Invest
Falling markets don’t necessarily mean falling earnings: portfolio manager
Rising interest rates have brought back volatility, and opportunities to buy good companies at better prices with it, a portfolio manager has said.
Falling markets don’t necessarily mean falling earnings: portfolio manager
Rising interest rates have brought back volatility, and opportunities to buy good companies at better prices with it, a portfolio manager has said.
While February’s dip hasn’t been repeated in recent months, the return of volatility presents opportunities to make like Warren Buffett, portfolio manager of Perpetual’s Global Share Fund Garry Laurence has said.
Speaking to Nest Egg, he said investors have opportunities through emerging markets’ consumer growth but face headwinds of rising interest rates and ensuing volatility.
The strength of online retailers and advertising portals, coupled with the technological themes present in emerging countries, could be tempered by rising interest rates, beginning in the US.
Naming this the “biggest headwind”, Mr Laurence said, “That's starting to suck liquidity out of capital markets. Companies that have higher levels of debt might see higher costs and interest rates and that affects their earnings.
“Also, there just might not be as much money going into markets so people need to be wary that it might not be as easy then, there might be more volatility in markets than we've seen over the past few years. “
However, he said the best thing to do when faced with higher volatility is to “take advantage of the fear” and look for buying opportunities in potential corrections.
“As an investor, we just like to continue to invest and take more of an averaging approach to investing,” Mr Laurence said
“If you do see markets falling, that might not necessarily be because earnings are falling, it's more of a valuation adjustment in markets potentially.”
For investors, this means there are opportunities to buy “good businesses” at better valuations.
Nevertheless, he predicts global growth will continue to be healthy thanks to reduced unemployment rates in many countries, including the US.
All things considered, Mr Laurence said good companies should continue to do well.
“The advice is always to, as Buffett would say, be greedy when others are fearful and be fearful when others are being greedy, and if you do get more volatility as interest rates rise and liquidity comes out of the market, that's often a good time to be investing,” he said.
RELATED ARTICLES
Stock market
Portfolio reviews as an operating discipline: turning volatility into a competitive edge
In a higher-rate, higher-volatility world, portfolio reviews are no longer an annual hygiene task; they’re a core operating rhythm that protects cash flow, unlocks tax alpha, and sharpens risk ...Read more
Stock market
Fee war on the ASX: Global X’s A300 turns up the heat on core Aussie equity ETFs
Global X has lobbed a 0.04% management fee into Australia’s core equity sandbox, launching the Australia 300 ETF (A300) to take on entrenched giants. Read more
Stock market
Challenger IM shakes up the ASX with private credit note and a side of risk
Challenger Investment Management has taken private credit mainstream with an ASX-listed note structure—LiFTs—that secured roughly $100 million in cornerstone commitments within a day of launch. Read more
Stock market
International stocks: Diversifying your portfolio beyond Australia
In an increasingly globalized market, Australian investors have the opportunity to enhance their investment portfolio by incorporating international stocks. Diversifying your investments globally can ...Read more
Stock market
Stock market rally likely to continue regardless of Fed minutes tone, says deVere CEO
The bull run that has propelled Wall Street's major indexes to record highs this month is expected to continue regardless of the tone of the upcoming Federal Reserve minutes, according to Nigel Green, ...Read more
Stock market
US stock rally driven more by valuation growth than earnings, leaving tech names vulnerable: Innova
The strong gains in US stocks over the past year, particularly in the technology sector, have been driven more by expanding valuations than underlying earnings growth, leaving them exposed to a ...Read more
Stock market
Sun Silver to make its ASX debut with a $13 million IPO
Sun Silver Limited (proposed ASX Code: "SS1") has announced the opening of its Initial Public Offering (IPO) today, aiming to raise a minimum of $10 million and a maximum of $13 million (before costs)Read more
Stock market
Nasdaq hits record high, underscores the value of tech in investment portfolios
The Nasdaq Composite's surge to an all-time high last Friday highlights the importance of incorporating technology into investment strategies. Read more
Stock market
Portfolio reviews as an operating discipline: turning volatility into a competitive edge
In a higher-rate, higher-volatility world, portfolio reviews are no longer an annual hygiene task; they’re a core operating rhythm that protects cash flow, unlocks tax alpha, and sharpens risk ...Read more
Stock market
Fee war on the ASX: Global X’s A300 turns up the heat on core Aussie equity ETFs
Global X has lobbed a 0.04% management fee into Australia’s core equity sandbox, launching the Australia 300 ETF (A300) to take on entrenched giants. Read more
Stock market
Challenger IM shakes up the ASX with private credit note and a side of risk
Challenger Investment Management has taken private credit mainstream with an ASX-listed note structure—LiFTs—that secured roughly $100 million in cornerstone commitments within a day of launch. Read more
Stock market
International stocks: Diversifying your portfolio beyond Australia
In an increasingly globalized market, Australian investors have the opportunity to enhance their investment portfolio by incorporating international stocks. Diversifying your investments globally can ...Read more
Stock market
Stock market rally likely to continue regardless of Fed minutes tone, says deVere CEO
The bull run that has propelled Wall Street's major indexes to record highs this month is expected to continue regardless of the tone of the upcoming Federal Reserve minutes, according to Nigel Green, ...Read more
Stock market
US stock rally driven more by valuation growth than earnings, leaving tech names vulnerable: Innova
The strong gains in US stocks over the past year, particularly in the technology sector, have been driven more by expanding valuations than underlying earnings growth, leaving them exposed to a ...Read more
Stock market
Sun Silver to make its ASX debut with a $13 million IPO
Sun Silver Limited (proposed ASX Code: "SS1") has announced the opening of its Initial Public Offering (IPO) today, aiming to raise a minimum of $10 million and a maximum of $13 million (before costs)Read more
Stock market
Nasdaq hits record high, underscores the value of tech in investment portfolios
The Nasdaq Composite's surge to an all-time high last Friday highlights the importance of incorporating technology into investment strategies. Read more
