Trending On Livewire: Weekend Edition - Saturday 8th March
Markets are melting down—are you staying put or making moves? Opportunities emerge when fear takes over.
When markets melt down like this, particularly after an extended rally, I’m reminded of the frog in the boiling pot analogy – where the frog in the pot of gradually heating water doesn’t notice it is being cooked to death because the change is too subtle. Prior to the past couple of weeks, everything was rosy. Inflation was seemingly under control, US earnings season had been solid, and Trump had yet to embark on his tariff tit-for-tat.
Fast forward to today and it’s a vastly different scenario. According to Goldman Sachs, corporate Australia has just endured “the most volatile reporting season ever”, with 20% of stocks moving +/-10% on their results. US markets have pulled back sharply, with the Nasdaq entering correction territory as investors sour on several “Trump trades”, and economists have been raising their odds of a US recession as sentiment falls and tariff related uncertainty rises.
The only question for investors right now is “what are you doing about it?” Are you sitting like the boiling frog as markets - admittedly quite quicky - melt down, or are you taking action? The perma bulls would argue that the Trump induced volatility will pass – it did last time – and that fundamentally, nothing much has changed. The bears would argue that the world has fundamentally changed and that regardless of how quickly the episode might be over, you don’t want to be the frog.
However it plays out, the thing about meltdowns is that they create opportunities to buy companies that you like at more compelling prices and having some dry powder to deploy when things look their bleakest, provides a great opportunity for long-term outperformance and wealth creation. It might be time to dust off your risk management playbook. It you don’t have one, this five-step framework from QVG Capital’s Chris Prunty is a good start.
Chris Conway, Managing Editor, Livewire Markets
I’m sorry, you don’t need (or even want) property – Part 2/2
Livewire’s Vishal Teckchandani challenged me to a debate on property versus shares. In Part 1, I dismantled the myths around property’s role in wealth creation, costs, and returns. Now, in Part 2, I tackle the final two flaws: the idea that property protects bad investors and that residential real estate yields are strong (spoiler - they aren't). I also highlight the rising risks of property investing in today’s market. If you’re serious about making smart investment decisions about your wealth, read the full rebuttal and decide where you stand.
FNArena reporting season monitor: February 2025 - Week 4 (324 stocks covered)
Welcome to the fourth weekly report for the February 2025 results season. The FNArena Reporting Season Monitor reports ratings, consensus price target changes, and brief summaries of the collective responses from FNArena's database of brokers for each of the stocks covered. The latest update is now available for download, with coverage of the 324 stocks that have reported results in February. You can access the full PDF in the attachment at the bottom of this wire. Readers should be aware that it doesn't matter what profit or loss has resulted from a company. What's important is how the stock fared against consensus forecasts – whether management delivered a "miss" or a "beat".
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Chart of the Week: Ignore the noise
This week's chart of the week comes from Ophir Asset Management, and is a timely reminder of why we should ignore the noise when markets wobble - although that is admittedly very hard to do. The chart shows the S&P 500 per annum returns after some major market meltdowns - the current one is just a minor one at this stage - and shows that if you're investing over the long-term, you stand a pretty robust chance to make solid returns
Chris Conway, Managing Editor, Livewire Markets
Weekly Poll
With the ASX 200 now down around 7% from the mid-February high, what - if anything - are you doing about it?
a) Nothing - this too shall pass
b) Tinkering around the edges - the weakness has prompted me to pull my portfolio weeds
c) Cashing up - have pulled the weeks as well and some of my positions that had run hard
d) Yes – I’m exploring alternatives like equal-weighted and factor-based ETFs.
LAST WEEKS POLL RESULTS
We asked "Recent data suggests investors see market-cap-weighted ETFs as risky due to their increasing concentration. Do you agree?"
The poll shows 51% are neutral on market-cap-weighted ETFs, 29% are exploring alternatives, and 20% believe the index is functioning as intended.
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