Invest
The ‘buy now, ask later’ investment strategy
As world markets show strong signs of recovery, with the NASDAQ 100 reaching record highs and Australia’s ASX 200 briefly crossing 6,000 points, many investors are buying now and asking questions later, a portfolio manager explains.
The ‘buy now, ask later’ investment strategy
As world markets show strong signs of recovery, with the NASDAQ 100 reaching record highs and Australia’s ASX 200 briefly crossing 6,000 points, many investors are buying now and asking questions later, a portfolio manager explains.
During Fidelity’s media briefing, portfolio manager George Efstathopoulos noted that investors are becoming increasingly optimistic about the future, which is seeing money flood back into the market.
“In March it was ‘sell now, ask questions later’. If you’ve seen what has happened in the past couple of months, it has been the exact opposite,” Mr Efstathopoulos said.
“It’s been buy, with a fear of missing out syndrome, and ask questions later.”
Mr Efstathopoulos said he is becoming increasingly worried about the divide that is happening between the fundamentals of world economies, which are facing an uncertain post-COVID-19 future, and the markets, which are pricing in a fast recovery.
“We are seeing a meaningful divergence between global economic fundamentals where huge uncertainties lie ahead and financial markets that are pricing a strong V recovery,” the portfolio manager said.
“We think the driving force behind this growing wedge is the massive injection of liquidity from central banks.”
A key concern for the portfolio market is there are too many assumptions that are increasingly priced in as certainty, whereas the reality can be very different.
Mr Efstathopoulos explained that key data, including employment, retail sales and real estate markets, remain uncertain despite positive signs.
“If we look at the job data, a higher proportion of what is classified as temporary employment rather than permanent employment, which supports the V-shaped recovery narrative.”
“However, the longer the return to normality takes, the higher the bankruptcy, the higher the defaults. We are seeing them across the services sector, food and beverage sector, and it will cause temporary unemployment to permanent unemployment,” he said.
The portfolio manager pointed out how the resumption of activity still has uncertainty despite early positive signs.
“I think two things. Firstly, speed also matters. Is the resumption of activity as fast as we thought two months ago? In some instances, that speed has fallen behind.”
“[Secondly] the resumption of these activities tells us nothing about how consumption will be affected by soaring unemployment or how business investment will respond to widespread bankruptcy that are already happening,” he said.
“The end of recession caused by mechanically lifting bans on supply side activity is completely different from an economic recovery driven by consumer and business demand,” the portfolio manager concluded.
Did you enjoy this article? You may also be interested in:
- Is the share rally sustainable?
- US equities surge on 'V shaped' recovery predictions
- Is it time to expand your investment horizon?
RELATED ARTICLES
About the author
About the author
Stock market
6K Additive secures A$48 million through initial public offering on the Australian Stock Exchange
6K Additive, a prominent player in the advanced metal powders and alloy additions market, has made a significant stride by successfully completing its Initial Public Offering (IPO) on the Australian ...Read more
Stock market
Institutional investors increase stock allocations to 18-year high amid cautious market shifts
In a recent development, State Street Markets unveiled the findings of its latest State Street Institutional Investor Indicators, revealing intriguing shifts in institutional investor behaviourRead more
Stock market
FOREX.com launches in Australia to empower self-directed traders
StoneX Group Inc. (NASDAQ: SNEX) has announced the Australian launch of FOREX.com, expanding access for self-directed traders to a global suite of Contracts for Difference (CFD) products across ...Read more
Stock market
Westpac and CMC Markets strengthen partnership to enhance online trading services
In a significant move that underscores the evolving landscape of online trading in Australia, CMC Markets Stockbroking has been chosen as the preferred vendor by Westpac Banking Corporation to extend ...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
6K Additive secures A$48 million through initial public offering on the Australian Stock Exchange
6K Additive, a prominent player in the advanced metal powders and alloy additions market, has made a significant stride by successfully completing its Initial Public Offering (IPO) on the Australian ...Read more
Stock market
Institutional investors increase stock allocations to 18-year high amid cautious market shifts
In a recent development, State Street Markets unveiled the findings of its latest State Street Institutional Investor Indicators, revealing intriguing shifts in institutional investor behaviourRead more
Stock market
FOREX.com launches in Australia to empower self-directed traders
StoneX Group Inc. (NASDAQ: SNEX) has announced the Australian launch of FOREX.com, expanding access for self-directed traders to a global suite of Contracts for Difference (CFD) products across ...Read more
Stock market
Westpac and CMC Markets strengthen partnership to enhance online trading services
In a significant move that underscores the evolving landscape of online trading in Australia, CMC Markets Stockbroking has been chosen as the preferred vendor by Westpac Banking Corporation to extend ...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
