Show me a picture of goldilocks11/28/2023 ![]() ![]() You can stay nimble and get in and out of stocks a lot easier than a big fund can. My gut, for whatever that’s worth, says this will happen soon.īut that’s the advantage you have as a small investor over the big funds. Plus, with broader markets up so strongly over the past few months, it’ll only take one chink in sentiment for things to fall back down fast as people lock in profits. You need to be alive to the fact some piece of bad news could come out of nowhere and derail things. Of course, if markets have taught us anything, it’s to expect the unexpected. If that’s the case, it could mean it’s time to start diving back into a few well-chosen, small-cap stocks. Interestingly enough, despite the broader market gains, the small-cap market has been fairly lacklustre this year.Ĭheck out this chart of the ASX Small Ordinaries, an index of small-cap stocks in Australia, for example:Īs you can see, small caps have basically done nothing over the past 12 months.Īnd despite all the big-picture drama, an optimist like me would say it seems to have found a bottom. That means you’ve still got time to plan your moves… An opportunity in small caps? With inflation coming down fast and interest rate rises set to be nearing an end, this is usually how these things go. To me, these are all clues more money is starting to come back into the riskier end of the market. That kind of move hasn’t happened in a while. Last week, for the first time in a long while, I had multiple buy alerts ping in areas as diverse as biotech, oil juniors, uranium stocks, and even a helium miner!Īnd one of my strongest crypto recommendations - a larger one, not some obscure, dubious one - surged 20% in just one day. That way, I only pay attention to stocks and sectors when the price is telling me something may be up (see my Money Morning article from 10 July for more information on how I do this). I, myself, keep a very close eye on the small-cap market and have a number of price alerts set. Central banks still face the challenge of controlling inflation, preventing a recession, and dealing with political pressures…but we seem to be nearing the end of this phase of high inflation and low growth with a tight labour market.’ ‘ In summary, the increasing copper-gold ratio points to a bullish economic period. It pinged a signal last week to move from 100% cash to a 60% stocks-40% bonds mix.Ĭhewy noted in response to the signal that: He’s navigated the topsy-turvy markets of the last 18 months better than anyone I know.Īnd I’ve heard on the grapevine he’s got a new presentation coming out soon, so keep your eyes peeled for that.Īnother one of our trading gurus, Peter Bakker (Chewy), uses a computer (quantitative) model to work out how best to position your portfolio. He’s got a really good system for analysing shifts in market trends and uses ‘pivot points’ to determine the best times to get in and out of the market. I’ll be very interested to see what our pro trader Murray Dawes has to say about the market this week. Luckily, here are Fat Tail Investment Research, we have a few trading experts that can help with such things… What are our pro traders saying? Though, perhaps we need to see the market rally last a few more weeks to really put the boot into the sidelined bears. Market psychology is the one constant in our fast-changing world. ![]() ‘ So, do we give in and participate in the upward momentum or give the market enough rope? Believe me, I’ve been giving (pardon the pun) this a lot of thought.’Īs I noted four weeks ago, it’s when this kind of conviction wanes that you’re probably more likely to see markets turn down in the short term. Some are even close to capitulating and turning bullish.įor example, I noted one long-time doomsayer wrote last week that: They’re rationalising the market action trying to find new reasons why they’re still right. ![]() Since then, the ASX 200 is up 1.3%, the Dow Jones is up 3.91%, and the tech-focused exchange Nasdaq is up 4.06%. ‘ Don’t blame me, I don’t make the rules…’ ‘ When those sitting on the sidelines finally capitulate and invest, then, and only then, will we get the pullback everyone is waiting on! ‘ …I wouldn’t be surprised if the next pain trade will be for markets to keep surging higher as everyone waits for a pullback that never comes. But what’s the next pain trade? And how should you play it? Read on for my base case scenario and the sector I’m most excited about… The longer it continues, the higher the pain for those locked out the market, waiting for falls that didn’t come. In today’s Money Morning…the pain trade for the past few months has been the market going ever higher. ![]()
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