.

10. KEEP ALL TRADING SYSTEMS SIMPLE:
Complication breeds confusion; simplicity breeds profitability.

11. AN UNDERSTANDING OF MASS PSYCHOLOGY CAN BE MORE IMPORTANT THAN AN UNDERSTANDING OF ECONOMICS:
Simply put, “When they’re cryin’ you should be buyin’ and when they’re yellin’ you should be sellin’!” But it’s difficult…very!

12. REMEMBER, THERE IS NEVER JUST ONE COCKROACH:
The lesson of bad news is that more almost always follows… usually immediately and with an ever-worsening impact.

13. BE PATIENT WITH WINNING TRADES; BE EVEN MORE IMPATIENT WITH LOSERS:
The older we get the more small losses we take… and willingly so.

14. DO MORE OF THAT WHICH IS WORKING AND LESS OF THAT WHICH IS NOT:
This works well in life as well as trading. If there is a “secret” to trading… and to life… this is it!

15: CLEAN UP AFTER YOURSELF:
Need we really say more? Errors only get worse.

16. SOMEONE ALWAYS HAS A BIGGER JUNK YARD DOG:
No matter how much “work” we do on a trade, someone knows more and is more prepared than are we… and has more capital!

17: WHEN THE FACTS CHANGE, WE CHANGE!
Lord Keynes… again… once said that “When the facts change, I change; What do you do, Sir?” When the technicals or the fundamentals of a position change, change your position, or at least reduced your exposure, perhaps exiting entirely.

18. ALL RULES ARE MEANT TO BE BROKEN:
But they are to be broken only rarely and true genius comes with knowing when, where and why!

Final Weekly Insights For 2018

This is the final Weekly Insights for calendar 2018. I hope you all enjoyed reading my weekly snippets and analyses as much as I did researching and writing them. It's been a long and eventful year, and not just because of share market shenanigans at the very end of it.

During my presentations and media appearances this year I have felt on numerous occasions a genuine connection with investors in that they sensed the overall context for the share market was changing, but nobody had as yet properly explained the how and why of it all.

At FNArena, the team has continued developing new additions and further improvements to our service. Last week we launched ESG Focus, a new dedicated segment to our news service. We have one more fresh initiative upon our sleeves before year-end holidays kick in.

That'll be my final-final effort for the year, before I retreat to spend some time near the water, hiding from the sun, catching up on a million things left to do, including reading some more, and recharging the inner battery.

I sincerely hope 2018 hasn't been too much of a disappointment, and that our efforts at FNArena, including my personal observations and insights, have made a significant and positive contribution. Next year will be different again, as is always the case. May Dame Fortuna smile graciously upon you all.

Weekly Insights will resume at the end of January. Till then take care, and all the best. We shall continue this relationship in 2019, hopefully.

Rudi On TV

My weekly appearance on Your Money (the channel formerly known as Sky News Business) is now on Mondays, midday-2pm.

I shall make an appearance on Peter Switzer's program on Your Money on coming Monday, 7.30pm.

Rudi On Tour In 2019

-ASA Inner West chapter, Concord, Sydney, March 12
-ASA Sydney Investor Hour, March 21
-ASA Toowoomba, Qld, May 20
-U3A Investor Group Toowoomba, Qld, May 22

(This story was written on Tuesday 27th November 2018. It was published on the Tuesday in the form of an email to paying subscribers at FNArena, and again on Thursday as a story on the website. Part Two will be published on the website on Friday morning).

(Do note that, in line with all my analyses, appearances and presentations, all of the above names and calculations are provided for educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions. All views are mine and not by association FNArena's - see disclaimer on the website.

In addition, since FNArena runs a Model Portfolio based upon my research on All-Weather Performers it is more than likely that stocks mentioned are included in this Model Portfolio. For all questions about this: info@fnarena.com or via the direct messaging system on the website).

****

BONUS PUBLICATIONS FOR FNARENA SUBSCRIBERS

Paid subscribers to FNArena (6 and 12 mnths) receive several bonus publications, at no extra cost, including:

- The AUD and the Australian Share Market (which stocks benefit from a weaker AUD, and which ones don't?)
- Make Risk Your Friend. Finding All-Weather Performers, January 2013 (The rationale behind investing in stocks that perform irrespective of the overall investment climate)
- Make Risk Your Friend. Finding All-Weather Performers, December 2014 (The follow-up that accounts for an ever changing world and updated stock selection)
- Change. Investing in a Low Growth World. eBook that sells through Amazon and other channels. Tackles the main issues impacting on investment strategies today and the world of tomorrow.
- Who's Afraid Of The Big Bad Bear? eBook and Book (print) available through Amazon and other channels. Your chance to relive 2016, and become a wiser investor along the way.

Subscriptions cost $420 (incl GST) for twelve months or $235 for six and can be purchased here (depending on your status, a subscription to FNArena might be tax deductible): https://www.fnarena.com/index2.cfm?type=dsp_signup

(Do note that, in line with all my analyses, appearances and presentations, all of the above names and calculations are provided for educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions.)  

P.S. I - All paying members at FNArena are being reminded they can set an email alert for my Rudi's View stories. Go to My Alerts (top bar of the website) and tick the box in front of 'Rudi's View'. You will receive an email alert every time a new Rudi's View story has been published on the website. 

P.S. II - If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" - Warning this story contains unashamedly positive feedback on the service provided.

FNArena is proud about its track record and past achievements: Ten Years On

article 3 months old

Rudi’s View: Macquarie, Aristocrat Leisure And Emeco

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

-Out With The Garbage
-Change: Rudi On TV
-Zimbabwe on Top Of The World
-Conviction Calls
-UBS On Inflation

-Rudi Talks
-Rudi On Tour


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

Zimbabwe On Top Of The World

Some things a sane mind simply cannot make up, no matter what the context.

With equity markets globally in turmoil, and the Australian share market giving up all the gains that had been booked over the first nine months of calendar 2009, the stock exchange in Harare, Zimbabwe was celebrating an all-time record high.

Make no mistake, the ruling elite is still enriching itself while ruining further what once was a thriving exporter in the south of Africa.

Hyperinflation is no more, but economic decay remains and nobody believes the official inflation estimate currently printing 4.8%.

Businesses are being affected by acute shortages in foreign currency. Investors are treating equities as a preservation of wealth. In local currency, the Zimbabwean Stock Exchange has appreciated some 18% this year, which makes it one of the best performers in the world.

Conviction Calls

First up, a warning from me, again, to all investors out there: do not get sucked into this whole theme of "value" is now going to outperform "growth" by buying into (or holding onto) the wrong stocks.

On Monday, I referred to Domain Holdings ((DHG)) and Fairfax Media ((FXJ)) issuing a profit warning. On Wednesday, as I am writing Part Two of this week's Weekly Insights, shares in The Reject Shop ((TRS)) are down by -34% after yet another profit warning from an under pressure business model that has a long legacy for surprising into the negative.

These examples should remove two misconceptions that have long survived inside the financial industry: the first is that a lower share price takes care of all the risks, which clearly is not the case (not even after this month's heavy sell-off) and the second one is that High PE stocks represent higher risk because, you know, watch what'll happen when they disappoint.

The irony here is, of course, that if you pick the high quality companies among the High PEs you'll seldom encounter a nasty surprise such as delivered by Domain and The Reject Shop. Whereas The Reject Shop shares had fallen from $8 to $6 already, and then further to $4.50 as the share market met broad based selling.

By that stage the shares were trading on PE ratios well below market average and an implied dividend yield well above the banks and the market average. And as we know now, the shares still had another -34% downside in them on the back of today's profit warning.

Fact remains, most stocks in the "value" basket are carrying a lot of operational risks and uncertainties, as old economy stalwarts are struggling to cope with a changing market place, increased competition, technological advances and government policies (or the lack thereof).

Many of the quality growth companies had become too popular and the current share market correction is taking care of this. However, it remains yet to be seen if and for how long these quality companies, providing robust growth outlooks, will remain out of favour.

In the meantime: don't get stuck with value traps such as The Reject Shop which, coincidentally, would also have been a yield trap for those investors desperately seeking income and lured in by what must have looked like a very attractive yield.

(See also Part One published on the website on Wednesday)



****

Shares in Aristocrat Leisure ((ALL)) have put in a solid rally this week and that should not surprise. Amidst ongoing positive feedback via industry reports, sector data, conferences and stockbroking research, the shares kept sliding from a high around $33 in July to near $28 on Monday.

Enough reasons for experts to step into the limelight and declare the shares are nothing but a buying opportunity. Cue Mathan Somasundaram, market portfolio strategist at Blue Ocean Equities, alongside analysts at Deutsche Bank, UBS, Wilsons, Baillieu Holst and CLSA (I might have forgotten a few) who all declared Aristocrat shares are a screaming buy at these beaten down levels.

Baillieu Holst upgraded to Buy on Tuesday, declaring the -17% fall from the record closing high of $32.98 "has come to be a rare opportunity in recent years to buy the stock on material weakness". Baillieu Holst upped the new price target to $33.15 from $31 previously. Among the positives cited in support of the move was favourable feedback from last week's global gaming expo in the USA; G2E.

One day earlier, in the midst of the severe sell-down of Australian equities, Wilsons declared it is time to step up and declare Aristocrat shares an unmitigated buying opportunity. Wilsons has a fair value assessment around $33. It's price target sits at $32.95. Over at CLSA the analysts have a price target of $41.26.

I do know Aristocrat Leisure, due to its link with pokie machines in Australia, is not everybody's taste. Just saying...

***

CLSA (senior) banking analyst Brian Johnson has been a long time groupie of the Millionaires Factory nowadays operating as Macquarie Group ((MQG)) and amidst October turmoil he has shown no intention to change his view. Quite to the opposite, when selling orders started hitting Australia, and Macquarie Group shares too started sliding ever further away from the $130 all-time high, Johnson issued a special missive to the database of clients: buy the dips.

Admittedly, said Johnson, this is a high beta stock, and one cannot but point out Macquarie is, essentially, "an asset recycler leveraged to rising asset values in an environment where bond rates are also rising". But this is no time to bail, declared he.

Amongst the numerous reasons pointed out, Johnson points out conservative accounting virtually guarantees tailwinds to persist for a long while yet. Unless impairments would rise, market consensus forecasts are most likely to be proven too low yet again for the years ahead.

The company is also a beneficiary of market volatility, a weaker AUD and US tax cuts. Plus it carries surplus Common Equity Tier 1 (CET1) capital in combination with regulatory approval for a $1bn buyback, while generating $750m in suplus CET1 each year.

Bell Potter banking analysts TS Lim and Tim Piper, on Monday, equally used a general preview to the upcoming banks reporting season to reiterate their sector preference remains with Macquarie Group. This despite Bell Potter rating three of the Big Four as Buy (Westpac ((WBC)) being the exception) while also viewing Suncorp ((SUN)) shares worthy of the highest rating possible.

Bell Potter has a $132.50 price target for Macquarie Group, declaring "the recent share price decline provides a great opportunity to invest in this “Cash and Growth” story".

In case you wondered, and I have no doubt many among you do, here's Bell Potter's view on the Big Four: "ANZ ((ANZ)) and NAB ((NAB)) appear to be most resilient to medium term Royal Commission headwinds while CBA ((CBA)) has, in our view, reached an inflexion point that now justifies an upgrade to a trading Buy".

****

One of the yield/value traps that had many an investor bamboozled in 2018, G8 Education ((GEM)), has proven quite resistant this month. I guess there's only so far a share price can fall and Australia's number one owner/operator of childcare centres is still paying dividends, despite persistent industry headwinds.

Those dividends were cut in FY17, and the same scenario applies to FY18 (financial year to December). Most analysts covering the stock are projecting dividend increases again from next year onwards. We'll see. In the meantime, analysts at Wilsons are not budging from their view the shares are not worth more than $2.03 (around where the shares are trading) and their message to long suffering shareholders is as clear as pie: you will have to be patient.

Inside the FNArena universe of stockbrokers covering this stock, Wilsons sits near the bottom in terms of valuation, rating G8 Education no more than a firm Hold. If you have access to Stock Analysis on the FNArena website, you'll find the likes of Morgans, UBS and Ord Minnett are still willing to stick with a more positive view.

But hey, take it from me, there's nothing as easy as adopting a positive view after the share price has been walloped. Investors do it every day in the share market. It didn't work so well with Slater & Gordon ((SGH)), iSentia ((ISD)) or The Reject Shop, just to name a few.

****

One sector that has quite a number of analysts excited are the contractors and equipment providers to miners and energy producers. Overall activity is forecast to pick up for the coming 2-3 years or so, though this hasn't helped RCR Tomlinson ((RCR)) of late. And who could forget Forge Group?

Nevertheless, Goldman Sachs this week initiated coverage on Emeco Holdings ((EHL)) with a Buy rating and a price target of 47c, suggesting significant upside given the share price on Wednesday is trading around 38c, no doubt already on the up because of Goldman's positive expectation.

Emeco, which is Australia's largest mining equipment rental firm, is making a come-back after having been in the dog house from 2014 until mid-2017. If Goldman Sachs' projections prove correct, CAGR for the next three years is 27%. Further adding to the analysts' confidence is the forecast Emeco will announce the return of a dividend for shareholders in the second half of FY20.

****

Investors should note analysts have equally stepped up support for shares in Link Administration ((LNK)) this week past, but we already published a story about this on Wednesday:

https://www.fnarena.com/index.php/2018/10/17/treasure-chest-investors-missing-link/

For full disclosure: All three of Aristocrat Leisure, Macquarie Group and Link Administration are proudly held in the FNArena/Vested Equities All-Weather Model Portfolio (see also further below).

Investors can read more about the Portfolio here:

https://www.fnarena.com/index.php/2018/10/04/rudis-view-all-weather-model-portfolio/

UBS On Inflation

Prepare for an inflation shock by month's end.

No, not what you are thinking right now. Economists at UBS have conducted a deep dive into what is occurring underneath underlying consumer prices inflation in Australia and their conclusion is the quarterly update locally, scheduled for October 31, is most likely to surprise to the downside.

Mind you, quarterly CPI readings have mostly underwhelmed over the past two years, so we shouldn't be shocked by this. But there is a higher oil price, and a weaker Aussie, plus a number of economists continues to hammer home that wages inflation, it is coming.

If UBS's calculations will be vindicated by month's end, the third quarter is about to generate one of the lowest inflation readings on record. Yes, you read that correctly. One of the lowest, ever.

UBS thinks a reweighting of the CPI basket, plus price deflation for child care, education and autos will more than just compensate for dearer fuel and tobacco tax hikes. On UBS's current estimate, Q3 underlying CPI will print 0.3% (versus 0.4% the previous quarter) to pull down the year-on-year number to 1.7%.

Combine this forecast with a bearish view on the housing market and it is no surprise UBS thinks there will be no action from the RBA until 2020.

Rudi Talks

Audio interview from last week in which I advocate investors raise more cash and keep a list of stocks they do not own, but would like to:

http://boardroom.media/broadcast/?eid=5bbd2c4b7410a23524811618

Rudi On Tour

-Presentation to ATAA members and guests Sydney, on 18 October
-AIA Celebrity Lunch, Brisbane, on November 3

(This story was written on Monday 15th October 2018. It was published on the Monday in the form of an email to paying subscribers at FNArena, and again on Wednesday as a story on the website. Part Two was written on Wednesday and published on Thursday).

(Do note that, in line with all my analyses, appearances and presentations, all of the above names and calculations are provided for educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions. All views are mine and not by association FNArena's - see disclaimer on the website.

In addition, since FNArena runs a Model Portfolio based upon my research on All-Weather Performers it is more than likely that stocks mentioned are included in this Model Portfolio. For all questions about this: info@fnarena.com or via the direct messaging system on the website).

****

BONUS PUBLICATIONS FOR FNARENA SUBSCRIBERS

Paid subscribers to FNArena (6 and 12 mnths) receive several bonus publications, at no extra cost, including:

- The AUD and the Australian Share Market (which stocks benefit from a weaker AUD, and which ones don't?)
- Make Risk Your Friend. Finding All-Weather Performers, January 2013 (The rationale behind investing in stocks that perform irrespective of the overall investment climate)
- Make Risk Your Friend. Finding All-Weather Performers, December 2014 (The follow-up that accounts for an ever changing world and updated stock selection)
- Change. Investing in a Low Growth World. eBook that sells through Amazon and other channels. Tackles the main issues impacting on investment strategies today and the world of tomorrow.
- Who's Afraid Of The Big Bad Bear? eBook and Book (print) available through Amazon and other channels. Your chance to relive 2016, and become a wiser investor along the way.

Subscriptions cost $420 (incl GST) for twelve months or $235 for six and can be purchased here (depending on your status, a subscription to FNArena might be tax deductible): https://www.fnarena.com/index2.cfm?type=dsp_signup

(Do note that, in line with all my analyses, appearances and presentations, all of the above names and calculations are provided for educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions.) 

P.S. I - All paying members at FNArena are being reminded they can set an email alert for my Rudi's View stories. Go to My Alerts (top bar of the website) and tick the box in front of 'Rudi's View'. You will receive an email alert every time a new Rudi's View story has been published on the website. 

P.S. II - If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" - Warning this story contains unashamedly positive feedback on the service provided.

FNArena is proud about its track record and past achievements: Ten Years On