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.
Stock market
The pros and cons of DIY investing
“Social trading” is being flagged as a very real issue now affecting the Australian stock market – especially as low-cost stock trade platforms gain popularity. ...Read more
Stock market
Where to find dividends in a low-rate environment
Australian investors who are income-focused are still able to find strong dividend-paying stocks, but the market is changing, an expert has said. ...Read more
Stock market
Did investors overreact to the COVID-19 pandemic?
The economic downturn has not hit many sectors of the economy as hard as first predicted, with the reporting season revealing that many sectors will recover quickly, an investment fund has revealed. ...Read more
Stock market
Market volatility not a worry for Millennial investors
In spite of COVID-19-related volatility, Australian investors aged between 24 and 39 remain bullish about the current sharemarket. ...Read more
Stock market
Why investors will miss their mark for the next 5 years
Australian investors are urged to rethink their investment targets, with the COVID-19 recovery likely to have an impact on returns, new research has found. ...Read more
Stock market
Standing strong in a crisis, ethical investments are here to stay
Ethical investments are more than just a short-term fad, an investment manager has advised. ...Read more
Stock market
Sovereign wealth fund goes negative for the first time since the GFC
The Future Fund has posted a rare negative return for 2020 and warned that a “challenging and volatile” economic climate could hurt previously strong gains moving forward. ...Read more
Stock market
Don’t worry about dividends: Stocks still going strong
Dividends are still up for grabs for active investors willing to wade through the major headlines and an abundance of market negativity, an investment expert has flagged. ...Read more
Stock market
The pros and cons of DIY investing
“Social trading” is being flagged as a very real issue now affecting the Australian stock market – especially as low-cost stock trade platforms gain popularity. ...Read more
Stock market
Where to find dividends in a low-rate environment
Australian investors who are income-focused are still able to find strong dividend-paying stocks, but the market is changing, an expert has said. ...Read more
Stock market
Did investors overreact to the COVID-19 pandemic?
The economic downturn has not hit many sectors of the economy as hard as first predicted, with the reporting season revealing that many sectors will recover quickly, an investment fund has revealed. ...Read more
Stock market
Market volatility not a worry for Millennial investors
In spite of COVID-19-related volatility, Australian investors aged between 24 and 39 remain bullish about the current sharemarket. ...Read more
Stock market
Why investors will miss their mark for the next 5 years
Australian investors are urged to rethink their investment targets, with the COVID-19 recovery likely to have an impact on returns, new research has found. ...Read more
Stock market
Standing strong in a crisis, ethical investments are here to stay
Ethical investments are more than just a short-term fad, an investment manager has advised. ...Read more
Stock market
Sovereign wealth fund goes negative for the first time since the GFC
The Future Fund has posted a rare negative return for 2020 and warned that a “challenging and volatile” economic climate could hurt previously strong gains moving forward. ...Read more
Stock market
Don’t worry about dividends: Stocks still going strong
Dividends are still up for grabs for active investors willing to wade through the major headlines and an abundance of market negativity, an investment expert has flagged. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
