Invest
Bearish investors warned against buying the dip
Investors have taken advantage of falling equity prices, with trade volumes increasing, although they have been warned not to jump straight back in.

Bearish investors warned against buying the dip
Investors have taken advantage of falling equity prices, with trade volumes increasing, although they have been warned not to jump straight back in.

According to BetaShares, ETFs grew exponentially in March, even as funds under management (FUM) declined due to equity prices falling.
BetaShares CEO Alex Vynokur said: “During this challenging period, the extraordinary rise in ETF trading volumes indicates that Australian investors are increasingly turning to ETFs to express their investment views, suggesting that the liquidity of ETFs is proving attractive amidst some of the most intense volatility in recent history.”
However, the research also found that most investors are pessimistic about the future, with most transactions going in bear market funds.
“Unsurprisingly, given the slump in sharemarkets, the three top-performing funds for March were the BetaShares Bear Suite, which all rose sharply, up between 17 per cent and 33 per cent,” Mr Vynokur said.
Founder and director of Bourse Communication Rod North agrees with these bearish investors, highlighting markets could further fall before recovering.
“The Aussie sharemarket is in the middle of a brief bear market rally mirroring the gains made back in October 2008 before the GFC pulled shares down a further 25 per cent before we finally reached the bottom of the market in March 2009.
“In our case, and in the context of today, expect that bottom and buy signal to be reached sometime by yearend 2020 or early 2021.
Mr North advised long-term investors: “Don’t be lured into the ‘bear market trap’ and perceived honey pot of gains to be had just because the market has risen like a soufflé in the past few weeks.”
Many top 200 Australian companies will not be able to maintain their dividends and may have to drop them in the light of the coronavirus-induced slump in earnings. Earnings is always the key driver of the sharemarket sending it to higher levels and nobody wants to see companies cut their dividends, but this becomes inevitable when earnings totally disappear even for a short period.
The Australian sharemarket over recent days may have technically returned to bull market territory temporarily, Mr North said, but he sees the uptick as a series of “dead cat” market-induced bounces being a precursor of much deeper lows ahead of us as the full impact of a declining and systemic economy heading into a COVID-19-induced recession fully kicks in and delivers more bad news and company profit declines in the months ahead.
About the author

About the author


Stock market
Markets succumb to jitters as US CPI maintains strength
Following a slight drop of 0.2 per cent in the United States inflation rate, the latest US April consumer price index (CPI) data indicating higher than expected figures has triggered a fall in the US ...Read more

Stock market
Qantas forecasts return to profitability, announces ultra-long flights
Qantas expects its net debt to condense from $5.5 billion at the end of 2021 to $4.5 billion at the end of April following a period of sustained recovery in travel demand. ...Read more

Stock market
Headwinds to outnumber tailwinds in 2022
Headwinds are likely to outnumber tailwinds in 2022 as the world continues to readjust to the post-pandemic era, one expert has said. ...Read more

Stock market
Aussies can now net frequent flyer points by trading stocks
Superhero is looking to sweeten the deal for traders who are excited for the return of international travel. ...Read more

Stock market
Facebook debuts new name
Zuck gets meta. ...Read more

Stock market
2 big questions investors should ask as Australia reopens
Investors need to stop thinking about how to profit from the mineral sector’s struggles, and start looking at when the best time to ride the recovery will be. ...Read more

Stock market
Trading app popularity skyrockets as retail sector booms
In 2021, trading has never been easier for retail investors, meaning the number of users on trading applications has exploded to an all-time high. ...Read more

Stock market
ETF rush predicted to intensify
The Australian ETF sector advanced AU$6.3 billion in August to hit a new milestone, as its popularity among financial advisers soared. ...Read more

Wrapping up an eventful 2021
Listen now

What Omicron means for property, and are units right for first-time buyers? What is equity crowdfunding? Are industry super funds tapping into member funds to save their skins?
Listen now

Will housing affordability improve in 2022? Will buy now, pay later become the norm? Why are Aussies staying in failing super products?
Listen now

Who really benefits from crypto ETFs? How will the RBA respond to rising inflation? Could a mandate help address unpaid super?
Listen now

Stock market
Markets succumb to jitters as US CPI maintains strength
Following a slight drop of 0.2 per cent in the United States inflation rate, the latest US April consumer price index (CPI) data indicating higher than expected figures has triggered a fall in the US ...Read more

Stock market
Qantas forecasts return to profitability, announces ultra-long flights
Qantas expects its net debt to condense from $5.5 billion at the end of 2021 to $4.5 billion at the end of April following a period of sustained recovery in travel demand. ...Read more

Stock market
Headwinds to outnumber tailwinds in 2022
Headwinds are likely to outnumber tailwinds in 2022 as the world continues to readjust to the post-pandemic era, one expert has said. ...Read more

Stock market
Aussies can now net frequent flyer points by trading stocks
Superhero is looking to sweeten the deal for traders who are excited for the return of international travel. ...Read more

Stock market
Facebook debuts new name
Zuck gets meta. ...Read more

Stock market
2 big questions investors should ask as Australia reopens
Investors need to stop thinking about how to profit from the mineral sector’s struggles, and start looking at when the best time to ride the recovery will be. ...Read more

Stock market
Trading app popularity skyrockets as retail sector booms
In 2021, trading has never been easier for retail investors, meaning the number of users on trading applications has exploded to an all-time high. ...Read more

Stock market
ETF rush predicted to intensify
The Australian ETF sector advanced AU$6.3 billion in August to hit a new milestone, as its popularity among financial advisers soared. ...Read more